Apr. 28, 2012: It's an agency world (including a reminder about the 120 day premium recapture) with lots of updates; at least the joke is a classic
your weekend discussion with neighbors while mowing the lawn,
and they bring up Fannie Mae and Freddie Mac and how much money
they’re losing, be sure to remind them that the press seems to
leave out one important issue: the preferred dividends paid to
the U.S. Government (and thus the taxpayer). This 10% dividend,
which has accounted for billions and made up a large portion of
the reported losses, is usually mentioned almost as an
afterthought. (It is also believed, and I have not checked this
out, that neither Fannie nor Freddie has ever made enough profit
to cover the basic “nut” that the dividend amounts to.) The
latest on Fannie, by the way, involves its ex-CEO Daniel Mudd’s
legal battles: http://www.businessweek.com/articles/2012-04-26/fannie-maes-former-chief-fights-to-clear-his-name.
Freddie Mac's Monthly
Volume Summary for March, its total mortgage portfolio decreased
at an annualized rate
of 2.9% in March compared to a decrease of 3.3% in February. So
far in 2012 Freddie’s portfolio has shrunk by 3.8% - but it is
not a matter of simply saying, “Uh oh, Freddie’s shrinking, and
Wells Fargo is larger!” since the portfolio has many pieces. The
unpaid principal balance of the mortgage related investments
portfolio at the end of the period was $618 billion: $202
billion in PC’s, REMIC’s, and other structured securities, $20
billion in agency securities, $138 billion in non-agency
securities, and $248 billion in mortgage loans. The total
mortgage portfolio balance was $2.1 trillion.
is good to note that the single family seriously delinquent rate
was 3.51% March, down from 3.57% in February. Freddie Mac
approved 4,308 loan modifications in March 2012 and 13,677 for
the three months ended March 31, 2012.
issued guidelines to its servicers today improve the timing and
methods of handling short
sales, and the industry said, “What took so long with
short sale procedures?” Fannie Mae completed 70,025 short sales
in 2011 and 69,634 in 2010. The new rules apply to all
conventional mortgage loans held in Fannie Mae's portfolio,
loans purchased for that portfolio but subsequently securitized
into Fannie Mae mortgage backed securities (MBS) pools and those
originally delivered as part of an MBS pool. While not
required, servicers are encouraged to follow the guidelines for
loans sold to Fannie Mae that are guaranteed or insured by
government agencies or which are sold to Fannie Mae under a
recourse arrangement as long as that does not preclude Fannie
Mae from a full recovery under the guarantee or recourse
policies include a) Establish maximum required response time for
pre-foreclosure sale offers submitted on properties securing
loans as described above, b) Requires servicers to provide
borrowers with status updates during the evaluation process, and
c) Eliminates the need for servicers to first conduct an
evaluation for alternative solutions before responding to an
offer. Servicers have until June 25th to comply, but
may-as-well do it sooner than later.
The new guidelines are part of the Federal Housing Finance
Agency's (FHFA) Servicing Alignment Initiative to better match
the servicing and loss mitigation standards of Fannie Mae and
Freddie Mac. It establishes deadlines for acknowledging receipt
of the BRP, notifying the borrower of any missing documentation,
and sets up reporting specifications if the servicer is unable
to provide the borrower with an approval, approval with
conditions or a denial with a counteroffer within 30 days. The
servicer has a maximum of 60 days to complete the
pre-foreclosure sale evaluation and must inform Fannie Mae if
exceeding the original 30 day deadline. There are also
requirements for documenting borrower contacts in the loan
Freddie Mac is adjusting loss mitigation options to help
struggling borrowers through a number of initiatives, including
the revision of the State Housing Finance Agencies (HFAs)
Mortgage Assistance and Hardest Hit Fund programs. Transition
assistance funds from state HFAs must be accepted provided that
it doesn’t conflict with Freddie protocol. Effective for trial
period plan evaluations conducted on and after July 1, 2012,
Freddie will also be adjusting its Standard Modification
interest rate, which is currently at 5%. The new rate will be
published on the Standard Modification interest rate site (http://freddiemac.sparklist.com/t/408395/4682832/4992/26/),
will list the rate that must be used when calculating the terms
of a trial period payment plan.
