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                                              Fannie Mae Issues Recovery
                                              & Loan Modification Report
                                                           ---------
                                           Solution to Defaults and Claims

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Overview

Fannie Mae has released Helping Housing Recover: A Report on Fannie Mae's Mission Performance, which describes the company's efforts in 2009 to provide liquidity, stability and affordability to the nation's housing finance system.

The report cites $823.6 billion in funding the company provided last year to help keep the single-family and multifamily mortgage markets operating.

This issuance provides information regarding Fannie Mae's support for the markets and its support of the Administration's Making Home Affordable program. The U.S. Treasury appointed Fannie Mae is its agent to administer the Home Affordable Modification Program (HAMP).

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.

Highlights

Support for Markets

Fannie Mae provided $823.6 billion in funding, or liquidity, to "keep the singlefamily and multifamily mortgage markets operating during 2009." Fannie was responsible for more than 40 percent of the mortgage-related securities issuances, which made funds available for people to buy and refinance homes; and it also provided over 40 percent of financing for rental housing.

Through this funding, Fannie Mae provided financing that helped:

  • 600,000 borrowers buy homes during the tightest mortgage credit market in decades,
  • 2.5 million borrowers refinance into loans with lower payments, better terms or to meet other needs, and many borrowers were able to refinance despite having lost equity, and
  • Purchase, refinance or rehabilitate 372,000 rental units.
In addition, more than 160,000 borrowers with Fannie Mae-owned loans were able to keep their homes through loan modification or other loan assistance.

Support for Making Home Affordable (HAMP)

In February 2009, the Administration announced the Making Home Affordable Program - the most aggressive housing relief effort in decades - and gave Fannie Mae two distinct and central roles in the program:

  • Loan modification: The U.S. Treasury appointed Fannie Mae as its agent to administer the Home Affordable Modification Program (HAMP). This program helps struggling borrowers - those whose loans are owned or securitized by Fannie Mae or Freddie Mac and those financed by other institutions - to modify their loans and avoid losing their homes to foreclosure.
  • Loan refinancing: Under the Home Affordable Refinance Program (HARP), which is available to borrowers with GSE-owned or guaranteed loans, Fannie Mae offers the opportunity to refinance into better loans, even if the value of their homes has declined to the point where they owe more than their homes are worth.
REDUCE HIGH FHA Defaults
 

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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Helping Housing Recover: A Report on Fannie Mae's Mission Performance - March 2010 (3/18/10)





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