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1 July 2013 | Making Home Affordable

Home Affordable Unemployment Program (UP)

Training for Servicers


Resources

Overview 1

Evaluation Phase Phase 1

UP Process 2

Reporting Requirements 3

4

Forbearance Period Phase 2

Transition Phase Phase 3

Agenda


Overview

Home Affordable Unemployment Program (UP)

Core element of the MHA Program.

Offers assistance to borrowers who are suffering a financial hardship due to unemployment.

Grants a forbearance during which the borrower’s monthly mortgage payment may be reduced

or suspended.

UP Expansion

Effective on June 1, 2012, UP was expanded to allow more homeowners to qualify for assistance: Requirement that the borrower’s monthly mortgage payment ratio be greater than 31% was

removed; Loans secured by rental properties may now be considered; Borrowers who did not successfully complete a HAMP trial period plan or lost good standing

under a permanent modification may now be considered for UP; The initial forbearance period was extended to a minimum of 12 months (there continues to be

no maximum forbearance period); and It was announced on May 31st that the deadline to request UP assistance was extended to

December 31, 2015

What Is UP?


Evaluation Phase Forbearance Period Transition Phase

UP Process

Phase 1 Phase 2 Phase 3


UP Specific Criteria

UP Process – Evaluation Phase

Eligibility Criteria Guideline

Property

• May be the borrower’s principal residence or rental property occupied by a tenant or available for rent on a year-round basis.

• One-to-four units. • Property securing the mortgage loan has not been condemned.

Borrower

• Has documented financial hardship and does not have sufficient liquid assets to make the monthly mortgage payment.

• Is unemployed at date of request.

• Must be a natural person.

• Has submitted a written request for UP Forbearance on or before December 31, 2015.

Existing Mortgage

• Amount owed on first mortgage is equal to or less than $729,750. Higher limits for 2-4 unit properties.

• First lien mortgage originated on or before January 1, 2009.

• The mortgage loan is delinquent or default is reasonably foreseeable.


UP Specific Criteria



Monthly mortgage payment ratio

• The borrower must be considered for UP assistance regardless of his/her monthly mortgage payment ratio.

Total delinquency • The delinquency, at the time of the UP request, does not exceed 12

months of the borrower’s scheduled monthly mortgage payments.

Unemployed non-borrower

• Unemployed borrower must be liable on the note to qualify.




Receipt of unemployment benefits

• Borrower will receive unemployment benefits in the month of the Forbearance Period Effective Date; or

• Borrower is unemployed and received unemployment benefits within six months prior to request for UP, but benefits are currently expired.

Prior unemployment mortgage assistance - Received

Borrower must be evaluated for extension of forbearance assistance to an aggregate total minimum of 12 months if:

• UP forbearance plan was completed prior to October 1, 2011 and borrower remains eligible for UP; or

• Borrower is currently in an UP forbearance plan as of October 1, 2011 and remains eligible.

Prior unemployment mortgage assistance - Denied

Borrower must be re-evaluated for unemployment assistance for a minimum of 12 months if he/she was previously denied prior to October 1, 2011 for the following reasons:

• The mortgage was seriously delinquent (more than three mortgage payments due and unpaid) at time of the request; or

• The borrower received less than three months of unemployment benefits.



Borrower Status – Interaction with HAMP

Borrower becomes unemployed while being evaluated for HAMP or while in a HAMP Trial Period Plan (TPP).

Borrower becomes unemployed while in a HAMP permanent modification and loses good standing.

Unemployed borrower in a HAMP TPP fails to make all required trial period payments.

A borrower who is unemployed and requests assistance under HAMP must be evaluated for and, if qualified, must receive an offer for an UP forbearance plan.

Borrower in a HAMP permanent modification who is in good standing is not eligible for UP.


1

A loan may not be referred to foreclosure or a foreclosure sale must not be conducted if any of the following apply:

Borrower makes a request and is being evaluated for UP. 1

Forbearance Plan Notice (FPN) has been mailed. 2

During the initial UP forbearance plan or any extension thereof. 3

Following the UP forbearance plan while the borrower is being evaluated for or participation in HAMP or HAFA.

4

Until any associated Escalated Case has been resolved. 5

UP Process – Evaluation Phase Suspension of a Referral to Foreclosure or Foreclosure Sale

NOTE: If a request for UP assistance is received after midnight on the seventh business day prior

to a scheduled foreclosure sale, considering the borrower for UP is not required.


If the borrower’s mortgage was referred to foreclosure prior to the UP evaluation, provide a written notification to the borrower that:

• Explains concurrent forbearance and foreclosure processes; and

• States that while certain foreclosure activities may continue, the home will not be sold at a foreclosure sale while the borrower is being considered for or making payments under an UP forbearance plan.

Model language for the notice is available on HMPadmin.com.

Communications Policy

UP Process – Evaluation Phase Simultaneous Forbearance Plan and Foreclosure


• UP interacts to complement Non-MHA Unemployment Assistance Programs.

• Includes Hardest Hit Fund℠ (HHF), or other state mortgage assistance programs.

• Non-MHA Unemployment Assistance may precede an UP forbearance plan or be used to extend it.

Non-MHA Unemployment Assistance Program



Submission

• Receive request for UP consideration from borrower.

• Send written notice to borrower within 10 business days confirming the receipt of the request and identifying required documentation.

