WaterfallCalc.com Announces Additional Options for Loss Mitigation Review Calculations

VA, RHS, & GSE MODIFICATIONS NOW AVAILABLE

Grand Rapids, MI (November 13, 2017) — DLS Servicing Consultants, LLC has significantly improved its already successful loss mitigation waterfall calculation system.

Previously, WaterfallCalc.com offered only FHA Waterfall home retention calculations. The newly added calculation options include VA, RHS, and the Fannie Mae/Freddie Mac Flex Mod.

WaterfallCalc.com will continue to offer other user-friendly options including easy title ordering from one of our two integrated title companies, an escrow analysis option, and printable modification documents that are recordable in all jurisdictions.

For more information contact Brandi Tankersley at btankersley@assistanceoptions.com or (616) 406-4310.

 

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Coming Soon!

Changes Coming to WaterfallCalc.com in October:

  • Rural Housing Service Calculations
  • VA Calculations
  • Fannie Mae Flex Mod Calculations

Other convenient options for our WaterfallCalc.com users include:

  • Setting up a client relationship with one of our two integrated title services for easy title ordering.
  • Printing Modification Documents that are fully compliant and recordable in all jurisdictions nationwide.

 

If you would like a demo of WaterfallCalc.com, or to discuss our other consulting services, please contact Brandi Tankersley at btankersley@assistanceoptions.com, or call 616.406.4310.

Advice for Dealing with Disaster Related Defaults

By Donna Schmidt, Managing Director – DLS Servicing Consultants, LLC

 

With Hurricane Harvey, wildfires in Montana, flooding in West Virginia, and severe weather in other parts of the country, it is essential that Mortgage Servicers are prepared and poised to assist your neighbors/mortgagors through the crises.

 

The rules vary based on the Investor/Holder of the loan or the insurer/guarantor.  Below is a brief summary of what you can and cannot do.

 

In general, the best practice is:

 

  • Validate that the disaster either damaged the property or impaired the mortgagor’s income potential.
  • Only those mortgagors who have submitted a loss mitigation application (borrower response package) should be considered for a special disaster forbearance plan, if the loan is current. A small percentage of mortgagors will not be able to qualify for a permanent home retention option at the end of a forbearance plan.  If the mortgagor can maintain the monthly payments, they should be encouraged to do so.
  • Once a loan does become delinquent and the delinquency is in direct result of the disaster, most insurers/guarantors will offer a 90 day special forbearance to give the mortgagor time to recover, file insurance claims or FEMA applications or find new employment. For some mortgagors they have lost everything and they need time to reconstruct essential documentation to apply for assistance.
  • In addition, most entities will also afford a 90 day moratorium on initiating foreclosures, foreclosure sales and evictions.

 

We are recommending the following:

 

  • When a mortgagor calls to report their property is damaged or that they are now temporarily unemployed due to a disaster – issue a loss mitigation application package and encourage them to submit as much documentation as they can pull together. The most essential items are evidence such as an insurance claim or letter from employer, etc.  The loss mitigation application will be processed in accordance with the insurer/guarantor or investor’s guidelines.
  • If there is no contact with the mortgagor, the property falls within the FEMA map of individual assistance areas (or HUD’s affected county list) and the loan is 30+ days delinquent one month after the disaster, issue a special forbearance plan that provides for a monthly payment of $10 per month for three months (when not restricted by the insurer/guarantor or investor). This will encourage the borrower to make contact, and remain in contact, during the 90 day moratorium period.
  • For properties that are located in the FEMA individual assistance counties or the counties identified by HUD, the servicer should refrain from reporting a delinquent loan to the credit repositories for the 90 day moratorium period.
  • Please remember that, as the servicer, you still have an obligation to have abandoned properties secured. It is critical to attempt contact with the mortgagor and to schedule inspections as soon as possible for any property that falls within the disaster mapping areas.  This inspection will also determine if the property was indeed damaged by the disaster and help the servicer understand if additional relief options are necessary.

 

Below is a brief summary of the various guidelines – please see the individual entity announcements, handbooks, circulars and guides for more detailed guidance.

 

GSE Loans (Fannie Mae or Freddie Mac)

 

Both GSE’s offer a moratorium for 90days for the initiation of new foreclosure and the continuance of any existing foreclosure, until it can be determine whether the property was affected by the disaster.  Under no circumstances should a foreclosure be allowed to consummate until It is determined that a foreclosure is feasible.

 

The GSE’s allow for a 3 month forbearance, and up to a 6 month plan if there is contact with the mortgagor.

 

FHA

FHA has issued a 90 day moratorium on foreclosures and forbearance on payments. This became effective 8/28/2017, and will expire on 11/26/2017.

VA

VA has issued a circular dated 8/29/2017 that states that they encourage a 90 day moratorium on the referral to foreclosure and foreclosure sales.  They also encourage forbearance for those mortgagors directly affected by the disaster, but servicers should use sound judgement to determine if the default may have been caused by another reason.

VA further allows the servicer to reverse previous prepayment (principal curtailments) and reapply as contractual payments, as an effort to keep the loan current.

VA further reminds servicers that the National Guard has been called to assist in numerous instances and the Soldiers and Sailors Relief Act protections would apply to those mortgagors asked to assist.

Rural Housing

Section 4 of the Rural Housing Guide provides detailed instructions on how to handle a disaster.  RHS authorizes a 90 day moratorium for new foreclosure referrals and foreclosure sales – however, they clearly state that there must be evidence that the property or the mortgagor’s employer was directly affected by the disaster.

