This action might not be possible to undo. Are you sure you want to continue?
Home Affordable Modification Program
An introduction for servicing non-GSE loans
Guidance Effective for Verified Trial Period Plans Revised May 2011
Fannie Mae. The Making Home Affordable logo is a trademark of the United States Department of the Treasury and is used under license.
Welcome to this presentation on the “Home Affordable Modification Program” or “HAMP.” This presentation is designed for servicers of non-GSE loans – that is, loans that are not owned or guaranteed by Fannie Mae or Freddie Mac. With respect to non-GSE loans, your participation as a servicer in HAMP is voluntary. This presentation will introduce you to HAMP, and provide you with the information you need to make an informed decision about your participation. If you also service loans that are owned or guaranteed by Fannie Mae or Freddie Mac, note that your participation in HAMP is required for those loans. IMPORTANT NOTE: With the release of Supplemental Directive 10-01, a new process has been introduced. The new process must be used for all HAMP trial period plans with effective dates on or after June 1, 2010 but can be used prior to this date. This overview describes the new process. While every effort has been made to ensure the reliability of the content of this presentation, the provisions of the Supplemental Directives (as further supplemented or clarified in FAQs) govern, and must be adhered to in the event of any conflict.
What is HAMP?
A uniform loan modification process through which eligible borrowers can have their loans modified to a more affordable monthly payment targeted at 31 percent of their gross monthly income
February 2010 | Making Home Affordable
Let’s begin by defining HAMP… which is a uniform loan modification process through which borrowers who are in default, at risk of imminent default, or in foreclosure can have their loans modified to a more affordable monthly payment targeted at 31 percent of their gross monthly income. Before the modification is finalized, the borrower must successfully complete a trial payment period. HAMP is a key component of the Obama Administration’s “Making Home Affordable” initiative that was introduced on March 4th, 2009. It is intended to provide relief to millions of homeowners who are struggling to make their mortgage payments. The program will accept new borrowers through December 31, 2012 – and offers significant benefits to borrowers, servicers, and investors alike.
The amount of this reduction is calculated as the lesser of $1. they will receive a “pay for performance” reduction in their principal loan balance. borrowers whose monthly payments are reduced by at least six percent. With HAMP. whether they are struggling to keep their loans current or have already fallen behind with their mortgage payments. Plus.000 ($83.Slide 3 Benefits to eligible borrowers Help for those who are struggling to keep their loans current or are already behind with their mortgage payments Reduced mortgage payments to sustainable levels Annual “pay for performance” principal balance reduction for first five years as incentive to keep modified loan current Applies to borrowers whose monthly payments are reduced by at least 6 percent Calculated as lesser of $1. will have an additional financial incentive to keep their modified loan current.000 or one-half of the reduction in the borrowers’ annualized monthly payment. . For the first five years following completion of the modification.33/month) or half of reduction in borrowers’ annualized monthly payment February 2010 | Making Home Affordable 3 Borrowers who satisfy eligibility requirements for HAMP will receive much-needed help. provided their modified loan is in good standing. borrowers’ monthly mortgage payments will be reduced to sustainable levels.
This incentive will be paid for the first three years of a modification – and calculated as the lesser of $1.000 for each modification you complete – plus. . you’ll be compensated in the amount of $1.Slide 4 Benefits to participating servicers Avoid foreclosures and help make mortgages more affordable for borrowers Financial incentives $1. $500 for each modification of a current loan for a borrower facing imminent default.000 or half of the reduction in the borrowers’ annualized monthly payment amount.33/month) or half of reduction in borrowers’ annualized monthly payment amount February 2010 | Making Home Affordable 4 As a participating servicer in HAMP.000 ($83. Additionally. you’ll contribute to the housing recovery effort by avoiding foreclosures and help make mortgages more affordable for borrowers.000 for each completed modification $500 additional for a modification of a current loan for which payment default was imminent Additional annual incentive for modifications that reduce borrowers’ monthly payments by at least 6 percent • For first three years • Provided modified loan is in good standing • Calculated as lesser of $1. you’ll receive an additional payment for modifications that result in reducing the borrowers’ monthly payment by at least six percent—provided the loan remains in good standing. For doing so.
