U.S. Bank Home Mortgage

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U.S. Bank Home Mortgage

• National Council of State Housing Agencies

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Introduction

• Good afternoon.
• Its a pleasure to be here with all of you this
  afternoon.
• Id like to take some time from a Master
  Servicers point of view and talk about
  Servicing first time homebuyer loans.

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History

• Our Mortgage Revenue Bond Program Division dates
  back to 1988 when THEN The Leader was selected as
  the Master Servicer for the Ohio Housing Finance
  Agency. In 2008, we are proud to celebrate our
  20th year as Master Servicer for this agency.

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History continued

• Leader then decided to expand its markets in 1994
  by offering our services as a single family
  Master Servicer to other HFAs across the nation.
  
• From 1995 to date, 56 agencies have selected
  Leader/USBHM-MRBP to serve in the role as Master
  Servicer.

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Our partnerships created not only tremendous
growth, but also the need

• For an equity partner.
• In 2002, U.S. Bancorp, the 6th largest financial
  services holding company acquired The Leader.
• In June 2004 The Leader Mortgage Company adopted
  the name of its parent company, U.S. Bank Home
  Mortgage.

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USBHM is the only Master Servicer

• Our facility in Bedford, Ohio is dedicated solely
  to the acquisition and servicing of Mortgage
  Revenue Bond loans. As such, we are well versed
  in not only normal servicing procedures, but also
  in how we communicate and work with First Time
  Homebuyers. This unique business requires
  commitment, and a desire to continually reach out
  to the borrower.

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As a Master Servicer we

• Support the needs of our customers whether its
  the borrower, the lenders or the HFAs.

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Customer Access Borrowers

• Borrowers have web access to their mortgage loan
  accounts 24/7 by logging onto http//www.usbankhom
  emortgage.com. They have the ability to view
  items such as loan payment transactions, view
  and/or pay their bill online, current balance and
  due date, real estate tax and hazard insurance
  information.
• Borrowers may also e-mail a Customer Service
  Representative if they have any questions about
  their account. Customers also have 24/7
  accesses via telephone and the IVRU (Interactive
  Voice Response Unit).

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Client Access Lenders

• Lenders have access to bond program information
  and have the ability to e-mail USBHM by accessing
  the website http///www.mrbp.usbank.com. This
  website was established specifically for Lenders
  and HFAs use. Lenders can select a specific
  bond program to view program guidelines forms
  and verify program updates.

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Client Access HFAs

• HFAs have access to borrower information for
  loans originated in their programs through the
  MRBP website, http//www.mrbp.usbank.com. HFAs
  select the option Mortgage Loan Information
  which will direct them to a secure website
  application created specifically for them, the
  Dynamic Loan View (DLV).
• DLV allows HFAs access to specific borrower
  information such as current balance, due date,
  transactions, interest rate, etc. An
  administrator for the Corporation is
  password-designated and has the ability to add
  viewing capabilities for additional staff
  members.

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M.O.R.E. System

• HFAs have another tool in the form of an online
  report source. M.O.R.E. (Mortgage Online Reports
  made Easy) is accessed through a specified
  website. This will allow HFAs to view, download
  or print standard Servicing reports at will.

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In todays market, the rising rate of
delinquencies are a concern

• As a Master Servicer our default areas find it
  necessary to go above and beyond normal practices
  to help our first time homebuyers who may need
  assistance.

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As a leading Master Servicer our

• Borrowers are more than a loan number.
• We are their partner in homeownership.
• Were committed to provide HELP and HOPE to our
  borrowers in need.

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• In Default at USBHM we realize that the first
  step in developing a successful relationship with
  the borrower is helping them to understand their
  mortgage.
• We often find the need to clarify the common
  misconceptions

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Education

• Misconception The mortgage company decides to
  whom they can provide assistance.
• FACT U.S. Bank Home Mortgage is largely a
  servicer, maintaining loans on behalf of the
  investor who owns the loan and determines which
  options are available to defaulted borrowers.

