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News You Can Use


Keep up with the latest mortgage industry news with these informative links:


Too many news alerts, ebulletins and emails?

I read, sort and filter through all the mortgage critical material published daily, so you don't have to - must read posts are below...


Looking forward to seeing you there!!

MBA’s National Mortgage Servicing Conference and Expo on February 22 - 25, 2011 

@ Gaylord Texan Hotel and Convention Center, Dallas, Texas

New Predictive Credit Score

Risk Scoring Tool Adapted To Changing Customer Behavior


Changing economic conditions, their effect on consumer behavior and related shifts in credit risk are driving efforts to provide credit scoring models with a more predictive risk assessment edge. VantageScore Solutions, Stamford, Conn., is one such provider that redeveloped its credit-scoring algorithm. Sarah Davies, SVP of product management, analytics and research, told this publication VantageScore 2.0 is based on over 45 million data files and expands credit rating analysis beyond the typical two-year period dataset to a three-year window. Changes are expected to increase the score’s predictive power from 10% to about 15%.

By Amilda Dymi @ Mortgage Servicing News

Mezzanine Financing

Freddie Mac  Freddie Mac Announces Strategic Mezzanine Financing Arrangement for Multifamily Housing Lenders

McLean, VA – Freddie Mac (NYSE:FRE) announces mezzanine financing arrangement where it will allow mezzanine debt on qualifying senior multifamily mortgages (first mortgages) it purchases. Freddie Mac is partnering with experienced multifamily players to help bridge the capital gap for borrowers who need to finance or refinance overleveraged multifamily properties whose value has declined.

This program is aimed at recapitalizing multifamily properties and easing the painful process of deleveraging. It is not intended to increase leverage at the property level or fuel excessive risk taking by investors.


“The intent is to help the industry reduce the number of properties that may otherwise become defaults, timely workouts or foreclosures if they don’t get much-needed financing,” said Mike May, Freddie Mac senior vice president of Multifamily. “We are working with mezzanine providers who are experienced multifamily owners, operators, or investors to help fill the capital gap due to reduced property valuation compared to existing financing.”


Over the last few years, the apartment finance industry has undergone significant changes that have resulted in a capital gap for many owners. Tighter lending standards, declining property values, and fewer capital players have combined to put several apartments at risk of default at loan maturity. This program seeks to fill this gap for experienced borrowers in good standing.


How it works

Freddie Mac Seller/Servicers (multifamily lenders) will originate a first mortgage with a loan-to-value ratio (LTV) of up to 75 percent, then work with the mezzanine lender to provide additional leverage, up to another 15 percent for their borrower. This allows property owners to borrow up to 90 percent of a property’s value. Freddie Mac will then purchase eligible first mortgages from its Seller/Servicers to either retain in its portfolio or securitize into its K Certificate multifamily mortgage backed securities.

The mezzanine portion of the financing is backed by the borrower’s equity, not the property, so Freddie Mac is not taking on additional risk with this arrangement. The mezzanine providers also have the capability to bid on the b-piece of a Freddie Mac K Certificate if the first mortgages are securitized.



Mezzanine financing is available for qualifying loans that meet the following criteria:

  • Loans refinanced from either Freddie Mac or non-Freddie Mac portfolio
  • Take-out of existing construction loan financing
  • Acquisitions
  • Properties/assets in good physical condition and experienced sponsors
  • Stabilized Class A and B conventional multifamily properties
  • Capital Markets ExecutionSM loans (loans intended for Freddie Mac K Certificate multifamily mortgage-backed securities), portfolio executions and structured transactions

Additional Terms

  • Minimum 10 percent cash equity in the property required
  • Maximum 75 percent loan-to-value (LTV) ratio on first mortgage
  • Maximum 90 percent combined LTV ratio
  • First mortgage must be fixed-rate
  • Mezzanine debt may be fixed-rate or adjustable-rate mortgage (ARM)

Since the launch of Freddie Mac’s multifamily business in 1993, it has provided more than $228 billion in financing for approximately 57,000 multifamily properties. 

per freddiemac.com/news

Are Servicers Ready for the Shadow Inventory?

Preparing for the Housing Industry's Shadow Inventory


The nation's shadow inventory, or the growing backlog of pre-foreclosure homes, is looming as a major threat to the mortgage industry and nation. Much research has been conducted throughout 2009, and this data points to an estimated 7 million homes that are in some state of delinquency or have already been issued a foreclosure notice. The "cure rate" trend is worsening by the month, and if the trends of default from 2009 hold the course then the inevitable will occur with this inventory heading towards foreclosure. This astronomical volume of properties weighs heavily on the shoulders of an industry that is trying to get its legs under itself. However, the preamble to this looming crisis offers many opportunities for lending institutions that proactively take the necessary steps to prepare.


As we know, there are several key drivers generating these pending foreclosures. One of them is the issue of negative equity. Increasingly, homeowners who owe more than their property is worth, seemingly choose to walk away and rent instead, a much cheaper alternative than remaining "upside down" on their mortgage in a world when real property values are in a steep decline without a true barometer of when things will turn around. Good, bad or indifferent we are hearing more and more about this new industry term of "Strategic Default."


Another factor causing the shadow inventory is high unemployment. People without work are simply unable to pay their mortgages. Finally, federal and state regulations and government programs designed to help the housing crisis may be delaying inevitable foreclosures with good intentions, adding to this backlog of "shadow inventory" and REO that will ultimately burst.


The sheer volume of homes headed towards foreclosure may seem daunting to the unprepared, but there are several steps lending institutions can take to navigate effectively and sell foreclosed properties quickly. The first decision a lending institution should consider is whether or not to outsource the influx of additional responsibilities that inherently come with undertaking such an unfamiliar situation and evaluate those costs and risks of building infrastructure to handle these tasks in-house. There are a number of benefits to outsourcing the responsibilities, which include lower capital costs, increased efficiency, reduced labor costs, reduced compliance risks and increased focus on the lending institution's core competencies.

If the lending institution decides to keep its services in-house, it will provide a higher sense of control of the entire process but must realize that it has to accomplish the very same level of roles, responsibility and results as that of the outsourcer and their expertise in the core competency of REO disposition. The shadow inventory's demanding breadth of responsibilities and size will be a challenge that the lending institution will need to consider when analyzing facts prior to decision.


Whether the final decision is to "in-source" or outsource, there are a number of steps that lending institutions must accomplish in order to survive the shadow inventory's immensity of expected foreclosures throughout 2010 and beyond. First, they must set up a multi-tiered program in preparation for the high volume of foreclosures. The program should include ongoing training to existing staff, hiring and training new personnel, establishing additional facilities to further accommodate the need for scaling operations and continuing to build a strong network of reliable vendors providing the many different components of the REO services spectrum.


Holders of REO must also implement a quality maturity system embodying oversight management for securing and reselling REO properties in full compliance with local and federal regulations. The lending institution should establish specialized teams of experts that handle very specific activities associated with the liquidation process, such as compliance-related issues. The idea is that the more conversant the specialized team is with its particular niche of the REO disposition process, the more successful the execution of disposition management will be in reducing costs and mitigating risk (no one wants to be in the limelight right now).


And lastly, bolster the technology behind it all, so the many disparate systems across mortgage origination, loss mitigation, REO and its vendors can communicate.


It is important to understand that the shadow inventory is not a matter of "if," it is really only a matter of "when," and those lending institutions that decide not to swiftly start the preparation process now will struggle to cope with the changing responsibility, overwhelming volume of properties and legal risk associated. Those without a plan in place may risk the health of their entity and ability to maneuver towards future organizational stability.


A word to the wise: entrench yourself with all data points available, surround yourself with people and business partnerships that will elevate your performance, strategize, plan and execute as if your organization's survival depended on it. "Success by design" is warranted; random acts of execution will prove harmful. If the "cure rate" trend continues, the current shadow inventory of 7 million properties and the estimated 250,000 inventory growth each month forward represents one of the largest and most challenging hurdles to the recovery of our nation's housing market. The industry must collectively unite to solve this issue. When times are tough this nation is known for pulling together to overcome what seems to be impossible!


By: Dan Reymolds, VP @ LAMCO - Mortgage Servicing News

CRE Default a Growing Risk to Banks

Regulators Fret over CRE Concentrations, but Banks Looking to Modify


The recent surge in community bank failures has been widely attributed to small and mid-size lenders’ high concentrations of commercial real estate (CRE) loans. The impact that the sector’s continued deterioration could have on lower-tiered lenders and their local markets has become a growing concern among policymakers and regulators. Elizabeth Warren, head of the Congressional Oversight Panel (COP) charged with overseeing the Troubled Asset Relief Program (TARP), told CNBC this week that by the end of 2010, about half of all commercial real estate mortgages will be underwater, and most of these souring loans are concentrated in regional banks.


