Safeguard Properties

HARP Refi Numbers Dwindling Despite FHFA?s Efforts

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Investor Update
November 27, 2015

The total number of loans refinanced through the Home Affordable Refinance Program (HARP) to an unexpected turn downward in the third quarter.

According to the Federal Housing Finance Agency (FHFA) third quarter Refinance Report, a total of 25,824 HARP refinances were completed between July and September, down from the 31,561 refinances completed from April to June. In addition, HARP volume accounted for 5 percent of total refinance volume in the third quarter.

The FHFA reported that over 3.3 million borrowers have refinanced through the HARP program, which was enacted in 2009 to help homeowners that are not able to refinance due to falling home values.

The Agency approximates that over 429,000 borrowers nationwide have a financial incentive to use the HARP program but still have not.

HARP refinances were highest in Florida, California, Illinois, Michigan, and Georgia, the FHFA stated.

The report showed that Florida, Ohio, Illinois, Michigan, and Georgia are the top five states with the most “in the money” borrowers that are able to use HARP. These borrowers could save an average of $200 per month on mortgage payments.

FHFA deems borrowers to be “in the money” if they meet HARP eligibility requirements, have a mortgage balance of $50,000 or more, have a remaining mortgage of no more than ten years, and an interest rate at least 1.5 percent higher than current market rates.

“FHFA is continuing its efforts to reach HARP-eligible borrowers and has held town-hall style events with local community leaders in Chicago, Atlanta, Detroit, Miami, Newark and Phoenix to get the word out about HARP,” the report stated.

Those who refinance using HARP are typically have a lower delinquency rate compared to those who are eligible for the program but choose not to use it, the FHFA says.

Of all HARP refinances for underwater borrowers (those with a loan-to-value ratio greater than 105 percent), 28 percent resulted in 15-and 20-year mortgages. The FHFA noted that this method helps build equity for borrowers quicker than 30-year mortgages.

The FHFA cautioned potential refinancers that “HARP will sunset on December 31, 2016.”

Click here to view the full report.

Source: DS News

GSEs Announce Lowest Ever Interest Rate on Standard Mortgage Modifications

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Investor Update
November 9, 2015

Fannie Mae and Freddie Mac recently announced that the standard mortgage modification interest rate will be under 4 percent for the first time ever since the benchmark was established in January 2012.

According to similar releases from the GSEs, starting on November 13, 2015, Fannie Mae will lower its standard modification interest rate from 4 percent to 3.875 percent. Meanwhile, Freddie Mac will lower its standard modification interest rate by the same amount beginning on November 5, 2015.

This will be the lowest the rate has ever been at 3.875 percent.

“By adjusting the interest rate from time to time, you will have the ability to provide borrowers with a rate that aligns more closely to current market conditions,” Freddie Mac said in its Standard Modification FAQs.

Last month, the GSEs lowered the standard modification interest rate to 4 percent from 4.25 percent, where the rate had been from July 2015 to September 2015.

Servicers must use the current Fannie Mae Standard Modification Interest Rate when evaluating a borrower for a conventional mortgage loan modification, excluding Fannie Mae HAMP Modifications.

Servicers must use the Freddie Mac Standard Modification interest rate when determining the terms of a Standard Modification Trial Period Plan, Freddie Mac Streamlined Modification Trial Period Plan or a Capitalization and Extension Modification for Disaster Relief Trial Period Plan.

Freddie Mac’s Guidelines to Using the Interest Rate:

  • Visit this Web page on or after the fifth business day of every month for the new interest rate.
  • Implement the new interest rate on the tenth business day of the month, but no sooner.
  • Use the interest rate that is in effect and posted on Freddie Mac’s website when evaluating a borrower until the mandatory effective date of the new interest rate.
  • Ensure the interest rate used to determine final modification terms is the same fixed rate that was used when determining eligibility for the Trial Period Plan and calculating the Trial Period payment – even if the interest rate that must be used for new Trial Period Plan evaluations subsequently changes.

Click here to view Fannie Mae’s Standard Modification Interest Rate.