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Common Misconceptions

• Misconception Mortgage companies make money by
  foreclosing on properties.
• FACT The average Foreclosure sale results in a
  loss to the investor and/or insurer.

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Common Misconceptions

• Misconception The worse a borrowers financial
  picture appears, the more likely they are to
  receive assistance in keeping the home.
• FACT A borrower must be able to demonstrate a
  long term ability to afford the mortgage payment,
  along with their other obligations, to receive
  assistance in keeping the home.

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In Default at USBHM our emphasis is that we are
One team with One goal and thats Home
Retention.

• In Jan 2004 when I took over Default at USBHM we
  created one unit where collectively Default
  Counseling, our Financial Team and Loss
  Mitigation work together under one Management
  Structure .
• We put the power of US to work for you.
• We put the power of US to work for the borrower
• EXPLAIN FINANCIAL TEAM see next page

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Apart of the re-organization was

• To create a division within Default Counseling
  called the Financial Team who reaches out to our
  borrowers and provides them with immediate
  solutions to cure their delinquencies.

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First, the Default Counselors

• Through the interview process determine if the
  mortgagor is a viable candidate for Loss
  Mitigation.
• If that is the case, the call is transferred to
  trained live agents on the FT.

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While on the telephone, our

• FT consults with that borrower to obtain their
  financial information as opposed to mailing the
  borrower a financial worksheet, thus saving
  valuable time.
• An immediate assessment of how we might best be
  able to assist the borrower is done while they
  are on the phone.

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Because we review their income status

• In many cases, borrowers qualify for a repayment
  plan with Default Counseling.
• If its determined they cannot afford the
  repayment plan, they are immediately referred to
  LM for a possible workout option.

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By developing this FT at USBHM

• We have created an immediate bridge between
  Default Counseling and Loss Mitigation.
• With the help of this FT, we are also able to
  assess other areas where LM assistance might be a
  viable alternative. Loans currently in FC are
  one such group. We continue our LM efforts at
  USBHM right up until the foreclosure sale.

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Our Mission as a Master Servicer is

• To minimize the number of delinquent loans
  through extensive customer contact, education and
  awareness.

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At USBHM, we believe

• that all of our Default Counselors are Loss
  Mitigators to a certain extent.
• Whether a loan is 30, 60, 90, 120 days
  delinquent, in Foreclosure or Bankruptcy, loss
  mitigation options are available if the mortgagor
  qualifies and is willing to work with us.

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Its a requirement for our

• Counselors to discuss loss mitigation options
  with every delinquent call. We feel it is
  important that our borrowers know we are here to
  help them and provide them with solutions and
  options to help cure their default.

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Some techniques we use to attempt contact with
the borrower are first, Telephone Calls.

• 1st 60 day and greater delinquencies
• 10th 30 day delinquencies
• 20th Initiate specialized call campaigns
  targeting 90 day plus loans seeking financials
  over the phone done by FT
• 25th Initiate various state campaigns
• 27th Reminder call on entire DLQ portfolio
• All Calls are made from experienced live agents
  with an average years of service for the staff
  being 4.5 yrs and management at 8 yrs

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Collection Letters required and then

• 17th Payment notification
• 20th Financials sought if live contact is not
  made
• 42nd HUD426 notice sent for FHA loans
• 62nd Loss Mitigation Solicitation DVD
• Individual generated letters sent by the
  Counselors based on the stage of DLQ.

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DVD - Wed Like to Help

• This has been a key tool in helping borrowers
  understand the process to help avoid the loss of
  their home.
• At the 62nd day of delinquency, when attempts to
  contact the borrower via phone and required
  delinquency mailings have not been successful,
  this tool provides USBHM with another method to
  reach the borrower, letting them know we are here
  to help them, but need immediate contact.

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DVD continued

• The DVD provides common delinquency scenarios to
  the mortgagors letting them know they are not
  along in their financial situation.
• The message we are trying to get across is Its
  not too late to call us.

