Standard Solutions To Mitigate Mortgage Default and Delinquency P E N NS Y L VA N I A HOUS I NG F I NANCE A GE N CY Important If your a g e n c y is viewing ID: 704029
Download Presentation The PPT/PDF document "Presented by the Pennsylvania Housing Fi..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Presented by Paul Kaegel, Compliance Officer
Standard Solutions To Mitigate Mortgage Default and Delinquency
P
E
N
NS
Y
L
VA
N
I
A
HOUS
I
NG
F
I
NANCE
A
GE
N
CYSlide2
Important
If
your ag
en
c
y is viewing this webinar in a group setting, please e-mail each counselor’s name to pkaegel@phfa.org, so each attendee can receive credit for today’s presentation.Please use the “Chat Box” to write your questions or comment to the presenter only – questions may be answered during or at the end of the presentation.Please do not use the “Q&A section” to write your questions or commentPlease mute your phone so we do not hear background noises.
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide3
MISSION STATEMENT
The Pennsylvania Housing Finance Agency (PHFA) has diligently pursued its mission to foster community and economic development in making the Commonwealth a better place to live. PHFA provides the capital for decent, safe, and affordable homes and apartments for older adults, persons of modest means, and those persons with special housing needs. PHFA works with housing counseling agencies, local lending institutions, realtors and other public and private organizations. Through the years, it has gained the experience necessary to be effective in Pennsylvania communities by providing services and programs that expand and protect home ownership, and stabilize urban and rural neighborhoods.
P
EN
NS
YLVANIA HOUSING FINANCE AGENCYSlide4
To ensure everyone understands the information provided PHFA has partnered with Mentimeter to help facilitate this webinars Knowledge Checks.
Please follow the information below and test it out! Slide5
Course
Agenda
T
raining Goals Meet The Players Mortgage Loan Products The Three Step ProcessStrength Based CounselingThe Counselor’s Role Know Your Options - Curable and Incurable PHFA Loan Servicing Departments The Foreclosure Proces
s
Mo
rt
gage
Foreclosure Scams Bankruptcy Resources
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide6
Training Goals
To provide new and existing counselors with an overview and refresher course in the counseling process.
This course also provides details about the PHFA Financial Statement and contact information in the PHFA Loan Servicing Department.
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide7
Pri
m
ary Ma
rket
Secondary Market Mortgage OriginatorMortgage HolderSource: Foreclosure Prevention Counseling: Preserving The American DreamStandard Solutions to Mitigate Mortgage Default and DelinquencyMeet the PlayersBanks, savings associations, credit unions, housing finance agencies, mortgage brokers, and mor
t
gage
banke
r
s
Financial markets such as Fannie Mae and Freddie Mac where mor
t
gages
are
sold
s
hor
tly after they are made
The bank or lending institution that makes the original mortgage to the mortgagor
O
w
ns
the
m
or
t
gage
and
has
t
he
r
i
ght
to
in
i
t
i
ate
the foreclosure
ac
t
ionSlide8
Mortgage
Servicer
Govern
m
ent Mortgage Guarantors Standard Solutions to Mitigate Mortgage Default and DelinquencyMeet the PlayersResponsible for customer service, including: making collection calls, collecting mortgage payments, managing escrow related matters and providing and processing payoffsFederal Government Agencies that insure mortgages to protect mortgage holders against the risk of default.Federal Housing Administration
(FH
A
)
Rural
Housing Services
(RHS)Department of V eterans Affairs (V A)Slide9
Mortgage Loan Products
Types of Mortgages
Conventional, FHA, VA, and RHS
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide10
Fixed
Rate
Mortgage
Adjustable
Rate Mortgage Hybrid MortgageStandard Solutions to Mitigate Mortgage Default and DelinquencyA mortgage loan where the interest rate remains the same throughout the term of the loanA mortgage loan that has an interest rate that periodically adjusts based in a variety of indicesA combination of a fixed rate mortgage and an adjustable rate mortgageMortgage Loan ProductsSlide11
Option
A
RMS
Reverse
Mortgage2-28 Mortgage Standard Solutions to Mitigate Mortgage Default and DelinquencyMortgage Loan ProductsThe “pick-a-pay” or “pay-option” is typically a mortgage with an added flexibility of making 1 of several repayments monthlyA mortgage available to homeowners who are 62 years and older and wish to use the equity they have built up in their property30 year adjustable rate mortgage that
has a
f
ixed in
t
erest
rate for the first 2 years and then is fully adjustable
for
the re
m
aining
28 yearsSlide12
Mortgage Loan Products
3/27
Mortgage – a 30 year adjustable
rate m
or
tgage that has a fixed interest rate for the first 3 years and then is fully adjustable for the remaining 27 yearsInterest–Only Mortgage – a mortgage where the mortgagor only pays the interest on the principal balanceConvertible Mortgage – a mortgage that starts as one mortgage product (which can either be an
ARM
or a
fixed rate
m
ortgage) and turns into anotherStandard Solutions to Mitigate Mortgage Default and DelinquencySlide13
Mortgage Loan Products
Balloon
Mortgage
–
a
mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity of the mortgage. The final payment is called a balloon payment because of its large size. A non-conforming loan.Graduated Payment Mortgage – is a flexible mortgage with low initial monthly payments that gradually increases
over
a specific
t
i
me frameStandard Solutions to Mitigate Mortgage Default and DelinquencySlide14
V
endee Mortgage – a m
ortgage product
o