Click here to view Freddie Mac’s Standard Modification Interest Rate.

Source: DS News

Freddie Mac: What?s New With Your Scorecard?

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Investor Update
November 9, 2015

Transparency is critical to a strong working relationship. Today, we made several enhancements to your Freddie Mac Servicer Success Scorecard (Scorecard) to strengthen our relationship and make it easier to do business with us.
 
The What’s New Page
 
We’ve added an easy way for you to track recent enhancements to your Scorecard. The What’s New page is located on the left-hand navigation and provides a detailed snapshot of updates we’ve made to your Scorecard. We’ll update this page as we make enhancements.

Internet Explorer Compatibility
 
Your Scorecard is now compatible with Internet Explorer 11. Going forward, to ensure that you can view and use your Scorecard correctly, you must turn off the Compatibility Mode setting in all versions of Internet Explorer. You can disable this feature via the “Tools” menu. Also, as a result of this upgrade, you can now download your Scorecard directly to Microsoft® Excel.
 
Forecast Updates
 
The “Alternatives to Foreclosure” section of your Scorecard now displays your annual forecast as the sum of your actual year-to-date performance, through the current quarter, and the remainder of your projected volumes through the remainder of the year.
 
For more details on the changes described above and other enhancements, check out the What’s New page by logging in to your Servicer Performance Profile.
 
For More Information

Source: Freddie Mac

Freddie Mac: We’re Moving Workout Prospector Forward

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Investor Update
November 16, 2015

Today, the evolution of Workout Prospector® continues with the addition of a new automated settlement functionality for liquidations, including short sales, deeds-in-lieu of foreclosure, charge-offs, and third-party foreclosure sales. We announced these changes in Single-Family Seller/Servicer Guide (Guide) Bulletin
2015-14.

You must use the new automated settlement functionality to settle liquidations not later than March 1, 2016. However, we encourage you to incorporate automated settlement into your existing processes and procedures today.

The Evolution Continues

We’ve listened to your feedback and are making today’s updates with you in mind. Together, we’re moving Workout Prospector forward and making it easier to do business with us.

Settlement automation for liquidations provides the following benefits:

  • Reduced settlement turnaround times from days to minutes.
  • Fewer required settlement fields.
  • Quicker receipt of charge-off credits in your Detailed Adjustment Report (DAR).
  • Faster expense reimbursements.
  • Easier two-way communication through the comment section.
  • Improved controls and efficiencies by:
  • Eliminating the need to send us most paperwork, including Form 1160, Third-Party Transmittal Worksheet, and the Settlement/Closing Disclosure Statement.
  • Providing an electronic record of all settlement transactions.
  • Reducing errors by providing you with real-time feedback on missing or incorrect data.


Want to Learn More?
 
Find out more about today’s enhancements by reviewing our updated Workout Prospector Users’ Guide [pdf] and signing up for new and updated workout settlement training.
 
Reminder: DAR Changes
 
As we announced in Guide Bulletin 2015-14, the charge-off credit amount for third-party foreclosure sales in your DAR is now determined, in part, by the gross sale proceeds rather than the net sale proceeds from the sale of the property. For further details, please read Guide Bulletin 2015-14.
 
For More Information

 

Source: Freddie Mac

Freddie Mac Single-Family Update: Available Training on The Learning Center

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Investor Update
November 10, 2015

Register today to take part in one or both of these upcoming training events offered by The Learning Center.

Workout Prospector®: Enhanced Evaluation Process for Liquidations (updated)  available dates
This webinar details how to structure and analyze liquidation transactions including short sales, deeds-in-lieu of foreclosure, and charge-offs using Workout Prospector and features the NEW automated settlement process for these workout options.
 
Workout Prospector: Processing Third-Party Foreclosure Sales (new)   available dates 
This webinar details the new process on how to input data for third-party foreclosure sales into Workout Prospector and features the NEW automated settlement functionality.
 
For additional Servicing learning opportunities and tools, click here.

Visit The Learning Center for all your Single-Family training & education needs.

