Foreclosure Counseling Rubino


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Foreclosure Counseling Rubino

  1. 1. Chase Homeownership Centers Frank Rubino, VP JPMorgan Chase & Co. Orlando, Florida September, 2009
  2. 2. Chase Homeownership Centers <ul><li>&quot;While Chase has helped many families already, we feel it is our responsibility to provide additional help to homeowners during these challenging times. We will work with families who want to save their homes but are struggling to make their payments.&quot; </li></ul><ul><li>Charlie Scharf , CEO of Retail Financial Services at Chase </li></ul><ul><li>&quot;We created these local Homeownership Centers so our borrowers can sit down and discuss their situation face-to-face with trained loan advisors in these challenging times. They are part of a wide-ranging initiative to help families stay in their homes whenever possible.&quot; </li></ul><ul><li>David Schneider , Chase Home Lending Servicing </li></ul>
  3. 3. Chase Foreclosure Prevention Efforts <ul><li>Helped prevent more than 400,000 foreclosures, primarily by modifying loan terms for customers in combined Chase, WaMu and EMC mortgage businesses over the last 2 years. </li></ul><ul><li>Delayed starting foreclosure on over $22 billion of Chase-owned mortgages of more than 80,000 homeowners so that we could review for possible mortgage modification. </li></ul><ul><li>Established a dedicated toll-free number for all Chase, WaMu and EMC customers seeking foreclosure prevention information (866-550-5705). Customers calling this number are assisted by a special triage team that identifies the specific platforms (Chase, WaMu or EMC) and customer needs, and directs them to the appropriate business area for specialized assistance. </li></ul>
  4. 4. Foreclosure Prevention - Recent Enhancements <ul><li>Opened 26 regional counseling offices – Chase Homeownership Centers – in high mortgage default areas to assist customers with severe delinquencies as of first quarter, 2009. </li></ul><ul><li>Established an independent review team to evaluate each loan individually before it enters foreclosure and ensure that each borrower has been properly contacted and offered a mortgage modification, if appropriate. </li></ul><ul><li>Added 300+ new loan counselors to provide better help to troubled borrowers bringing the total number of counselors to more than 2,500. </li></ul><ul><li>Extended mortgage modification efforts to investor-owned loans serviced by Chase; working with the GSEs (Fannie Mae/ Freddie Mac) to identify those borrowers facing possible default. </li></ul><ul><li>Working as part of the industry-wide effort to implement Hope for Homeowners program. </li></ul>
  5. 5. Foreclosure Prevention – Recent Enhancements <ul><li>Implemented the recently announced “Making Home Affordable” program under President Obama’s Homeowner Affordability and Stability Plan, a $75 billion plan to assist customers struggling to make their mortgage payments.  </li></ul><ul><li>The “Making Home Affordable” program is designed to give homeowners options: </li></ul><ul><ul><li>Home Affordable Refinance : Homeowners who have been continuing to make their monthly payments but have not been able to take advantage of refinance options at historically low interest rates because they have seen their property values fall. </li></ul></ul><ul><ul><li>Home Affordable Modification : Homeowners who are now struggling to make payments due to reduced or lost income. </li></ul></ul>
  6. 6. Chase Homeownership Centers <ul><li>Chase Homeownership Centers are a key element of the newly launched foreclosure prevention efforts. </li></ul><ul><li>Locations were chosen based on a number of criteria to specifically address the needs of hardest-hit communities and neighborhoods where the Home Price Index (a forward look at how housing prices will do two years from now) is expected to continue to suffer. </li></ul><ul><li>In these centers, existing Chase, WaMu and EMC delinquent mortgage customers can meet face-to-face with a mortgage relief specialist: </li></ul><ul><ul><li>Loan Advisors are specially trained in foreclosure prevention tactics. </li></ul></ul><ul><ul><li>Spanish-speaking Advisors are available in all Centers. </li></ul></ul><ul><ul><li>Centers have extended evening hours and are open on Saturday. </li></ul></ul>