We now have 2,988 banks – mostly midsized, that have these dangerous concentrations in commercial real estate lending,” Warren said in the television interview, adding that the economy will face another “very serious problem” as these loans come due that will have to be resolved over the next three years.


Comptroller of the Currency John Dugan echoed Warren’s sentiments when he spoke at the annual convention of the Independent Community Bankers of America (ICBA) earlier this month. He said that experience from the late 1980s and the early 1990s, and from the current period, illustrates that significant concentrations in CRE lending leave banks vulnerable to an economic downturn.


While a healthy economy will mask problems with poor underwriting for a while, Dugan said, the rapid buildup of commercial real estate loans is likely to overwhelm risk management controls, and some concentrations are so large that even the most sophisticated control systems cannot protect the bank from a serious economic downturn.


“We know that significant CRE concentrations in economic downturns can lead to an increase in problem banks, an increase in bank failures, loss of jobs, loss of incomes, loss to communities, loss to the deposit insurance fund, and higher costs for all banks, even those that do not have CRE concentrations,” Dugan said.

As the nation’s top regulators fret over banks’ commercial mortgage concentrations, the head of the Treasury Department says he’s less concerned that it’s a major threat.

“Commercial real estate’s still going to be a problem for the country,” Treasury Secretary Timothy Geithner said in an interview with CNBC. “But we can manage through this process.”


News from the field seems to support Geithner’s assumptions, as lenders appear to be moving more aggressively to modify commercial mortgages and avert another default tsunami. “Commercial lenders throughout the United States are becoming increasingly aware of their need to enter into modification agreements with their borrowers,” according to Kevin Levine, EVP of Strategic Asset Services, an advisory services firm in Woodland Hills, California that provides commercial loss mitigation support.


“When we first began offering commercial loan modification services in early 2009, many lenders were reluctant to recognize the seriousness of their commercial loan problems and modify the loans,” Levine said. “But in the past several months, that recognition has increased dramatically. As a result, we find more and more banks and other lenders welcoming our services on behalf of their borrowers.”


Levine explained that commercial loan values are falling in most markets, and that office, retail, and multi-family properties are losing tenants at a recession-driven pace. As a result, borrowers are experiencing compressed cash flow, and are unable to meet their loan payments. Unless the loan is modified to reduce the payments, the lender inevitably will be forced to commence foreclosure proceedings, but Levine says the balance sheets of banks are only able to absorb a limited number of foreclosed properties, and that limit is quickly being approached by many lenders.


“We saw the same initial reluctance of the residential lenders to work with their borrowers and modify their stressed home loans several years ago,” Levine said. “But just as the residential lenders were forced by declining circumstances to cooperate with the homeowners, so the commercial lenders are now being compelled to negotiate with their borrowers. It is preferable for them to have a paying asset, even at a reduced return, than to go through the expense of foreclosure and incur property management expenses during a two-three year holding period while attempting to sell the property.” 

By: Carrie Bay - DSNews

FNMA Performance Report

Fannie Mae logo  Fannie Mae Releases Mission Performance Report 


WASHINGTON, DC — Fannie Mae (FNM/NYSE) today released "Helping Housing Recover: A Report on Fannie Mae's Mission Performance," which describes the company's efforts to provide liquidity, stability and affordability to the nation's housing finance system. 


The report cites $823.6 billion in funding the company provided last year to help keep the single-family and multifamily mortgage markets operating. The report also notes that the company enabled 1.7 million low- and moderate-income families to obtain affordable housing in 2009, and helped more than 160,000 struggling borrowers with Fannie Mae-owned loans keep their homes through loan modification or other loan assistance.


"Fannie Mae has been asked to play a significant role and received significant government assistance to support borrowers and the country's housing finance system during these difficult economic times," said Michael J. Williams, President and CEO. "We take this duty very seriously, and this report chronicles our efforts to fulfill this critical mission. We will build on our work with our industry partners and the government to help struggling borrowers stay in their homes, provide additional financing for affordable housing and restore the health of America's housing market."


Through the company's funding efforts, Fannie Mae provided financing in 2009 that helped:

  • 2.5 million borrowers refinance into loans with lower payments, better terms or to meet other needs. Many borrowers were able to refinance despite having lost equity.
  • 600,000 borrowers buy homes during the tightest mortgage credit market in decades.
  • 372,000 rental units be purchased, refinanced or rehabilitated.

To view the complete report, please visit http://www.fanniemae.com/about/mission-report.html.

NeighborWorks Works for Homeowners

Unemployed, Underwater Borrowers Get Help Through HAMP Expansion


On March 26, the Obama Administration announced a series of adjustments to the Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) programs to assist homeowners who have been affected by the current economic crisis.


Borrowers get assistance in three ways through the HAMP expansion: The unemployed can get a three-to-six-month forbearance on their mortgage payments, after which they will be evaluated for a loan modification. Banks will get financial incentives to reduce the principal balances of delinquent, underwater borrowers. And borrowers who are current on their mortgages, but underwater, can refinance into loans backed by the FHA.


Marietta Rodriguez, deputy director of National Homeownership Programs and Lending at NeighborWorks America, said that the recent changes are a positive move and will hopefully ease some of the pressure that those seeking re-employment are feeling. See NeighborWorks News.com


In an interview with CNNMoney.com Rodriguez added that the expansion will help convince people to stay in their homes. "For many borrowers, it's really hard to justify figuring out a payment plan for a property that's so underwater," she said.


Read communication about these changes from HUD Assistant Secretary for Housing/Federal Housing Commissioner David Stevens. More information about the impact of these changes is available at CNNMoney.com.

HAMP program under fire

Treasury Adds New Consumer Protections to HAMP


Is the Home Affordable Modification Program (HAMP) really preserving homeownership? That’s the question posed by lawmakers sitting on the House Committee on Oversight and Government Reform Thursday.


The administration’s foreclosure prevention plan has come under heavy fire lately, with critics taking aim at everything from the program’s turtle-like conversion rates to officials’ ‘revised’ modification goals to servicing staffs’ lack of capacity and expertise to handle large modification volumes.

In response to all the flying bullets, Assistant Treasury Secretary Herbert Allison announced at the House committee hearing Thursday that the administration has decided to incorporate new consumer protection policies into its modification program.


Beginning June 1, HAMP servicers must evaluate all homeowners who have missed at least two mortgage payments for the program. No foreclosure can begin unless the borrower does not respond to the servicer’s outreach efforts, is determined to be ineligible for HAMP, or fails to make their trial modification payments.

Servicers will be required to provide borrowers with clear written communications explaining the foreclosure and modification procedures and stating that a foreclosure sale will not take place during the trial period.


If a borrower is found ineligible for HAMP, a foreclosure sale cannot be scheduled sooner than 30 days after the date of a non-approval notice so that the borrower has a chance to respond and appeal. Servicers must also certify to their foreclosure attorneys that a borrower is not eligible for HAMP before a sale may be conducted, and are now required to consider borrowers in active bankruptcy for HAMP if a request for modification is made.


Allison told lawmakers that the changes will “help address some of the confusion and anxiety that some borrowers reported surrounding their rights during the evaluation process.” The official implementation of the new policies comes less than a month after DSNews.com reported that the administration was considering such changes, after receiving numerous complaints from borrowers and their foreclosure counselors that the program just wasn’t working for them.

By: Carrie Bay - DSNews



New Process for Submitting a Non-Delegated HAMP Case Announced

Fannie Mae logo  HomeSaver Solutions - HAMP-Related Enhancements


During the weekend of April 17, 2010, we plan to implement the following enhancements related to the Home Affordable Modification Program (HAMP) to the HomeSaver Solutions® Network (HSSN), part of the Asset Management Network:

  • New Process for Submitting a Non-Delegated HAMP Case
  • New HAMP-Specific Loan Modification Approval Letter
  • Extending a HAMP Trial Modification Period
  • New Data Fields for the Conversion of Trial Loan Modifications to Permanent
  • New File Transfer Portal Link / Imminent Default Indicator™
  • New/Updated Edits


Imminent Default Indicator is a trademark of Freddie Mac.