ffered to purchase V A Real Estate Owned properties. The mortgage is available to both veterans and non-veterans. The homebuyer does not have to be a veteran to qualify.Jumbo Mortgage – a mortgage loan in an amount above the conventional conforming loan limits set by Fannie Mae and Freddie
Mac
Standard Solutions to Mitigate Mortgage Default and Delinquency
Mortgage Loan ProductsSlide15
Mortgage Loan Product
B
uydown
Mortgage
–
a mortgage which enables the buyer to get a lower interest rate by paying a lump-sum fee or by paying a fee that is financed over the life of the loanThere are 2 types of buy down mortgages:Temporary – lowers the interest rate and monthly payments for the first few yearsPermanent – lowers the interest
ra
t
e
f
or the life of the loanStandard Solutions to Mitigate Mortgage Default and DelinquencySlide16
Mortgage Loan Product
80/20
– often ca
lled
“piggyback” mortgage. Two different mortgages made at the same time. The 1st mortgage is made for 80% of the purchase price (down payment) and any amount that is not financed becomes the 2nd mortgage80/10/10 Mortgage – Also called a piggyback mortgage. The first mortgage is made for 80% of the purchase price (down payment), and a second mortgage is made for 10% of the purchase price.103% or 107% Mortgage – a mortgage that does not require any up-front cash. The loan covers
100% of the appraised
value
and prov
i
des the mortgagor with an additional 3% or 7% in cashStandard Solutions to Mitigate Mortgage Default and DelinquencySlide17
(
1)
Data Gathering
In
i
tial Face-To-Face Meeting with clientIn-take processWhat is the reason for the default/delinquency?What are the client’s intentions/goals?What is the loan type?What is the status of the mortgage?Get client to sign the Letter of Authorization
Get
client
to
write a Letter of Circumstance/Hardship Lett
e
r
Standard Solutions to Mitigate Mortgage Default and Delinquency
The
Three
Step ProcessSlide18
(2)
Analysi s
of Hom
eowner
’s Sit uat ion Discuss client’s affordabilityPull credit reportCreate a realistic action planDevelop a realistic budgetDiscuss curable and incurable optionsStandard Solutions to Mitigate Mortgage Default and DelinquencyThe Three Step ProcessSlide19
The
Three
Step Process (3)
Developm
ent
of An Intervention (Action) PlanSelection of the best loss mitigation optionGather supporting documentationWrite a cover letterExplain the homeowner’s situationInclude any available cash reservesInclude a copy of the Letter of Authorization
Send
all
support
i
ng information to the lenderStandard Solutions to Mitigate Mortgage Default and DelinquencySlide20
Strength Based Counseling
Inspi
re with P
raise
E
mpower with EducationExplain the ProcessIdentify OptionsGuide Through Problem SolvingRestore Hope and ConfidenceStandard Solutions to Mitigate Mortgage Default and DelinquencySlide21
Knowledge Check #1Slide22
Standard
Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleThe Counselor’s role is to assist the client to obtain the best outcome for their circumstances.Slide23
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleEstabl
ish and build
rapport
ea
rly on Develop a positive working relationshipExplain that your organization works in a solution-oriented wayLook for and acknowledge qualities the client already has to help them recoverSlide24
Standard
Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleGet clarit
y
on the
problem Ask Questions:Why has the client come in today?Are there time constraints?Identify deadlines, especially if there is a pending foreclosure sale date.What is the reason for default?What are the client’s goals for the home?What is the homeowner trying to accomplish for their home? Do they want to stay in it, or are they ready to dispose of it?What options has the client tried?Which have been useful, and which have not?Slide25
The
Counselor ’s
Role
Pract
ice self-management – set expectations for how you want your counseling session to move forward. Be non-judgmental and calm. Be prepared to go into difficult conversations.Be aware of and maintain professional boundaries –Do NOT provide advice or other services that require a license or certification.
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide26
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleContact the Lender/Servicer
Get EXACT totals on arrears, and the number of months in defaultRequest delays or an extension on deadlinesDetermine if the lender will accept payments or partial paymentsIf yes, encourage client to begin making payments as instructed by the lender/servicer.
If no, encourage client to set aside funds to use when payments are accepted.
Emphasize that these funds should
not be used to pay other debts.Slide27
Standard
Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleAcknow
ledge
the
gravity of the situation Don’t dwell on the problem. Say things like “I understand you’re going through a difficult time. I’m here to help you find ways to get through this.”Slide28
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleWork collaboratively to solve problems and make choices.
Encourage homeowners to tap into their own creativity.Is their goal realistic?Discuss ALL available options, including those the homeowner may not want to hear.Make recommendations and explain your reasoning for them.
Be prepared to say things that may make the homeowner uncomfortable.
Do
not offer promises that they will receive a loan modification, HEMAP loan, etc.For example, if you are completing a HEMAP summary application, be prepared to explain this to the homeowner and give them options. “We’re completing this application to give you time to gather your resources. Let’s make a back-up plan, too.”Slide29
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleExplain the process to the homeowner up-front.