com. During the first five years of a loan modification. .HMPadmin.500 – provided the borrower’s monthly payments are reduced by at least 6 percent. and Lesser of borrowers’ monthly payment at 38 percent. For details. Note that for loans held in a lender’s portfolio. which can be accessed from the Web site. For loans on properties that are located in markets that are hardest hit by falling home prices. Each subsidy payment is equal to half of the payment difference between the borrowers’ monthly payment at the target monthly mortgage payment ratio of 31 percent – and the lesser of the borrowers’ monthly payment at 38 percent … or the borrowers’ monthly amount prior to the modification.500 for each loan that was current prior to the start of the trial payment period—provided monthly payments are reduced by at least 6 percent Additional incentive payments will be paid in markets hardest hit by falling home prices February 2010 | Making Home Affordable 5 Investors in non-GSE loans that agree to a loan modification under the Home Affordable Modification Program receive financial incentive payments. Additionally. or borrowers’ pre-modification monthly payment One-time bonus payment of $1. provided the loan servicer has entered into a Servicer Participation Agreement. www.Slide 5 Benefits to investors Monthly payment subsidies for the first five years as compensation for reduction in borrower payments of half of the payment difference between: Borrowers’ monthly payment at target monthly mortgage payment ratio of 31 percent. the lender is considered the investor. the investor will receive a one-time payment of $1. refer to Treasury’s Supplemental Directive 09-04. the investor will receive monthly payment subsidies as compensation for agreeing to reduced borrower payments. additional incentive payments will be automatically calculated and payable to the investor. for each modified loan that was current at the start of the borrower’s trial payment period.
Slide 6 GSEs’ roles with HAMP on behalf of Treasury Fannie Mae serves as financial agent. the Treasury has contracted with the GSEs to act on its behalf with regard to HAMP. Freddie Mac has been designated as the program’s compliance agent – to monitor participating servicers to ensure their compliance with all terms and provisions of the program. Fannie Mae is serving as the program’s financial agent. record keeper. . and paying agent. including Program administrator Record keeper Paying agent Freddie Mac serves as compliance agent February 2010 | Making Home Affordable 6 For non-GSE loans. including acting as its program administrator.
com Receive e-mail confirmation from HAMP Solution Center that includes additional required forms. Your next step is to send the completed HAMP Registration form to the HAMP Solution Center by email. Once you have reviewed the Servicer Participation Agreement and are ready to move forward with the process… your first step is to complete the HAMP Registration form. 2. The HAMP Registration form. all terms and conditions. and instructions for completing it. you agree to all terms and conditions of the program. www. you will receive an e-mail from a representative of the HAMP Solution Center.HMPadmin. and additional instructions 3.com and is used to report data to the US Treasury. Inc. You also must register for the HAMP Reporting Tool. Plus. HAMP Servicer Number(s). Complete HAMP Registration form Send completed form to HAMP Solution Center via email to setup@hmpadmin. confirming receipt of your HAMP Registration form that includes additional required forms. 2010. (LPS) at (866)939-4469 and select Option 1. www. and prepared to comply with. you become contractually obligated to participate in the program… which means you then must consider all loans that may be eligible for a modification. By entering into this Agreement.com.pdf. you must register for the HAMP Reporting Tool by contacting Lender Processing Servicer. February 2010 | Making Home Affordable 7 To participate in HAMP. a HAMP Registration Number. Within a few days.com. and further instructions for completing the registration process. The Servicer Participation Agreement can be accessed from Treasury’s HMP website for mortgage servicers. you’ll want to review the Agreement carefully to ensure that you are aware of. then Option 5. Once you are a HAMP Participating Servicer.HMPadmin. and practices following all procedures that are required to maintain eligibility to participate in the program cooperating fully with any compliance reviews or investigations of potential fraud cases…and more.Slide 7 How to become a participating servicer 1. To do so. . HAMP Registration Number(s). including-adhering to all applicable laws. Before initiating the process of becoming a participating servicer. regulations. also can be found on the website. The HAMP Reporting Tool is available on the secure servicer area of the HAMP Web site www. you must enter into a Servicer Participation Agreement with Fannie Mae – no later than October 3. then attach it to your e-mail. save it in electronic format such as .HMPadmin.