Home Mortgage Delinquency Linked to Loss of Income

Freddie Mac What's driving home mortgage delinquencies?
According to MBA data, nearly three quarters of all delinquencies among prime borrowers are due to unemployment and the curtailment of income (58%) or excessive obligation (16%).
Data below represents prime borrowers who are delinquent on conventional conforming loans owned by Freddie Mac and had successful contact with their servicer and requested loss mitigation assistance.

Hardship Reasons                                                            2009

Unemployment or curtailment of income


Excessive obligation                                                           


Illness or death in the family


Marital difficulties


Inability to sell or rent property


Employment transfer or military


Property problem or casualty loss


Extreme hardship


All other reasons


Commercial Real Estate Outlook

Survey: Commercial Real Estate Investors


Based on the findings of the first quarter 2010 PricewaterhouseCoopers’ Korpacz Real Estate Investor Survey released this week, investors believe that owners and lenders are finally coming to grips with what assets are truly worth. As a result, the report finds that while 2010 is expected to be a slow year for sales activity by historical comparison, there could be marked improvement from 2009, as banks appear more willing to lend even though underwriting will remain extremely conservative and more equity will be required to secure debt.


“There is a tremendous amount of capital seeking real estate opportunities, and now is still a great time to buy,” Smith said. “Many investors in our survey still anticipate

incurable deleveraging issues on the part of both lenders and owners to provide opportunities to acquire quality assets at below-peak pricing, and there’s strong competition among buyers for such deals, as investors indicate increasing activity with both the number of bids and good offers.”


According to the report, looming debt maturities remain a top-of-mind issue among surveyed investors, who believe the out-of-balance loans coming due over the near term will present major hurdles for owners and lenders. Smith says that while the industry is looking to lenders and special servicers of commercial mortgage-backed securities (CMBS) to provide forced sales, some investors believe that more distressed selling will likely come from borrowers, who are more comfortable with where the market is now and will accept a loss in order to move on.


Surveyed investors anticipate vacancy rates to continue to increase in the coming year but not as steeply as the prior year. In addition, they foresee rental rates continuing to decline in most markets, but to lesser degrees, as property visits and tenant interest show slight improvements across the country.


As weak tenant demand lingers, investors surveyed indicate an increasing need to offer prospective tenants free rent during lease negotiations. Overall, just over 91 percent of surveyed investors reported the use of free rent. Last year, this survey figure was 84 percent. Office markets where survey investors report the highest levels of free rent over an average seven-year term include Phoenix (up to 24 months), Atlanta and Chicago (up to 18 months), and Dallas (up to 15 months). Lower levels are noted for San Diego (up to 6 months) and Los Angeles and Denver (up to 7 months).


Investors are expecting the apartment sector to continue to lead the recovery as value losses have been almost fully recognized, and some multifamily assets are actually showing slight value increases. 

By: Carrie Bay - DSNews


NeighborWorks Keeps Focus on Housing

NeighborWorks America creates opportunities for people to acquire and retain affordable homes


    NeighborWorks America’s FY 2010 (from HR-3288) appropriation totals $233 million, and includes:

  • A base budget of $133 million
  • An additional $65 million to continue the National Foreclosure Mitigation Counseling Program, and
  • An additional $35 million for capital grants to rehabilitate or finance the rehabilitation of affordable
    housing units.

    This compares favorably to the FY 2009 appropriation which provided:

  • A base budget of 131 million; and
  • An Additional $50 million for the National Foreclosure Mitigation Counseling program

Particularly in the midst of the current economic/budgetary environment, the corporation’s FY 2010 appropriation is a real testament to the hard work of NeighborWorks America staff and the staff and boards of local NeighborWorks organizations across the country, making a difference in the lives of the families and communities they serve.
From NeighborWorks News


Fannie Mae logo  Fannie Mae Alternative Modification™ (Alt Mod™) to HAMP 


Fannie Mae's new Alternative Modification to the Home Affordable Modification Program is for borrowers who were accepted into a Home Affordable Modification Program trial period plan but were subsequently denied a permanent modification because of eligibility restrictions. 


This applies to all mortgage loans in active HAMP trials initiated prior to March 1, 2010.


To help servicers better understand Alt Mod, a servicer FAQ has been developed to complement the Lender Letter. Additionally, borrower-focused documentation -- including a servicer script, sample letters, FAQs, and related documents -- now available to help servicers communicate this solution to borrowers. All are posted on the Alternative Modification page on eFannieMae.com.


  • Lender Letter LL-2010-04, Fannie Mae Alternative Modification™ to the Home Affordable Modification Program (Alt Mod™)

Loan Quality Initiative

Fannie Mae logo  Lender Letter LL-2010-03, An Introduction to Fannie Mae's Loan Quality Initiative


Historically, many issues related to compliance with Fannie Mae selling policies are not detected until after loans are delinquent or through the foreclosure process. Loan repurchase requests to lenders have increased in the past three years, highlighting the need for an improved approach for working with lenders to deliver loans that meet Fannie Mae's underwriting and eligibility guidelines. Fannie Mae conducted an extensive analysis to determine the primary drivers of repurchase requests and is launching the Loan Quality Initiative (LQI) to identify and implement policy, process, and technology enhancements to improve the compliance with underwriting and eligibility guidelines and mitigate repurchase risk.



Working with its lender partners, Fannie Mae will implement the LQI enhancements to promote improved loan delivery data that is complete, accurate, and fully reflective of the terms of the mortgage. The LQI will also help ensure that the loan meets the credit and eligibility standards, pricing guidelines, and other requirements of the Selling Guide or negotiated variances. A primary focus is on capturing critical loan data earlier in the process and validating it before, during, and immediately after loan delivery.



This updated approach is designed to stand the test of time across market cycles and risk tolerances, thus supporting market stability and reducing investor and lender risk. Changes introduced under the LQI are intended to reduce repurchase requests through improved data integrity and consistent and early feedback on policy compliance while maintaining the current business model of relying on lenders to make appropriate decisions in accordance with Fannie Mae's guidelines - From eFannieMae.com

  • Announcement SEL-2010-01, Selling Guide Updates for the Loan Quality Initiative
  • LQI Summary (LL-2010-03) with Key Dates and Resources
  • FAQs for LL-2010-03
  • Lender Tips for Identifying Undisclosed Liabilities
  • Live Web Seminars
  • Collateral Data Delivery (CDD) page
  • Commercial Default

    Five Star Announces Move into Commercial



    The Five Star Institute - an education provider that offers professional guidance and a specialization in working with defaulted properties, is carving out its place in the commercial real estate sector.

    FSI is hosting its first-ever Commercial Default 360° conference, from April 5-7 at the Sheraton Hotel in downtown Dallas. The conference provides a forum for mortgage default servicing professionals to collaborate with high-level players from the commercial real estate sector, to address the challenges the market faces in the wake of rising delinquencies, complex commercial mortgage restructurings, looming foreclosures, and swollen portfolios of repossessed assets.

    The FDIC’s Suzy Gardner, a senior examination specialist in the agency’s policy and program development group, will be providing a keynote address. Gardner drafted the interagency guidance on prudent commercial real estate loan workouts issued by regulators in 2009. She will be

    discussing this guidance in detail with Commercial Default 360° attendees and providing additional insight on workout options to save deteriorating assets.

    The general consensus among analysts is that the commercial real estate sector will continue its downturn through 2010 and under the most favorable conditions, hit bottom and begin a slow trek upward by 2011. Along the way, financial institutions will be moving to clean up their balance sheets, whether that means modifying troubled loans or aggressively disposing of financially distressed assets.

    According to Andi Zimmerman, president of The Five Star Institute, Commercial Default 360° will provide the solution-driven exchange and deal-making potential to meet the challenges of this pivotal era head-on.

    “The commercial real estate sector still has a long road ahead to recovery, but with the right tools in place, default servicing professionals can help drive the industry to stability and growth,” Zimmerman said.

    By connecting key distressed asset stakeholders, Commercial Default 360° aims to offer a backdrop against which solutions and strategies can be crafted to lessen the impact of the commercial real estate downturn for all industry participants-lenders, servicers, investors, borrowers, asset managers, legal representatives, and government agencies.

    The Five Star Institute is an affiliate company of DS News, often working in union to bring educational opportunities to real estate and mortgage professionals across the country, in order to equip them with the training and certification needed to successfully navigate today’s default servicing challenges.
    By: Carrie Bay - DSNews


    Non-HAMP Loan Mods Lead the Way

    HOPE NOW's Reports Non-HAMP Loan Mods Lead the Way


    HOPE NOW, the private sector alliance of mortgage servicers, investors, insurers, and nonprofit counselors, completed 99,499 proprietary loan modifications in January, almost double that of the 50,364 permanent mods finalized under the Home Affordable Modification Program (HAMP) industry-wide during the same month.  

