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Guaranteed Program Highlights Serves low to moderate income households 90% of America is rural 100% financing, no down payment 30 year fixed interest rates and loan terms Guaranteed Underwriting System 90% loan guarantee against loss
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Single Family Housing Guaranteed Loan Program Update
January 2016
Joyce AllenDeputy Administrator
AGENDA• Program Benefits and Eligibility• Loss Claim Process Improvements• Delegated Loan Servicing• Loan Application Improvements• Handbook, Regulation and Legislative
Updates
Guaranteed Program Highlights• Serves low to moderate income households • 90% of America is rural• 100% financing, no down payment • 30 year fixed interest rates and loan terms• Guaranteed Underwriting System• 90% loan guarantee against loss
Process and Service Improvements
• Eliminated the backlog of loss claims in September. – Average claim processing time reduced from
261 days per claim to 68 days per claim.
• 3555 Regulation change to require lenders to order liquidation appraisals. Publishing expected within 60 days. – Pilot results demonstrated a reduction of 41
days from claim submission to payment.
Process and Service Improvements
• Revising 3555 to change foreclosure bidding instructions to match HUD thresholds. Publication expected within 60 days. – Pilot results demonstrated an increase in 3rd party
sales anywhere from 86% to 186%.Foreclosure sale bid amounts will be at a percentage of fair
market value as indicated on state level tables, which mirror HUD’s current allowable state percentages.
• We encourage the use of auction companies and will reimburse for the fee on the loss claim.
Delegated Servicing Roll Out Loss mitigation delegation roll out to lenders began June 1. Delegated servicers will no longer need to get permission for loan modifications or other servicing actions.
Eliminates Agency approval time, which averaged 22 days. Improves lender servicing, reduces delinquency, expedites and improves service to the borrower and facilitates the lenders’ ability to meet CFPB servicing timeframes
Target Completion of December 2016
Process Improvements (cont.)• Implemented edit code modifications to reflect current market
conditions and reduce number of loss claim file reviews. – Reduced the number of times the edits are triggered
by 30% reducing or eliminating review of submitted claim.
• Added 109 lenders to automated claim submission. – Per claim processing time reduced from 6 hours to 3.
(Any lenders who would like to become an automated partner call us at 866-550-5887)
Servicing Improvements Forthcoming
• Lean 6 effort in progress - includes extensive automation to further improve loss claim turn-times and service to lenders.
• Introduce and pilot the New Claim Payment Model or “Settle at Foreclosure Concept.”
A Sneak Preview of New Claim Payment Model Concept
• Predicts REO sale value using:– Linear regression analysis– Historical claim payment data– Characteristics at time of default
• Lender Benefits– Elimination of marketing period before payment.– Claim paid when title transfers eliminating all invoices and documents
related to REO marketing and sale– Full control of REO marketing, elimination of Property Disposition Plans– Unencumbered flexibility to make property improvements to maximize
return or quickly dispose without penalty– Future recoveries eliminated– Reduces lender FTE, training and oversight
Loan Application Process Improvements
Future Handbook Revisions
• Credit validation: Trade-line requirements3 trade-line credit score validation
requirement down to 2 trade-lines. • Distance requirements for wells and septic
systems Will defer to local municipal or state
standards
Regulation Releases Single Close Construction to Permanent Financing Agency will issue loan guarantees at the time the initial construction
loan is closed.Single Close is Ginnie Mae eligible.Home builders and construction companies benefit - no need to
invest their own capital into the construction project since the lender funds the loan.
The lender can establish an interest reserve account from which monthly payments can be made during the construction period. This means the borrower does not have to make both rent and construction loan payments during construction, making the process more affordable.
Process and Service Improvements
• Credit unions and small community banks now eligible
• Interest rate cap expanded
Future Regulation Releases 7 CFR Part 3555 Final Rule • Refinance loans: 100 BP reduction requirement
removed • Nationwide Streamlined Assist Refinance (formerly
Rural Refinance Pilot) • Qualified Mortgage (QM) definition• Indemnification: 5 years from origination
Legislation Updates
2016 Appropriation – general provisions• Delegated Underwriting• GUS User Fee
IT enhancements and regulation changes needed for implementation.
What Does It All Mean?The Rural Housing Service is
striving to become your affordable housing partner. By working together, we can support the
success of rural communities.
Questions?
