Home Affordable Modification Program Update

1. Home Affordable Modification Program Update Laurie Maggiano U.S. Department of the Treasury

2. Making Home Affordable Treasury funded plan to stabilize mortgage markets, protect communities and prevent avoidable foreclosures Home Affordable Refinance (HARP) Home Affordable Modification (HAMP) Home Price Decline Protection (HPDP) Second Lien Modification Program (2MP) Home Affordable Foreclosure Alternatives (HAFA) (Pending)

3. HAMP Participating Servicers  2,300 participants service loans owned or guaranteed by Fannie Mae or Freddie Mac. These servicers automatically participate in HAMP. 63 servicers have signed servicer participation agreements (SPA) to modify non-GSE loans under HAMP. The SPA covers loans held in portfolio or loans serviced on behalf of other investors.

4. HAMP Public Reporting Performance through September 2009

5. Trial Modification Tracker: Trial Modifications as a Share of Estimated Eligible 60+ Day Delinquencies

6. Home Price Decline Protection Additional investor incentive to modify loans in markets where property values continue to decline Results in greater number of positive NPV outcomes especially in areas with greatest price depreciation Fixed amount per property calculated based average price decline in prior quarters Payments accrue monthly for 24 months, paid annually Automatic � No action required by borrower or servicer

7. Second Lien Program (2MP) Supplemental Directive 09-05: Introduction of the Second Lien Modification Program (2MP) Separate Servicer Participation Agreement � servicers may opt in for HAMP/2MP or both 2nd lien automatically modified if corresponding first lien is modified through HAMP 2nd lien interest reduced to: 1% (amortizing) 2% (I/0) for five years Year 6 rate steps up to match rate on 1st Term and principal deferment to match first lien Extinguishment option

8. Foreclosure Alternatives (HAFA) Pending Supplemental Directive - Short Sale and Deed-in-Lieu of Foreclosure � Complements HAMP � only HAMP eligible borrowers Pre-approval of short sale terms prior to listing Standard forms Borrower�s relieved of liability for debt Financial incentives to servicers, borrowers, and investors Effective January 1, 2010

9. Streamlined Documents Supplemental Directive 09-07 New - borrower friendly forms Reduces borrower signatures No borrower supplied tax returns Simplifies document verification requirements Increases servicer discretion and flexibility All process changes retroactive

10. Home Affordable Modification Program Update Eric Schuppenhauer Fannie Mae It�s an honor to take part in today�s discussion about HAMP. During this difficult economy, millions of Americans struggle to hang on to their dream of homeownership. All of us in housing finance have been called to play an important role during this crisis. Our challenge is to help homeowners weather the economic storm and restore a healthy and sustainable housing market. With HAMP, the Administration has given us a framework and powerful tools to achieve these goals. Nothing like HAMP has ever been attempted before. In April, servicers received the first detailed guidance on HAMP. They were asked to immediately begin helping 3-4 million eligible borrowers. Servicers stepped up to meet that challenge. Today, hundreds of thousands of borrowers have access to more affordable, sustainable mortgage loans, with many more modifications to come. Fannie Mae was asked by Treasury to serve as administrator for HAMP, so I�d like to share our perspective on what�s been achieved to date� a great deal � and what challenges we face.It�s an honor to take part in today�s discussion about HAMP. During this difficult economy, millions of Americans struggle to hang on to their dream of homeownership. All of us in housing finance have been called to play an important role during this crisis. Our challenge is to help homeowners weather the economic storm and restore a healthy and sustainable housing market. With HAMP, the Administration has given us a framework and powerful tools to achieve these goals. Nothing like HAMP has ever been attempted before. In April, servicers received the first detailed guidance on HAMP. They were asked to immediately begin helping 3-4 million eligible borrowers. Servicers stepped up to meet that challenge. Today, hundreds of thousands of borrowers have access to more affordable, sustainable mortgage loans, with many more modifications to come. Fannie Mae was asked by Treasury to serve as administrator for HAMP, so I�d like to share our perspective on what�s been achieved to date� a great deal � and what challenges we face.

11. Role as Program Administrator As program administrator, Fannie Mae responsibilities include: Disseminate guidelines and policies Preparing documents, tools, and training Serving as paying agent for subsidies and compensation Keeping records on executed modifications and program administration Working with Treasury and others to achieve program goals Performing other tasks as directed by Treasury As servicers have put HAMP into operation, borrowers have faced their own learning curve. Fannie Mae is working to help borrowers: Overcome skepticism, Avoid foreclosure scams, and Take action. Let me focus on where we stand in our work with servicers and our outreach to borrowers. As program administrator, Fannie Mae responsibilities include: Disseminate guidelines and policies Preparing documents, tools, and training Serving as paying agent for subsidies and compensation Keeping records on executed modifications and program administration Working with Treasury and others to achieve program goals Performing other tasks as directed by Treasury As servicers have put HAMP into operation, borrowers have faced their own learning curve. Fannie Mae is working to help borrowers: Overcome skepticism, Avoid foreclosure scams, and Take action. Let me focus on where we stand in our work with servicers and our outreach to borrowers.

