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Laurie Anne Maggiano , Senior Policy Advisor Office of Single Family Asset Management

HOPE for Homeowners (H4H) Servicing. Laurie Anne Maggiano , Senior Policy Advisor Office of Single Family Asset Management. Servicing H4H Loans Preserving the Dream. First mortgage serviced by holder/designee SEM and SAM mortgages serviced by U.S. Department of HUD

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Laurie Anne Maggiano , Senior Policy Advisor Office of Single Family Asset Management

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  1. HOPE for Homeowners (H4H) Servicing Laurie Anne Maggiano, Senior Policy Advisor Office of Single Family Asset Management

  2. Servicing H4H Loans Preserving the Dream

  3. First mortgage serviced by holder/designee SEM and SAM mortgages serviced by U.S. Department of HUD c/o C&L Service Corp./Morris-Griffin Corp. 2488 East 81st Street, Suite 700 Tulsa, Oklahoma 74137 H4H – Loan Servicers

  4. Standard FHA Requirements Loss Mitigation Prohibition on Subordinate Financing Refinance Restrictions H4H–First Mortgage Servicing

  5. Home Retention Options Special Forbearance – no change Modification – HUD will subordinate SEM and SAM Partial Claim – Subordination not required H4H –Loss Mitigation

  6. Disposition Options Pre-ForeclosureSale – use existing ratios, $2,000 allowance for lien payoff only available for preservation liens Deed-in-Lieu – $2,000 allowance for lien payoff only available for preservation liens H4H –Loss Mitigation

  7. Impact of 1st Payment Default Servicer must provide loss mitigation HUD unable to pay claim H4H –Loss Mitigation

  8. 5-year prohibition on any subordinate financing except to preserve and protect the property H4H – Subordinate Financing

  9. Only for health and safety or property deterioration No cosmetic or routine maintenance Cost must be reasonable Closed-end loans only – no HELOCs Loan cannot reduce HUD’s equity share CLTV = to or less than 95% of new appraisal Contact NSC for approval H4H – Subordinate Loan Requirements

  10. No refinance in year 1 No FHA streamlined refinance ever No refinance to reverse mortgage Limits on accessing equity and appreciation Any refinance must payoff SEM H4H – Refinance Restrictions

  11. Equity Refinance Equity Refinance Only in Years 2 to 5 • 30 year/fixed with lower payments • Proceeds must pay off HUD’s equity share • Only initial and earned equity can be used

  12. Property value at origination $100,000 Initial H4H loan balance $ 90,000 Loan balance 3 years after orig. $ 89,000 Property value after year 3 $110,000 Principal pay off $ 89,000 Initial and earned equity $ 11,000 Max refinance amount $100,000 Equity Refinance Example

  13. New P&I must be lower than H4H mortgage $7,000 (70%) of proceeds must be used to pay off SEM Borrower has $5,000 for transaction costs and proceeds No impact on SAM Equity Refinance Example (Cont’d)

  14. Limited Appreciation Refinance After Year 5 Cash out limited to initial and earned equity and 25% of appreciation SAM modified to state fixed amount of appreciation due to HUD plus 50% of future appreciation Appreciation Refinance

  15. Property value at origination $100,000 Initial H4H loan balance $ 90,000 Loan balance in year 6 $ 88,000 Property value year 6 $120,000 Principal pay off $ 88,000 Initial and earned equity $ 12,000 25% of appreciation $ 5,000 Max refinance amount $105,000 Appreciation Refinance Example

  16. $5,000 of proceeds must be used to pay off SEM Borrower has $12,000 for transaction costs and proceeds SAM modified to reflect $10,000 due to HUD plus 50% of future appreciation Appreciation Refinance Example (Cont’d)

  17. SEM and SAM must be paid on sale Closing agent sends payoff demand and appraisal NSC receives SEM/SAM proceeds NSC pays ASC holders in exchange for surrender of certificates Sale and Payoff of H4H Loans

  18. Equity = value at origination less H4H loan amount Sliding scale for equity share During Year 1 100% of equity due to FHA During Year 2 90% of equity due to FHA During Year 3 80% of equity due to FHA During Year 4 70% of equity due to FHA During Year 5 60% of equity due to FHA After Year 5 50% of equity due to FHA H4H – Equity Share Payoff

  19. Earned equity (decrease in loan balance) is property of the borrower unless net proceeds are not enough to pay FHA’s share H4H – Equity Share Payoff (Cont’d)

  20. SAM due only on sale – may not be paid earlier Appreciation = net proceeds from sale less appraised value at origination Arms length transaction Limit on closing costs Credit for capital improvements H4H – Appreciation Share Payoff

  21. Appreciation reduced by 75% of cost of capital improvements if Cost was greater than $2,500 Borrower can provide invoices Work significantly enhanced property value Cost was reasonable No interior décor, routine landscaping, or repairs No allowance for sweat equity H4H – Capital Improvement Credit

  22. H4H loans will not be included in Tier Ranking Scores Tier 1 lender benefits will apply to H4H claims H4H and Tier Ranking

  23. NSC will monitor H4H loans through Statistical analysis of lender default and FC rates Servicing Desk Reviews Referral to Quality Assurance/Mortgagee Review Board for noncompliance findings or failure to engage in loss mitigation Monitoring H4H Servicers

  24. National Servicing Center FHA Call Center –1-800-Call FHA Policy Guidance –hsg-lossmit@hud.gov Data Requests –sfdatarequests@hud.gov H4H Servicing Help

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