Source: Freddie Mac

Freddie Mac Plans to Use Proven Formula for Assisting HAMP Borrowers With Rate Increases

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Investor Update
November 11, 2015

Freddie Mac is using the results of aggressive loss mitigation experiments the GSE conducted a decade ago in an attempt to ease the impact of scheduled rate increases for homeowners whose mortgages have been modified using the government’s Home Affordable Mortgage Program (HAMP).

In a commentary titled “A Better Way to Reach Homeowners,” Freddie Mac’s VP of Single-Family Customer and Operational Services Lisa Cookson lays out the Enterprise’s plan for assisting HAMP borrowers with loans backed by Freddie Mac that are near the end of their five-year term and may be facing payment shock as a result of rate increases.

“Specifically, we’re giving lists of these HAMP and post-modification borrowers to Consumer Credit Counseling Services of San Francisco and ClearPoint Counseling Solutions, Inc. in Atlanta,” Cookson said. “They then use their expertise to contact, engage, and prepare the homeowner for the scheduled interest rate increase.” Those two agencies also give counseling to homeowners with new loan modifications and help them understand the terms of the new modification, and also assist them with preparing to be successful in making payments under the new terms.

Freddie Mac utilized CCCS of San Francisco and ClearPoint back in 2005 in order to engage delinquent borrowers who were unresponsive to servicers’ loss mitigation efforts. As a result, Freddie Mac prevented 350,000 additional foreclosures, which exceeded the Enterprise’s expectations.

The aggressive outreach efforts by Freddie Mac to delinquent borrowers 10 years ago came about as the result of research that showed just how unresponsive delinquent borrowers were, Cookson said. The research found that 31 percent of borrowers had not talked to their servicer/lender, 28 percent did not believe their servicer could help them, yet 74 percent (nearly three-quarters) said they would talk to a housing counseling agency, yet 38 percent of the homeowners who were surveyed did not know that counseling was available to them.

In response to that research, Freddie Mac joined with CCCS of San Francisco and ClearPoint to launch a campaign with two objectives: Inform the homeowners about the benefits of housing counseling and motivate them to utilize the counseling that was available to them. Freddie Mac added a third agency, Home Preservation Foundation, to the outreach effort in 2013.

“Developing a financial budget that reduced overall debt and increased savings allowed many homeowners to return their mortgage to good standing and prepare for any future financial road bumps.”

Lisa Cookson, Freddie Mac

Freddie Mac provided the counseling agencies with a list of delinquent borrowers who were unresponsive to their servicers, and the agencies worked with those borrowers and encouraged them to contact their servicers to work out some type of loss mitigation.

“What’s more, the counseling agencies provided a holistic counseling approach that went beyond income and expenses and also included lifestyle changes that could help homeowners succeed over the long term,” Cookson said. “Developing a financial budget that reduced overall debt and increased savings allowed many homeowners to return their mortgage to good standing and prepare for any future financial road bumps.”

Cookson said it has been a cost-effective approach for Freddie Mac—the Enterprise and taxpayers have received an estimated $10 in benefits for every $1 that has been spent. And just because serious delinquency rates on Freddie Mac loans are back down to their pre-recession levels, she said this is no time to let up on outreach to delinquency borrowers.

“Instead, it’s time to adapt the borrower outreach experiments we began with CCCS of San Francisco and ClearPoint 10 years ago to do better business in today’s market,” Cookson said. We can—and are—applying them to new challenges, like preparing HAMP borrowers for scheduled interest rate increases.”

Source: DS News

Freddie Mac November 2015 Insight & Outlook

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Investor Update
November 23, 2015

Freddie Mac (OTCQB: FMCC) released today its monthly Insight & Outlook for November. This month’s Insight examines the changes in mortgage servicing and discusses some of the factors that produced them since the housing crisis. And the Outlook looks at the highly influential role the 55+ age cohort plays in today’s housing market. A video preview, along with the complete monthly Insight & Outlook commentary is available here.