    Of the proprietary loan modifications completed in January, 74 percent involved reductions of principal and interest payments. HOPE NOW said this, and the fact that proprietary non-HAMP solutions outnumbered HAMP modifications almost two to one, is further proof that the industry is looking at a breadth of solutions designed to keep families in their homes.

    Last year, HOPE NOW and its alliance partners decided to re-think survey data metrics as the issues and scope of the housing crisis changed. The result was an expansion and re-tooling of the data reporting—focusing on non-HAMP modifications and other non-HAMP industry solutions.

    “Our primary purpose for reporting data remains unchanged: To track industry efforts helping distressed borrowers and avoiding foreclosure,” said Faith Schwartz, executive director of HOPE NOW. “While Treasury and other government sponsored programs have garnered much attention, much of the servicers’ hard work has gone unnoticed. Our new dataset is proof that the industry continues to aggressively find solutions for borrowers facing default.” 

    Although HOPE NOW is seeing substantial success with non-HAMP modifications, the organization is also taking a lead in collecting documents to convert trial HAMP modifications to permanent status.  

    Most recently, 15 HOPE NOW servicers assisted more than 2,700 homeowners from across Arizona during four homeownership preservation events held during the second week of March. The last day of these workshops was a document collection event, specifically held for HAMP applications.

    In addition, HOPE NOW is also using its Web portal—HOPE LoanPort—to speed along the HAMP application process. As DSNews previously reported, HOPE NOW recently expanded the HOPE LoanPort through its housing counselor partners in 25 states and more than 100 cities.

    HOPE LoanPort gives HUD-approved counselors the ability to submit completed Home Affordable Modification Program (HAMP) applications directly to a homeowner’s servicer, and it allows counselors to track the status of the application in order to provide borrowers with more timely decisions.

    According to a recent article on Chicagotribune.com, counselors at Neighborhood Housing Services of Chicago started processing applications through the HOPE LoanPort in January. Use of the Web portal doesn’t necessarily mean more homeowners will qualify for loan modifications, but it does help borrowers know sooner whether or not they qualify for a HAMP modificaiton.

    The first 33 applications put through HOPE NOW’s HOPE LoanPort program locally received a decision in two to four weeks, the article said. This is a notable improvement compared to May’s average of 180 days and January’s average of 153 days to get a decision for a manually-processed application.

    Nationally, the HOPE LoanPort’s average response time is 22 days for modifications that are granted and 17 days for those that are denied, the article said. However, Larry Gilmore, CEO of LoanPort, said as more applications enter the system, that kind of quick turnaround isn’t expected to last. Still, he said, it is an improvement over the current process.

    Bt: Brittanny Dunn - DSNews

    Really, more bailout money??

    Fannie to U.S.: We need another $15.3 billion


     Battered by the housing crisis, mortgage finance company Fannie Mae said Friday that it needs another $15.3 billion in bailout money from the federal government. Fannie Mae (FNM, Fortune 500), which is controlled by the government, reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department. This is down from $25.2 billion a year earlier and $19.8 billion in the third quarter.
    Posted by: NAMP editor in chief

    A Drop in the Delinquency Bucket

    Servicers Complete 170,000 Permanent HAMP Mods  


    It's been a year since the government’s Home Affordable Modification Program (HAMP) was implemented and only 170,207 troubled homeowners have received permanent loan restructurings. The number of modifications in the column did increase 45 percent from 116,297 in January, but it’s still a mere drop in the bucket when you consider the Treasury’s own estimate that there are currently 1.8 million borrowers who are behind on their payments and eligible for the program.

    According to the administration’s February HAMP report card released Friday, more than 1.3 million homeowners have received offers for trial modifications, and the Treasury says this represents 34 to 45 percent of the administration’s goal of 3 to 4 million offers extended by the end of 2012. But the sticking point still seems to be in converting trials to permanent status.

    The colorful debate continues over whether the blame for this lies with the servicers or the homeowners themselves. DS News is still hearing homeowner horror stories of servicing staff losing paperwork, misplacing files, or being so unfamiliar with the program procedures that homeowners and their counselors are given erroneous information when they finally reach someone for follow-up.

    On the other hand, though, servicers say the delay in many cases is on the part of the borrower. And the Treasury’s February report does show that there are another 91,843 permanent modifications pending, that have been approved by servicers and are just waiting on the borrower’s signature.

    During the conversion process, servicers have repeatedly faulted borrowers for not providing the correct required documentation to finalize the modification. The Treasury is expecting to circumvent this blip in the program, though, by requiring that all the necessary paperwork be submitted prior to the trial phase commencing.

    Throughout the first 10 months of HAMP, servicers were allowed to initiate a trial mod based on stated, not verified, income. The verification came later, after the borrower successfully completed their trial payments but before the mod was converted to permanent status. The new upfront requirement applies to all new HAMP modifications that become effective after June 1, and the Treasury says this policy change should significantly expedite servicers’ conversion rates.

    As of the end of February, the Treasury says more than one million borrowers were receiving a median savings of $500 each month – a 36 percent median monthly payment decrease. In aggregate, the administration calculates that homeowners have saved over $2.7 billion through trial and permanent modifications. Upon completing one year of on-time payments per HAMP guidelines, borrowers are eligible to earn up to $1,000 to be applied to their outstanding mortgage balance.

    Of modifications that have converted to permanent status, the Treasury reports that 0.9 percent have been canceled, due to the borrower’s failure to fulfill the payment obligations. Of all modifications started, 8.2 percent have been canceled.

    Looking at the largest servicers’ numbers, Wells Fargo has completed 24,975 permanent modifications, putting it out in front of the pack yet again. Bank of America has permanently modified 20,666 of its troubled mortgages, but has another 22,000 pending.

    JPMorgan Chase has converted 19,385 trials to permanent status. CitiMortgage has completed 15,607 permanent mods, and GMAC has permanently modified 14,675 delinquent loans.

    Bt Carrie Bay - DSNews



    HAFA's Coming Soon to Servicers Near You

    Foreclosure SME Admonishes HAFA Program


    President Obama’s Home Affordable Foreclosure Alternative (HAFA) program has been under intense fire this week. As DSNews.com reported, four appraisal organizations sent a letter to Treasury Secretary Timothy Geithner on Monday, opposing the program’s allowance of broker price opinions (BPOs). However, appraisers aren’t the only ones with concerns about HAFA.


    On Thursday, the chief foreclosure expert at Ushud.com and its parent company Heavy Hammer Inc. warned that this new program is “rife with problems that will adversely impact real estate professionals and consumers alike.”  Michael Urbanski, CEO of Annapolis, Maryland-based Heavy Hammer Inc. and Ushud.com, said the administration’s “unprecedented scheme” will encourage homeowners to abandon mortgage contracts. He believes HAFA rewards financial irresponsibly by eliminating the traditional consequences associated with defaulting on your mortgage.


    Under the plan, homeowners will receive a $1,500 relocation allowance, and their credit scores will remain unaffected. In addition, lenders will rely on real estate agents to provide appraisals of distressed properties rather than employ certified appraisers, opening the door to fraud and abuse. This risk of fraud associated with BPOs was echoed in the concerns voiced earlier this week by the appraisal organizations.


    “The administration’s approach with this program is completely wrongheaded,” Urbanski said. “While some principal forgiveness for upside down homeowners may be useful, this program will encourage homeowners on the fence to give up on homeownership and turn a handful of real estate investors into real estate barons. The real estate crisis, and by extension the crippled economy, will be further damaged as a result.”


    According to Urbanski, many lending institutions are already ill-equipped to manage the current volume of short sale transaction requests, and an anticipated influx of new request will further overwhelm an already bogged-down system. This, he says, will inadvertently create a higher number of foreclosures.

    By:Brittany Dunn - DSNews

    The Next Loan Default frontier

    MBA Reports Continued Rise In Commercial Delinquencies


    Delinquency rates continued to increase in the fourth quarter for most commercial/multifamily mortgage investor groups, according to the Mortgage Bankers Association's (MBA) Commercial/Multifamily Delinquency Report.

    Based on the unpaid principal balance of loans, delinquency rates for each investor group at the end of the fourth quarter were as follows:

    • commercial mortgage-backed securities - 5.69% (30+ days delinquent or in REO), a 1.63 percentage point increase from the third quarter;
    • life company portfolios - 0.19% (60+days delinquent), a 0.04 percentage point decrease;
    • Fannie Mae - 0.63% (60+ days delinquent), a 0.01 percentage point increase;
    • Freddie Mac - 0.15% (90+ days delinquent), a 0.04 percentage point increase; and
    • banks and thrifts - 3.92% (90+ days delinquent or in non-accrual), a 0.49 percentage point increase.