in turn.Slide 8 The HAMP Process 1 2 3 4 5 Request that borrower provide “Initial Package” documents Verify eligibility. you are then obligated to consider all borrowers who may qualify for HAMP. The process of completing a modification under HAMP – at a high level – is illustrated here. Step 1 – Request that borrowers provide “Initial Package” documents Step 2 – Verify eligibility. . calculate the proposed payment amount and perform NPV test Step 3 – Inform the borrower Step 4 – Trial Period Plan Start Step 5 – Conversion from Trial to Permanent Loan Modification Now. Remember. calculate proposed payment amount and perform NPV test Inform the borrower Trial Period Plan Start Conversion from Trial to Permanent Modification February 2010 | Making Home Affordable 8 Once you enter into a Servicer Participation Agreement. this is the new process that has been introduced as part of Supplemental Directive 10-01 and must be used for all HAMP trial period plans with effective dates on or after June 1. 2010 but can be used prior to this date. we’ll walk through each step.
referred to as the “initial package”— Request for Modification and Affidavit (RMA) Form IRS Form 4506-T or 4506T-EZ Evidence of Income The RMA Form provides the servicer with borrower and co-borrower financial information including the cause of the borrower’s hardship. 2010. referred to as Government Monitoring Data (GMD). the Dodd-Frank Certification must be received from the borrower.HMPadmin.com. however. Allowable documents are described in the “Borrower Income/Asset Documentation and Verification of Eligibility” section of Supplemental Directive 10-01.com. fraud. Both forms are available. in English or Spanish. However. . the co-borrower. The form is available on www. The borrower must provide income verification documentation. ethnicity and gender of the borrower and co-borrower. 2010. if you do use other forms then you must obtain an executed MHA Hardship Affidavit. The borrower must print. or • Tax evasion A servicer must obtain a completed Dodd-Frank Certification from each borrower. in connection with a mortgage or real estate transaction.Slide 9 Step 1: Request that borrower provide “Initial Package” documents… Effective for all trial period plans with effective dates on or after June 1. you may evaluate a borrower for HAMP only after you receive the following documents. The 4506T-EZ is encouraged because of its relative simplicity. on www. The income evidence and financial information must not be more than 90 days old as of the date the Initial Package is received by the servicer. if applicable. you may not refuse to accept an RMA if this sections is not completed. A standalone version of which is available on www. Lastly.com. forgery • Money laundering. has been convicted within the last 10 years of any of the following: • Felony larceny.HMPadmin. It also solicits data related to the race. The financial and hardship sections of the RMA must be completed and executed by the borrower and. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provides that no person is eligible to begin receiving assistance under the MHA Program if such person. sign and send the form to his/her servicer. You may use other proprietary financial information forms that are similar in content to the RMA. you may evaluate a borrower for HAMP only after you receive the following documents.HMPadmin. All borrowers must provide a signed and completed IRS 4506-T or 4506T-EZ. theft. referred to as the “Initial Package”— Request for Modification and Affidavit (RMA) Form IRS Form 4506-T or 4506T-EZ Evidence of Income and Dodd-Frank Certification February 2010 | Making Home Affordable 9 Effective for all trial period plans with effective dates on or after June 1.HMPadmin. The RMA Form is available on www.com.
you must acknowledge in writing the borrower’s request for HAMP participation and include the following details: Confirmation that the Initial Package was received A description of the servicer’s evaluation process A timeline of the servicer’s evaluation process You may email the acknowledgement if the borrower sent the documents via email. . you must acknowledge in writing the borrower’ s request for HAMP participation and include the following details: Confirmation that the Initial Package was received A description of the servicer’s evaluation process A timeline of the servicer’s evaluation process February 2010 | Making Home Affordable 10 Within 10 business days following receipt of an Initial Package. Ensure that you maintain evidence of the date of receipt of the borrower’s initial package in your records.Slide 10 Step 1: … and acknowledge receipt Within 10 business days following receipt of an Initial Package.
you must review the documentation provided by the borrower for completeness. you may discontinue document collection efforts and determine the borrower ineligible for HAMP. you must review the documentation provided by the borrower for completeness If the documentation is incomplete. If the borrower is still unresponsive. you must send the borrower an Incomplete Information Notice: Lists the additional required verification documentation Include a specific date by which the documentation must be received (no less than 30 calendar days from the date of the notice) February 2010 | Making Home Affordable 11 Within 30 calendar days following receipt of an Initial Package. you must make one additional attempt to contact the borrower in writing regarding the incomplete documents. . If the documentation is incomplete. you must send the borrower an Incomplete Information Notice that: Lists the additional required verification documentation Includes a specific date by which the documentation must be received (no less than 30 calendar days from the date of the notice) If the documents are not received by the date specified in the notice.Slide 11 Step 1: … and verify completeness Within 30 calendar days following receipt of an Initial Package. This additional notice must include the specific date by which the documentation must be received which must be no less than 15 calendar days from the date of the second notice. you must inform the borrower and consider other loss mitigation options. If this is the case.
