MANY CHANGES 1/1/2010 Fannie/Freddie/HAMP

[davephx]

MANY CHANGES 1/1/2010 Fannie/Freddie/HAMP

Fannie and Freddie on 12/14/09 issued new servicing guides with lots of stuff mostly good and new borrower notices that follow HMP.ADMIN Directive from Nov I previously posted. HMP is for non GSE's. Unfortunately we have 3 different sets of guides that are similar but not exactly the same.

Fannie and HAMP aka HMP.Admin require extensive notices if denied either a trial or a final modification. The notice are required for all servicers to provide (if Fannie or non GSE - HAMP) as of 1/01/10 (encouraged to adopt before)

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FANNIE Servicing Guide Announcement 09-36 12/14/09

Title company endorsements now only needed if roll up of back payments exceeds $50,000 (was $20,000)

A servicer must send an extensive written notice to every borrower that has been evaluated for HAMP but is not offered a trial period plan, or is not offered a permanent HAMP modification within 10 days of the denial.

The notice must also describe other foreclosure prevention alternatives for which the borrower may be eligible, if any, including but not limited to other modification programs, preforeclosure sale, or deed-in-lieu of foreclosure, and identify the steps the borrower must take in order to be considered for those alternatives.

NPV TEST INPUTS
When the borrower is not approved for a HAMP modification because the mortgage loan is deemed NPV negative, the notice must include a list of certain input fields that are considered to reach the NPV result and a statement that the borrower may, within 30 calendar days of the date of the notice, request the date the NPV test was completed and the values used to populate the NPV input fields defined in Attachment 1. The purpose of providing this information is to allow the borrower the opportunity to correct values that may have impacted the analysis of the borrower’s eligibility.

If the borrower (or the borrower’s authorized representative) requests the specific NPV values orally or in writing within 30 calendar days from the date of the notice, the servicer must provide them to the borrower within 10 calendar days of the request.

IMPORTANT - DELAY FORECLOSURE SALE :
If the mortgage loan is scheduled for foreclosure sale when the borrower requests the NPV values, the servicer may not complete the foreclosure sale until 30 calendar days after the servicer delivers the NPV values to the borrower. This will allow the borrower time to make a request to correct any values that may have been inaccurate.

[ DAVE NOTES - I hope this means they hold off sale long enough to get the notice to request the NPV Values, seems a bit vague and could service sell before request is made by borrower?]

If the borrower identifies inaccuracies in the NPV values, the servicer must suspend the foreclosure sale until the inaccuracies (if material) are reconciled. Servicers are not required to provide the numeric NPV results or NPV input values not enumerated in Attachment 1.

For much more:
https://www.efanniemae.com/sf/guides.../2009/0936.pdf
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Freddie Mac Bulletin 2009-28 12/14/09
But its a "guide" as is Fannie: "With this Single-Family Seller/Servicer Guide (“Guide”) Bulletin..."

This longer bulletin is a bit more messy. Freddie is reviewing the FAQs of HAMP (for non GSE's) and will announce results in future bulletin. Other HAMP docs it refers to and is very confusing about in "Additional Guidelines on SD 09-07"

Goes into detail of requirements for imminent default evaluations and refers to future direction.... what a mess... different forms required after 3/1/10.

As provided in SD 09-07, Borrowers are not required to sign or return the new Trial Period Plan Notice. Servicers must retain a copy of the Trial Period Plan Notice sent to the Borrower in the Mortgage file and record the date that it was sent to the Borrower. Timely receipt of the first payment due under the Trial Period Plan Notice is evidence of the Borrower’s acceptance of the trial period plan terms and conditions.

Under the revised requirements, documentation of a Borrower’s income may not be more than 90 days old as of the date that the Servicer receives such documentation in connection with evaluating a Mortgage for a modification under HAMP. Servicers are not required to update such documentation during the remainder of the Trial Period.

OPTIONS FOR OBTAINING TREASURY NPV VALUES - very detailed rules about the model approved by Compliance Agent etc.