Insight Highlights

Several factors account for the changes playing out in the mortgage servicing industry:

  • Regulatory and counterparty oversight of servicing has increased;
  • Post-crisis changes in servicing practices have significantly increased the cost to service, particularly for nonperforming loans;
  • The cost of holding mortgage servicing rights (MSR) as an asset has become more expensive in the wake of new capital rules and increased regulatory scrutiny.
  • Between 2008 and 2013, the average cost to service a performing loan increased 2.6 times. Over the same period, the cost to service a nonperforming loan increased 4.9 times. 

Outlook Highlights

  • Baby boomers appear to be staying in the family home longer than previous generations and the imbalance between housing demand and supply continues to boost prices. 
  • Expect house price appreciation to average 5.4 percent in 2015 and to moderate a bit to 4.3 percent in 2016, still well above long-run house price growth. 
  • According to estimates by the Urban Institute, households aged 55 plus will account for more than all of the growth in households over the decade spanning 2010 to 2020.
  • Householders aged 55 plus will grow by between 12.4 and 12.9 million over this period, households headed by those aged 54 and younger will shrink in number by between 0.4 and 1.7 million over the same period.
  • This age group holds the keys to an outsized share of the nation’s housing stock and housing wealth. According to the 2013 Survey of Consumer Finances, households aged 55+ accounted for 42 percent of all households, but held two-thirds of all home equity. 

Quote: Attributed to Sean Becketti, Chief Economist, Freddie Mac.

“Prior to the housing crisis and Great Recession, mortgage servicing had followed a decades-long trend of consolidation. In 2001, the top five servicers handled 37 percent of all servicing. By 2009, the market share of the top five had grown to 59 percent. But during the recession, this trend reversed, and by the second quarter of 2015 the share of the top five servicers shrank to 40 percent. In many ways, today’s market resembles the 1980’s where smaller servicers and nonbank servicers held a higher share before the industry started to consolidate. Housing finance is still evolving, and mortgage servicing is likely to continue to change along with it. It’s too soon to say if recent trends will persist or be reversed.”

“Demographics drive the housing market. The press overflows with questions about Millennials — when will they form households and buy homes? The housing choices of the Millennials matter greatly, but just as impactful are the choices that will be made by the older generation, those who are 55 and older. The housing decisions of the 55+ age group will play a significant role in shaping the future housing and mortgage markets over the next decade. They control the supply and they hold the vast majority of the home equity, some $8 trillion in total.”

Source: Freddie Mac

Additional Resource:
Mortgage News Daily (11/25/15) 

Freddie Mac: New! Keep Track of DRLS Law Firm Reporting with ADR Access

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Investor Update
October 29, 2015

Effective immediately, we’re providing our Servicers with access to Attorney Data Reporting (ADR), our reporting system that enables law firms to enter timeline and related data for Freddie Mac Default-Related Legal Services (DRLS) referred to them by Freddie Mac Servicers. 

We’re doing this in the spirit of transparency and with the expectation that seeing what DRLS law firms report to Freddie Mac on their referrals will be a helpful management resource.
 
As you know, law firms are required to report accurate information in a timely manner, but we’ve noticed that some firms have fallen behind. We’ll be conveying to law firms soon that they have 90 days to update ADR with all required DRLS information and documents. Please submit this ADR Servicer Access Request Form for your ADR read-only access now, so you may keep track of your DRLS firms’ reporting progress.
 
Browser Requirements
 
ADR requires one of the following browsers:

  • Windows® Internet Explorer (IE) Versions 9 or later (We strongly recommend you use the IE plugin “Chrome Frame”).
  • Firefox Version 20 or later.
  • Google Chrome Version 12 or later.
  • Safari Version 5 or later.

Reminder
 
Servicers are responsible for managing and monitoring all aspects of law firm performance and providing necessary assistance to law firms, relating to Freddie Mac DRLS. Refer to Freddie Mac’s Single-Family Seller/Servicer Guide (Guide) sections 66.38, 69.10, and 69.3(p) for details regarding your responsibility to work with our vendors for deficiency collections and reporting requirements for Servicers and/or law firms.
 
Resources
 
Visit our Default-Related Legal Services Web page for detailed information for Servicers, law firms, and Legacy Matters. We provide access to a number of tools aimed at helping you manage your DRLS firms, including the ADR Quick Reference Guide. 