The property cannot be vacant or condemned.400 for four-unit properties Borrowers’ loan is a first lien originated on or before January 1.200 for two-unit properties $1. . they must occupy one of the units. . .to four-units. 2009 Borrowers’ total mortgage payment exceeds 31% of their gross monthly income Loan was not previously modified under HAMP February 2010 | Making Home Affordable 12 The next step in processing a modification under HAMP is to verify the borrowers eligibility.The property securing the loan must be their primary residence.And finally. but will have experienced a financial hardship resulting in a significant change in their income or expenses – that has made it increasingly difficult for them to make their payments. Higher limits apply to properties with two. insurance. and homeowner association dues – must exceed 31% of their verified gross monthly income.The unpaid principal balance of the loan must not exceed $729.The borrowers’ total mortgage payment – including principal. . Note that while borrowers are being considered for HAMP. borrowers must meet all of the following requirements. the loan must not have previously been modified under HAMP – as loans can only be modified under the program once.129. . any foreclosure proceedings should temporarily be suspended. Potential candidates may not necessarily be behind in their payments. To be considered for HAMP.The loan must be a first lien that was originated on or before January 1. If it is a two. taxes. 2009. .750 for one-unit properties $934.750 – if it is a one-unit property.to four-unit property Unpaid principal balance of loan is equal to or less than— $729.250 for three-unit properties $1.Slide 12 Step 2: Verify eligibility… Borrowers are owner occupants of a one.to four-unit property.403. . interest.
including one or more of the following causes— Reduction or loss of income Change in household financial circumstances Increase in expenses Lack of sufficient cash reserves Excessive monthly debt payments Other reasons for hardship February 2010 | Making Home Affordable 13 Next.) Determine legitimate financial hardship. you will need to evaluate the borrowers’ financial condition in light of the hardship – and inquire about the condition of the property securing the loan. In making this determination. You will need to determine they have experienced a legitimate financial hardship. Once you make the determination of imminent default. Borrowers who inform you about a hardship while they are current or less than 60 days delinquent must be screened for imminent default. Legitimate causes of financial hardship include one or more of the following— A reduction or loss of income. including information on the borrower’s financial condition and circumstances of the property securing the loan. . Excessive monthly debt payments and overextension with creditors. you must document the basis for your decision in your servicing system – and retain any documentation that was used to reach it. you must determine financial hardship and review the borrowers’ financial information. A lack of sufficient cash reserves – excluding retirement accounts and emergency funds. A change in household financial circumstances. or Other reasons for hardship.Slide 13 Step 2: …verify eligibility (cont. An increase in expenses.
pensions. you should inform the borrower and consider other foreclosure prevention alternatives. you must first determine the borrowers’ monthly gross income. Include in this calculation the total of principal. hazard and flood insurance. calculate the monthly mortgage payment ratio to determine whether it is greater than 31 percent. multiply it by 1. taxes. you perform a review of the borrowers’ financial condition. tips.25 to estimate monthly gross income Monthly mortgage payment Borrowers’ monthly housing payments Do not include mortgage insurance premium payments or payments to holders of subordinate liens Monthly mortgage payment ratio Borrowers’ monthly mortgage payment divided by monthly gross income Must exceed 31 percent to be eligible for modification February 2010 | Making Home Affordable 14 Next. commissions. Finally. although borrowers will be required to provide income documentation later in the process.one of the eligibility requirements for HAMP. salary. To do so. including— Monthly gross income Borrowers’ income before any payroll deductions If only net income available. Next. and all other income. interest. The monthly mortgage payment ratio is the ratio of the borrowers’ monthly mortgage payment to monthly gross income. The borrowers’ monthly gross income is the amount of total income before any payroll deductions. To do so. homeowner’s association and/or condominium fees – but do not include mortgage insurance premium or payment to subordinate lien holders. If you find that a borrower is not eligible for HAMP at this stage.) Review borrowers’ financial condition. You must first determine whether the borrowers’ monthly mortgage payment ratio exceeds 31% . overtime fees. Income includes wages. determine the borrowers’ monthly mortgage payment. . social security. multiply monthly net income by 1. Monthly net income may be used to estimate monthly gross income at this early stage.Slide 14 Step 2: …verify eligibility (cont.25 for an estimated monthly gross income.
