Mod 2 - Loan Boarding/Escrow Management Flashcards
How much of the proceeds is the servicer able to disburse for loans current or less than 31 days delinquent?
- for proceeds ≤ $40,000: full release in one payment
- for proceeds > $40,000: initial disbursement up to the greater of: $40,000, 33% of insurance loss proceeds, funds exceeding UPB, accrued interest, and advances on the mortgage loan.
- remaining funds to be released based on periodic inspections of repair work
How much of the proceeds is the servicer able to disburse for loans 31 days or more delinquent?
- for proceeds ≤ $5,000: full release in one payment
- for proceeds > $5,000: initial disbursement of 25% of the insurance loss proceeds but no more than $10,000 or funds exceeding UPB, accrued interest, and advances on the mortgage loan
- remaining funds to be released based on periodic inspections of repair work
What are the eligibility requirements for automatic termination of MI?
- a loan is eligible for automatic termination if the loan has reached its scheduled termination date or the mid-point of the amortization period and the borrower is current on their payments
- for 1-4 principal residences & second homes - termination is earlier of when principal balance reaches 78% of original value or mid-point of amortization period
- for 1-4 investment property or a 2-4 unit principal residence - termination date is no later than the 1st day of month after mid-point of original amortization period
- the servicer must not charge the borrower a fee for processing an automatic termination
Describe borrower-initiated termination of MI based on original value of property
when a borrower initiates termination of MI due to reduction in UPB through scheduled payments or unscheduled principal curtailments
Name the 3 steps the servicer must take to evaluate a borrower’s request for MI termination based on the original value of the property
1 - verify the LTV ratio elibility criteria:
* for a 1-4 unit principal residence or second home - LTV must reach 80% of original value
* for 1 -4 investment property or 2-4 principal residence - LTV must reach 70% of original value
2 - verify the borrower has an acceptable record:
an accepetable record is evaluated as follows
* current when termination is requested and payment for month preceding requested termination date was paid
* no payment 30+ days past due in last 12 months
* no payment 60+ days past due in last 24 months
The 12 and 24 month payment histories must be masured backward from the later of the date:
* balance is first scheduled to reach, or actually reaches, the required LTV of the original value
* the date the borrower requests termination
3 - verify the property’s current value is not less than its original value
- servicer must obtain property valuation from Fannie Mae’s servicing solutions system and verify value is at least equal to original value
- if value is at least equal to the original value, terminate MI and notify the borrower within 30 days
- if value is less than original value, servicer must deny the request unless borrower pays down mortgage loan balance to satisfy LTV ratio eligibility criteria
servicer must notify borrower within 30 days if request is denied and include grounds for denial and results of property valuation
Name the 2 steps the servicer must take to evaluate a borrower’s request for MI termination based on the current value of the property
1 - verify the LTV ratio meets eligibility criteria
* for a 1-4 unit principle residence or second home - if seasoning of the loan is between 2-5 years, LTV ratio must be 75% or less; if seasoning is > 5 years LTV ratio must be 80% or less
* for 1-4 investment property or a 2-4 principal residence - if seasoning is > 2 years LTV must be 70% or less
2 - verify the borrower has an acceptable record:
an acceptable record is evaluated as follows
* current when termination is requested and payment for month preceding requested termination date was paid
* no payment 30+ days past due in last 12 months
* no payment 60+ days past due in last 24 months
The 12 and 24 month payment histories must be measured backward from the later of the date:
* balance is first scheduled to reach, or actually reaches, the required LTV of the original value
* the date the borrower requests termination
servicer must notify borrower within 30 days if request is denied and include grounds for denial and results of property valuation
For properties that are abandoned and/or have a scheduled foreclosure sale date, what must the servicer do if the borrower wants to repair/restore the property?
- evaluate the borrower for a workout option
- ensure the property is preserved and maintained
- submit a Report of Property Insurance Loss Form (form 176) to Fannie Mae’s SF CPM within 5 business days of learning of the borrower’s intent
For properties that are abandoned and/or have a scheduled foreclosure sale date, what must the servicer do if the borrower doesn’t want to repair/restore the property?
- ensure the property is preserved and maintained
- submit a Report of Property Insurance Loss Form (form 176) to Fannie Mae’s SF CPM within 5 business days of learning of the borrower’s intent
If there is an overage after when an analysis is performed what should your servicer do with it?
For surpluses $50 or more, our servicer will send a refund check with the escrow analysis statement attached if the loan is current or will hold the anticipated overage in the escrow account if the loan is delinquent.
Surpluses that are less than $50 will be divided over 12 months and the monthly payment is reduced by that amount.
If there is a shortage when an analysis is performed what should your servicer do with it?
Our servicer spreads shortages over 12 months and the monthly payment is increased by that amount.
Our servicer also gives the borrower the option to pay the shortage in full to reduce the amount of the monthly payment.
Shortages on modified loans are spread up to 60 months. Each year, the new shortage is spread over the remaining term of the original spread but not less than 12 months
Why is it important to monitor Special Flood Hazard Areas (SFHA – flood zones)?
We need to monitor SFHAs monthly since the flood zone map from FEMA is updated on a monthly basis. If we see that a property that was originated in a flood zone and is no longer in a flood zone, the subservicer should contact the borrower to see if they would like to retain their flood insurance. If the loan wasn’t originated in a flood zone and is now currently in a flood zone, the subservicer needs to contact the borrower to get additional insurance within 30 days
Future State County’s property taxes can be paid anytime from November 1 to March 31 without being delinquent. Payments made before March receive a discount with the amount of the discount the highest in November and reduced every month from December to February. There is no discount if taxes are paid in March. When should the subservicer pay the taxes for borrowers in Future State County?
November (earliest discount period)
Describe when the servicer must terminate MI for modified loans and the steps after termination
the servicer must automatically terminate MI on the termination date or must approve the borrower-initiated termination request if all requirements are met based on the terms of the modified loan. The servicer must not collect any MI payments more than 30 days as of the later of:
* the date the termination request was received (or scheduled termination date/mid-point of the amortization period)
* the date all eligibility criteria for termination were met
once terminated the servicer must:
* reduce the borrower’s payment by the amount perviously collected
* notify the borrower within 30 days after termination
* refund any unearned MI payments within 45 days
* report the termination to Fannie Mae
How does the servicer verify if a borrower who is impacted by a disaster has an acceptable payment record?
- applies when revieweing the borrower’s request for termination of conventional MI based on either the original or current value of the property
- servicer must not consider any payment > 30 days past due in the last 12 months or > 60 days in the past 24 months that is attributable to the disaster event