Receive Documents

• Allow the borrower no fewer than 15 calendar days to send the required documents.

Review & Determine Eligibility

• Proceed with review and decision of documentation provided by the borrower.

• Determine eligibility within 30 calendar days of receipt of required documentation from borrower.

Communication

• Communicate status to borrower within 10 business days of decision by sending:

• FPN; or

• Non-Approval Notice.

10 business days 30 calendar days 15 calendar days 10 business days

UP Process – Evaluation Phase Timeline



Unemployed borrowers who are ineligible for UP must: • Receive a Non-Approval Notice that includes the primary reason for ineligibility

and a description of other foreclosure alternatives.

• Be evaluated for foreclosure alternatives, if eligible, including:

Proprietary forbearance programs;

HAMP;

HAFA; or

Proprietary short sale or deed-in-lieu (DIL) options.

Borrower Not Eligible

NOTE: If the borrower is not offered any type of unemployment forbearance plan and is

evaluated for HAMP, exclude unemployment benefits from the monthly gross income.


UP Process - Evaluation Phase

• A borrower who is eligible for an UP forbearance plan, but declines, must be notified that he or she may not be considered for a HAMP modification, while eligible for UP.

• Although not required, a borrower MAY be evaluated for HAMP, if permitted by investor guidelines.

• A borrower may request reconsideration under HAMP at a future time, if eligible.

Borrower Declines UP


Evaluation Phase Forbearance Period Transition Phase

Phase 1 Phase 2 Phase 3

UP Process Forbearance Period


Send the borrower either an FPN for a Non-Approval Notice within 10 business days of determination.

Borrowers are not required to sign or return the FPN, unless required by investor guidelines.

The FPN must include:

• Effective date, duration, and expiration of

UP forbearance plan

• Monthly payment amount

• Explanation of post-UP procedures

• Borrower’s responsibility to provide

employment status changes

1

2

UP Process – Forbearance Period Forbearance Plan Notice (FPN)


UP Process – Forbearance Period

Payments must be applied in accordance with the terms of the existing loan documents.

• Hold partial payments as “unapplied funds” and apply once the amount reaches a full monthly payment.

• Apply any unapplied funds remaining at the end of the UP forbearance plan that do not constitute a full principal, interest, taxes and insurance, or PITI, payment to reduce any amounts that would otherwise be capitalized onto the principal balance.

Application of UP Payments


Forbearance plans may be incrementally extended. 1

Discretion should be used for any borrower eligibility review or documentation requirements that may apply after the initial forbearance period.

2

UP Process – Forbearance Period Forbearance Period Extensions


The FPN may be terminated if any of the following conditions occur:

Terms of the UP forbearance plan are not honored

Borrower advises that he or she is no longer going to seek employment

Property is abandoned or sold (unless vacancy is approved by the servicer

Borrower is re-employed

Borrower is evaluated for a modification under HAMP and qualifies for a TPP

Dollar amount of delinquency exceeds 12 months of the scheduled monthly mortgage payments

UP Process – Forbearance Period Forbearance Plan Termination


Phase 1

Evaluation Phase

Phase 2

Forbearance Period

Phase 3

Transition Phase

UP Process Transition Phase


If borrower remains unemployed:

• Extend forbearance based on investor guidelines.

• Consider for HAMP.

• Consider for proprietary modification options.

• Consider for HAFA or other short sale or DIL programs. If borrower has found employment:

• Consider borrower for HAMP.

• Consider borrower for proprietary modification options.

• Consider borrower for HAFA.

UP Process – Transition Phase End of Forbearance Period

Transition from UP


Not Required

UP Process – Transition Phase HAMP Consideration after UP

Borrower must submit a complete Initial Package: 1. RMA; 2. Updated proof of income; and 3. IRS Form 4506-T, 4506T-EZ or a signed copy of the

borrower’s tax return for the most recent tax year, including all applicable schedules and forms.

Required


New employment income as verified by an offer letter

First pay stub

Other documentation consistent with the judgment employed by servicers when modifying mortgage loans held in their own portfolio

UP Process – Transition Phase Borrower’s Monthly Gross Income

Updated employment income to include:


UP Process – Transition Phase

• Borrower must be considered for other available loss mitigation options including:

HAFA (Short sale and DIL options); and

Proprietary modifications

• Other alternatives may be considered including:

Capitalizing the arrearages and re-amortizing the new balance into a non-HAMP modification.

Maintaining the current scheduled payment by extending the loan term by the equivalent of the months of delinquency.

NOTE: Requiring a lump sum contribution from the borrower for unpaid interest and fees, as a

condition to considering the borrower for other available loss mitigation options, is

PROHIBITED.

Borrower Not Eligible for HAMP after UP


• Ensure that the data that is reported is accurate, timely, complete and consistent with servicing records.

• Submit monthly UP forbearance plan summary level data

• Report milestones, such as when the borrower exits from a TPP to UP

and when transitioning from UP forbearance plan to TPP

• Continue to report a “full-file” status report to credit repositories for each loan in an UP forbearance plan

Reporting Requirements

Submissions


• Training resources

• NPV tools and documents

• Reporting resources

• Live webinar training

calendar

Servicer Integration Team

HAMP_Integration_Team

@fanniemae.com

HAMP Solution Center

[email protected]

For Servicers

www.HMPadmin.com

Resources


Thank You

Discussion / Questions

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