BORROWER NOTICES - refers back to SD 09-08 from 11/3/09 and must comply as of 1/1/10. Seems similar to Fannie but can't confirm for sure without a lot of research (I am Fannie so they are my main personal interest and Fannie Announcement is far less confusing and lays it all out in one place vs Freddie)

Than gets into eModification restrictions which may or may not only relate to electronic filings - can't use if engaged in litigation etc... details only an attorney would love like:
The Servicer is unable to comply with the recording jurisdiction’s recordation and formatting requirements for an electronic document, and Chapter C65 requires the Modification Agreement to be recorded or in recordable form

REVISIONS TO LOAN MODIFICATION REQUIREMENTS FOR ALL MORTGAGES
Increases the capitalization threshold regarding Title insurance from $20,000 to $50,000 the same as Fannie

For much more see:
http://www.freddiemac.com/sell/guide...df/bll0928.pdf

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HMP ADMINISTRATION Supplemental Directive 09-08 from November 3, 2009 which I posted about in Nov

Is all about the Borrower Notices which upon brief scan seems to have the same directives as the Fannie Announcement above and the about the same exhibit of the notification format.

See https://www.hmpadmin.com/portal/docs...cer/sd0908.pdf
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Fannie & Freddie issue "Servicing Guides".. I don't like the word "Guides"... usually start out saying, "Guidance to Fannie Mae-approved servicers..." But then most everything in the "guide" says "must"

So if a guide is not a must, are the musts within the guide not musts but guides?

So what does Guide as a verb mean?

Merriam-Websters says to direct in a way or course, to supervise, or influence usually to a particular end. Doesn't seem to include "must"

Dictionary.com also includes:
3. to force (a person, object, or animal) to move in a certain path.
I like the word FORCE but also:
4. to supply (a person) with advice or counsel, as in practical or spiritual affairs.
5. to supervise (someone's actions or affairs) in an advisory capacity.

But then in the "guides" they say "MUST"!!!!

I am confused if they are guides or musts!!!!!

[AzGryffindor]

Dave:

The way I understand it is that the Fannie/Freddie guides are MUSTS. Fannie/Freddie pays the servicers to "service" the loan but since they are the note holders (investors), the servicers must adhere to their (Fannie/Freddie's), guidelines.

I guess to find the real answer to this question, we'd need to find the servicing agreements between the servicers and Fannie and Freddie.

Hopefully, they're available on Financialstability.gov.

[AzGryffindor]

Dave: The MUSTS are MUSTS:

https://www.efanniemae.com/sf/guides/ssg/index.jsp#pv

Click on the link: Access the Selling and Servicing Guides via AllRegs
You must use IE and then disable the popup blocker for the site to come through.

From there you will have access to the servicers contract.

Of special interest to me:

VIII, A: Specific Breaches of Contract (07/05)
Breaches of this Contract include the following:

1.

Harm, Damage, Loss Or Untrue Warranties. It is a breach if any act or omission of the Lender in connection with the origination and sale to us of any mortgage or participation interest causes us harm, damage or loss. It is also a breach if the Lender sells us any mortgage or participation interest knowing that any of the mortgage warranties are untrue (these warranties are listed in Section IV A).

2.

Failure To Comply With This Contract Or Our Guides. It is a breach if the Lender does not comply with this Contract or our Guides through any act or omission, including, without limitation, the following: • failure to establish and maintain accounts for our funds or mortgagors' funds as required by our Guides; • use of our or mortgagors' funds in any manner other than that permitted by our Guides, including the Lender's failure to deposit all mortgage funds if, when, and to the extent required by our Guides; • failure to remit all funds due to us within the time periods required by our Guides; • failure to make or ensure, according to the provisions of each mortgage or of applicable laws or regulations, proper and timely payment of all: - taxes; - assessments; - leasehold payments; - ground rents; - insurance premiums (including premiums of casualty, liability and mortgage insurance and other forms of required insurance); - required interest on escrow funds; and - other required payments with respect to any mortgage (including mortgaged property) serviced; unless the Lender is relieved of these responsibilities by the express provisions of our Guides, or by our written instructions that relate to a particular mortgage or property; • failure to renew or ensure renewal of any required insurance policy on any mortgage (including mortgaged property) serviced under this Contract; • failure to maintain adequate and accurate accounting records and mortgage servicing records for the mortgages, or to maintain proper identification of the applicable loan files and mortgage records that prove our outstanding participation interests; • failure to submit adequate and accurate accounting and mortgage servicing reports within the time required by our Guides; or • failure to take prompt and diligent action under applicable law or regulation to collect past due sums on mortgages, or to take any other diligent action described in our Guides that we reasonably require for mortgages in default.