    The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another. In total, the above five investor groups hold more than 80% of commercial/multifamily mortgage debt outstanding.

    “The ongoing impact of the economic fallout on commercial real estate markets continued to drive up commercial and multifamily mortgage delinquencies for most investor groups in the fourth quarter,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. “Continued job losses, consumer restraint and a lack of household growth all sustained the pressure on commercial real estate operations and mortgages during the fourth quarter.”

    By MortgageOrb.com - March 11, 2010

    FHLMC offers many Homeowner solutions

    Freddie Mac   Our business activities are numerous and varied, but from their initial design to their market implementation, we ask the same questions:


    • Do our credit policies and mortgage practices advance responsible lending?
    • Do our mortgage products and securities provide essential liquidity to the residential mortgage market while compensating us for the risk?
    • Do our portfolio management activities sustain homeownership, where possible, for those in financial distress? 

    During the economic crisis, much of our single-family business activity has involved helping homeowners to manage existing mortgage obligations and costs. We do this through a combination of loan refinancing and loan modification programs. Depending on the homeowner's individual circumstances, we provide a continuum of solutions to reduce mortgage costs. Which option is the best fit?


    Let's begin with homeowners whose credit profile meets our standards, have sufficient home equity, but whose mortgage rate is higher than the current market rate.


    Here, refinancing is the most widely used option. And for good reason: mortgage rates are near historic lows, and refinancing produces an immediate and permanent reduction in mortgage payments. Last year, through our traditional mortgage products, Freddie Mac refinanced $344 billion in home loans for 1.6 million families. The cost savings to homeowners were substantial: an estimated reduction in mortgage payments of $2,600 annually, on average. Put another way, our traditional refinancing produced an estimated $4.13 billion in economic relief for homeowners. Even better, this stimulus repeats itself year after year.


    But what about homeowners whose houses are worth much less today than when they took out their original mortgage? Normally, some of these homeowners would not qualify for refinancing, or if they did only at unfavorable terms. This is where an Administration initiative, the Home Affordable Refinance Program (HARP), applies. Last year, we developed a new offering, the Freddie Mac Relief Refinance MortgageSM, for a targeted set of homeowners: those whose loans are owned by Freddie Mac and are current in their payments, but whose home equity is low or even negative. As we have seen during this decade, house prices can fluctuate wildly. But unlike some who walk away from their mortgage obligations – a practice known as strategic defaults -- most responsible homeowners pay their mortgage regardless of current property values.


    For these homeowners, our Relief Refinance Mortgage is a good fit. Here, we refinance high-balance loans. Indeed, the amount still owed on a mortgage can exceed the current value of the home by as much as 25 percent. Importantly, we do not require new or additional mortgage insurance. For example, take a homeowner who put more than 20 percent down on an original mortgage and did not purchase mortgage insurance. If current property values have driven down the equity position to less than 20 percent, or even negative equity, we do not require the homeowner to purchase mortgage insurance on the refinanced loan.


    We launched the Relief Refinance Mortgage in the second quarter of 2009, and finished the year refinancing $35 billion of loans for 170,000 families. The estimated annual cost savings: about $2,200 per homeowner, on average, or $368 million in total. Waiving mortgage insurance requirements produced additional cost savings. We even found that homeowners with adequate home equity used this product as well. Relief Refinances have steadily climbed in our monthly reports and represent a growing percentage of our refinances.


    All this is well and good for homeowners who qualify for refinancing. But what about homeowners who do not? In other words, families who have lost some or all income, suffered a medical crisis, or experienced another event that prevents them from paying the mortgage? Unfortunately, in an economy where the unemployment rate has touched 10 percent, too many families have found themselves in this situation. Throughout the United States, there are roughly five million homeowners who have missed at least three consecutive monthly payments and/or face imminent default. Freddie Mac guarantees or owns less than 10 percent of these loans. For these homeowners, we provide an array of options to help them avoid the cost and stigma of foreclosure.


    Our first option comes from the Administration: the Home Affordable Modification Program (HAMP), which was rolled out in the second quarter of 2009. HAMP is suited for homeowners who have suffered a long-term reduction in income. The loan modification reduces mortgage payments to as low as 31 percent of monthly income through a combination of reducing mortgage rates, lengthening the loan term and/or deferring principal. Under HAMP, homeowners must make three consecutive payments at the new, lower level before the modification becomes permanent. This trial period helps ensure that a sustainable alternative is in place. At year-end 2009, 129,000 homeowners with existing Freddie Mac loans were in this trial period, and 14,000 had their modifications made permanent.


    What if homeowners do not qualify for HAMP or fail to make it through the trial period? Here, we turn to our traditional foreclosure prevention options. These include other forms of loan modification or forbearance plans that allow homeowners to skip several payments before completing a permanent modification. In 2009, Freddie Mac used these options to help 120,000 families stay in their homes. When even these options do not work, and the homeowner simply cannot afford to hold on to the property, we still make it possible to avoid foreclosure. For example, last year we arranged for the pre-sale of houses for 23,000 families.


    Of course, modifying loans requires regular contact with the homeowner. However, many families in need do not reach out to their mortgage Servicers because they believe the process will be too intimidating or confusing. That's why Freddie Mac has invested significant resources to reach as many homeowners in need as possible. We have done so both inside and outside of our lender network. For example, we have:


    • Launched a nationwide telephone help network for homeowners
    • Opened help centers in four major cities with non-profit housing counselors
    • Dramatically expanded our in-house servicing and call center staff
    • Placed loss-mitigation specialists on site at key Servicers
    • Redesigned the FreddieMac.com home page to highlight a tool that enables consumers to easily determine whether Freddie Mac owns their loan


    The FITCH-rated Universe

    CMBS Delinquencies Propelled by Five-Year Loans


    The 29 basis-point (bp) increase in delinquencies to 6.26 percent at the end of February was driven in large part by upcoming maturities from U.S. commercial mortgage-backed securities (CMBS) deals originated in 2005, according to the latest U.S. CMBS delinquency index results from Fitch Ratings.  


    “Five-year loans originated in 2005 will continue to have difficulty refinancing this year as liquidity remains limited,” said Mary MacNeill, managing director at Fitch. “In many cases, sponsors will have to either contribute additional equity in order to refinance their loans or look to the servicers for extensions and modifications.”


    Fitch said approximately 30 percent of the newly-delinquent loans were from 2005 transactions. Furthermore, the four largest newly-delinquent loans, ranging in size from $65 million to $112 million, are from this period. Three of these four loans are already past their 2010 maturity dates and are now categorized as non-performing matured loans.


    Because these three non-performing loans are office properties, this property type had a greater bp increase than the overall average increase for the first time. Fitch recorded a month-to-month movement of 45 bps for office properties, notably higher than the overall index of 29 bps. In addition, multifamily, increasing 64 bps, and industrial, jumping 43 bps, also exceeded the overall index change.


    Current delinquency rates by commercial property type are as follows:

    • Office – 3.5 percent
    • Industrial – 4.16 percent
    • Retail – 5.09 percent
    • Multifamily – 8.97 percent
    • Hotel – 16.61 percent


    The delinquency index includes 2,505 loans totaling $28.5 billion of the Fitch-rated universe of approximately 42,000 loans comprising $452.6 billion that are at least 60 days delinquent or in foreclosure.


    The index excludes Fitch-rates loans that are 30 to 59 days delinquent, which currently total $3.2 billion.  In addition to the increased rate of delinquency, Fitch also reported that nine CMBS loans were transferred to special servicing during the period of February 25 to March 4. The individual loans ranged from an outstanding balance of $84 million to $20 million.

    By: Brittany Dunn - DSNews.com

    HOPE NOW delivers big results

    HOPE NOW Helps Almost 2,100 Troubled Borrowers in February



    Thousands of homeowners across the nation are facing foreclosure, but nearly 2,100 of these troubled borrowers received mortgage assistance through HOPE NOW’s homeownership preservation events in February in Sacramento, California and Houston.  


    The workshop in Sacramento, California had 1,200 attendees, and almost 900 families attended the Houston workshop. In Sacramento, hundreds of homeowners with financial documents still outstanding also participated in a special document collection clinic with servicers. HOPE NOW said these clinics helped move homeowners already in trial plans into permanent Making Home Affordable modifications.


