The National Mortgage Settlement: What Servicemembers Need to Know

1. The National Mortgage Settlement: What Servicemembers Need to Know California Monitor Program A Program of the Attorney General Last edited 10/4/2012

2. Disclaimer: This presentation reflects the views of the California Monitor Program. It does not necessarily reflect the views of the Attorney General or the California Department of Justice.

3. National Mortgage Settlement • Five major banks agreed to improve servicing standards and to provide relief to borrowers: • Bank of America (includes Countrywide) • Wells Fargo • JPMorgan Chase • Citibank • Ally Financial (formerly known as GMAC) • Relief under the settlement includes: • Loan modifications such as principal reductions or refinances • Improvements in how banks treat consumers trying to save their homes

4. National Settlement: What the Settlement Does Not Do • Deal does NOT limit rights to pursue: • Criminal charges for conduct covered • Securities or false claims act claims • Federal or state fair lending or civil rights claims • Rights of CONSUMERS to bring actions for loan servicing, foreclosure abuse, or loan origination.

5. National Settlement: Settlement Homeowner Relief • Relief to be provided: $25 billion • Consumer Relief for Homeowners (e.g. loan modifications) • New Servicing Standards (e.g. restrictions on dual tracking) • Cash payment: $2.3b, including $410m to CA • Restitution to foreclosed: $1.5b (est. $2,000 per recipient) • California Commitment: $12 billion of relief to be provided to California homeowners

6. Consumer Relief: Principal Reduction and Other Programs • Loan eligibility • Does NOT include Fannie/Freddie • DOES include FHA, VA, USDA loans • $10b: Principal reductions for underwater HOs • Eligible mortgages/modifications: • Delinquent or at risk of imminent default • LTV ratios of >100% • Result in debt-to-income ratios of 31% and LTV ratios ≤ 120% (some caveats) • $7b: Principal forbearance, deficiency waivers, short sales, cash for keys & other programs

7. Refinances: Consumer Relief • Origination Criteria • Originated before January 1, 2009 • Not FHA, VA, Fannie/Freddie, manuf. home • Loan Characteristics • Servicer-owned first-liens • Pre-refi interest rate of at least 5.25% • LTV> 100% • Not modified in prior 24 months • Homeowner Status • Current and no late payments in past 12 mos • No bankruptcy or foreclosure in past 24 mos

8. Who Controls Your Mortgage? • A Mortgage Servicer is the party that collects the payments and fees. They communicate with homeowners in default. • The Owner (Investor) is the party that eventually receives your payments. Often, this is a group of investors, whose interests are represented by a trust bank. Other common investors are Fannie Mae or Freddie Mac, or the same bank who services your loan. • Your eligibility under the Settlement depends on the identities of both the Servicer and the Owner of your mortgage.

9. Overview: California Commitment • Separate 3-year agreement to aid CA homeowners signed by Bank of America, Wells Fargo, and Chase • $12 billion loss mitigation commitment • Any principal reduction modifications of first or second liens or short sales • Must be creditable under national agreement • Speeding meaningful relief to hardest-hit places • Extra credit ($1 = more than $1) for 1st lien principal reductions in first year (through March 1, 2013) and in 12 counties wit highest foreclosure rate • $1.15 credit for every $1 reduction in first year (March 1, 2012 through March 1, 2013) • $1.25 credit for every $1 reduction in first year in 12 hardest hit CA counties

10. Enforcement: California Commitment • National Monitor will determine how much credit Servicers earn toward the California Commitment • Separate penalties • If do not meet obligations at end of 3 years, pay up to 50% of unmet obligations • Penalties total $800 million maximum for 3 institutions • AG may request all information in National Monitor’s possession about relief provided in CA

11. Improvements in Mortgage Servicing • These new servicing standards apply to any owner-occupied loan serviced by the five banks. They apply regardless of who owns the loan. • The five banks must: • NOT impose improper fees • Have adequate staffing and training • Have new rules for better and faster handling of loan modifications to help prevent foreclosure of consumers seeking help

12. Improved Communication • Establish a Single Point of Contact (SPOC) if you are having difficulty with payments. The banks must assign a SPOC to consumers in financial trouble. • The SPOC’s duties include explaining loan modifications and alternatives to foreclosure and coordinating receipt of documents from consumers who seek help • You have the right to speak to the SPOC’s supervisor • SPOCs must communicate with housing counselors when borrower provides written authorization REMEMBER:Stay in touch with your SPOC and open all bank mail

13. Loan Mod Handling: Servicing Stds • Timing Deadlines for Processing Applications • Upon receipt: • Servicer must acknowledge receipt of loan mod application within 3 days; • Servicer must send missing items letter giving borrower 30 days to submit additional documents within 5 days. • Decisions made within 30 days of receipt of completed application. • Denials: • Servicer must send letter in 10 days with reasons for denial; • Servicer must give some borrowers 30 days to appeal denial.

14. Loan Mod Handling: Servicing Stds • Restrictions on Dual Tracking • Pre-referral to foreclosure: No dual track if complete loan mod application submitted by day 120 of delinquency. • Post-referral to foreclosure: No dual track if complete loan mod application submitted: • < 30 days after attorney letter to borrower • > 30 days after attorney letter but > 37 days before sale • If loan mod application is submitted < 37 days before sale but > 15 days before sale, servicer must conduct an expedited review of the borrower’s application.