Explain the foreclosure process in Pennsylvania in a calm and clear manner, and give approximate timelines.If you are pursuing work-out options including HEMAP, HAMP, loan modifications, etc., explain those processes and timelines.Slide30
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s RoleOnce you have determined the course of action, begin filling out necessary paperwork.
Make sure you have the client complete the PHFA 3-1 authorization form.If the lender is PHFA, include this with the packet you are submitting.Slide31
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s Role
Create a budget for the client using actual expenditures.Obtain
required utility bills, bank statements, etc., and use them in the budget.Review bank statements for expenses such as
dining out,
alcohol, haircuts, etc., that the client may not mention.Review paystubs to determine if the client may have savings that have not been disclosed.Ask clients if they have IRA’s, 401K’s, or other savings vehicles they can tap into for funds to bring the mortgage current.Slide32
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s Role
Develop an Action Plan for the clientUse PHFA’s Universal Action Plan to develop Action Steps both you and the client will take.Help the client complete a hardship letter/letter of circumstance.
Letter should be specific and detailed.Slide33
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s Role
Explain what the waterfall is, and how it works. The waterfall is the process a lender uses to determine if a borrower is eligible for assistance with their loan, and the type of assistance.Slide34
Standard Solutions to Mitigate Mortgage Default and Delinquency
The Counselor’s Role
In Court, the counselor acts as a witness.DO provide information about the actions you have taken on behalf of the client. For example, “I submitted a loan modification packet to the lender on April 15, 2017.”DO NOT provide information about which you don’t have first-hand knowledge. For example, “The client’s wife just got a new job.” In this case, you could say, “I submitted a letter of employment for the client’s wife to the lender on April 20, 2017.”
DO NOT act as the client’s advocate. The client’s attorney acts in that capacity.Slide35
KNOW YOUR OPTIONS
Standard Solutions to Mitigate Mortgage Default and DelinquencyBorrower DefaultsBankruptcy Chapter 13Partial ClaimModificationRefinance or Reverse Equity MortgageRepayment Plan or ForbearanceLocal Resource Options and Rescue FundsDetermine Cause of DefaultAnalyze Borrower FinancialsDetermine Collateral Value and ConditionDetermine if Default is Curable or IncurableForeclosureBankruptcy Chapter 7
Pre-Foreclosure Sale
Deed-In-Lieu
Hardship Assumption
Sell the Property
Servicer Initiates Contact with Borrower
Default is Curable
Default is Incurable
The Lender Retains the Final Decision Regarding the Availability of Workout OptionsSlide36
Standard Solutions to Mitigate Mortgage Default and Delinquency
Does the borrower have access to available funds: 401k’s, IRA’s, Pending
Income Tax returns, etc.FHA Waterfall
If yes, STOP.
If no, continue to next step.
Is the client eligible for a repayment plan? Can they afford to make a larger payment for a limited period of time?If yes, STOP.If no, continue to next step.Is the client eligible for a forbearance (a smaller payment or no payment) for a limited period of time?If yes, STOP.If no, continue to next step.Is the client eligible for a loan modification?Is the client eligible for a partial claim?If yes, STOP.If no, continue to next step.If yes, STOP.If no, lender will continue to foreclosure.Slide37
K
now
Y our O
ptions
- CurableForbearance Agreement An agreement offered by the lender to temporarily suspend or reduce the monthly mortgage payments for a specified period of timeHave time to improve the homeowner’s financial situation and get back on their feetLess damaging to the credit score than a foreclosureStay in home and avoid foreclosureStandard Solutions to Mitigate Mortgage Default and DelinquencySlide38
K
now
Y our
Op
tions
– CurableFannie Mae Unemployed Forbearance AgreementAn agreement offered by a lender to provide forbearance to homeowners whose financial hardship results from unemployment May receive up to 6 months of reliefSpecial consideration is given to homeowners who require 12 months of rel
ief
Prohibi
t
s
the
lender from proceeding with a foreclosure during the forbearance period
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide39
K
now
Y our O
ptions
– CurableMilitary Forbearance Agreement An agreement between a homeowner and their lender to temporarily suspend or reduce their monthly mortgage payments during a specific period of time. May continue for the entire term of the homeowner’s active duty and for another 3 months after the hom
eowner
returns.
F
or
ho
meowners who are facing financial hardship due to injury or the inj
ury
of a spouse
resulting from
being
in
the military
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide40
K
now
Y our O
ptions
– CurableMilitary Forbearance Agreement (Cont.)Lowers or temporarily suspend the monthly mortgage payment for up to 6 months, giving the homeowner time to improve their financial situation and get back on their feetNo adverse credit reporting during the forbearance period
Stay
in
th
e
ir home and avoid foreclosureStandard Solutions to Mitigate Mortgage Default and DelinquencySlide41
Knowledge Check #2Slide42
K
now
Y our
Op
tions
- CurableModification An agreement between the homeowner and the lender to change the original terms of the mortgage (payment amount, length of loan or the interest rate, rate reduction, or a combination, etc.), as long as the payments are affordable.May reduce the monthly mortgage payments to a more affordable amountLess damaging to the credit score
than
a
foreclosure
Stay
in the property and avoid foreclosureStandard Solutions to Mitigate Mortgage Default and DelinquencySlide43
Know
Y
our Options
– Curable
- FHA
Home Affordable Modification Program (HAMP) – FHA only The loan is modified to make the monthly mortgage payment no more than 31% of the gross (pre-tax) monthly income.