  7. 7. Delinquency Cycle 30 days Refer to Foreclosure 90+ days 60 days Current Number of days past due Collections Loss Mitigation
  8. 8. Types of Assistance Offered <ul><li>Retention Options: </li></ul><ul><ul><ul><li>Special Forbearance </li></ul></ul></ul><ul><ul><ul><li>Repayment Plan </li></ul></ul></ul><ul><ul><ul><li>Loan Modification </li></ul></ul></ul><ul><ul><ul><li>Partial Claim </li></ul></ul></ul><ul><li>Mortgage Modification Hierarchy </li></ul><ul><ul><li>Regimented approach to determine modified payment where mortgage terms (rate, term, actual principal balance, interest only term) are altered until an affordable payment is reached. “Affordable payment” amount is determined using housing ratio and gross disposable income calculations. </li></ul></ul><ul><li>Net Present Value Analysis </li></ul><ul><ul><li>The NPV Analysis will compare the Net Present Value of cash flows expected from a modification to the Net Present Value of cash flows without a modification.  If the NPV Analysis generates a positive result, Chase is required to offer a Home Affordable Modification to the borrower.  If the NPV result is negative Chase will seek other foreclosure prevention alternatives, including alternative modification programs, deed-in-lieu and short sale programs. </li></ul></ul><ul><li>Liquidation Options: </li></ul><ul><ul><ul><li>Short Sale/Pre-foreclosure Sale </li></ul></ul></ul><ul><ul><ul><li>Deed-in-Lieu of Foreclosure </li></ul></ul></ul>
  9. 9. Special Forbearance <ul><li>A period of suspended or reduced payments that prevents late charge and fee accumulation, and referral to or progression of a Foreclosure action, as long as the contract is being honored by the borrower. This option does not forgive payments – it simply provides the borrower a set amount of time in which a full contractual payment will not be required, as long as the terms of the forbearance contract are being honored. </li></ul><ul><li>Special Forbearance example: </li></ul><ul><li>A borrower was to be temporarily laid off by employer for 3 months. He was due for his current month’s payment however he had no reserve funds to bridge the gap. He visited a housing agency requesting assistance money. </li></ul><ul><li>Counselor reviewed his situation and gathered proof that payment was sustainable long-term. Housing agency contacted the CHOC and provided all relevant documentation. CHOC was able to help set up a 3 month, no-payment forbearance to help the borrower during the temporary unemployment period. </li></ul>
  10. 10. Repayment Plan <ul><li>Past due amounts are divided and added onto the regular monthly payments for an extended amount of time to bring the loan current. Loss Mitigation plans may be from 6 to 18 months in duration. Collection plans are typically less than 6 months in duration. </li></ul><ul><li>Repayment Plan example: </li></ul><ul><li>Borrower is past due after making a checking account error and incurred significant fees from her bank. She had missed 3 payments of $1,350 for a total past due amount of $4,050. </li></ul><ul><li>She provided all the necessary financial information after receiving a loss mitigation mailing. Based on a financial analysis of her current situation, a 12-month repayment plan of $1,687.50 per month was negotiated. </li></ul>
  11. 11. Loan Modification <ul><li>Loan is brought to current status by adjusting one (or more) of three terms of the mortgage: </li></ul><ul><ul><li>Increasing principal balance by adding the past due amount to the existing principal balance. </li></ul></ul><ul><ul><ul><li>May increase the unpaid principal balance beyond the original value of the home. Past due amount may include interest, taxes, insurance and corporate advances. </li></ul></ul></ul><ul><ul><li>Extending the term of the loan. </li></ul></ul><ul><ul><li>Reducing the interest rate. </li></ul></ul>
