Making Home Affordable  Parrilla
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
1,295
On Slideshare
1,292
From Embeds
3
Number of Embeds
1

Actions

Shares
Downloads
2
Comments
0
Likes
0

Embeds 3

http://www.slideshare.net 3

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide
  • ExampleMortgagor had a reduction of income and is delinquent three (3) full mortgage payments.  The unpaid principal balance on the mortgage on the date of default is $150,000 and the monthly payment is $1,220 (consisting of P&I of $920 and escrows, including MIP, of $300). The financial analysis reveals that the mortgagor’s gross monthly income is $3,500 and the total monthly other recurring debt payments are $800.    
  • Example - ContinuedIn order to fulfill the 31% Front End Ratio requirement, the mortgagor(s) total monthly mortgage payment would have to be reduced to $1,085 ($3,500 x 31%). Therefore, P&I would have to be reduced to $785 ($1,085 total monthly mortgage payment less $300 escrow and MIP). Assuming that the loan modification will have an interest rate of 6% and a P&I of $785, the new mortgage amount would have to be $130,931, resulting in a principal reduction of $19,069 ($150,000 unpaid principal balance less $130,931). In this example, the mortgagor’s Back End ratio is 53.9% ($1,885/$3,500), which satisfies the 55% Back End Ratio limitation.  
  • Example - ContinuedIn this example, the maximum principal deferment is $41,340 (30% of $150,000, less the $3,660 delinquency, or $45,000 - $3,660). However, based on their gross income, mortgagor is eligible only for a principal deferment of $19,069 plus $3,660 arrearages (which would include any foreclosure costs incurred to that point, in accord with Mortgagee Letter 2008-21) for the total Partial Claim of $22,729.
  • Example - ContinuedA principal reduction of $19,069 ($150,000 unpaid principal balance less $130,931) is needed to support the new modified loan amount. In this example, the total partial claim would be $22,729 ($19,069 principal deferment + $3,660 arrearage). The Mortgagor’s Back End Ratio is 53.9% ($1,885/$3,500), which satisfies the 55% Back End Ratio limitation.  

Transcript

  • 1. Making Home Affordable
    Program: FHA’s Home
    Affordable Modification Loss Mitigation Option
    Mortgagee Letter 2009-23, page 1
  • 2. Basic Program Guidelines FHA-Home Affordable Modification Program (FHA-HAMP)
    FHA-HAMP combines a Partial Claim with a Loan Modification
    Total Partial Claim, including arrearages of up to 12 months Principal, Interest, Taxes, and Insurance (PITI) plus legal fees and costs related to a canceled foreclosure action (maximum over life of loan), and deferred principal, may not exceed 30 percent of the unpaid principal balance as of the default date.
    Mortgagor must first complete a three month trial plan with a payment equal to the monthly PITI to be required on the modified loan (must be a fixed rate mortgage).
    If trial plan payments are not made in a timely manner, the Mortgagor is no longer eligible for FHA-HAMP.
    Mortgagee Letter 2009-23, pages 1 and 2
  • 3. Debt to Income Ratios
    Front-End Ratio – The total first mortgage payment (PITI) divided by the Mortgagor’s gross monthly income, shall be 31%.
    Back-End Ratio – The total first mortgage payment plus all recurring monthly debt divided by the Mortgagor’s gross monthly income, shall not exceed 55%.
    Mortgagee Letter 2009-23, page 2
  • 4. Calculation of Maximum Partial Claim Amount under FHA-HAMP
    Maximum Partial Claim amount is <=30% of the outstanding principal balance.
    Maximum principal deferment on the FHA-HAMP is determined by:
    Outstanding Principal Balance x 30% - Amount of Arrearages - Foreclosure fees and costs.
    Subject to the requirements of ML 2008-21.
    Principal deferment shall not exceed amount needed to bring the total monthly mortgage payment to 31 percent of the Mortgagor(s) gross monthly income.
    Mortgagee Letter 2009-23, page 2
  • 5. Calculation of MaximumPartial Claim - Example
    Unpaid Principal Balance = $150,000
    Current Monthly Payment (PITI) = $1,220 (P&I = $920 + TI = $300)
    Current Other Recurring Debt = $800
    Gross Monthly Income = $3,500
    Number of Payments Past Due = 3
    Total Arrearage = $3,660
    Mortgagee Letter 2009-23, page 2
  • 6. Calculation of MaximumPartial Claim – Example - Continued
    Maximum Partial Claim = $150,000 x 30% = $45,000
    Maximum Monthly PITI = $3,500 x 31% = $1,085 (Front Ratio)
    Maximum Total Monthly Debt = $3,500 x 55% = $1,925 (Back Ratio)
    Mortgagee Letter 2009-23, page 2
  • 7. Calculate Terms of Modified Loan – Example - Continued
    New P&I = $1,085 (Max PITI) - $300 (T&I) = $785
    New Mortgage Term = 360 months
    New Interest Rate = 6% (Assumed fixed rate)
    Calculated New Principal Balance = $130,931
    Mortgagee Letter 2009-23, page 2
  • 8. Principal Reduction and Total Partial Claim
    Principal Reduction = $150,000 - $130,931= $19,069
    Total Partial Claim = $19,069 principal deferment + $3,660 arrearage = $22,729
    Total Partial Claim < $45,000 Calculated Maximum Partial Claim
    Mortgagor’s New Back End Ratio is 53.9% [Sum of PITI + Other Recurring Monthly Debt ($1,085 + $800) divided by $3,500 Gross Monthly Income] which satisfies the 55% Back End Ratio limitation.
    Mortgagee Letter 2009-23, page 2
  • 9. Requirements to Use FHA-HAMP
    Mortgagees must evaluate the defaulted mortgage for Loss Mitigation actions in the following priority order:
    1. Existing FHA Home Retention
    Loss Mitigation Options
    2. FHA-HAMP
    Mortgagee Letter 2009-23, page 3
  • 10. FHA-HAMP continuation
    The property securing the FHA-insured property must be the mortgagor’s primary and only residence; and only single family (1-4 units) properties are eligible.
    The servicing lender also must obtain an executed Hardship Affidavit from every mortgagor and co-mortgagor seeking an FHA-HAMP. Mortgagee Letter 2009-23
  • 11. Partial Claim Filing and Document Delivery
    Partial Claim(s) must be subordinated to the modified first-lien mortgage.
    Original Credit and Security Instruments are to be forwarded to HUD’s Secretary-Held Servicing Contractor.
    Mortgagee Letter 2009-23, pages 3
  • 12. Remittance
    Repayment Terms, Option Failure and
    Disclosures described in Mortgagee Letters
    2000-05 and 2003-19 apply.
    Subordination requests and any payments for Partial Claims are to be sent to HUD’s Secretary-Held Assets Servicing Contractor.
    Secretary-Held Assets Servicing Contractor website:
    http://www.hud.gov/offices/hsg/sfh/nsc/fmaddr.cfm
    Mortgagee Letter 2009-23, page 3 and 4