Safeguard Properties

MHA HAMP Reporting Update HAMP Reporting System Outage This Weekend

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Investor Update
March 21, 2016

Due to this weekend’s HAMP Reporting System Release, a planned system outage is scheduled from 6:00 p.m. ET Thursday, March 24, 2016 through 8:00 a.m. ET Monday, March 28, 2016.

During this time frame, HAMP Reporting System response files will not be available. Servicers will be able to submit and upload HAMP loan data files via the HAMP Reporting Tool and receive response files except from 6:00 a.m. ET to 12:00 p.m. ET on Sunday, March 27, 2016.

New functionality will be implemented in the HAMP Reporting Tool that supports:

  • Supplemental Directive 15-06 (SD 15-06) and Supplemental Directive 15-07 (SD 15-07) Making Home Affordable Program – Streamline HAMP Modification Process
  • Streamline HAMP Eligibility
  • Submission of Streamline HAMP Loan Setup Data
  • Streamline HAMP Additional Data Reporting Data
  • Streamline HAMP Official Monthly Reporting
  • Streamline HAMP Interactions With Other Modifications & Programs
  • Streamline HAMP Compensation
  • Streamline HAMP Servicing Transfers
  • Administrative Clarifications: Non-Approval Notices
  • Supplemental Directive 15-08 (SD 15-08) Making Home Affordable Program – Administrative Clarifications
  • HAMP Tier 2 Standard Modification Waterfall – Principal Forbearance Eligibility
  • New Servicing Transfer Reason Code for GSE Non-Performing Loan Sales
  • Interface File Changes

Servicers are encouraged to review updates related to this release from the program-specific sections on HMPadmin.com.

Questions?
For more information, email the HAMP Solution Center or call 1-866-939-4469.

Source: MHA

MHA HAMP Reporting Update February 2016 UP Survey Now Available

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Investor Update
March 15, 2016

The February 2016 UP survey is now available on HMPadmin.com (login required). Servicers that have executed a Servicer Participation Agreement (SPA) and that have cumulative UP activity must complete and upload their UP survey response to the HAMP® Reporting Tool (login required) by Tuesday, March 22, 2016.

SPA servicers that have any cumulative UP activity as of February 29, 2016 must submit an UP survey at this time.

For details on downloading and submitting the UP survey response, log in to HMPadmin.com, navigate to the HAMP Loan Reporting Tools & Documents area, and select the UP Survey tab.

Questions?
For more information, email the HAMP Solution Center or call 1-866-939-4469.

For questions specifically regarding the survey contents, email the HAMP Servicer Survey team.

Source: MHA

HUD Measures Progress Toward Helping Struggling Homeowners

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Investor Update
March 11, 2016

HUD has helped millions of struggling homeowners avoid foreclosure and stay in their homes with the completion of more than 10.2 million modifications and other forms of assistance arrangements since April 2009 (as of January 2016), according to HUD’s February Scorecard released this week.

According to HUD, more than 2.5 million of these actions assisting homeowners have taken place through the Making Home Affordable (MHA) program, which was launched in February 2009 in response to the housing crisis. MHA is scheduled to end on December 31, 2016, and the Department of Treasury released its first set of guidelines to servicers for MHA termination earlier in March.

Nearly 1.6 million of those 2.5 million homeowner assistance actions were permanent loan modifications completed through the Home Affordable Modification Program (HAMP). The Federal Housing Administration (FHA) has completed more than 3.1 million loss mitigation and early delinquency interventions during that same period from April 2009 until January 2016.

“These Administration programs continue to encourage improved standards and processes in the industry, with lenders offering families and individuals more than 4.6 million proprietary modifications through December,” said Katherine O’Regan, Assistant Secretary for the Office of Policy Development & Research at HUD. “Although there is good news overall, the Administration remains committed to helping more Americans realize their dream of home ownership through an improving economy and new programs that will provide greater access to credit.”

