Many homeowners face significant payment shock when their mortgages reset to higher interest rates or begin to amortize principal over the upcoming months. Current market conditions indicate that many of these borrowers will not be able to refinance their loans and will become at risk for default and foreclosure. The federal financial regulatory agencies implemented the Statement on Working with Mortgage Borrowers and the Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages to encourage lenders and servicers to take a systemic approach to addressing mortgage loans for owner occupied homes where the borrowers are current, but cannot afford their payments after their loans reset. In addition, the following written guidance and articles may be helpful.

Laws and Regulations

• Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.
• Interagency Questions and Answers on the Community Reinvestment Act (www.ffiec.gov)

Supervisory Guidance

• Servicing for Mortgage Loans: Supplemental Information for Loss Mitigation Strategies (FIL-77-2007)
• Servicing for Mortgage Loans: Loss Mitigation Strategies (FIL-76-2007)
• Subprime Mortgage Lending: Interagency Statement Addresses Safety and Soundness and Consumer Protection Standards (FIL-62-2007)
• Working With Residential Borrowers: FDIC Encourages Institutions to Consider Workout Arrangements for Borrowers Unable to Make Mortgage Payments (FIL-35-2007)
• Interagency Guidance on Nontraditional Mortgage Product Risks, and Addendum to Credit Risk Management Guidance for Home Equity Lending (FIL-89-2006)
• Home Equity Lending Credit Risk Management Guidance (FIL-45-2005)
• Unfair or Deceptive Acts or Practices Under Section 5 of the Federal Trade Commission Act (FIL-26-2004)
• Unfair or Deceptive Acts or Practices: Applicability of the Federal Trade Commission Act (FIL-57-2002)
• Homeownership Counseling Act (FIL-43-2002)
• Expanded Guidance for Evaluating Subprime Lending Programs (FIL-9-2001)

Industry Modification Criteria

• Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans, Executive Summary, December 6, 2007 (www.americansecuritization.com)
• American Securitization Forum Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans, Questions and Answers , December 17, 2007 (www.americansecuritization.com)
• American Securitization Forum: Recommended Definitions and Investor Reporting Standards for Modifications of Securitized Residential Mortgage Loans , December 2007 (www.americansecuritization.com)

Hurricane Relief Mortgage Forbearance Policies (www.ffiec.gov)

Loan Modification and Refinance Programs

• FDIC Loan Modification Program Guide – "Mod in a Box"
  This guide provides an overview of the FDIC's program to assist bankers, servicers, and investors in this process. It outlines FDIC program terms at IndyMac Federal Bank, offers insight into the specific portfolio characteristics that drive modification modeling at that bank, and provides a framework for developing and implementing a similar program at your institution.
• HOPE for Homeowners (H4H) (www.hud.gov)
  The HOPE for Homeowners (H4H) program was created by Congress to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. H4H is an mortgage option designed to keep borrowers in their homes.