  12. 12. Loan Modification Example <ul><li>Current customer loan situation: </li></ul><ul><ul><li>Unpaid principal balance (UPB) = $130,000.00 </li></ul></ul><ul><ul><li>Monthly payment amount = $930.00 </li></ul></ul><ul><ul><li>Interest rate = 7.5% </li></ul></ul><ul><ul><li>Payments made on loan = 27 (333 remaining) </li></ul></ul><ul><ul><li>Payments currently due = 4 </li></ul></ul><ul><ul><li>Total past due amount = $4,000.00 </li></ul></ul><ul><li>Financial analysis indicates a $120.00 per month surplus thus customer is not likely to be able to afford a repayment plan. </li></ul><ul><li>One or more of three loan terms may be changed to bring the loan current. </li></ul><ul><ul><li>Add past due amount to UPB and re-amortize over remaining loan term </li></ul></ul><ul><ul><li>Extend the remaining loan term </li></ul></ul><ul><ul><li>Reduce the interest rate </li></ul></ul>
  13. 13. Loan Modification Example <ul><li>Add past due amount to UPB and re-amortize over remaining loan term </li></ul><ul><ul><li>Most common modification </li></ul></ul><ul><ul><li>Add the total past due of $4,000 to the UPB of $130,000 </li></ul></ul><ul><ul><li>Re-amortize the loan at the current interest rate of 7.500% over the remaining 333 months for a new payment of $957.00. </li></ul></ul><ul><li>Extend the remaining loan term </li></ul><ul><ul><li>If the resulting payment after adding the past due amount to the UPB is too high for the borrower, it is possible to extend term back to the original loan term 360 months or beyond. </li></ul></ul><ul><ul><li>Add the total past due of $4,000 to the UPB of $130,000 </li></ul></ul><ul><ul><li>Re-amortize the loan at the current interest rate of 7.500% over 360 months for a new payment of $937.00 </li></ul></ul><ul><li>Reduce the interest rate </li></ul><ul><ul><li>If the payment remains unaffordable, the interest rate may be reduced. </li></ul></ul><ul><ul><li>Re-amortize the new UPB of $134,000 at 6.500% over 360 months for a new payment of $847.00. </li></ul></ul>
  14. 14. Partial Claim (FHA Only) <ul><li>Loan is brought current by securing up to 12 months of past due principal, interest, taxes, insurance and attorney’s fees/costs as a separate interest-free note payable when the original mortgage is satisfied. </li></ul><ul><ul><li>This interest-free note is then tracked and serviced by a HUD vendor called First Madison, and can be paid off early. </li></ul></ul><ul><ul><li>Loan must be 4 months past due. </li></ul></ul><ul><ul><li>Owner-occupant and committed to continuing occupancy of primary residence. </li></ul></ul><ul><ul><li>For use when modification does not make sense financially, clouded title, or when origination was less than 12 months prior. </li></ul></ul><ul><li>Partial Claim example: </li></ul><ul><li>Borrower had missed 9 payments of $1,200 and had a principal balance of $148,000. The loan was only 10 months old. After providing all the necessary financial information it was determined that the borrower had little surplus funds to bring the loan current via other means. </li></ul><ul><li>A partial claim was approved for $10,800.00 to bring loan current. </li></ul><ul><li>Borrower may be asked to pay upfront all outstanding late charges and fees to execute the partial claim. </li></ul>
  15. 15. Short Sale (Pre-foreclosure Sale) <ul><li>An approved sale of the property to an unrelated third-party for less than what is owed on the mortgage, preventing a foreclosure on the borrower’s credit report. </li></ul><ul><ul><li>Additional liens on the property need to be satisfied by the borrower prior to closing. </li></ul></ul><ul><ul><li>Cash contribution may be requested to offset loss. </li></ul></ul><ul><ul><li>Never assume that any default activity will be stopped during short sale negotiations. </li></ul></ul><ul><ul><li>Closing date should be set for at least 45 days from date of documentation submission. </li></ul></ul><ul><li>Important FHA Program highlights: </li></ul><ul><ul><li>Borrower supplies financial analysis, application to participate, and homeownership counseling certificate (see </li></ul></ul><ul><ul><li>Servicer orders/reviews title and appraisal, advising to list property at appraised value. </li></ul></ul><ul><ul><li>Up to 150 days to obtain qualified buyer, free of foreclosure activity. </li></ul></ul><ul><ul><li>If closing occurs under program guidelines, seller may be eligible for $750.00 - $1,000.00 closing incentive which may be used toward liens, closing costs, etc. </li></ul></ul><ul><ul><li>If the property has been rented for more than 12 months, the borrower is not eligible for program. </li></ul></ul>