3.

Failure To Properly Foreclose Or Liquidate. Where a mortgage is in default and the Lender is required or has decided to foreclose or liquidate it, it is a breach if the Lender fails to take prompt and diligent action consistent with applicable law or regulations to foreclose on or otherwise appropriately liquidate such mortgage and to perform all incident actions. It is a breach whether or not the failure results from the acts or omissions of an attorney, trustee or other person or entity the Lender chooses to effect foreclosure or liquidation.

4.

Failure To Properly Manage, Dispose Of, Or Effect Proper Conveyance Of Title. It is a breach if any mortgage serviced under this Contract has been foreclosed or the possession or title to the property has been taken by us or on our behalf, or on behalf of other owners of a participation interest in the mortgage, and the Lender: • fails to properly manage, dispose of or effect proper conveyance of title to the mortgaged property; or • fails to do the above in accordance with this Contract, our Guides, and any pertinent laws, regulations, or mortgage insurance policies or contracts.

5.

Lender's Financial Ability Impaired. It is a breach if there is a change in the Lender's financial status that, in our opinion, materially and adversely affects the Lender's ability to satisfactorily service mortgages. Changes of this type include: • the Lender's insolvency; • adjudication of the Lender as a bankrupt; • appointment of a receiver for the Lender; or • the Lender's execution of a general assignment for the benefit of its creditors. If any such change does take place: • no interest in this Contract will be considered an asset or liability of the Lender or of its successors or assigns; and • no interest in this Contract will pass by operation of law without our consent.

6.	Failure To Obtain Our Prior Written Consent. It is a breach if the Lender fails to obtain our prior written consent for: • a sale of the majority interest in the Lender; or • a change in its corporate status or structure.

7.	Failure To Comply With This Contract Or Our Guides. It is a breach if the Lender fails at any time to meet our standards for eligible mortgage sellers or servicers so that, in our opinion, the Lender's ability to comply with this Contract or our Guides is adversely affected.

8.

Court Findings Against Lender Or Principal Officers. It is a breach if: • a court of competent jurisdiction finds that the Lender or any of its principal officers has committed an act of civil fraud; or • the Lender or any of its principal officers is convicted of any criminal act related to the Lender's lending or mortgage selling or servicing activities or that, in our opinion, adversely affects the Lender's reputation or our reputation or interests.

Some pretty interesting stuff.

[I-LOVE-MOEBEDARD]

Dave and AZ - thanks. But yeah I'm confuuuuused to. I only just scanned this, and will need to spend time later. We need a Cliffs notes on the changes and who they affect and who they don't!

[davephx]

AzGryffindor - Good research. Seems clear directives are must. Now the problem is if they don't... what... but at least it is clearly stated that directives are musts.

caldwellb02 - That was the "Cliffs note",... the announcements much more detailed. Fannie more in clear English, Freddie very hard to understand only a lawyer would appreciate!

[GottaMakeThisWork]

Wow! I tried to decipher this but it is so confusing. What is GSE? My mortgage is not Fannie, Freddie, Sallie or Sammie, but if this new rule means anything good I sure as heck hope I can participate.

[davephx]

The government-sponsored enterprises (GSEs) are a group of financial services corporations created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent.

Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and it targeted education when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate via Fannie Mae, Freddie Mac and Ginna Mae