Citing data from the National Association of Realtors, HUD also reported that in January, existing homes rose to their second-highest pace since 2007, increasing by 0.4 percent up to a pace of about 5.47 million units annually—an 11 percent year-over-year increase. Existing-home sales have sold at a rate of more than 5 million annually for 10 of the last 11 months. Housing prices were up by 5.6 percent over the previous six months and are 1.2 percent above the peak reached in March 2007, according to data from the Federal Housing Finance Agency.

Click here to view the entire HUD February scorecard.

Source: DS News (full article)

HAMP: Managing Higher Payments After Resets

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Investor Update
March 18, 2016

The Administration’s Home Affordable Modification Program (HAMP), which was created in February 2009 to provide relief for homeowners facing financial hardship by reducing monthly payments to affordable levels through lowered interest rates and modified loan terms, is nearing its conclusion.

With HAMP Tier 1, homeowners receive a modification that reduces their interest rate to as low as two-percent for the first five years and then gradually steps up no more than a one-percent a year until the market interest rate at the time of the modification is reached. The median payment reduction for a homeowner in HAMP is about $500 per month (about 36 percent). The typical HAMP homeowner will experience two to three step-ups; the nationwide median payment increase after the first step-up is $93, while the median payment increase after the final step-up is around $206.

According to Mark McArdle, Deputy Assistant Secretary of Financial Stability at the U.S. Department of Treasury, even with a step-up, homeowners in HAMP will have a lower monthly payment than before their modification. In addition, more than 90 percent of HAMP homeowners will step-up to a permanent interest rate at or below five-percent after their final interest rate step-up.

Through December 2015, approximately 287,000 homeowners who have completed a HAMP modification have experienced a step-up in their monthly mortgage payment, and the percentage of them that disqualify in the months following a step-up is less than or equal to one percent, according to Danielle Johnson-Kutch, Acting Chief of the Homeownership Preservation Office at Treasury.

“One of the benefits of HAMP is that we now have a data set that demonstrates that the rate can be significantly reduced to achieve payment reduction and then step-up as the borrower has recovered,” Johnson-Kutch said. “This early data suggests that homeowners are able to manage the step-up and it could be part of a modification structure on the go forward if it’s done in the moderate way that a HAMP step-up is done to gradually increase the payment.”

Treasury is monitoring the data closely and has created a three-pronged safety net to help borrowers should they struggle with a step-up to avoid re-defaulting. The prongs are one, requiring servicers to notify borrowers at two separate time points that a step-up is imminent (no less than 120 days from first rate increase and at least 60 days prior to first increase); the second is introducing post-modification counseling for borrowers who are at risk of re-default and have missed a payment; and the third is an enhanced suite of tools which include increased incentives for remaining current and improved HAMP Tier 2 modification options.

“The good news is we’ve been tracking the performance of HAMP loans fairly aggressively since the program started, and we have not seen, as of yet, a significant impact (of step-ups),” McArdle said, noting that there have been 18 separate monthly vintages of HAMP modifications that have increased after five years. Some have even reached their second step-up and Treasury has still not seen a significant impact. McArdle said Treasury has a toolkit in place that includes, among many other things, a way to track and handle HAMP step-ups to determine if the modifications are sustainable even after the program expires.

“One of the lasting legacies of HAMP is proving that modifications can work long-term. The performance of HAMP Tier 1 modifications after the benchmark of 24 months, overall 24 percent of those modifications that have aged 24 months have disqualified,” McArdle said. “For recent vintages, it’s as low as 17 percent. So basically, four out of five borrowers are performing after two years. Beforehand, the general perception of the industry was that modifications were always kicking the can down the road and that they weren’t sustainable. Now I think if you can provide payment relief, there’s enough evidence to show that a modification is a sustainable alternative.”

Barring Congressional action, HAMP will expire on December 30, 2016. To date, in slightly more than seven years, the program has helped 1.8 million families and completed 2.3 million homeowner assistance actions.

Danielle Johnson-Kutch will be a speaker at the upcoming 2016 Five Star Government Forum on March 31 in Washington, D.C.