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We start the DVD out with the worst

• Case scenario Foreclosure losing their home.
  
• Our goal is to keep the borrower in their home
  and impress upon them through the DVD that we are
  here to help them as their partner in
  homeownership.

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Another means of contact is the Property
Inspection

• Property inspections are ordered to verify
  occupancy and the general condition of a property
  if the account is due for two (2) or more monthly
  payments. If an account remains in default,
  additional property inspections are conducted
  every thirty (30) days until the account is
  brought current.

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An extremely valuable tool for contact from a
Master Servicers point of view is the assistance
of Non- Profit Organizations

• When available, non-profit counseling agencies
  are very important to our Default Counseling
  Department.
• Non-profit counseling agencies are third party
  entities located in communities usually familiar
  to the borrower and familiar with other area
  issues that may be affecting the borrowers
  ability to make their monthly payments.
• As a loan servicer, we also rely on the
  counseling agents expertise in helping us to
  identify borrowers that we can help through the
  different means available to us to help keep the
  borrowers in their homes.

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• Certain HFAs that we service for have hired
  counseling agencies in their districts and
  require that when one of their borrowers is at a
  certain point of delinquency, we must notify the
  counseling agency of the status of delinquency.
  Upon notification those counseling agencies will
  attempt to contact the mortgagors for assistance.
  

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• In many cases the counseling agencies will
  collect the borrowers information and refer that
  data to the servicer so the servicer has an
  insight into the mortgagors reason for default.
  At that point the servicer can begin to review
  the various options to help the mortgagor.
• The Servicer and the Counseling agencies work
  hand in hand to help the mortgagor retain
  homeownership.

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Other agencies

• HOPE LINE 1-888-995-HOPE or the website
  www.995HOPE.org
• Neighborhood works agencies
• 211 Call for Help

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Online Access

• www.usbankhomemortgage.com
• Establish repayment plans
• Provide financials
• Make payments
• Email questions or seek assistance

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What if we are unable to contact?

• Contact is the most effective collection tool.
  Default Counselors make every attempt to contact
  a delinquent borrower to resolve the default.
• Attempt directory assistance
• Utilize Search America (search engine)
• Order a property inspection
• Generate no contact letter
• Send Wed like to help DVD

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Summary

• In Default Counseling loss mitigation discussions
  are initiated with the borrower during the 1st
  collection call made on a loan. At this time
  the Default Counselor requests the borrowers
  updated financial information.
• A borrower may be considered for a workout at any
  time during the default process. Default
  Counseling and Loss Mitigation activities are
  aligned to ensure consistency in the workout
  process.

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Loss Mitigation Department

• Early contact and counseling is the key to
  successful loss mitigation.

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Loss Mitigation itself is defined

• As resolving a delinquency without having to
  foreclosure on the property, thus eliminating or
  reducing a monetary loss for the servicer, the
  investor and/or insuring agency.
• Loss Mitigation options are called alternatives
  to foreclosures and vary according to insuring
  agency.

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Goals

• Maintain Home Ownership
• Reduce Foreclosures with Home Saving and
  Disposition Programs

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Loss Mitigation Retention Options

• FHA backed mortgages
• Type 1 Special Forbearance
• Loan Modification
• Partial Claim
• FNMA backed mortgages
• Special Forbearance / Repayment Plan
• Modification
• Freddie Mac backed mortgages
• Special Forbearance
• Repayment Plan
• Modification

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Type 1 Special Forbearance

• A signed written agreement between the mortgagor
  and the mortgagee.
• Reinstates a loan that is at least 3 months
  unpaid but not more than 12 months delinquent
  PITI
• Does not change the loan terms
• Provides failure options

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Loan Modification

• A permanent change in one or more of the terms of
  a mortgagors loan
• Allows a loan to be reinstated and results in a
  payment the mortgagor can afford
• Three full payments are due an unpaid
• A minimum of 12 months have elapsed since the
  loan was originated
• May not be in foreclosure when executed