The
m
o
d
ifi
cation permanently ch
a
n
g
e
s
t
h
e original terms
of the mortgage.Resolves the delinquency after successful completion of the 3-month trial periodMay reduce
t
h
e
m
o
n
t
h
ly
m
ortg
a
ge
p
a
y
m
e
n
ts
to a
m
ore
a
f
ford
a
b
l
e
a
m
o
u
n
t
Giv
e
s
t
h
e ho
m
e
o
wner
a n
e
w
start
Less
d
a
m
a
g
i
n
g
to t
h
e cre
d
it
sc
o
re
t
h
a
n a
forec
l
os
u
re
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide44
K
now
Y our
Op
tions
– Curable - FHAHUD Partial Claim An option where HUD advances funds to reinstate the mortgage via a zero interest loan to the homeowner.Resolves the delinquencyCan catch up on past due mortgage paymentsHomeowner must execute a Promissory Note and a Subordinate MortgageLoan is payable at the end of the mortgage, if the homeowner refinances, or when the homeowner disposes of the property.Typically used with a loan modification, but can be used without.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide45
K
now
Y our
Op
tions
– Curable - FHAHUD Partial Claim (cont)If a homeowner’s monthly payment is greater than 31% of the borrower’s gross income, the lender may consider a partial claim.FHA agrees to remove a portion of the borrower’s principal so the borrower’s mortgage payment falls below 31% of their gross monthly income.The portion of the loan removed from the principal becomes an interest free loan the borrower must repay to FHA at the end of the loan, if the borrower refinances, or if the house is sold.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide46
K
now
Y our
Op
tions
– Curable - FHAHUD Partial Claim (cont)The lender will not receive the removed principal amount from the borrower, so it will make a claim to FHA to recover the amount of the principal that was removed from the loan.This is called a “partial claim” because the lender claims reimbursement for only a portion of the principal.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide47
K
now
Y our
Op
tions
– Curable – Both FHA and ConventionalRefinance A new loan with either new terms, interest rate, or monthly payment that completely replaces the existing mortgage.Payments are more affordableNo negative activity on the credit reportResolves the delinquency immediatelyStay in the home
and
avoid
foreclosure
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide48
K
now
Y our
Op
tions
– Curable – Both Conventional and FHAReverse Equity MortgageA form of equity release available to seniors aged 62 or older. It enables eligible homeowners to access a portion of their equityHomeowners draw the mortgage principal in one of several different ways:Lump sum: If this option is chosen, there is no further payout over the life of the loan Monthly payments for a specified
term
M
onthly payments for as long as they occupy the home
Line of credit
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide49
K
now
Y our
Op
tions
– Curable – Conventional and FHARepayment Plan An agreement between the homeowner and their lender that lets the homeowner pay the past due amount along with the current mortgage payment over a specified time period to bring the mortgage current.Resolves the delinquency.Can catch up on past due mort
gage
pay
m
ents.
Less
damaging to the credit score than a foreclosure.
Stay
in
ho
m
e
and avoid foreclosure.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide50
K
n
ow Y
our
O
ptions – Curable – Conventional HEMAPHEMAP is a short-term loan (24-36 months) designed to bring delinquent conventional mortgages current.The mortgagor cannot be more than 24/36 months and $60,000 delinquent.The mortgage default must result from circumstances beyond the mortgagor’s control.Counseling agencies are reimbursed at a rate of $50 per hour, up to a maximum of 5 hours for completion of a HEMAP application.PHFA offers a detailed HEMAP course monthly. Refer to the Quarterly Training Schedule for dates, times, and registration instructions. Standard Solutions to Mitigate Mortgage Default and DelinquencySlide51
K
n
ow Y
our
O
ptions – Curable – Conventional Insured Conventional Mortgage Revenue Bonds (MRB) Loan ModsEach Private Mortgage Insurer (PMI) has their own protocol, which is accessed through the company’s online portalThe PMI makes the loan modification decision.Loans are not recast to 360 months (30 years) because it will affect the insurance coverage. Standard Solutions to Mitigate Mortgage Default and DelinquencySlide52
K
n
ow Y
our
O
ptions – Curable – Conventional Uninsured Conventional MRB Loan Mods PHFA follows the Loan Mod protocol followed by the VA.Eligibility will be determined using the Freddie Mac Primary Mortgage Market Survey (PMMS) plus .25% , rounded to the nearest 1/8th percentage.If the borrower is not eligible, PHFA would use the same process to determine eligibility by extending the loan no more than 10 years If the uninsured borrower qualifies for either of the two options, PHFA will require an interior inspection.Note: PHFA will not recast VA loans because it affects the guaranty.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide53
Str
a
ight Sale
A
lso
known as a regular home sale, a straight sale involves selling the home for an amount that will pay off the mortgage. If the home sells for more than the mortgage amount, the difference between the amount of the sale and the mortgage amount belongs to the homeownerResolves the delinquency immediatelyStandard Solutions to Mitigate Mortgage Default and DelinquencyKnow Y our Options - IncurableSlide54