Source: DS News

GAO-16-351: Troubled Asset Relief Program: Treasury Should Estimate Future Expenditures for the Making Home Affordable Program

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Investor Update
March 8, 2016

What GAO Found

The U.S. Department of the Treasury (Treasury) monitors activity and aggregate expenditures under its Troubled Asset Relief Program (TARP)-funded Making Home Affordable (MHA) program, but it has not instituted a system to review the extent that it will use the full available program balance ($7.7 billion as of October 16, 2015). In a July 2009 report, GAO found that Treasury’s estimates of program participation may have been overstated, reflecting uncertainty caused by data gaps and assumptions that had to be made, and recommended that Treasury periodically review and update its estimates.
 
In response, Treasury started performing periodic estimates of the eligible HAMP population. Treasury officials previously told GAO that they could not reliably estimate future participation levels due to data limitations and that they assumed that all available MHA funds would be spent. GAO recognizes that no estimate of future participation and expenditures can be made with certainty. But prior GAO work has concluded that reviewing unexpended balances, including those that have been obligated, can help agencies identify possible budgetary savings. Moreover, Congress’s recent action to limit entry into the MHA programs after December 31, 2016, and to allow Treasury to obligate up to $2 billion in TARP funds, including MHA funds, to the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (Hardest Hit Fund), provides Treasury with greater certainty and opportunity with respect to estimating and reprogramming excess MHA fund balances. Since then, the President’s 2017 Budget identified $4.7 billion in potential excess funds, and Treasury has announced its intention to transfer $2 billion of these funds to the Hardest Hit Fund. Officials said that deobligating additional amounts would present undue risk of having insufficient funds, and that further estimates of excess funds should await the completion of all new activity.
 
GAO performed its own analysis of September 2015 mortgage data to estimate potential future HAMP participation and costs. This analysis resulted in estimates of MHA program balances as of October 16, 2015, that ranged from using all available funds to a surplus of $2.5 billion. In preparing these estimates, GAO attempted to provide a wide range of possible outcomes and generally used inclusive assumptions. Thus the actual number of eligible loans is likely to be lower and the unexpended balances higher than GAO’s estimates. Taking action to estimate likely MHA expenditures allows Treasury to deobligate excess funds and, as appropriate, move funds to the Hardest Hit Fund. To the extent that additional funds may be deobligated, Congress may then have the opportunity to use those funds on other priorities.
 
Why GAO Did This Study
 
Since 2009 Treasury has obligated $27.8 billion in TARP funds through its MHA program to help struggling homeowners avoid foreclosure. The Emergency Economic Stabilization Act of 2008 includes a provision for GAO to report every 60 days on TARP activities. This report examines the extent to which Treasury is reviewing unexpended balances and cost projections for the MHA programs. To do this work, GAO used 2015 mortgage and other data from a private vendor and Treasury to help illustrate potential future costs of MHA/HAMP, reviewed internal Treasury documents, and interviewed relevant federal agency officials.
 
What GAO Recommends
 
GAO is making two recommendations to Treasury and has one matter for congressional consideration. Treasury should (1) estimate future expenditures for the MHA program and any unexpended balances and (2) deobligate funds that its review shows will likely not be expended and move up to $2 billion of such funds to the TARP-funded Hardest Hit Fund as authorized. Congress should consider permanently rescinding any deobligated MHA funds that are not moved to the Hardest Hit Fund and make them available for other priorities. Treasury agreed with our recommendations and indicated that it has updated its cost estimates and subsequently deobligated $2 billion of MHA funds on February 25, 2016.
 
For more information, contact Mathew Scire at (202) 512-8678 or sciremj@gao.gov.

Source: GAO

Additional Resource:

GAO-16-351 Full Report [pdf]

Freddie Mac: Your Workout Settlements Roadmap Will Guide the Way

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Investor Update
March 1, 2016

Greater transparency. Improved customer experience. Time savings. These aren’t just catch phrases to us, they’re our commitment to you.
 
We’re continuing our forward momentum, and staying in high-gear, to better serve you. Our new Workout Settlements website is the next big step in our journey that began with automated settlements for modifications in 2014 and continued with automated settlements for liquidations in 2015.
 
This new interactive website guides you through the automated settlement process from start to finish – from preparing a transaction for settlement, to monitoring and completing the settlement, to making post-settlement corrections, if necessary. We provide training opportunities, links to additional resources, and helpful tips along the way, so you can avoid potential roadblocks.
 