12. Key Accomplishments & Efforts Fannie Mae has supported HAMP by: Launching servicer website � HMPadmin.com Helping to developing borrower website: MakingHomeAffordable.gov Working alongside servicers to implement HAMP and integrate new systems and processes Creating FAQ process Helping Treasury establish call centers for borrowers and servicers and Partnering with Treasury on multi-city borrower outreach campaign in hard-hit communities (11 as of 10/7). More than 10,000 borrowers have attended these foreclosure prevention events. Fannie Mae has supported HAMP by: Launching servicer website � HMPadmin.com Helping to developing borrower website: MakingHomeAffordable.gov Working alongside servicers to implement HAMP and integrate new systems and processes Creating FAQ process Helping Treasury establish call centers for borrowers and servicers and Partnering with Treasury on multi-city borrower outreach campaign in hard-hit communities (11 as of 10/7). More than 10,000 borrowers have attended these foreclosure prevention events.

13. Servicer Website: HMPAdmin.com Servicers turn to HMPadmin.com for training, information, and resources. In response to servicer experience and concerns, we have -- Refined NPV model; Worked to provide advance notice of changes to give servicers time to adapt systems; Offered a grace period authorized by Treasury to give borrowers more time to submit paperwork to complete their current trial period, and we are working to Streamlined borrower documents. As Laurie said, we are working with Treasury to implement 2MP, short sales, and deeds-in-lieu as program parameters and needs have evolved. Servicers turn to HMPadmin.com for training, information, and resources. In response to servicer experience and concerns, we have -- Refined NPV model; Worked to provide advance notice of changes to give servicers time to adapt systems; Offered a grace period authorized by Treasury to give borrowers more time to submit paperwork to complete their current trial period, and we are working to Streamlined borrower documents. As Laurie said, we are working with Treasury to implement 2MP, short sales, and deeds-in-lieu as program parameters and needs have evolved.

14. Borrower Website: MakingHomeAffordable.gov We�re just as focused on the other side of the equation -- helping struggling borrowers understand HAMP. Since MakingHomeAffordable.gov launched in March, the information-rich site has received more than 36 million page views. Millions of distressed borrowers have learned about HAMP through mailings or brochures developed by Fannie Mae. More people now know about HAMP, yet borrower response isn�t what it should be. Only 29 percent of borrowers have responded to a recent HAMP solicitation letter. So Fannie Mae is conducting research into ways to communicate more effectively with borrowers. New research findings predict a better response rate if the servicer calls the borrower before the mailing is sent and after it is received. Mailings also had a better response rate if they: Contained a specific payment offer; Included testimonials from other borrowers; and Set a deadline to respond. We�re just as focused on the other side of the equation -- helping struggling borrowers understand HAMP. Since MakingHomeAffordable.gov launched in March, the information-rich site has received more than 36 million page views. Millions of distressed borrowers have learned about HAMP through mailings or brochures developed by Fannie Mae. More people now know about HAMP, yet borrower response isn�t what it should be. Only 29 percent of borrowers have responded to a recent HAMP solicitation letter. So Fannie Mae is conducting research into ways to communicate more effectively with borrowers. New research findings predict a better response rate if the servicer calls the borrower before the mailing is sent and after it is received. Mailings also had a better response rate if they: Contained a specific payment offer; Included testimonials from other borrowers; and Set a deadline to respond.

15. We�ve made tremendous headway, but our challenges are far from over. HAMP is operationally complex, and servicers must retrofit the process into their business. That�s why we do our best to offer additional lead time to implement new aspects. Let�s look at the major challenges still faced by servicers: Do more to make that initial contact with struggling borrowers. Be sure to fully train staff about HAMP before they face borrowers. Not withstanding the scope of this undertaking, servicers report they�ve made great progress on this. Operationalize HAMP as a systematic and efficient modification process. Since getting completed documents from borrowers is often a challenge, a document tracking system can be an invaluable asset. Finally, we all must do more to understand the borrower. Fannie Mae will continue working with Treasury and with servicers to explore creative ways to improve borrower outreach. We have learned from experience that not every borrower is willing or able to take part. When HAMP is not an option, borrowers need help to find other options to foreclosure, including short sales and deed-in-lieu. We�ve made tremendous headway, but our challenges are far from over. HAMP is operationally complex, and servicers must retrofit the process into their business. That�s why we do our best to offer additional lead time to implement new aspects. Let�s look at the major challenges still faced by servicers: Do more to make that initial contact with struggling borrowers. Be sure to fully train staff about HAMP before they face borrowers. Not withstanding the scope of this undertaking, servicers report they�ve made great progress on this. Operationalize HAMP as a systematic and efficient modification process. Since getting completed documents from borrowers is often a challenge, a document tracking system can be an invaluable asset. Finally, we all must do more to understand the borrower. Fannie Mae will continue working with Treasury and with servicers to explore creative ways to improve borrower outreach. We have learned from experience that not every borrower is willing or able to take part. When HAMP is not an option, borrowers need help to find other options to foreclosure, including short sales and deed-in-lieu.

16. HAMP is a powerful tool, but we can only achieve its goals through the combined efforts of government, servicers, and the GSEs. We�ve made a good beginning but hard work lies ahead if we�re to keep millions of more homes from going into foreclosure. Families, communities, and our industry are counting on us. It�s a big mountain to climb. Together, we can do the job. HAMP is a powerful tool, but we can only achieve its goals through the combined efforts of government, servicers, and the GSEs. We�ve made a good beginning but hard work lies ahead if we�re to keep millions of more homes from going into foreclosure. Families, communities, and our industry are counting on us. It�s a big mountain to climb. Together, we can do the job.