H
ardshi
p Assumpt
ion
(Assumption of Mortgage) A 3rd party, who has qualified for a mortgage loan, accepts liability for an existing debt(s) secured by the mortgage. The homeowner remains liable to their lender until the lender releases the homeowner from further liabilityResolves the delinquencyGet a new startStandard Solutions to Mitigate Mortgage Default and DelinquencyKnow
Y
our
O
p
tions - IncurableSlide55
Standard Solutions to Mitigate Mortgage Default and Delinquency
Short
sale/Pr
e-foreclosure
SaleA short sale involves selling the home for less than the balance remaining on the mortgageBorrower must make a good faith effort to sell the property with the use of a brokerRequires the approval of the mortgageeEliminates the mortgage debt – pre-approved short payoffAvoid the negative impact of a foreclosureKnow Your Options - IncurableSlide56
Ho
m
e Affordable
Foreclosu
r
e Alternative Option (HAF A) Designed to help HAMP-eligible homeowners who can no longer afford their home avoid a foreclosure and resolve their mortgage debt. HAFA typically applies when a homeowners has been unable to meet the requirements of a HAMP trial period (e.g., the homeowners misses two out of the three trial payments), or if the homeowner requests a DIL or short sale.Standard Solutions to Mitigate Mortgage Default and DelinquencyKnow Y our Options – IncurableSlide57
Ho
m
e Affordable
Foreclosu
r
e Alternative Option (HAF A) Standard Solutions to Mitigate Mortgage Default and DelinquencyKnow Y our Options – IncurableFinancial assistance for relocation may be available.May be able to get another Fannie Mae mortgage in as little as 2 years.If the homeowner qualifies for HAF A, the hom
eowner wi
l
l
go to a
traditional short sale. If the home does not se
l
l
or
the
short
sale is not approved, the ho
meowner may be eligible for a Deed In Lieu of Foreclosure. The loan must be owned by Fannie Mae
or Freddie
Mac.Slide58
Deed
in Lieu
of
Foreclosu
re (DIL)A process where the homeowner voluntarily transfers the ownership of their property back to their lender in exchange for a release from their mortgage obligations.Borrower must make a good faith effort to sell the home through a broker.Eliminates the remaining mortgage debt.A void the negative impact of a foreclosure.May be eligible for relocation assistance
in so
m
e cases.
Start
repairing their credit sooner than if they went through a foreclosure.
Standard Solutions to Mitigate Mortgage Default and Delinquency
K
n
ow
Y
our
Options - IncurableSlide59
Deed
For Lease
An
option for loans that are owned by Fannie Mae that allows the homeowner to lease their home back after they completed a successful Deed In Lieu of Foreclosure from their lender. The lease term is up to 12 months and the monthly rent is based on the current rental rates for the area.Eliminate the remaining mortgage debt.
Resolve
the
delinquen
c
y and avoid foreclosure.Stay in their home and
neighborhood.
Pay
no secur
i
ty
depos
it.Standard Solutions to Mitigate Mortgage Default and Delinquency
Know Y our Options - IncurableSlide60
Cash
For Keys
An ag
ree
m
ent between the lender and the homeowner in which the homeowner is given a cash settlement in exchange for vacating the foreclosed home.Lender may make an offer of anywhere from $1,000 to $5,000.Helps lenders avoid the extremely expensive and time consuming eviction process.Homeowner can use the cash
to
begin a new life.
Standard Solutions to Mitigate Mortgage Default and Delinquency
K
n
ow Y our Options - IncurableSlide61
Knowledge Check #3Slide62
PHFA Loan servicingSlide63
It is extremely important to understand that ALL HFA’s (including PHFA) are exempt
from the Dodd-Frank and CFPB regulation that states all delinquent borrowers must have a single point of contact until the loan goes to foreclosure. Standard Solutions to Mitigate Mortgage Default and DelinquencySlide64
Standard Solutions to Mitigate Mortgage Default and Delinquency
Bankruptcy Department
Escrow DepartmentForeclosure Department
Home Retention Department
Monitors and oversees clients through the bankruptcy process
Collects and pays taxes and insurance premiumsOversees the foreclosure process through the court system Calls borrowers and mails default notices for both conventional and FHA loans.PHFA Mortgage Servicing DepartmentsSlide65
Standard Solutions to Mitigate Mortgage Default and Delinquency
Loss Mitigation Department
Property Preservation Dept
Real Estate Owned (REO) Dept
Negotiates workout plans and other alternatives to foreclosure for both Conventional and FHA loans
Handles insurance claims, and manages vacant properties, damage, and vandalismAssumes all responsibilities for ownership of properties after the sheriff salePHFA Mortgage Servicing DepartmentsSlide66
T
o review any account-specific information for a PHFA borrower, PHFA must have an executed Counseling Services Authorization
(3-in-1) on file. It can be found on Counselor’s Corner under “Resources and Forms” then click Counseling Agency Update Forms. The 3-in-1 can be faxed to (717) 780 – 3804. Do NOT instruct a
PHFA borrower that they cannot contact PHFA, or discourage
PHFA borrowers from making their mortgage
payment.Standard Solutions to Mitigate Mortgage Default and DelinquencyPHFA Loan ServicingSlide67
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
The PHFA Financial Statement is a 9 page document that must be used when requesting assistance for a PHFA borrower.