Your feedback drives us to continually get better and, together, we’re making it easier to service Freddie Mac loans with smart, efficient technologies and transparent processes.
 
Follow your interactive workout settlements roadmap, so you never lose your way!
 
Reminder
 
Effective March 1, 2016, you must settle all liquidations through Workout Prospector® using the automated settlement functionality.
 
For More Information

Source: Freddie Mac

Freddie Mac: Four Questions to Get Back to Basics With Fraud Prevention

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Investor Update
February 22, 2016

For borrowers and lenders, spring 2016 means a still-hot housing market and demand from home buyers who see a rise in inventory and want to purchase before interest rates go any higher.

But for fraudsters, spring means opportunity of another kind. The bad kind.

That’s why we’re encouraging our customers to get “back to basics” and boost your risk mitigation and fraud prevention efforts through intensified quality control and borrower education.

“Combatting fraud in the mortgage industry requires a thorough focus on collecting, assessing and verifying borrower information,” said Joan Ferenczy, Vice President, Financial Instrument Fraud and Anti-Money Laundering Compliance Officer who’s been with Freddie Mac since 1982. “Getting back to basics means protecting your organization from losses and educating your borrowers to avoid dangerous risks.”

Consequences for Fraud Are High

Despite the fact that big fraud schemes aren’t splashed across the front pages as they were a few years ago, don’t think mortgage fraud has vanished. Smaller, loan-level mortgage fraud cases continue to occur across the country and recent prosecutions related to fraud spotlight the consequences.

  • A recent HousingWire article reports that a former real estate sales associate faces 150 years for Florida mortgage fraud.
  • According to Loansafe.org, a New Jersey man admitted that he recruited straw buyers and submitted fraudulent loan applications in a multi-million dollar scam.
  • The U.S Attorney’s Office regularly spotlights new fraud cases, including one in which a Maryland real estate developer fraudulently obtained approximately $2.5 million from a lender who discovered the falsified loan documents after the loan closed.


Get Back to Basics by Answering Four Questions

So what can you and your organization do to prevent and detect fraud, which often starts in the loan processing and underwriting process? Start by giving yourself a quick test.

Can you answer a resounding YES to the following?

1. Are you and your organization familiar with our Single-Family mortgage fraud mitigation best practices document [pdf] – which calls out red flags for commons fraud types – and mortgage screening checklist [pdf]?
2. Do you have controls in place to prevent and detect fraud, from basic loan processor training to a comprehensive verification process to stop falsified information (e.g. employment, income, etc.) from slipping through the cracks? This includes training to spot a borrower who’s been taken by a fraud scam.
3. Do you know the immediate steps to take when you suspect fraud?
4. Are you prepared to educate borrowers so they know what to look out for and how to avoid potentially risky situations?

If you answered no to any of the four questions above, make necessary changes now so that you can answer YES as soon as possible.

“Back to Basics” Ways to Be More Informed and Vigilant

  • Read the Single-Family mortgage fraud mitigation best practices document [pdf] and mortgage screening checklist [pdf].
  • Visit the Freddie Mac fraud prevention Web page and share our updated resources with appropriate members within your organization.
  • Refer to Single-Family Seller/Servicer Guide Chapters 7, 57 and 2.24 for our complete requirements on fraud prevention, detection and reporting.
  • Contact us immediately if you suspect fraud related to any loans we’re working on together. Call (800) 4FRAUD8 or email Mortgage Fraud Reporting.


Boost Borrower Education With Our Three Videos

As part of your borrower education efforts, please share these three Freddie Mac videos:

The Financial Fraud Investigation Unit is committed to helping you fight fraud. As you get back to basics with fraud prevention, detection and reporting, thank you for your vigilance.

Source: Freddie Mac

Framework at Year 3: Selling Rep and Warranty Relief for Many Freddie Mac Loans

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Investor Update
March 2, 2016

Three years ago, Freddie Mac implemented the Selling Representation and Warranty Framework to provide you with relief from certain selling representations and warranties for loans that demonstrate an acceptable payment history.
 