    These borrower outreach events gave at-risk homeowners a chance to meet face-to-face with their mortgage servicer or a HUD-approved housing counselor. More than a dozen major mortgage servicers were on hand to offer assistance at both events, as well as representatives from several local HUD-approved counseling organizations.


    The signature workshops, sponsored by the HOPE NOW Alliance, the Obama administration’s Making Home Affordable Program, and NeighborWorks America, were the continuation of an aggressive outreach effort to visit many of the hardest-hit housing markets in the country.


    “Since 2008, HOPE NOW has held more than 60 of these events nationwide, and we are proud of the fact that the industry has come together with the government and the nonprofit community to offer a much needed face-to-face outreach model,” said Faith Schwartz, executive director of HOPE NOW.


    HOPE NOW said it plans to continue these homeownership preservation events throughout 2010. Workshops are already lined up; March in Tucson, Arizona; Phoenix; Portland, Oregon; and Seattle. In addition, events in Las Vegas and Reno, Nevada are planned for April.

    By: Brittany Dunn - DSNews.com


    Fannie Mae plays Let's Make a Deal

    FANNIE Cuts FHA-Like Deal to Sell Homes 


    Even as Fannie Mae tightens standards on most new mortgages, the government-sponsored enterprise is offering buyers of its repossessed homes financing with some of the most generous terms available today. 


    Fannie’s HomePath program lets borrowers put down as little as 3%, without paying for mortgage insurance, which is usually required for conforming loans where the borrower has less than 20% equity. HomePath also accepts borrowers with credit scores as low as 660 — 60 points below Fannie’s standard cutoff. Appraisals, a traditional prerequisite for getting a mortgage, are optional under HomePath.


    The program underscores Fannie’s motivation to clear its inventory of homes, which swelled 36% last year, to 86,155. 


    “Only time will tell if the risk is worth the reward, but Fannie is giving up little to eliminate a nonproducing asset,” said John Dutra, a mortgage broker in Fremont, Calif. “Once closed, Fannie has a productive loan again,” instead of an empty house that is not generating cash.

    By: Kate Barry - America Banker

    HARP gets extension

    Fannie Mae logo  Per Michael J. Williams President and CEO, on the Extension of the HARP 


    Thousands of families have already received much-needed relief under the Home Affordable Refinance Program, and extending HARP for another year will enable us to help even more families achieve a more affordable mortgage. Fannie Mae's Refi Plus program has given borrowers new options for refinancing, and more than 329,000 loans have been delivered to Fannie Mae through the Refi Plus flexibilities. Of those loans, more than 100,000 were refinanced under the HARP with loan-to-value ratios between 80 percent and 125 percent, which means that many borrowers who had few options are now on more stable financial footing.

    FannieMae News Release - March 1

    Quality Initiative Launching

    Fannie Mae logo  Lender Letter LL-2010-03, An Introduction to Fannie Mae's Loan Quality Initiative

    Fannie Mae has issued the following Lender Letter:

    • Lender Letter LL-2010-03

    An Introduction to Fannie Mae's Loan Quality Initiative, provides advance notice of upcoming changes to policies, business processes, and tools to support delivery data on the loans delivered to Fannie Mae that is complete, accurate, and fully reflective of the actual terms of the mortgage, as well as aligned with Fannie Mae policies and standards. Fannie Mae conducted an extensive analysis to determine the primary drivers of repurchase requests and is launching the Loan Quality Initiative (LQI) to identify and implement policy, process, and technology enhancements to improve the compliance with underwriting and eligibility guidelines and mitigate repurchase risk. 

    Over the next few months, Fannie Mae will release several Selling and Servicing Guide announcements and release notes (Loan Delivery and Desktop Underwriter®) that will describe the specific LQI changes to help familiarize lenders with the changes that are coming in order to facilitate lender planning and allocation of resources for the implementation.

    We will issue a Selling Guide Announcement and Update on Tuesday, March 2 to provide details on several changes previewed in the Lender Letter. Please note that the contents of that update related to the LQI will be only a subset of the changes described in the Lender Letter.

    For more information please see the Loan Quality Initiative page on eFannieMae.com, which includes a number of resources, including FAQs, and a Loan Quality Initiative summary of the changes, key dates, and resources.  

    Mortgage Forbearance for the Unemployed?

    MBA Develops Forbearance Program for Unemployed Homeowners


    The Mortgage Bankers Association (MBA) has put forth a concept for a new forbearance program that would allow borrowers who’ve lost their jobs to remain in their homes while they seek new employment. According to the proposed program, loan servicers would reduce the borrower’s mortgage payment for up to nine months while the homeowner looks for employment.

    “The vast majority of new distressed borrowers we are seeing involve the loss of income,” said John A. Courson, MBA’s president and CEO. “This program is designed to buy those borrowers time to find a new job, after which they could hopefully qualify for a loan modification.”

    Under MBA’s proposal, borrowers would be initially evaluated for the forbearance program using a model that assumes the borrower will be reemployed within nine months and earning 75 percent of their previous salary. The borrower would be reevaluated as to employment and income status every three months for a total forbearance of nine months. Once new employment is secured, the program would serve as a “bridge” for the borrower to be considered for a modification under the administration’s Home Affordable Modification Program (HAMP).

    “Recent statistics show that the average unemployed U.S. worker stays unemployed for between six and seven months,” Courson said. “That is a long time for a borrower with a dramatic drop in income to stay current on their mortgage. Further, borrowers with such a precipitous drop in income can’t qualify for most loan modification programs.”

    MBA suggests that some participating servicers would need access to special loans through Treasury so they could continue to advance payments to investors during the extended forbearance period. The trade group also noted that the program would need to be voluntary and flexible due to financial accounting considerations, in particular whether or not lenders would have to classify the forbearance as a troubled debt restructuring (TDR).

    MBA created this program through a special task force of its members, and consulted with Fannie Mae and Freddie Mac on the design. Last week, MBA representatives met with officials from the White House, the Treasury Department, and HUD to present the proposal.

    Last Friday, President Obama announced a new initiative to provide $1.5 billion to housing finance agencies in especially hard-hit states for them to develop their own loss mitigation programs, with one particular area of focus being assistance for unemployed homeowners. MBA’s proposal though, puts the unemployment issue on the national stage, and although participation by servicers would be voluntary, the program would be coupled with federal HAMP efforts.

    Nationwide, MBA said in a letter to Treasury Secretary Timothy Geithner, “Over the last year, we have seen the ranks of the unemployed increase by about 5.5 million people, increasing the number of seriously delinquent loans by almost 2 million loans and increasing the rate of new foreclosures from 1.07 percent to 1.42 percent.”

    By: Carrie Bay - DSNews.com





    Deed for Lease

     Fannie Mae logo  Deed-for-Lease Program Helping Families and Stabilizing Neighborhoods


    Last November, Fannie Mae launched the Deed-for-Lease™ Program (D4L) to help minimize family displacement brought about by foreclosure, while fostering neighborhood stabilization. The program provides Fannie Mae's servicers with an additional tool to apply to loss mitigation efforts and allows Fannie Mae to manage its inventory of REO properties while generating cash flow until the properties can be sold. 

    Candidates for D4L are borrowers (or their tenants) who are eligible for a deed-in-lieu of foreclosure and who wish to remain in their homes even after their property has been transferred to Fannie Mae. The program is ideal for families who may need more time to transition (e.g., families with children attending neighborhood schools who want them to remain there until the end of the school year). D4L also works well for tenants who want to stay in their rental homes, even if their landlord is no longer able to afford the mortgage.  

    D4L is available for investor properties if it is the resident's -- either the former borrower or current tenant -- primary residence.  


    Fannie Mae does not require occupants to pay a security deposit to stay in the home. Landlords usually require a first and a last month's rent to lease a property. By eliminating the need for this cash outlay, families can preserve their funds to assist them in other areas during this difficult time.  

    The D4L Process

    From the servicers' perspective, once a deed-in-lieu of foreclosure (DIL) candidate is identified, the D4L process is easy to follow. Servicers will need to:

    1. Pre-screen the candidate's loan type and payment history against the short list of requirements found on the D4L Referral Form (Fannie Mae Form187).
    2. Ask the borrower if he or she is interested in leasing back the property. If the answer is "yes", complete the D4L Referral Form and e-mail it to Fannie Mae's rental team to the address noted on the form.
    3. Provide the borrower with the D4L Instructions for Borrowers; Fannie Mae will handle the rest of the leasing process. Within 10 days, Fannie Mae will let you know if a lease was signed and whether the property can remain occupied.
    4. Complete the DIL according to the standard process. Please note that the D4L is contingent upon a successful completion of the DIL process.
    5. Upon receipt of the D4L Referral Form, Fannie Mae will assign a property manager to inspect the property and to meet with the borrower or the tenant. (The D4L Instructions for Borrowers outlines this process.)  