15. Servicing Standards for Servicemembers Under the National Mortgage Settlement

16. Servicemembers: Servicing Standards • Rectify past foreclosures • Possible restitution for servicemember homes that were wrongly foreclosed (pending an independent audit) • Interest rate relief • Servicers must determine if any servicemembers were wrongly charged more than 6% interest, after the servicemember requested relief under SCRA. • Compensation for Permanent Change of Station (“PCS”) shortfalls • Possible compensation available to servicemembers who had to sell homes at a loss after getting PCS order.

17. Servicemembers : Servicing Standards • SCRA protections for active duty homeowners • If a servicemember states they were on active duty in the last 9 months or is currently under orders to go on active duty, lenders must determine if they receive extra SCRA or Settlement protections. • All servicemembers will be referred to SPOCs or customer service representatives knowledgeable about SCRA servicing benefits • All homeowners delinquent 45 days on their mortgage must be notified that servicemembers may receive special protections against foreclosure, high interest rates, and are entitled to free housing counseling from certified counselors.

18. California Monitor’s Role • Program of the CA Attorney General • Provide Expert Advice and Support to the AG • Independent of banks • UCI Law Consumer Protection Clinic

19. Servicemembers: Servicing Standards • Protections for servicemembers (continued) • With few exceptions, within 9 months of active duty service, if eligible for Hostile Fire/Imminent Danger Pay AND is serving outside the US or more than 750 miles from mortgaged property, servicer cannot seize, foreclose, or sell servicemember’s house. • Servicer cannot require a servicemember to be delinquent to qualify for short sale, modification, or any other relief if he/she is suffering a financial hardship and is otherwise eligible for relief.

20. Tasks of California Monitor • Track and handle HO complaints & inquiries • Provide more tailored and detailed assistance to facilitate communication with bank or answer questions • Record data on nature of complaints and bank responses • Monitor banks’ implementation of settlement • Analyze data and information to detect implementation problems or settlement violations • Engage banks on how to improve their CA performance • Outreach, Innovation, and Expertise • Workshops and events for counselors, legal aid, etc. • Advice on broad range of consumer protection initiatives as requested by AG

21. Update on California Monitor • Operations • Two law professors, staff attorney, and three fellows • Clinic at UCI Law School with 7 law • Complaint Handling • Built database to capture alleged violations and relief requests • Coding 1,400+ complaints since April 1 • Monitoring Implementation • Conversations and follow-up with all 5 institutions • Focusing on banks’ delivery of consumer relief • Outreach • Fourteen events in summer; more events scheduled • Developing handouts, presentations, and website content • Preparation of public reports

22. CA Monitor’s Homeowner Assistance • Respond to all homeowners who contact us • Read each complaint carefully and note issues to track patterns of problems • Provide information to homeowners on Settlement • Discuss issues with the banks in order to obtain improved treatment of customers • Refer homeowners to HUD-certified housing counselors

23. Resources for Homeowners

24. Resources for Homeowners

25. Resources for Homeowners

26. What We Can’t Do • We cannot help homeowners unless their mortgage is serviced by one of the settling servicers: • Bank of America/Countrywide, Ally/GMAC, JPMorgan Chase, Citi, and Wells Fargo • We cannot help homeowners with mortgage origination and ownership transfer issues. • We cannot help homeowners who have already lost their homes. • Homeowners must be underwater on their first mortgage to be eligible for relief under the Settlement.

27. How to Get Help or Learn More about the Settlement • For more information, visit: • http://oag.ca.gov/nationalmortgagesettlement • Questions or complaints about your servicer? • Email the California Monitor at: CAMonitor@doj.ca.gov

28. Homeowner Bill of Rights • On February 29, 2012, Attorney General Harris announced her sponsorship of a legislative package designed to protect homeowners and help consumers. • These bills are referred to collectively as the Homeowner Bill of Rights. • On July 11, 2012, the Homeowner Bill of Rightswas signed into law. Effective date: January 1, 2013.

29. Homeowner Bill of Rights: Foreclosure Reduction Act • One aspect of the Homeowner’s Bill of Rights was the Foreclosure Reduction Act (AB 278/SB 900), which: • Requires servicers provide notice to borrowers of right to foreclose. • Prohibits “dual tracking” while a complete loan modification application is pending. • Mandatesthe lender provide a single point of contact. • Requires a foreclosure avoidance notice describing the servicer’s loan modification process within 5 days of recording a notice of default if a borrower has not submitted a complete loan modification application.

30. Homeowner Bill of Rights:Tenant Protections • AB 2610/SB 1473 protects tenants in a foreclosed property from eviction for 90 days following sale. • Also requires that purchasers of a rental property in a foreclosure sale honor a tenant’s existing fixed lease, unless the new owner plans to make the property her principal residence or the tenant is the original mortgagor.

31. The National Mortgage Settlement: What Servicemembers Need to Know California Monitor Program A Program of the Attorney General Last edited 10/4/2012