  16. 16. Short Sale (Pre-foreclosure Sale) <ul><li>Short Sale example: </li></ul><ul><li>Borrower has a reduced income due to retirement and as a result cannot afford property at the current interest rate and payment. He has tried to refinance, but as a result of declining property values and a decrease in income cannot obtain affordable financing. </li></ul><ul><li>The borrower currently owes $150,000.00 on the home but currently the value of home is closer to $90,000.00. </li></ul><ul><li>The borrower called a housing counselor who was able to assist borrower in obtaining affordable financing. </li></ul><ul><li>Chase reviewed the file and per investor approval was able to accept the short refinance for $90,000.00 thus keeping the borrower in the home at an affordable rate of pay. </li></ul>
  17. 17. Deed-in-lieu (DIL) of Foreclosure <ul><li>The property is voluntarily returned to the investor, preventing a foreclosure on the borrower’s credit record. Prevents long-term foreclosure proceedings for those just wanting to walk away. </li></ul><ul><ul><li>Not a common workout and is typically the result of the death of the primary borrower(s). </li></ul></ul><ul><ul><li>Investor often prefers short sale to be considered prior to deed-in-lieu. </li></ul></ul><ul><li>Deed-in-lieu example: </li></ul><ul><li>The sole borrower passed away and his son could not afford to keep the home, which had depreciated. The son requested assistance in “giving the property back”. Loan was 4 payments past due and not in foreclosure. </li></ul><ul><li>Working with the estate attorney all of the necessary documentation was provided for review. The DIL was approved and executed resulting in a savings over foreclosure of $4,000.00. </li></ul>
  18. 18. Partnering with Nonprofit Organizations <ul><li>Chase is committed to partnering with local nonprofit organizations to help customers avoid foreclosure and remain in their homes, whenever possible. </li></ul><ul><li>Successfully working together with you, our valued community leaders and professional partners, is an integral part of the solution and key to achieving Chase’s mission/vision. </li></ul><ul><li>Our team members live and work in the communities we’re helping, serving the markets with high levels of default and foreclosures. </li></ul>
  19. 19. Partnering with Nonprofit Organizations <ul><li>How the Chase Homeownership Centers will help customers in your area: </li></ul><ul><ul><li>Customers more than 30 days past due on their mortgage should call to set-up an appointment with a trained Loan Advisor </li></ul></ul><ul><ul><ul><li>CHOC hours of operation are Monday – Thursday 10:00 am to 7:00 PM, Friday 9:00 am to 6:00 pm, and Saturday 9:00 am to 1:00 pm. </li></ul></ul></ul><ul><ul><li>Customers should bring the following documents with them to the appointment: </li></ul></ul><ul><ul><ul><li>Chase Borrowers Assistance Form </li></ul></ul></ul><ul><ul><ul><li>W-2 statement </li></ul></ul></ul><ul><ul><ul><li>Recent pay stubs </li></ul></ul></ul><ul><ul><ul><li>Bank statements </li></ul></ul></ul><ul><ul><ul><li>Tax returns </li></ul></ul></ul><ul><ul><ul><li>Monthly expense documentation </li></ul></ul></ul><ul><ul><ul><li>Hardship letter </li></ul></ul></ul>
  20. 20. Partnering with Nonprofit Organizations <ul><li>How the Chase Homeownership Centers will help customers in your area: </li></ul><ul><ul><li>The initial appointment should last approximately 1 hour. The Advisor will discuss with the customer their current financial situation, review all documentation and summarize the customer’s current financial state. </li></ul></ul><ul><ul><li>The Advisor will review possible solutions with the customer including potential modifications and other loss mitigation options. </li></ul></ul><ul><ul><li>All information and documents will be sent to our dedicated processing team for verification and further evaluation. </li></ul></ul><ul><ul><li>Within 60 days, the Advisor will contact the customer or housing counseling agency to review the recommended solution. </li></ul></ul>
  21. 21. Chase Homeownership Center Locations