    The property manager inspects the home to ensure it meets local regulations for rental properties, determines the market rate rent, and screens the tenant.

    The rent payment is based on local market conditions, not the borrower's mortgage payment. Fannie Mae requires the borrower/tenant to have the income to support a 31% income-to-rent ratio; the industry standard for most markets. Given the severe price declines in many markets, the rental rates are often lower than either the former mortgage or rent payment.


    If the candidate qualifies for any relocation assistance from the DIL program, Fannie Mae will pay the relocation funds at the end of the lease.


    FNMA Opens Mortgage Help Centers


    Fannie Mae logo  Fannie Mae Partners Include Civic and Community Leaders


    WASHINGTON, DC - February 23, 2010 -
    In the first of a series of planned nationwide Mortgage Help Centers, Fannie Mae (FNM/NYSE) announced the opening of a new Help Center in Miami that will accelerate the response time for struggling borrowers in South Florida with loans owned by Fannie Mae.

    At the Center, borrowers will meet directly with dedicated on-site staff and experienced housing advisors who speak English and Spanish, to discuss their mortgage situation. These face-to-face meetings will help borrowers better understand the entire range of foreclosure prevention options and work closely with servicers to achieve a prompt response.

    Fannie Mae is partnering on this initiative with civic and community leaders from Miami-Dade County, Neighborhood Housing Services of South Florida and major mortgage servicers.

    "The Center in Miami and our future centers across the country will build on Fannie Mae's long-standing community development network and strong partnerships with local governments nationwide," said Terry Edwards, Executive Vice President. "We are pleased to partner with the local officials of Miami-Dade County as we strive to keep people in their homes during this housing crisis. We are committed to helping struggling borrowers understand all of the options available to them to avoid foreclosure and to provide them with the assistance they need in the most streamlined manner possible."

    "We welcome Fannie Mae's first Mortgage Help Center to Miami," said Miami-Dade County Mayor Carlos Alvarez. "The nationwide housing slump has hit our area particularly hard, and this partnership has the potential to keep families struggling with foreclosure in their homes."

    "This is a very important partnership for residents in the City of Miami," said City of Miami Mayor Tomas Regalado. "The housing crisis has severely impacted many individuals here and across the country, and this type of assistance is desperately needed. We are looking forward to working along with Fannie Mae to make this effort a success."

    Services available at the center include reviewing the borrower's loan, discussing foreclosure alternatives, collecting the required documents for the federal Making Home Affordable Program and reaching a decision on any pending loan workout efforts. In establishing the facility, Fannie Mae and Neighborhood Housing Services of South Florida will provide information and clarify expectations for the foreclosure prevention process and work to counteract local scams and groups that charge fees for modifications and foreclosure prevention services.

    "This Mortgage Help Center is vital to many of the homeowners in my district, as well as throughout Miami-Dade," said Miami-Dade County Commissioner Dorrin D. Rolle. "Many homeowners don't realize what their options are before or during the foreclosure process. There are ways to keep your home, and my thanks go to Fannie Mae for assisting families in understanding their mortgage situations are not hopeless."

    "We know from first-hand experience that struggling homeowners get better results when they have direct access to the information and tools necessary to get a quick response to their mortgage situation," said Arden Shank, President and CEO, Neighborhood Housing Services of South Florida. "Fannie Mae's Mortgage Help Center is the respectful, professional environment borrowers need in order to make informed decisions about what solutions work best for them. Fannie Mae is a key partner in revitalizing neighborhoods and sustaining affordable housing in South Florida."

    The Mortgage Help Center is only for borrowers who have a mortgage held by Fannie Mae. Homeowners can visit: www.fanniemae.com/loanlookup or contact Fannie Mae at 800-7FANNIE. Homeowners who do not have loans owned by Fannie Mae can contact the Homeowner's HOPE™ Hotline at 888-995-HOPE.  The Center is available by appointment only and borrowers wishing to schedule a visit should call 877-208-3652.

    Banking Technology

    Banks Incubate The Innovation Fixation


    Most banks don't have Apple-esque credentials when it comes to innovation, but more are not only seeing the value of thinking out the box, but also understanding that creativity doesn't happen in isolation-hence the innovation lab.

    For some banks, the innovation lab is actually that-a facility where bank employees can dream up, plan, execute and get feedback on new products and processes. Branch locations where these products and concepts are field tested with actual consumers may also play a role. For other institutions, the innovation lab is a Website, where new or soon-to-be released products and services are presented and feedback is elicited.

    Bank of America has courted lots of attention for its various innovation initiatives, including its work in the far-reaching Center for Future Banking launched last March in partnership with the MIT Media Lab in Cambridge, Mass. While that's a big-picture, futuristic enterprise, the bank's Gateway Innovation Lab, staffed by seven employees, works with all lines of business exploring new concepts, building simulations and prototypes, and evaluating how new technology can be applied to specific business problems, according to Matt Calman, svp, and the research and development executive who runs the innovation lab for Bank of America.

    Last year, the Gateway Innovation Lab built more than 40 prototypes, worked on nine new patents, and supported five market trials of new capabilities. Calman says his team's work can be customer-facing, though the majority is for internal usage, and can range from "outfitting an ATM with a new piece of technology to [creating] a whole new sales play." The lab also oversees field tests at the bank's retail lab in Charlotte-more of a "showcase" than a branch, according to Calman-and Bank of America's two "customer-driven banking center stores" in New York, where it utilizes technology not widely available in most branches, including videoconferencing, surface computing and new safe deposit box technology.

    Retail-friendly Umpqua Bank experiments with a wide range of technology and design concepts in its Portland, Ore.-based innovation lab, launched at the end of 2007. This lab features a 25-foot interactive touch screen wall and videoconferencing kiosks and functions as a fully operational branch (or retail store, as Umpqua calls it) for the Roseburg, Ore.-based bank. Lani Hayward, evp of creative strategies for Umpqua, says the lab tries out technology and concepts "that are both edgy and ready for primetime."

    But banks don't always utilize a physical location to see how their new ideas might fly with customers. Wells Fargo launched its online lab in January 2007 "to expand the dialog with customers by gathering actionable feedback on things the bank just released or was about to release," according to Derick McGee, manager, strategic capabilities for Wells Fargo's Internet Services group. Among other services, the bank is currently soliciting reaction to its vSafe document storage, which is already available to customers, and to SettleUp, a pilot offering which allows customers to track shared expenses online and send friends IOUs. McGee estimates about 15 percent of the people visiting the Wells Fargo Labs site offer useful feedback, both positive and negative.

    U.S. Bancorp doesn't have a "branch of the future," according to Dominic Venturo, chief innovation officer for the bank's retail payments solutions division. But Venturo's group does often pilot early stage payments technology with employees and customers. "Not everything we pilot is ready to go commercially," he says.

    One of the benefits of the innovation lab setting is that they provide an environment where employees can create and develop and make improvements based on feedback without the "fear of failure" a traditional bank product development team would face, Calman says. Banks say these facilities give them the opportunity to understand not only what is possible, but what is practical and desirable to consumers - as well as a way for consumers to feel heard and appreciated in their opinions.

    "This is giving us new insights to create value for customers relevant to where they're going," Calman says. "The bottom line is that banks operate to be optimized around small improvements; we want to make breakthrough improvements here.".

    by; Karen Epper Hoffman - February 2010 - BTN

    Commercial Loans

    SBA to Reactivate Recovery Loan Queue 


    The SBA told credit unions and other lenders today that it will reactivate the Recovery loan queue by Feb. 22 to ensure that the $125 million appropriated to the agency in December will go out the door much faster to small businesses.

    The SBA received $730 million through the Recovery including $375 million to support raising the government guarantee to 90% on its7(a) loans and reducing some lender and borrower fees on its 7(a) and 504 loans. The funds ran out in November 2009.  SBA received an additional $125 million appropriation in December 2009 along with authority to continue both of the programs through February.

    The agency said it is in the process of finalizing the plan for transitioning its 7(a) and 504 programs back to their pre-Recovery Act terms and communicating those plans with its lending partners. This plan, when implemented, will include re-activating the Recovery loan queues no later than Feb. 22.  The queues will operate in the same manner as when originally implemented in November 2009. 