Rural Housing allows for a forbearance period, but does not specify the parameters, and therefore should be evaluated on a case by case basis – making it necessary for the borrower to submit a loss mitigation package.  At no time can the loan be more than 12 months delinquent during the forbearance period.

Privately Held Loans

We strongly recommend that all foreclosures be placed on a 90 day moratorium, until the property condition can be evaluated, as well as the occupancy status of the property.  Sound judgement should be used in determining whether the foreclosure can be commenced.

An automatic 3 month forbearance of $10 per month can be issued to all properties located in the disaster zone for all loans that are 30+ days delinquent.  This should only be granted if the servicer has determined that prior to the disaster the property had not been abandoned.

Additional Assistance

DLS Servicing Consultants, LLC is a loss mitigation outsourcing consulting firm.  Our experienced staff stands ready to assist and ensure that the mortgage servicer meets the needs of their portfolio and community.  Please visit our website at www.dls-servicing.com for more information.

When They’re Ready, We’re Ready

With the release of ML 2016-14, and a target compliance date of December 1, WaterfallCalc.com is ready to go! As always, WaterfallCalc.com was geared up for the new guidelines based on the original compliance deadline date.

WaterfallCalc.com partnered with MRG Documents to provide fully integrated loan modification and partial claim/subordinate mortgage and notes. The documents are in recordable format for all jurisdictions nationwide, and integrate the calculations for the loan’s eligible option.

The mortgage servicing industry is in a constant state of progressive change. Because of this, WaterfallCalc is designed to reduce staff training and processing times, and human error. With minimal data-entry required, the WaterfallCalc system immediately provides an analysis that includes calculations for each home retention option, and an explanation for each option for which the borrower is ineligible.

WaterfallCalc.com is in the process of adding the escrow analysis option, along with the waterfalls for other guarantors, such as Rural Housing and VA.

DLS Servicing Consultants, LLC partnered with Worksmart Database Masters, LLC to produce the most time-efficient, cost-effective method of processing FHA Loss Mitigation files.

WaterfallCalc.com has some Exciting News!

We are pleased to announce that we now offer fully integrated Loan modification and Subordinate Mortgage Documentation that flows directly from the systems calculations. We partnered with MRG Document Technologies to provide fully compliant and recordable documents for all HAMP options.*

Also in response to FHA’s Mortgagee Letter 2016-14, WaterfallCalc.com (WFC) was upgraded to include the changes to the loss mitigation waterfall as described therein. The changes are as follows:

1) Special Forbearance Plan – FHA has removed the requirement that a plan must last a minimum of 12 months. Previously WFC would calculate the lowest payment possible that allowed for a minimum of 12 payments, and would not allow the loan to exceed more than 12 months delinquent. Often this would result in a payment that was not affordable.

WFC will now calculate a payment that will be affordable to the borrower, or a minimum of $10 per month. The plan will last only until the loan becomes 12 months delinquent before terminating and requiring the borrower to submit updated financial information to be considered for a more permanent loss mitigation option.

2) Formal Forbearance Plan (WFC refers to as the Repayment Plan) – FHA now requires that any borrower with a front end debt to income (DTI) ratio of 31% or more, should be reviewed for the HAMP option, prior to the repayment plan option.

It is incumbent on our clients to perform a more thorough review of the borrower’s financial budget for any loan with a front end DTI of 31% or less, by requiring the receipt and review of actual bills to accurately reflect the true budget.

3) Standard Loan Modification – FHA has removed this option from the waterfall. Instead all loans should be reviewed to ensure that the new proposed mortgage payment is affordable. The HAMP – Loan modification only, HAMP – Partial Claim only and combination HAMP are all still available.
What you can expect:
• The system should be accessed via our website – www.waterfallcalc.com . It will now be split into Version 2.0 – loans entered prior to December 1, 2016 and Version 3.0 which will be for loans entered on December 1, 2016. You can find both links on the Client Portal/Servicers page.
• The loans you entered prior to December 1, 2016 will be found on version 2.0 or what we are referring to as the Legacy system. Access to Version 2.0 is gained through the “Client Portal”, “Servicer” and then select “Version 2.0”. You still will be able to enter new loans, edit previously entered loans and order Loan modification/partial claim documents, however anything run on the legacy system will be calculated based on the waterfall criteria that was in effect prior to Dec 1, 2016. This system will remain live for six months after which time it will be opened only at the request of a client seeking to perform due diligence or quality control reviews on seasoned portfolios.
• Version 3.0 will house the new live system which will base all calculations on Mortgagee Letter 2016-14. You will be able to retrieve PDF reports (Waterfall and Option Reports) from the PDF Reports selection available in the tool box (gear icon – top right on the dashboard) for any loan run on any previous version of WFC.
When you first enter the Version 3.0 – you will see a blank dashboard – a fresh start.
If you entered a loan on the legacy system, but now want the data to be analyzed and calculated based on the new criteria, it must be re-entered into the new live system.
• The Waterfall, special forbearance and HAMP reports were re-organized to reflect the required changes.
• We strongly recommend that before you enter any new information into WFC Version 3.0, you first clear the internet cache by clicking on the Ctrl + F5 keys.
Coming Soon
1) Fully integrated escrow analysis – to ensure that you are properly including the appropriate amount of escrow shortage in the partial claim or capitalization.
2) Ability to efficiently order title reports on loans that qualify for the HAMP option, to comply with the FHA requirement to protect the first lien position of the modified loan.
3) Adding Veterans Administration and the Rural Housing Services loss mitigation waterfall options to the program.
*The loan modification/partial claim document option is available for an additional $75 per loan. An updated contract must be executed in order to activate this option. Please contact WaterfallCalc.com for more information.