Other Freddie changes include the extension of the Home
Affordable Foreclosure Alternatives initiative (HAFA) and HAMP
through December 31, 2013, the exclusion of borrowers with
mortgages that are subject to full recourse or indemnification
agreements from HAMP, and updates to the Guide Directory 5 and
Fannie Mae has announced that the new Loan Delivery application,
used to support the Uniform Loan Delivery Dataset (ULDD)
requirements, will be required for all loans whose applications
are dated December 1, 2011 or before and that are delivered July
23, 2012 or after. The application can be accessed at http://cl.exct.net/?qs'69558a8a4943d1dd8a61adaf373c3e3fbd47a22669afe99a3a13e1e4c868b7.
live webinar on the application is also available; loan delivery
file import users can register at http://cl.exct.net/?qs'69558a8a4943d16df170fdf36fe910c0604d4ffde6ecb22048019985fed9e7,
and loan delivery data entry users can register at http://cl.exct.net/?qs'69558a8a4943d15c5e4d2372dbfedbc84019741d10654b8ac5898067878dbd.
as a reminder, since I am asked about this often enough, FNMA
has stated that if a loan pays off within 120 days after MBA
ISSUE DATE, they can recapture the premium. Expect the industry
In an effort to improve the foreclosure sale process, Fannie is
setting down maximum required response times for sale offers,
permitting servicers to respond to unsolicited offers without a
HAMP evaluation, and requiring servicers to give borrowers
regular updates throughout the evaluation process.
Fannie will be revising its policies on Delinquency Management
and Default Prevention Requirements for HAMP modifications,
standard modifications, and modification programs issued through
a directive or delegation. The relevant guidelines on Letters
and Notices, Income Documentation Requirements, and Frequently
Asked Questions will be updated accordingly.
Florida should be aware that, at present, Fannie Mae requires
that pre-filing mediation vendor fees paid for the Florida
Pre-filing Mediation Program be reimbursed via the Cash
Disbursement Request (Form 571). Servicers should submit their
invoices for fees incurred on or after April 1st directly to
Fannie, as Fannie plans to pay the pre-mediation filing fees
directly to vendors. Fannie will only reimburse servicers such
fees if the vendor issued the invoice before April 1st.
Both Fannie and Freddie will be releasing updates on their
delivery applications in accordance with the Uniform Loan
Delivery Dataset (ULDD) requirements on Monday, April 23rd,
which marks the beginning of the ULDD transition period.
Freddie is rolling out an updated version of the selling system
that will reflect the ULDD-named fields and converting all
relevant loan data to MISMO® 3.0 format. The GSEs will be
providing various resources to help make the transition smooth;
see Freddie’s customer test environment (CTE) tool for
assistance in navigating this Monday’s new selling system. Bear
in mind that all loans with applications dated December 1, 2011
or earlier must comply with the new requirements by July 23,
The recent FHA
underwriting changes on disputed credit have been updated to
include an identity/credit theft and/or unauthorized use
loophole. If a borrower’s outstanding debt was incurred due to
credit/identity theft or unauthorized use, the borrower may
provide supporting documentation and have these collections
excluded from the $1,000 limit on outstanding collections. HUD
has delayed these changes such that they will affect all case
numbers assigned on or after July 1, 2012.
Effective for case numbers dated April 1st or after, the FHA has
also clarified that, for the purposes of defining a “family
member,” a son, stepson, daughter, or stepdaughter may all be
classified as a “child,” and step-parents/grandparents and
foster parents/grandparents are classified as “parents.”
As an addendum to the guidelines for year-to-date Profit and
Loss and Balance Sheets, the FHA requires an audited P&L or
signed quarterly tax returns from the IRS if the income
designated to qualify the borrower exceeds the two-year average
of tax returns. This also affects all case numbers assigned on
or after April 1st.
THE TOP 31 THINGS THAT YOU WILL NEVER HEAR A SOUTHERN BOY SAY!
(Given that my son will be spending the summer in Mississippi,
and that this was sent to me by someone in Alabama, I can get
away with this.):
31. When I retire, I'm movin' north.
30. Oh I just couldn't, she's only sixteen.
29. I'll take Shakespeare for $1,000, Alex.
28. Duct tape won't fix that.
27. Come to think of it, I'll have a Heineken
26. We don't keep firearms in this house.
25. You can't feed that to the dog.
24. No kids in the back of the pickup, it's just not safe.
23. Wrestling is fake.
22. We're vegetarians.
21. Do you think my gut is too big?
20. I'll have grapefruit and grapes instead of biscuits and
19. Honey, we don't need another dog.
18. Who gives a darn who won the Civil War?
17. Give me the small bag of pork rinds.
16. Too many deer heads detract from the decor.
15. I just couldn't find a thing at Wal-Mart today.
14. Trim the fat off that steak.
13. Cappuccino tastes better than espresso.
12. The tires on that truck are too big.
11. I've got it all on the C: DRIVE.
10. Unsweetened tea tastes better.
9. My fiancée, Bobbie Jo, is registered at Tiffany's.
8. I've got two cases of Zima for the Super Bowl.
6. She's too young to be wearing a bikini.
5. Hey, here's an episode of "Hee Haw" that we haven't seen.
4. I don't have a favorite college team.
3. You Guys.
2. Those shorts really ought to be a little longer, Betty Mae.
AND THE NUMBER ONE THING THAT YOU WILL NEVER HEAR A SOUTHERN BOY
1. Nope, no more for me. I'm driving!
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at