The top page provides instructions for the borrower/counselor.
DO NOT send an incomplete packet. PHFA cannot move forward with an assistance request until all documentation is submitted. Because of the time restrictions in PA Act 91, this does not apply to HEMAP applications
.Slide68
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
The second page is a checklist to assure all documentation is enclosed.Slide69
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
Section 1A requests basic borrower Information:
NameContact Information
Military Status
Bankruptcy InformationDependent InformationSlide70
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
Section 1b requests information on borrower assets and income.
Bank accounts, stocks and bonds, cash on hand.
Owned real estate
other than the PHFA mortgaged property.Employer informationOther sources of incomeSlide71
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
In Section 2a, provide co-borrower/additional borrower information.
.Slide72
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
In Section 2b, provide all co-borrower/additional borrower assets and income.Slide73
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
Section 3 requests information about the property:
Property address
Client’s intention and occupancy status of the property
Listing information, if sellingRequired emergency repairsSlide74
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
Monthly living expenses should be listed in Section 4.
List all monthly living expenses as shown on this page.Slide75
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
Monthly living expenses should be listed in Section 4.
The form does not have a miscellaneous section. Don’t forget to include clothing expenses, haircuts, nails, etc. We suggest using the category for Gym membership, children’s activities, etc. to record these expenses.
Enter monthly debt payments (credit cards, student loan payments, etc.).
Summarize income, living expenses, and total debt payment s to determine net income or loss.Slide76
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
Section 8 is the Hardship Affidavit. Include:
Check all that are appropriate.
When the client expects the hardship to end.
Description of the hardship and how the client expects to resume making full monthly mortgage payments in the future.The client MUST also include a signed, detailed hardship letter in addition to completing the hardship affidavit.Slide77
Standard Solutions to Mitigate Mortgage Default and Delinquency
The PHFA Financial Statement
In Section 6, the client acknowledges and gives PHFA approval to investigate their financial documentation.
It also states that all borrowers must sign a loan modification, if approved.
The application must be signed by all borrowers.Slide78
Conventional
PHFA’s conventional loans have 4 Mortgage Insurers it is responsible to. Each has stated guidelines and policies that PHFA is subject to. PHFA
must receive approval for all loss mitigation requests:
The Pennsylvania Housing Insurance Fund (PHIF)
PMI Mortgage Insurance Company
Mortgage Guaranty Insurance Corporation (MGIC) RadianStandard Solutions to Mitigate Mortgage Default and DelinquencyPHFA Loss Mitigation OptionsSlide79
PHFA Loss Mitigation Options
VA
LoansFor VA loans, PHFA must receive approval from the US Department of Veterans Affairs for loss mitigation requests.
Uninsured
Not covered by any mortgage insurer
Borrowers have paid the 20% down paymentMore flexibility for Loss Mitigation option Standard Solutions to Mitigate Mortgage Default and DelinquencySlide80
PHFA Loss Mitigation Options
The following are the only acceptable PHFA Retention Options:
FHA Waterfall Options
Informal/Formal Forbearance/Repayment Plan
Special Forbearance FHA HAMP (may include a Partial Claim) Conventional Options Repayment PlanLoan Modification (may include flex-rate modification)HEMAPStandard Solutions to Mitigate Mortgage Default and DelinquencySlide81
Knowledge Check #4Slide82
PHFA Loss Mitigation Options
The following are the
only acceptable PHFA Disposition Options:
For ALL Loan types
:
Straight SaleShort sale/Pre-ForeclosureDeed-in-Lieu of Foreclosure If a PHFA loan has been foreclosed on, PHFA may consider offering Cash for Keys. This is rarely offered.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide83
Kate Newton, Director of Loan Servicing (717) 780-3996
Conventional Loans
Kim Ayala, Manager of Conventional Default Servicing (717) 780-1815
Early Delinquency – FHA and Conventional Accounts up to 45 days past due in payments.