although telephone counseling is acceptable.HMPadmin. including installment loans.) Monthly gross expenses Borrowers’ total housing payments plus all recurring monthly debt payments Obtain credit report to validate Monthly debt ratio Borrowers’ monthly gross expenses divided by monthly gross income If exceeds 55 percent. If the monthly debt ratio exceeds 55 percent. refer to Treasury’s Supplemental Directive 09-01. provided it covers the same topics as face-to-face sessions. The monthly debt ratio is the borrowers’ monthly gross expenses divided by monthly gross income.com. must send Home Affordable Modification Program Counseling Letter to borrower February 2010 | Making Home Affordable 15 In addition. Note that face-to-face counseling is preferred. www. you must send the Home Affordable Modification Program Counseling Letter to the borrowers requiring that they work with a HUD-approved counselor to reduce their monthly debt to less than 55 percent of monthly gross expenses. For a detailed list. . you must obtain a credit report for each borrower or co-borrower. which can be accessed from the Web site. The letter includes a list of local HUD-approved housing counseling agencies and directs the borrower to the appropriate HUD website. you will need to verify the borrowers’ monthly gross expenses and monthly debt ratio.Slide 15 Step 2: …verify eligibility (cont. revolving credit accounts. To validate the borrowers’ installment debt and other liens. monthly payments on all subordinate liens and more. The monthly gross expenses are the borrowers’ total housing payments plus all recurring monthly debt payments.
provide for principal forbearance. or servicing-related expenses. Note that if the resulting interest rate is below the market rate as of the date the trial period plan is prepared. To calculate the proposed monthly payment amount. payoff of the interest bearing balance. capitalize any amounts due from the borrower to cover accrued interest. to reach the target of 31 percent monthly mortgage payment ratio. you will need to perform an escrow analysis to determine whether there are sufficient funds in the borrowers’ escrow account.Slide 16 Step 2: … and calculate proposed payment amount… Follow these steps—in this order—until target of 31% monthly mortgage payment ratio is reached: 1. Extend mortgage term up to 480 months 4. Now. In the case of an ARM loan that is scheduled to reset in the next 120 days. all incentive payments will be calculated and paid based on the target ratio of 31 percent Next. In all cases. escrow advances. while you may choose to reduce the borrowers’ monthly mortgage payment ratio to below 31 percent. after 5 years. and servicing advances by adding to loan balance (if allowed by applicable law) 2. First. If the loan is a fixed-rate mortgage or an adjustable-rate mortgage. reduce the starting interest rate in increments of 1/8 percent to get as close as possible to a 31% target for the monthly mortgage payment ratio. if needed – to reach the applicable market rate of interest that was in effect when the modification documents were prepared.125% increments. Note that late fees may not be capitalized and must be waived if the borrowers satisfy all terms of the trial period plan. the interest rate floor is 2 percent. which will result in a balloon payment fully due and payable upon the earlier of the borrower’s transfer of the property. extend the mortgage term to up to 480 months from the modification date. The principal forbearance amount is non-interest bearing and non-amortizing. the interest rate will need to be stepped up in annual one percent increments – or less. Provide principal forbearance only if needed to reach 31% target Lastly. or loan maturity. plus to reimburse you for escrow advances you incurred to cover taxes and insurance premiums. to not less than 2% 3. In the case of escrow advances. Capitalize accrued interest. complete each step listed here – and proceed to the next one – only if needed. add monthly mortgage insurance payment (if applicable) and monthly escrow payment to be collected February 2010 | Making Home Affordable 16 The next step in the process is to calculate the proposed monthly mortgage payment amount…and perform the NPV test. Reduce interest rate in . . the interest rate will remain fixed for the remaining life of the loan. reduce the interest rate. From that point on. if you still have not reached a 31% monthly mortgage payment ratio. Also note that. taking into account any tax and insurance premiums that may come due during the trial period. use the current interest rate as the starting interest rate. the starting interest rate is the greater of the current rate or the reset rate using the index value as of the date of the evaluation. Any shortage that is identified would be included in the capitalized balance – as permitted by applicable laws Next. You may also opt for principal forgiveness. Finally. re-amortizing the payments over the extended term.