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Partial Claim FHA only

• A promissory note and subordinate mortgage to
  cover the mortgagees advance in the amount
  necessary to reinstate the delinquent loan issued
  in the name of the Secretary of HUD
• Four full payments are due and unpaid
• Total delinquency may not exceed 12 month PITI
• May not be in foreclosure when executed
• Maximum advance is 12 months PITI for the life of
  the loan
• Zero interest loan that is due when either the
  loan pays off or at the maturity date

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Loss Mitigation Disposition Options

• FHA backed mortgages
• Pre-Foreclosure Sale
• Deed-in-Lieu
• FNMA backed mortgages
• Pre-Foreclosure Sale
• Deed-in-Lieu
• Freddie Mac backed mortgages
• Pre-foreclosure Sale
• Deed-in-Lieu

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Pre-Foreclosure Sale

• Allows the mortgagor in default to sell the
  property and use the sales proceeds to satisfy
  the mortgage debt, even if the proceeds are less
  than the amount owed.
• Must be 31 or more days delinquent at the time of
  closing.
• Unavailable if the mortgagor has abandoned the
  property or has the ability to pay the debt.

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Deed-in-Lieu

• The mortgagor voluntarily deeds the collateral
  property to the investor in exchange for a
  release from all obligations under the mortgage.
• Must be 31 days delinquent when the Deed-in-Lieu
  is recorded.
• Unavailable if the mortgagor has abandoned the
  property or has the ability to pay the debt.
• Title must be free and clear of all liens.
• Offered after the Pre-Foreclosure Sale has failed
  to yield any viable offers.

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Denial of Assistance

• All loss mitigation denials due to the borrowers
  inability to pay receive a letter of explanation
  and a Pre-foreclosure Sale Package as an
  alternative to Foreclosure.

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Before Foreclosure Referral

• It is the practice of U.S. Bank Home Mortgage to
  attempt contact with each borrower right before
  the referral process to Foreclosure.
• Our goal is to offer any attempt to initiate a
  repayment plan or a Loss Mitigation workout
  option to eliminate the referral to foreclosure.

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Active Foreclosure

• Loans active in Foreclosure are not eliminated
  from receiving assistance. All Foreclosure loans
  are solicited for Loss Mitigation efforts up
  until the Foreclosure Sale Date.
• Goal Home Retention

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Summary

• U.S. Bank Home Mortgage is dedicated to
  collectively working in both Default Counseling
  and Loss Mitigation towards home retention.
• Our unique structure of creating the Financial
  Team, a bridge between Default Counseling and
  Loss Mitigation, enables successful workouts for
  those mortgagors that have the long term ability
  to afford the mortgage payment.

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Performance Ratings

• Our early and aggressive efforts to resolve a
  delinquency are visible by our investors as are
  ratings are at the highest standings
• Fannie Mae 55 workout ratio
• HUD Tier 1 Servicer
• Freddie Tier 1 Servicer and a Hall of Fame
  member. (2003 first time 1 / 2006 hall of fame)

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New Initiative

• The Loss Mitigation Department along with our
  Financial Team and members from Default
  Counseling are targeting locations and contacting
  borrowers that may be in need of our help to
  bring their loan current. Our staff is traveling
  to various locations to provide on-site help and
  work-out plans for our borrowers.

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Continued

• Our borrowers are more than a loan number
  working with them face to face not only assists
  the borrowers, but brings a more comfortable
  rapport with them and helps show them that we are
  here to help as their partner in homeownership
  and to dispel the misconception that the mortgage
  company wants their home.

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Closing

• As a Master Servicer, our willingness and ability
  to provide flexibility outside of the box within
  our unit and in particular within our Default
  Servicing processes helps us support our large
  first time homebuyer portfolio continue their
  American dream of homeownership.
• Thank you for your time. (DVD samples)