Conventional loans from 46 days past due – Elis Conde, Supervisor (717) 780-1890
Bankruptcy – Manages borrowers who are currently involved in bankruptcy proceedings.Standard Solutions to Mitigate Mortgage Default and DelinquencyPHFA Loan Servicing StaffSlide84
Kate Newton, Director of Loan Servicing (717) 780-3996
FHA Loans
Richelle Zimmerman, Manager of FHA Servicing; (717) 780-1870FHA Loss Mitigation – Lynn Mickel, Supervisor (717) 780-1828
FHA Foreclosure Accounts – Dee Martin, Supervisor (717) 780-3929
FHA Home Retention – Later
Delinquency – Brian Good, Supervisor (717) 780-7375FHA Accounts that are 46 days or more past due, through the time PHFA receives a complete financial packet, or until accounts are sent to the attorney for foreclosure -Standard Solutions to Mitigate Mortgage Default and DelinquencyPHFA Loan Servicing StaffSlide85
The
Foreclosu
re Process
Foreclosu
r
e A legal process by which the lender or lien holder obtains a termination of the borrower’s equitable right of redemption either by a court order or by the operation of the law.A foreclosure could seriously affect a homeowner’s ability to qualify for credit in the future and should be avoided if at all possible.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide86
The
Foreclosu
re Process
Each
state in the U.S. handles real estate foreclosures differently. It’s important to understand each state has:Specific state proceduresState-specific termsDifferent foreclosure time frames.One of the most important distinctions in a foreclosure process is whether the foreclosure is conducted through the court
sys
t
em (
j
udicial)
or outside the court system (non-judicial).Standard Solutions to Mitigate Mortgage Default and DelinquencySlide87
The
Foreclosu
re Process
Foreclosur
e
By Judicial Sale Judicial Foreclosure is permissible in almost every state. Pennsylvania is a Judicial Foreclosure state.The biggest benefit for the lender in a Judicial Foreclosure is that the lender can ask the court to enter a “Deficiency Judgment" against the borrower, when appropriate.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide88
The
Foreclosu
re Process
Deficiency
Judgment An unsecured monetary judgment against a homeowner whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note or loan in full.Money owed to the lenderGoverned by state lawCourt orderAmount can be negotiated.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide89
Current
Foreclosu
re Statis
tics
– PennsylvaniaAs of October 2017:One in every 1,912 housing units in Pennsylvania received a new foreclosure filing.Source: RealtyTrac.com: Retrieved 12/14/17Standard Solutions to Mitigate Mortgage Default and DelinquencySlide90
Standard
Solutions to Mitigate Mortgage Default and Delinquency
Pennsylvania Judicial Foreclosure Timeline
Mortgage Payment Due Day 1
Late Notice Sent
Day 16Collection calls begin Day 20Notice of DefaultDay 30Property Inspection Day 45Act 91 NoticeDay 90Judicial Complaint Filed Day 120Contest Foreclosure Action and Ongoing Negotiations with LenderJudgment notice of sheriff saleSheriff’s sale 4-6 months after filing.Confirmation of saleEviction. Time frame varies.Slide91
Standard
Solutions to Mitigate Mortgage Default and Delinquency
PHFA Foreclosure Process - FHA
Payment is due on the 1
st
of the monthLate fees are charged on 16th of the monthCollection calls begin 17th or 18th of the month.HUD 45 day letter sent40-45 days past dueProperty Inspection Day 45Act 6 Notice sent 60 days past dueSent to attorney 120 days past due. Judicial Complaint filed 2 to 3 weeks later.Negotiations continue. (Mediation and Diversion, etc.) Judgment notice of sheriff sale @ 60 days after filing.Sheriff’s sale 4-6 months after filing.Confirmation of saleEviction. Time frame varies.Slide92
Standard
Solutions to Mitigate Mortgage Default and Delinquency
PHFA Foreclosure Process - Conventional
Payment is due on the 1
st
of the monthLate fees are charged on 16th of the monthCollection calls begin 17th or 18th of the month.Past due letter sent40-45 days past due, varies by insurer.Property Inspection Day 45Act 91 Notice sent 90 days past dueSent to attorney 120 days past due. Judicial Complaint filed 2 to 3 weeks later.Negotiations continue. Mediation & Diversion, etc.Judgment notice of sheriff sale @ 60 days after filing.Sheriff’s sale 4-6 months after filing.Confirmation of saleEviction. Time frame varies.Slide93
Mortgage
Foreclosure Sca
ms
W
e have all heard the ads on the radio and seen the signs and fliers:“Having trouble with your mortgage?”“W e can help.”“Y ou may be eligible for mortgage assistance.”These scam artists may:Advertise on the internet.Illustrate their materials with government logos.Give their companie
s
o
f
ficia
l
-sounding names.Use scare tactics.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide94
Mortgage
Foreclosu
re Scam
s
Scam
artists convince struggling homeowners to pay fees in return for false promises.They prey on the desperate and attempt to gain the trust of homeowners who are in financial distress.They are able to identify distressed homeowners through public foreclosure notices in the
newspaper
and/or
onl
i
ne and target them with pressure sales tactics, pervasive marke
t
ing
ski
l
ls
and exaggerated
conversation.Standard Solutions to Mitigate Mortgage Default and DelinquencySlide95
Mortgage
foreclosure
scams continue to sweep the nation. In 2014, the Consumer Fraud Protection Bureau (CFPB) and 15 states filed lawsuits against three companies alleging they scammed $19,000,000 in illegal advance fees, promising homeowners to prevent foreclosures and renegotiate troubled mortgages.
At the same time, the Federal Trade Commission (FTC) filed 6 lawsuits against scammers, and states were taking 32 additional actions.
Standard Solutions to Mitigate Mortgage Default and Delinquency
Mortgage Foreclosure ScamsSlide96
Mortgage
foreclosure scams
usual
ly
fall into one of the following three categories.Phantom help The scam artist charges very high fees for basic phone calls and paperwork that the homeowner could have done or they make promises to represent the homeowner but will not follow through.Standard Solutions to Mitigate Mortgage Default and DelinquencyMortgage Foreclosure ScamsSlide97
Bait
out
/Equity Stri
pping
T
he scam artist “rescues” the homeowner by helping them to get rid of their home. The scam artist tricks the homeowner into surrendering the title to the house by promising they can stay on as a renter and buy back the house once things have been "fixed." In the end, the hom
eowner
can
'
t a
f
ford to buy back the house and the scam artist bleeds the house of most (or all of)
the
equit
y
.