In the case of a nonescrowed loan that is being considered for HAMP. 2010. . add the amounts to be collected monthly to cover mortgage insurance payments – if applicable – and escrow collections. which includes principal reduction as the required second step of the waterfall. you must establish an escrow deposit account – and advise the borrower of this requirement – before the start of the trial payment period. Beginning on October 1.Once you have calculated the proposed payment amount. servicers must evaluate any mortgage loan that is being considered for HAMP with a mark-to-market LTV ratio greater than 115% using both the standard modification waterfall (described previously) and the alternative modification waterfall.
If the NPV test result is positive – this indicates that the net present value is greater with a modification. www. you may use an automated valuation model.Slide 17 Step 2: …and perform NPV test Compares the net present value (NPV) of cash flows with modification and without modification If NPV test is positive… Indicates NPV is greater with modification In this case. the servicer may decide—subject to the investor’s approval. provided it offers a reliable confidence score – or a broker’s price opinion. It provides a comparison of the net present value of the economic results that would be expected with a modification…versus without a modification. deeds-in-lieu. In this case. preforeclosure sale programs. if the NPV test result is negative – this indicates that the net present value is greater with no modification. you are required to pursue with the borrowers a modification under HAMP although some exceptions apply. The “NPV Model” and instructions for submitting proposed modification data and retrieving and interpreting the results can be found on the website. The instructions also describe the exceptions that may apply. Conversely. you will enter a property valuation into an NPV model.com. it is up to you—subject to the investor’s approval—whether or not to pursue a modification under HAMP although some exceptions apply.HMPadmin. For the property valuation. In this case. including alternative modification programs. . HAMP must be offered (exceptions apply) If NPV test is negative… Indicates NPV is greater without a modification In this case. if applicable—whether or not to offer HAMP (exceptions apply) February 2010 | Making Home Affordable 17 The “Net Present Value” or “NPV” test is used to determine whether a Home Affordable Modification is required. and the Hope for Homeowners refinance option. If you decide against it. To perform the NPV test. you will need to explore other foreclosure prevention options.
com and reported via the HAMP Reporting Tool which is also available at www. current borrower income and a reason for default or explanation of hardship. NPV model input data and reason codes must be collected and reported to Fannie Mae. .Slide 18 Step 3: Inform the borrower Within 30 calendar days following receipt of an Initial Package. or . If the borrower is deemed eligible. or . a mortgage loan has been “evaluated” for HAMP using stated information. government monitoring data. Prior to June 1. at a minimum.com.HMPadmin. you must complete verification of the borrower’s eligibility. 2010. if one of the following has occurred: . as applicable.A borrower has verbally provided sufficient financial and other data to allow the servicer to complete a Net Present Value (NPV) analysis. as program administrator. calculate the proposed payment amount and perform NPV test. when a mortgage loan has been “evaluated” for HAMP. Note that beginning December 1.A borrower has submitted a written request (either hardcopy or electronic submission) for consideration for a HAMP modification which includes.HMPadmin. then certain data including identifying information. calculate the proposed payment amount and perform NPV test. 2010 if the borrower has submitted an initial package to the servicer.A borrower has been offered a Trial Period Plan A borrower has been “evaluated” for HAMP using verified information on or after June 1. Borrowers are not required to sign the TPP Notice but a servicer must retain a copy of the TPP Notice in the borrower file and note the date it was sent. then send the borrower a Trial Period Plan Notice If the borrower is deemed ineligible. you must complete verification of the borrower’s eligibility. you must communicate this determination to the borrower and consider other loss mitigation options The Trial Period Plan Notice describes the terms of the trial modification and the payment due dates. then send the borrower a Trial Period Plan Notice If the borrower is deemed ineligible. 2009. you must communicate this determination to the borrower and consider other loss mitigation options February 2010 | Making Home Affordable 18 Within 30 calendar days following receipt of an Initial Package. If the borrower is deemed eligible. The data must be provided as per the Schedules outlined in Supplemental Directive 09-06 which is available on www.