This year, many of the loans delivered in 2013 will meet the 36-month borrower payment requirement and will be eligible for rep and warranty relief.

  • For February 2016 alone, we expect almost 170,000 loans sold to Freddie Mac to have received relief under the framework, the majority of which is the result of the loans’ acceptable payment history.
  • We estimate that the total current gross unpaid principal balance (UPB) of these loans to be over $32 billion.
  • We expect over 1.4 million loans will receive rep and warranty relief by the end of 2016.
  • Under the framework, loans that receive rep and warranty relief will not be subject to our remedies, including a repurchase request, even if breaches to your rep and warranty obligations are discovered later.

The UPB of loans in your portfolio that have achieved rep and warranty relief can also be considered in your planning for capital requirements.
 
Are Any of These Loans Yours?
 
You can easily pull information about the relief status of loans in your portfolio from Freddie Mac Loan Coverage Advisor®, our  free application that calculates and tracks the rep and warranty relief status for every loan you sell to us. This will provide you with a clearer view of your exposure to Freddie Mac.
 
If you already have access to the application, follow these quick steps [pdf]. If you don’t, signing up is easy. Complete this form [pdf] and we’ll get you started.
 
Life of Loan Representations and Warranties
 
Remember – there are life-of-loan reps and warranties that aren’t included in the framework and are never relieved. The life-of-loan reps and warranties are described in detail in our Single-Family Seller/Servicer Guide which includes information on how misstatements, misrepresentations, and data inaccuracies are determined.
 
Review this chart to learn more about the enhancements to the life-of-loan representations and warranties. 
 
For More Information

Source: Freddie Mac

FHLMC Guide Bulletin 2016-4: Reorganized Guide Effective Today

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Investor Update
March 2, 2016

After our communications with you over the last few months, we are finally here. The reorganized Single-Family Seller/Servicer Guide (Guide) is now the official Guide version, as announced in today’s Guide Bulletin 2016-4. [pdf]
 
We want to reemphasize that we did not rewrite existing policies or requirements, nor did we introduce new ones.
 
Review today’s Bulletin for details on the reorganized Guide structure, including the numbering scheme and a description of the three segments that replace the two-volume Guide format. The Bulletin also identifies the key reorganization impacts and outdated requirements we deleted from the Guide. 
 
Updates to Purchase Documents and System Update

Negotiated Purchase Documents, including Master Agreements (MAs) and/or Master Commitments (MCs) and other Purchase Documents remain valid contracts. You may continue doing business with Freddie Mac using the same terms.
 
As applicable, we will issue updated Purchase Documents reflecting newly reorganized Guide references. Our goal is to have all MAs, MCs and Servicing provisions not in an MA updated by August 31, 2016.
 
Updated terms are available on AllRegs® if you deliver mortgages with the requirements of Guide Plus Additional Provisions.
 
Loan Prospector® will be updated on March 6, 2016, and the Selling SystemSM at a future date to reflect the reorganized Guide references.
 
Resources
 
Make sure to use the following updated resources to familiarize yourself with the reorganized Guide.

Source: Freddie Mac

FHLMC Guide Bulletin 2016-05: Important Servicing Requirement Changes

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Investor Update
March 9, 2016

In today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2016-5, we’re updating servicing requirements, largely in response to your feedback. As always, we’ll continue to listen and make it easier to do business with us.
 
Key Highlights

  • We’ve updated requirements for:
  • State foreclosure timelines, including ending the temporary suspension of compensatory fee assessments and billing in five jurisdictions.
  • Payment and reimbursement requirements for taxes and HOA dues on REO properties. The new requirements will eliminate, or at least minimize, the duplication of payments by you and our REO closing agent.
  • Mortgages subject to indemnification agreements are now eligible for modification, provided certain conditions are met. This applies to all borrower evaluations for any available Freddie Mac mortgage modification.
  • We’re giving you more flexibility to expedite Freddie Mac Default Legal Matters by waiving our deficiency rights in certain cases.


Please read Guide Bulletin 2016-5 for more details on these and additional updates.
 
For More Information

Source: Freddie Mac