Standard Solutions to Mitigate Mortgage Default and Delinquency
Mortgage
Foreclosure
ScamsSlide98
Ba
it
and swit
ch
T
he scam artist masquerades as a phony lender, agency, etc., armed with mounds of legal documents, often for a new loan that is going to “solve” the homeowner's problems. In reality, the homeowner signs forged documents that give the scam artist ownership of the
ho
m
e.
T
o make things worse, the homeowner still owes the mortgage, but no longer has the a
sse
t
.
Standard Solutions to Mitigate Mortgage Default and Delinquency
Mortgage
Foreclosu
r
e ScamsSlide99
Standard Solutions to Mitigate Mortgage Default and Delinquency
Beware of other common mortgage foreclosure scams:Forensic Loan Auditor
A claim that for a given amount of money, the auditor will determine if the lender processed the mortgage paperwork correctly. However, even if the papers have errors, it will not affect a mortgage payment.Phony Counseling Agencies The HUD Counseling Certification is designed to stop this.
Mortgage Foreclosure ScamsSlide100
Standard Solutions to Mitigate Mortgage Default and Delinquency
Beware of other common mortgage foreclosure scams:Bankruptcy Scheme
A scammer will request a borrower to provide 5-10% interest in their property to assist with their mortgage, and has them sign a deed of trust. The scammer transfers the money to a bankrupt property, then files bankruptcy on behalf of the borrower without their knowledge.
Mortgage Foreclosure ScamsSlide101
T
o
determine if a
ho
m
eowner was a victim of a scam, ask these two questions.Were you told you had to pay a fee to obtain counseling services?Were you guaranteed a loan modification or asked to do any of the following:Sign over title to your property?Redirect mortgage payments?Stop making loan payments?Standard Solutions to Mitigate Mortgage Default and DelinquencyMortgage Foreclosure ScamsSlide102
W
here
To Go To For Help
:
File
a complaint online through the Loan Modification Scam Prevention Network at www.preventionloanscams.org/report a scam.Pennsylvania Office of Attorney General - 800-441-2555 - www.attorneygeneral.govPennsylvania Department of Banking - 800-722-2657 - www.banking.state.pa.usStandard Solutions to Mitigate Mortgage Default and DelinquencyMortgage Foreclosure ScamsSlide103
W
here
To Go T
o For Help
:
If scammed by an attorney you may contact the P A. State Bar Association -www.pabar.org.Federal Trade Commission – 1-877-382-4957 - www.ftc.gov.NeighborWorks America’s Loan Modification Scam Alert Campaign - www.loanscamalert.or
g.
Standard Solutions to Mitigate Mortgage Default and Delinquency
Mortgage
Foreclosu
r
e ScamsSlide104
B
ankruptcy
Bankruptcy is a
legal
procedure used to assist
a person who cannot repay debts owed to creditors.Petitions are filed in federal bankruptcy courts: Relief or protection from all creditors (“Automatic Stay”)Allows the debtor some breathing roomPre-Bankruptcy counseling is requiredStandard Solutions to Mitigate Mortgage Default and DelinquencySlide105
Bankruptcy
Bankruptcy
Abuse
Preventi
on
and Consumer Protection Act (BAPCP A) went into effect on October 17, 2005Biggest reform to the bankruptcy laws since 1978Aimed at preventing abuse of the bankruptcy lawsExtensive changes were made to the Chapter 7 bankruptcy.Means test - any debtor with more than $182.50 in monthly disposable income, would face a presum
pt
i
on
of abuse
Debtors
have to wait 180 days before they can file another Chapter 7 or Chapter
13.
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide106
Bankruptcy
Chapter
7
Know
n
as a “Straight Bankruptcy” or “Liquidation”.Liquidation of most assets to satisfy creditorsAllowed to keep certain exempt property, but must maintain payments on that property Stays on credit report for 10 years from the date of filingStandard Solutions to Mitigate Mortgage Default and DelinquencySlide107
Bankruptcy
Chapter
13
Know
n
as a “Reorganization Plan” or a “Debt Consolidation”.Allows the debtor to develop a plan to repay all or part of their debts.Allows the debtor to undergo a financial reorganization supervised by bankruptcy courts and a bankruptcy Trustee.Debtor proposes a plan to pay creditors over a 3 to 5 year period.Stays on credit report for 7 years from the
date
of filing
.
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide108
Knowledge Check #5Slide109
Resources
Ea
ch
Other
P
ower Pay - www.powerpay.orgVolunteer Income Tax Assistance - www.vita-volunteers.orgPartnership for Prescription Assistance - www.pparx.orgUnited Way 211 - ww
w
.
2
1
1
u
s.orgLaw Help - www.lawhelp
.
o
r
g
K
n
ow
Your Opt
ions - www.knowyouroptions.comUSA Go
ve
r
n
m
ent
M
a
de E
a
sy
-
(
f
o
r
m
a
l
ly
Co
n
su
m
er
Act
i
o
n
)
-
w
w
w
.
u
sa.
g
ov
Standard Solutions to Mitigate Mortgage Default and DelinquencySlide110
Question & AnswerSlide111
Paul Kaegel
Compliance Officer
pkaegel@phfa.org
(717) 780-1824
Updated
: 9/16/19Standard Solutions to Mitigate Mortgage Default and Delinquency