September 2009 | Making Home Affordable Making Home Affordable

2 September 2009 | Making Home Affordable Home Affordable Modification Program (HAMP) Administration Fannie Mae Office of Home Ownership Preservation – Policy and Operations Interagency Involvement Federal Reserve Board Federal Housing Administration Comptroller of the Currency Office of Thrift Supervision Federal Housing Finance Agency Federal Deposit Insurance Corp. Compliance and Oversight Freddie Mac Office of Financial Stability – Compliance Office Special Inspector General - TARP OMB / GAO / Congressional Committees

3 September 2009 | Making Home Affordable HAMP Servicer Participation Servicers of loans owned or securitized by Fannie Mae or Freddie Mac must participate in HAMP and 2MP 62 Servicers have signed SPAs for non-GSE book

4 September 2009 l Making Home Affordable 4 Restrictions on HAMP Eligibility Originated after January 1, 2009 Previously modified under HAMP Secured by investment properties or secondary residences Secured by vacant or condemned properties HAMP expires December 31, 2012

5 HAMP Activity through August 2009 September 2009 | Making Home Affordable # GSE Loans Entering Trial Period202,189 # Non GSE Loans Entering Trial Period157,946 # of All Loans Entering Trial Period360,135 UPB of Non GSE Trial Period Loans$40.6 Billion # of Trial Period Plan Offers Extended to Borrowers571,354 # of Solicitations for Information Sent to Borrowers1,883,108

6 Compliance Validation of information reported through the MHA Data Reporting system (IR2) Public performance reports by Servicer published at On site and desk audits of all participating Servicers by Freddie Mac Second Look – new compliance process sampling – Loans evaluated but not approved for HAMP – 60+ delinquent loans not evaluated for HAMP September 2009 | Making Home Affordable

7 Information and Escalation Servicer / Counselor web Borrower Call Center HOPE (4673) General inquires / MHA Escalation Team Counselor/Government Escalation

8 September 2009 | Making Home Affordable Borrower Web Site Easy-to-Use Main Navigation for Homeowners to Quickly Find Information On the Home Page, consumers can access:  Spanish Content  HOPE (4673)  Beware of Scams  Information Video  Helpful Links in Footer Sample Home Page Access Checklist to Prepare Borrowers to Speak with their Mortgage Lender or Counselor

9 Second Lien Modifications - 2MP Separate Servicer Participation Agreement – servicers may opt in for HAMP/2MP or both 2 nd lien automatically modified if corresponding first lien is modified through HAMP 2 nd lien interest reduced to: -1% (amortizing) -2% (I/0) for five years -Year 6 rate steps up to match rate on 1 st Loan term extended to match first mortgage If HAMP included principal deferment, 2 nd lien modification must include pro-rata deferment September 2009 | Making Home Affordable

10 2MP Payoff Option Investor may choose to accept a cash payment from Treasury in exchange for writing off the debt -Payoff amounts range from 4% to 12% of the unpaid principal balance based on CLTV and the borrower’s back end DTI -If loan is more than 6 months delinquent the maximum payoff is 3% -Borrower must be released from all liability for repayment -Borrowers cannot be charged a fee for 2 nd lien modification or payoff September 2009 | Making Home Affordable

11 Home Price Decline Protection Additional investor incentive to modify loans in markets where property values continue to decline HPDP incentive – Fixed amount per property calculated based average price decline in prior quarters – Payments accrue monthly for 24 months, paid annually Automatic – No action required by borrower or servicer Results in greater number of positive NPV outcomes especially in areas with greatest price depreciation September 2009 | Making Home Affordable

12 Incentives Balance Interests Of All Parties Borrowers: - Pay for success - accrues monthly, paid annually to reduce principal - Up to $1,000 for HAMP* and fixed at $250 for 2MP Investors: - Incentive for interest rate reduction for HAMP* and 2MP - $1,500 up front payment to modify first liens in imminent default - Home Price Decline Protection incentive* – varies by geography Servicers: - Up front incentives - $1,000 for HAMP* and $500 for 2MP -Additional $500 if HAMP* borrower is in imminent default -Pay for performance incentive up to $1,000 – accrues monthly paid annually * Borrowers monthly payment must be reduced by at least 6% September 2009 | Making Home Affordable

13 Foreclosure Alternatives – Short Sale / DIL Alternative to legal FC when HAMP fails Borrower must be evaluated for HAMP first and must be meet basic eligibility (owner occupied, <729,000, etc.) Standard forms and procedures streamline complex process Incentives: Servicers - $1,000 / Borrowers - $1,500 Up to $3,000 to pay off jr. liens - $1,000 from Treasury Borrower must be relieved of debt – no deficiency September 2009 | Making Home Affordable

14 Streamlined Documents (early Oct) A concern of both servicers and counselors is the amount of documents required and the lack of standardization – Servicers report that many trial modifications are lacking complete documentation – Advocates often complain of lost or missing documentation In October, unveiling a more streamlined approach – Standardized intake and combined hardship affidavit – Simpler, more informative trial plan notice that does not have to be signed and returned – Reducing document requirements to bare minimum For Wage borrower: 2 pay stubs, signed 4506-T and signed intake/hardship affidavit No documentation required for small amounts of declared passive income September 2009 | Making Home Affordable

15 Questions? Contact Information: Mark McArdle Homeownership Preservation Office September 2009 | Making Home Affordable