Source: Freddie Mac

Freddie Mac: Doing Better Business Together With Improved Guide Design and Usability

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Investor Update
October 28, 2015

We know how critical it is for you to  access our Guide requirements quickly. That’s why we’re reorganizing the Single-Family Seller/Servicer Guide (Guide) to make it easier to locate specific information.

We listened to your feedback and we’re reorganizing the Guide to be more intuitive and aligned with how you work. Please note we are not rewriting existing policies or requirements, nor are we introducing new ones at this time.

But we want to make sure there are no surprises for you and you’re able to preview the new format before the reorganized Guide becomes the official Guide in March 2016.

The Reorganized Guide: Intuitive with How You Work
 
The redesigned Guide will feature a systematic numbering scheme and move the Guide content into three groupings:

  • Freddie Mac – Seller/Servicer Relationship has content common to both Sellers and Servicers and includes general contract terms (Series 1000 through 3000).
  • Selling includes requirements applicable to your production and daily workflow for originating, underwriting, selling and delivering eligible loans (Series 4000 through 6000).
  • Servicing includes requirements related to servicing mortgages for Freddie Mac (Series 7000 through 9000). 

Guide Bulletin 2015-19 [pdf] shows how chapters and sections will be numbered within a series. 

Getting Ready
 
As we transition to the new Guide format, start with the following resources to help you become familiar with the reorganized Guide.

  • A preview site hosted by AllRegs® includes a table of contents based on the new Guide format. This table of contents provides a limited view at this time, but you’ll have access to an interactive copy of the new full Guide before March 2016.
  • Preliminary Guide Reorganization Mapping spreadsheet. [xls] Use this resource to determine where current Guide content will be located in the reorganized Guide. The multi-tab spreadsheet provides a description of the series under the redesigned Guide and a listing of topics within the series.

In early 2016, the AllRegs preview site will expand to include all Guide content in addition to the table of contents. We’ll also offer webinars on the redesigned Guide. 

Source: Freddie Mac

FHLMC Guide Bulletin 2015-19: Updated Requirements for Information Security, Fraud Reporting and More

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Investor Update
October 28, 2015

In today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2015-19, we’re announcing updated requirements for information security programs, business continuity planning, and fraud reporting. We’re also offering a preview of the upcoming Guide reorganization. All changes are effective immediately, unless otherwise noted.
 
Key Highlights

  • Effective May 2, 2016, you must have in place both an information security program and business continuity plan (BCP), which meet the minimum requirements detailed in Guide Bulletin 2015-19. We’re making these changes to reduce the chances of unauthorized access to certain information and to support your continued ability to do business with us, especially in the event of a disaster or other interruption.
  • Lower thresholds for notifying us of fraud or other suspicious activity, from more than 25 mortgages and/or an unpaid principal balance (UPB) of $2.5 million to five mortgages and/or a UPB of $1 million. Since current fraud schemes are smaller in scope, lowering these thresholds will help identify fraud schemes earlier.
  •  A less time-consuming Exclusionary List screening process for you and your borrowers. This includes changing the Exclusionary List screening date from mortgage delivery date to note date. We’re also making changes to help you distinguish between FHFA’s Suspended Counterparty Program (SCP) and our Exclusionary List screening requirements, and clarifying our expectations around confidential information sharing.
  • A preview of our upcoming Guide reorganization, which we’re planning to complete by early 2016. We’re always looking for ways to improve the Guide’s usability, and this redesign will make it easier for you to find specific requirements. As part of the reorganization, we’re not rewriting existing policies/requirements or introducing new ones. We’ll provide more details and resources soon.


Additional Updates

  • We’re creating a new email account for quicker responses to Servicer notifications of valid matches to the Office of Foreign Asset Control’s list of Specially Designated Nationals and Blocked Persons List. 
  • For your convenience, we’ve published the September 16, 2015 Guide Snapshot PDF [pdf].

Please read Guide Bulletin 2015-19 for more details. 


For More Information

Source: Freddie Mac