the borrower must return the first trial payment. The effective date of the trial period will be set forth in the Trial Period Plan Notice and is the first day of the month in which the first trial period plan payment is due. As the expiration date of an offer approaches. you are encouraged to contact borrowers who have not responded. the borrower must return the first trial payment Borrower’s first trial period payment must be received no later than the end of the month in which it is due or Trial Period Plan offer expires The effective date of the trial period will be set forth in the Trial Period Plan Notice and is the first day of the month in which the first trial period plan payment is due February 2010 | Making Home Affordable 19 To start the trial period.Slide 19 Step 4: Trial Period Plan Start To start the trial period. . Borrower’s first trial period payment must be received no later than the end of the month in which it is due or Trial Period Plan offer expires.
provided this is permitted by the applicable loan documents – and applicable law.com. Any funds remaining as unapplied at the end of the trial period should be applied to the loan balance. During the trial period.HMPadmin. for example.com.com Apply trial payments to loan balance once total at least full contractual monthly payment February 2010 | Making Home Affordable 20 The trial payment period lasts for three months .HMPadmin. you must report your collections through www. Once the amount of trial period payments collected total at least a full monthly contractual payment amount. For detailed instructions for establishing loans in the HAMP reporting system and reporting collection activity. refer to the job aids that are accessible on www. As trial period payments are collected. . including specific data elements. if necessary.Slide 20 Step 4: …Trial Period Plan Start (cont) About trial period— Borrower must successfully complete Generally.HMPadmin. they should be held as unapplied funds. if required by applicable contract terms During trial period— Must report loan-level data through www. it must be applied as a payment to the loan balance. three months in duration May last longer.although it may be longer. to comply with the terms of any applicable contracts with an investor.
can be found at www.HMPadmin. For this purpose. “current” is defined as all required trial payments having been received by the last day of the month in which it is due . and instructions for preparing them. These documents. borrowers must be “current” for their loan modification to be made permanent.Slide 21 Step 5: Conversion from Trial to Permanent Modification After receipt of second trial payment— At the end of the trial period— Send Home Affordable Modification Agreement and Cover Letter to borrowers Borrowers must have submitted all the trial payments to receive a permanent loan modification (borrower must be “current” where current is defined as the borrower having made each trial period payment by the last day of the month in which it is due) February 2010 | Making Home Affordable 21 After receipt of the second trial period payment. prepare and send the Home Affordable Modification Agreement and Cover Letter to borrowers.com. At the end of the trial period.
The month after the loan setup process is completed.HMPadmin.com.HMPadmin. but by end of trial period.com. accept the modification with an effective date of the first day of the second month following the final trial period payment month. One day after the final trial payment is applied. the loan setup process must be completed to establish the modified loan in the HAMP reporting system. you may opt to accept modification with an effective date of first day of second month following final trial period month Loan setup must be established on day after final trial payment applied Loan activity must be reported monthly.HMPadmin. If the borrowers do not pay the final trial period payment on or before its due date – as specified in the Trial Period Plan Notice – you may at your option. beginning the month following loan setup February 2010 | Making Home Affordable 22 Once the borrowers successfully complete the trial period – and returns the signed Modification Agreement – the modification takes effect on the first day of the calendar month immediately following the final trial period payment month – with one exception.com— On first day of calendar month immediately following final trial period payment month—with one exception Exception: If receive borrowers’ final trial period payment after due date.Slide 22 Step 5: …execute modification Modification takes effect— Report modified loans through www. Detailed instructions and specific data elements for the loan setup process and loan-level reporting are provided on www. you must begin to report monthly loan activity through www. .
