Loss Mitigation

New initiatives are under way in Washington to help service members who are struggling with their mortgage payments avoid foreclosure. The efforts include a mortgage payment forbearance of up to six months where the death or injury of an active-duty service member causes a hardship for military families with a mortgage obligation. Fannie Mae and the U.S. Army made the announcement at a Pentagon event Monday.

Warren, Michigan-based Five Brothers, a nationwide provider of commercial and residential mortgage default management solutions, announced the release of its ClaimSys HUD claims processing system this week. ClaimSys acts as an enhancement to existing claims processing programs and expedites Federal Housing Administration (FHA) claims by allowing users to generate completed HUD claims A through E quickly and efficiently, according to the company.

The credit quality of first-lien mortgages serviced by the nation's largest banks and thrifts remained steady during the second quarter of 2010, according to a new regulatory report. Mortgage delinquency levels were relatively flat but elevated after rising for several quarters. Completed foreclosures were up by 7 percent from the previous quarter, but mortgage modifications increased 18 percent, and the report found that newer mods are showing significantly lower re-default rates.

Bank of America reports that it has provided mortgage modification assistance to more than 680,000 homeowners since January 2008, 79,859 of which have been completed through the administration's Home Affordable Modification Program (HAMP). According to the company, it leads the industry in HAMP modifications. BofA officials say HAMP results have slowed in recent months due to the implementation of a full documentation requirement prior to initiating a trial mod plan.

The Work Number, an employment and income verification service of Equifax, recently launched a new product, Point In Time, which, according to the company, is a response to market demands for loan-level documentation to investigate repurchases and mortgage insurance rescissions. Designed to provide retro income verification services to validate and document a borrower's employment and income for loan funding, Point In Time was created to help lenders, insurers, and investors automate and streamline the quality assurance process.

Freddie Mac says it cut its total mortgage portfolio by an annualized rate of 5.2 percent in August. The GSE has been downsizing for most of this year. Only two months during the early part of 2010 saw increases in the company's portfolio size. The GSE also reported that its single-family delinquency rate decreased to 3.83 percent in August, down from 3.89 percent the month before. The multifamily delinquency rate, on the other hand, increased to 0.32 percent, up from 0.30 percent in July.

According to a statement released by Freddie Mac and Fannie Mae, the companies are in the process of developing the Uniform Appraisal Dataset (UAD) to improve the quality and consistency of appraisal data on loans delivered to the GSEs. Business and technical details of the UAD, implementation dates for the Uniform Collateral Data Portal (UCDP), and use of the UAD and UCDP are expected to be released later this year. Implementations will occur in 2011.

Banks that sold bad mortgages to Fannie Mae and Freddie Mac have a contractual obligation to buy the loans back, according to their regulator. But many of the nation's largest institutions aren't living up to their end of that commitment. The director of the Federal Housing Finance Agency says that as of the end of the second quarter, Fannie Mae had $4.7 billion in outstanding repurchase requests, and Freddie Mac had $6.4 billion -- more than a third of which have been outstanding for more than 90 days.

According to the national nonprofit Homeownership Preservation Foundation (HPF), economists estimate that close to 4 million homeowners will face delinquency in the near future. In an effort to help thwart this assessment, HPF works to provide information and financial education to guide consumers toward sustainable homeownership. The foundation reports that its Homeowner's HOPE Hotline has aided more than 4 million distressed homeowners since the financial crisis began in 2008.

The Treasury issued a new directive of the Making Home Affordable (MHA) program this week. Also known as the Dodd-Frank Certification Requirement, it provides guidance on borrower certification for non-GSE loans participating in the program. The new requirement states that borrowers are not eligible to receive assistance through MHA if they have been convicted of felony larceny, theft, fraud, or forgery; money laundering; or tax evasion in connection with a mortgage or real estate transaction within the last 10 years.