5 Lenders and AG Settlement: MODIFICATIONS

admin Uncategorized

Here are some bullet points on the 27 page settlement agreement between 49 states and Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. (formerly GMAC).

When the settlement agreement addresses Modifications it is basically the HAMP Guidelines with the word “shall OR must” substituted for “may”.

As is the case with settlements with major lenders, the lenders basically agree to do what they are already doing. And the regulators, since they have no idea what servicer is doing, says “that sounds good.”

State AG and (CFPB) are to supervise and enforce. Which means we can use them to escalate files. The CFPB has their site up and running and ready for complaints. Lets see how efficient they are.

There are some great changes which give us in the industry a few more tools. However it is also more important than ever to make sure you are submitting good clean applications that qualify. Because these changes will also get servicers to foreclose more efficiently.

So here they go.

1. No more robo signing!

2. Pre filing servicer to produce affidavit detailing loss mitigation activities to date and activity.

3. Establishes an “attorney letter” 14 days prior to filing requirement that servicer will be referring to foreclosure attorney. NEW

4. Must document standing prior to filing.

5. Upon receipt of loan mod application before 120 days in arrears servicer SHALL not refer to foreclosure. (lets see what judges think about this one)

6. Banks MUST review and make determination on borrowers application with in 30 days. (LOL THAT WILL BE THE DAY!) NEW

7. No more “dual track!” (again lets see what judges think about this one) NEW IN SOME STATES

8. Requires lenders to create portals for communications and uploading of documents for (housing counselors and borrowers)

9. Mandates NPV Test on all loans GSE and NON GSE. NEW FOR NON GSE

10. If borrower had a trial plan pending review of docs (not prequalified, per hamp guidelines before june 2010) SERVICER SHALL SUSPEND ANY FORECLOSURE ACTIVITY (Lets see how this works) NEW

11. For borrowers on trial plans that were pre qualified/underwritten , permenent plans SHALL be offered immediately. The effective date will be the 4 month payment. NEW

12. Single Point of Contact Mandatory.

13. Single Electronic Record System Required.

14. Servicers shall disclose and provide accurate information to borrowers relating to the qualification and eligibility factors for all loss mitigation programs. NEW

15. When denied shall be in writing and substantive, makes it clear that NPV Data and Calculations must be provided. So Borrower can challenge. Within 30 days.

16. When Denied because of “investor”, must disclose investor name, reason for denial, and copy of limiting language in psa and must make avail electronic access to complete copy. NEW

17. Sales date must be 30 days from denial.

18. Servicer shall implement an automatic internal review process to review all loss mitigation denials, which shall include review by an ombudsman or review panel, which is independent of the group who initially conducted loss mitigation evaluation. Subject to monitoring by AG and CFPB. NEW

19. Where warranted on facts and circumstances servicer shall consider for FHA short refi program. (The last time I saw numbers on short refi I believe 300 had been done in the entire country.) NEW

20. Servicer shall evaluate all delinquent mortgages with a loan to value ratio of greater than 105%, or combined loan to value of greater than 115% using both standard and waterfall and a waterfall that includes principal reduction as the required first or second step in the waterfall. Servicer should use whichever results in a better NPV.

21. Material violations of agreement constitutes an unfair and deceptive trade practice and breach of duty of good faith and fair dealing.