as applicable Protect first lien position Monthly loan activity for all modified loans For as long as each modified loan is eligible for incentive payments Take any steps necessary to ensure fully enforceable February 2010 | Making Home Affordable 23 Once a modification is executed.000 once the borrowers successfully complete the trial period.HMPadmin. continue to report monthly loan activity to Fannie Mae for as long as the loan is eligible for incentive payments. take any steps that are necessary to protect a loan’s first lien position to ensure it is fully enforceable. as the servicer. you will receive the one-time incentive payment of $1. as applicable. then. It will be your responsibility. as they are accrued. .000 for each completed modification Additional incentive payments. First. Additional incentive payments that apply will be paid. After a modification is complete.com $1. to distribute incentive payments due your organization or the investor. In addition. or to apply them to reduce the borrowers’ loan balance. there are a few things you need to know and do.Slide 23 Once modification is executed Receive incentive payments— Continue to report through www.
three payments are due and unpaid as of the last day of the third month—the loan will no longer be considered in “good standing”…which means that it will no longer be eligible for incentive payments. servicer. must provide special notification to receiving servicer No longer eligible for borrower. you will need to comply with all reporting required by mortgage insurers. you will need to provide special notification to the receiving servicer – to advise that loans modified under HAMP are part of the portfolio being transferred.) Additional reporting requirements— Transfers of servicing Monthly “full-file” status reports to major credit repositories Compliance with all reporting required by mortgage insurer If transfer servicing of modified loans to another servicer. Consult with the mortgage insurer for their specific requirements related to the reporting of modified terms. and payment of claims for mortgages modified under HAMP. you must confirm that the receiving servicer has entered into a Servicer Participation Agreement. payment of premiums. In the case of borrowers who are current when they enter the trial period. If a borrower is unable to cure the default. good standing cannot be restored even if the borrower subsequently cures the default. In addition. you will need to continue to report a “full-file” status report to the four major credit repositories. you must report them as current but on a modified payment. and agrees to assume the additional responsibilities associated with servicing them. is aware of the special requirements for these loans. .Slide 24 Once modification is executed (cont. “Full-file” means that you must describe the exact status of each mortgage as of the last day of each month. If a modified loan subsequently becomes 90 or more days delinquent—that is. or investor incentives Will not be eligible for another modification under HAMP Evaluate borrower for other loss mitigation options If modified loan becomes 90 or more days delinquent— February 2010 | Making Home Affordable 24 Once a loan is modified. If at some point. Additionally. you transfer the servicing of loans that have been modified under this program to another servicer. Once lost. you will need to evaluate the borrower for any other available foreclosure prevention alternatives. Note that the Servicer Participation Agreement includes an assumption and agreement form that must be used for transfers of servicing.
www.HMPadmin. For details on the terms and conditions of the program. contact the HAMP Solution Center by sending an e-mail to support@hmpadmin.Slide 25 Next steps Learn more about HAMP— For servicer information.com. To learn about Home Affordable Modifications for GSE loans. www.com For consumer information. including step-by-step job aids. if you have questions about HAMP.HMPadmin.gov Review Servicer Participation Agreement— For details on terms and conditions of program To access.com Contact HAMP Solution Center E-mail: firstname.lastname@example.org Complete and send HAMP Registration form To access form and instructions. visit www.com.com or by calling 866. Please give us your feedback by completing a brief evaluation survey that follows. www. To learn more about the Home Affordable Modification Program for non-GSE loans. visit Treasury’s website for consumers.com.makinghomeaffordable.efanniemae. review the Servicer Participation Agreement. Finally. you play a key role in helping borrowers avoid foreclosure – and being part of the solution to the nation’s housing crisis. To initiate the process of becoming a participating servicer. www. To view consumer information on the Home Affordable Modification.HMPadmin. visit www.939.4469.makinghomeaffordable. the purpose of this tutorial is to provide you and other servicers of non-GSE loans an overview of the Home Affordable Modification Program.HMPadmin. visit www.freddiemac. Thank you for your interest in the Home Affordable Modification Program. along with instructions for completing it.gov. we have succeeded in doing so. www. complete and send the HAMP Registration form. which also can be accessed from the website. .com or Freddie Mac’s website. www. Hopefully. As a mortgage servicer at this difficult time. visit Fannie Mae’s website.com.HMPadmin. which you can access from the website.HMPadmin.com Call: (866) 939-4469 February 2010 | Making Home Affordable 25 As we stated earlier. visit the website. visit www.
Slide 26 PROPERTIES On passing. 'Finish' button: Allow user to leave quiz: User may view slides after quiz: User may attempt quiz: Close Window Close Window At any time At any time Just Once . 'Finish' button: On failing.