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                                          February Loan Modification Report
                                           Solution to Defaults and Claims



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On March 12, 2010, the U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) released an update on the Administration's nationwide campaign to help borrowers in the trial phase of their modified mortgages convert to permanent modifications under the Home Affordable Modification Program (HAMP).

The new data demonstrates that there has been a significant acceleration in the rate at which borrowers are being approved for permanent modifications.

The number of permanent modifications increased by 45 percent

As of the end of February, more than one million borrowers were receiving a median savings of $500 each month - a 36 percent median monthly payment decrease.

Permanent modifications have been granted to 170,000 homeowners and an additional 91,800 permanent modifications have been approved by servicers and are pending only borrower acceptance.

HAMP was designed to offer through 2012 up to 3-4 million homeowners reduced monthly mortgage payments that are affordable and sustainable over the long-term.


Making Home Affordable Program
Servicer Performance Report - February 2010

Number of Permanent Modifications Increases 45%

  • More than 170,000 permanent modifications have been granted to homeowners, who are guaranteed lower payments for five years.
  • An additional 91,800 permanent modifications have been approved by servicers and are pending borrower acceptance.

Over One Million Borrowers in Active Trial and Permanent Modifications

  • More than 1.3 million homeowners have received offers for trial modifications, representing 34-45% toward the goal of 3-4 million offers extended through 2012.
  • More than 72,000 new trial modifications started in February; borrower savings begin with the first trial payment. Nearly 1.1 million trial modifications have begun under the program.
  • Of the 1 million borrowers in active modifications, more than 168,000 borrowers are in active permanent modifications.
  • These homeowners' lower monthly mortgage payments represent a cumulative savings of over $2.7 billion.
  • Of modifications that have converted to permanent, 0.9% have been canceled. Of all modifications started, 8.2% have been canceled.
Borrowers in Permanent Modifications Experience Real, Long-Term Savings in Monthly Housing Expenses

  • Borrowers in permanent modifications are saving a median of 36% of their before-modification payment; median savings is more than $500 each month.
  • Qualified homeowners could reduce housing-related expenses from almost half of their gross income to less than one-third of their income.
  • Upon completing one year of on-time payments per program guidelines, borrowers are eligible to earn up to $1,000 to be applied to their outstanding mortgage balance.


Our Compare Ratio Task Force is designed to reduce high
 Compare Ratios caused by excessive defaults and claims.

Task Force Description
  • Staffed with subject matter experts and skilled auditors
  • Specially designed checklists and automated file screening systems
  • State-of-the-art quality control, compliance, forensics, and modern research facility
  • Scalable up to virtually any size default and claims experience
  • Upload/download large file formats for prompt reviews
  • Located in a secured and safe audit location
Our Remedy
  • Comprehensive review of existing defaults and claims for loss mitigation  and loan modification eligibility
  • HUD-FHA and regulatory compliance guidance for the mortgagee
  • FHA and conventional Early Payment Defaults resolution strategies and loss mitigation methodologies
  • Notification to mortgagee of borrower's loss mitigation eligibility
  • Notification of loss mitigation eligibility to the borrower
  • Referrals to expert, nationwide legal counsel to handle loss mitigation and loan modification strategies
  • Monitoring of loss mitigation applications in process
  • Follow-up with servicers to assure proper and timely resolution and notification to HUD-FHA
  • On-going review and loss mitigation of new defaults and claims

An indicator of excessive defaults and claims is the FHA Compare Ratio statistic. When a Compare Ratio is above 150, HUD begins a due diligence process.

The Compare Ratio provides a value that reveals the largest discrepancies between the mortgagee's default and claim percentage and the default and claim percentage to which it is being compared.
Mortgagees with a Compare Ratio of greater than 200 are subject to disciplinary review, termination of underwriting authority, and possible loss of FHA mortgagee approval.

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Making Home Affordable Program
Servicer Performance Report Through February 2010 - March 12, 2010

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