    The authorization for the 90% guarantee on 7(a) loans ends Feb. 28, though funds may be exhausted sooner, the SBA said. Applications in the queues after Feb. 28 will only be eligible for decreased or eliminated borrower fees when funds become available.

    Small business owners and lenders will have transparent access to the queue via www.sba.gov/recoveryq and will be able to remove themselves from the queue at any time to be considered for a non-Recovery SBA loan with all applicable fees and, for 7(a) loans, standard guaranty levels.

    By; Michelle Samaad - February 22, 2010 - Credit Union Times


    SaaS becomes more popular



    If you ask Dorado CEO Dain Ehring whether it’s true that Software as a Service and cloud computing are sweeping away traditional software models for mortgage technology, he is likely to direct you to apps.gov, the government portal for cloud computing, where you will find a video clip explaining why the model is being evangelized to improve efficiency and lower costs for all government agencies. Heading Dorado’s prognostications for 2010 was the prediction that “Software as a Service adoption will reach critical mass in mortgage originator use, with more than 30% of all originations in North America occurring in the cloud.”


    Two other SaaS-related Dorado predictions for 2010 were (1) that turnkey approaches to updating systems for regulatory compliance would offer lenders a competitive advantage, and (2) that new integration and interoperability capabilities would bring unprecedented expansion of low-cost choices in external mortgage services.


    Though SaaS often has been portrayed as best suited for small and medium-sized lenders, Mr. Ehring flatly predicts that within five years most of the processing in the mortgage industry will be done — by large and small lenders alike — with SaaS-based technology. Why? Because today’s rapidly changing market conditions mean that large lenders no longer are willing to take a chance on lengthy and expensive implementation projects, given that “seven out of the top 10 lenders have had $100 million projects that have failed in the last 20 years.”  He noted that for large lenders even more than for their smaller brethren, “it’s very hard to map your profitability to your production needs. The SaaS model gives them that capability. Some of the largest lenders have hundreds of SaaS contracts in place,” he said. “You don’t have to educate them, they get it.”


    SaaS integration specialists like Boomi, BridgeWerx and Cast Iron Systems offer white papers and blogs confirming that SaaS integration of multiple applications has become literally vital for most industries and that SaaS integration is now generally preferred over creating monolithic suites via enterprise integration.


    As Phil Wainwright observed in a ZDNet column, competition among technology providers is no longer a matter of survival of the fittest, “the strong, the quick and the nimble.” In the emerging SaaS world, where connectedness and interoperability are key, it’s “survival of the fit-most.”


    If mortgage industry endorsement of SaaS seems pervasive these days, that may be because no other model serves the current mortgage market as well. “Lenders are focused on one thing right now — how to grow their business while keeping costs low,” observed Don Covey, managing director of origination technology for Jacksonville, Fla.-based Lender Processing Services.

    By Scott Kersnar - MortgageTechnology.com

    Administration will pump $1.5 billion of EESA

    The administration will pump $1.5 billion into programs to address housing problems


    The program, which will use funds set aside for housing under the Emergency Economic Stabilization Act (EESA) of 2008, will be directed at states where the average home price has fallen more than 20 percent from the peak and where high unemployment is also an issue.  The President announced today the program during a speech in Nevada this afternoon, which has had one of the highest foreclosure rates in the country, among the highest rates of "underwater" mortgages, and an unemployment rate of 13 percent. 

    Funds will be directed to housing agencies in the individual states which will be able to use the funds to prevent foreclosures among unemployed homeowners and to assist those who cannot refinance because of mortgages larger than the value of their homes or because of junior liens. 


    The White House said that state and local Housing Finance Agencies (HFAs) in each state are already familiar with the urgent challenges facing their communities and have demonstrated the ability to address these challenges, and that the HFAs will determine the priorities facing their local markets.


    Under the new program, dubbed 4HM or Help for the Hardest-Hit Housing Markets, HFAs can submit their own program designs to Treasury.  The proposals must meet funding requirements of EESA which include that the recipient of funds must be an eligible financial institution and that the funds must be used to pay for mortgage modifications or for other permitted uses. Treasury will announce maximum state level allocations and rules governing the submission of programs within the next two weeks.


    The White House said that the kinds of programs that HFAs might design could include programs to help unemployed homeowners until they could find a job since, in earlier periods of high unemployment, people could sell their homes and use the funds to "tide them over."  Today, in the targeted states, those homeowners with negative equity do not have this option.


    The HFAs could also experiment with programs that would assist underwater borrowers to negotiate with lenders to write down mortgages which would allow them to refinance. Modification programs such as the Treasury Departments HAMP program have encountered real reluctance on the part of lenders to reduce principal balances.


    by Jann Swanson - February 19, 2010 - Mortgage News Daily

    Property valuation fraud risk index is up 40% over last year

    California Tops Mortgage Fraud Index for Fourth Quarter


    California now has the highest risk of mortgage fraud with an index value of 222, according to a report from Interthinx. Nevada, which had the highest index for the previous five quarters, drops to second place with an index of 220, and is closely followed by Arizona with an index of 211, according to the Mortgage Fraud Risk Report for the fourth quarter of 2009. Florida remains in fourth place at 179, while Colorado is fifth at 153. The occupancy fraud risk index rose 16% since last quarter, the first significant increase in the index since the fourth quarter of 2006. The magnitude of the quarter-on-quarter increase suggests that occupancy fraud risk will be a serious issue going forward, as continuing price declines and get-rich-quick schemes lure investors back into the market and as builders face continuing difficulty in moving unsold inventory. Despite a 4% quarter-on-quarter decrease, the property valuation fraud risk index is up 40% over last year and up more than 100% from two years ago.

    Schemes involving short sales, real estate owned inventories, wholesale flipping, and refinancing by borrowers whose equity has been impaired by falling real estate values continue to drive this index. Interthinx analysts expect lenders to focus more closely on fraud risk mitigation as they work to emerge from the downturn. This will help guard against the potential for fraud as a large number of adjustable rate mortgage loans, especially option adjustable rate mortgages with negative amortization features which reset between now and the first quarter of 2012.

    Mortgage Servicing News - February 18, 2010

    MICA reported PMI statistics for December 09

    “Mortgage insurers continue to play a key role in the national effort to stabilize the housing market.”
    said Suzanne C. Hutchinson, EVP of MICA.


    “Mortgage insurers are helping to prevent foreclosures by working with loan servicers, investors and lenders to modify and refinance home loans for troubled borrowers,”

    Key private mortgage insurance industry statistics for the month of December:

    • Dollar Volume. The dollar volume of primary new insurance written on newly originated conventional mortgage loans totaled $5,096.8 million in December.
    • Certificates Issued. MICA’s members reported that 19,989 borrowers used private mortgage insurance to buy or refinance a home in December.
    • Applications. The number of private mortgage insurance applications received in December by MICA’s members totaled 26,284.
    • Defaults and Cures. MICA’s members reported 94,651 defaults and 61,032 cures in December.

    The statistics in this month’s report include data from the following MICA member companies: Genworth Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, PMI Mortgage Insurance Co., Radian Guaranty Inc., Republic Mortgage Insurance Company and United Guaranty Corporation.

    MICA is the trade association representing the private mortgage insurance industry. Its members help loan originators and investors make funds available to home buyers for low down payment mortgages by protecting these institutions from a major portion of the financial risk of default.

    New Mortgage Insurers

    Fannie Mae logo  New Fannie Mae Approved Mortgage Insurers

    Fannie Mae has issued the following Lender Letter:

    • LL-2010-02, New Fannie Mae-Approved Mortgage Insurers

    This Lender Letter indicates the approval of four new mortgage insurers and provides updated delivery codes for the following companies:

    • Essent Guaranty, Inc.
    • MGIC Indemnity Corporation
    • PMI Mortgage Assurance Co.
    • Republic Mortgage Insurance Company of North Carolina

    An updated list of Fannie Mae-approved mortgage insurers and their associated mortgage insurance codes is posted on eFannieMae.com. 

    GSEs' Delinquency Buybacks

    The nation's two largest mortgage financiers have been stuck in the red for some time, and they regularly require cash draws from the Treasury to stay afloat. The GSEs' recent announcements to buy back some $200 billion in seriously delinquent loans from mortgage-backed securities holders over the next few months mean they'll have to come up with some extra cash fast. Analysts at Barclays Capital estimate that Freddie Mac will need to sell off $10 billion to $20 billion of its debt to fund the purchases, while Fannie Mae will need to raise about $60 billion.

     By: Carrie Bay - DSNews.com - 02/17/2010