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.

Loan Modification and Refinance Programs

• Making Home Affordable (www.makinghomeaffordable.gov)
  Making Home Affordable is a program the Obama Administration has introduced to help stabilize the housing market and help Americans reduce their monthly mortgage payments to more affordable levels. Eligible participants may have the opportunity to either refinance or modify their residential mortgage loans. The Home Affordable Refinance Program gives up to 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. The Home Affordable Modification Program commits $75 billion to keep up to 3 to 4 million Americans in their homes by preventing avoidable foreclosures. This website provides homeowners with detailed information about these programs along with self-assessment tools and calculators to empower borrowers with the resources they need to determine whether they might be eligible for a modification or a refinance under the Administration's program.
• 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.

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)

Legacy Loans Program

Foreclosure Rescue Scams

• Beware of Foreclosure Rescue and Loan Modification Scams [Spanish]
  If It's Too Good to be True, it Probably Is
• Foreclosure Rescue Scams: Another Potential Stress for Homeowners (www.ftc.gov)
• Consumer Alert — Bankruptcy Mortgage Foreclosure Scams (www.doj.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)

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)