• •

Eligibility Rules

First lien mortgage loan originated on or before January 1, 2009

The mortgage loan is secured by a one- to four-unit property, one unit of which is the • • borrower’s principal residence – Co-ops, Condos, and Manufactured homes are eligible The property securing the loan must not be vacant or condemned The mortgage loan is delinquent or default is reasonably foreseeable; loans currently in • foreclosure are eligible The borrower(s) complete the financial hardship affidavit and represents that there are • • not sufficient liquid assets to make the monthly mortgage payments

The borrower has a monthly mortgage payment ratio greater than 31%

Borrowers in active litigation regarding the mortgage loan or involved in a bankruptcy • proceeding are eligible to participate Borrowers agree to set-up an escrow account for the payment of taxes, hazard/HOA, and flood insurance (if applicable) • Borrowers with a total monthly debt ratio greater than 55% must consent to obtain HUD counseling to reduce their total monthly debt ratio to less than 55% •

Borrowers must satisfactorily complete a 3 month trial period plan before December 31, 2012

• •

Hardship Affidavit Details

• A reduction or loss of income, e.g., unemployment, reduced job hours, reduced pay, or a decline in self-employed business earnings • A change in household financial circumstances, e.g., death in family, serious or chronic illness, permanent or short-term disability, or increased family responsibilities (adoption or birth or a child, taking care of elderly relatives or other family members)

A recent or upcoming increase in the monthly mortgage payment

An increase in other expenses, e.g., monthly mortgage payment will rise or has risen, • high medical and health-care costs, uninsured losses (such as those due to fires or natural disasters), unexpectedly high utility bills, or increased real property taxes A lack of sufficient cash reserves to maintain payment on the mortgage and cover basic • living expenses at the same time Excessive monthly debts payments and overextension with creditors, e.g., the borrower • was required to use credit cards, a home equity loan, or other credit to make the mortgage payment Other reasons for hardship detailed by the borrower

Reasonably Foreseeable (Imminent) Default

• Borrowers that are current or less than 30 days delinquent who contact the credit union for a modification, appears potentially eligible for a modification, and has suffered a hardship must be screened for imminent default:

The borrowers debt coverage ratio is less than 1.20

[Disposable Income/Current P&I Payment]

•

If the credit union determines that default is imminent, the credit union must apply the Net Present Value test

Net Present Value (NPV) Test

http://www.hmpadmin.com/docs/NPV%20Overview.pdf

• All loans that meet the eligibility criteria and are either deemed to be in imminent default or 60 days or more delinquent must be evaluated using a standardized NPV test • that compares the NPV result for a modification to the NPV result for no modification If the NPV result for a modification fails, the credit union may still modify the mortgage at its discretion • If the credit union elects not to modify a mortgage that fails the NPV result for a modification, it must consider the borrower for other alternate modification options, • deeds-in-lieu, and pre-foreclosure sale programs The NPV test requires use of an automated valuation model (AVM)

A Credit Union must…

• • •

Register for participation and execute the participation agreement prior to December 31, 2009 Have all borrowers complete a personal financial statement (not a 1003)

[Fannie Form 1020 or Freddie Form 1126] Follow all program guidelines and reporting requirements; required documents, • notifications, borrower communication and qualification Not directly solicit non-delinquent borrowers (31 days +) (General Notification Allowed) • • Waive all late charges, penalties, stop payment fees, or similar fees must be waived upon successful completion of the trial period

Not charge the borrower to cover the administrative processing costs incurred in

connection with a HMP modification. The credit union must pay any actual out-of-pocket expenses such as required notary fees, recordation fees, title costs, property valuation • • fees, credit report fees, or other allowable and documented expenses. Fannie/Freddie will reimburse for all but the credit report, for GSE loans that a credit union services Obtain a new title commitment if capitalizing more than $20,000.00

Obtain an AVM Property Value with a reliable confidence score

A Credit Union can…

•

Modify non-GSE and/or GSE loans through the program end-date of December 31, 2012 if the borrowers have satisfactorily completed the Home Affordable Trial Period Plan

• Receive the Servicer incentives of $1,000 for every participating modification, plus an additional $500 if the mortgage was current at the time of entering into the modification plan, and up to $1,000 per year for each of the initial three (3) years completed successfully • Receive the Investor incentives of $1,500 for every participating modification if the mortgage was current prior to the start of the trail period and one-half of the dollar difference between the lesser of (a) the borrower’s original monthly mortgage payment or (b) the mortgage payment at a debt ratio 38% of gross income, and 31% of gross income • Receive the Borrower incentives (principal pay-down monies) of up to $1,000 per year for each of the five (5) years completed successfully

Trial Period Timeline

Initial borrower contact Month 1 Establish & send trial plan to borrower Receive financial documents and first trial payment from borrower

Trial plan effective date

Month 2 Receive second trial payment Month 3 Send modification documents to borrower Receive signed modification documents from borrower Month 5 Month 4 Receive third trial payment

Modification effective date Modification first payment due date

Complete system updates Month 6

Modification Example

Concurrent 2 nd Mortgage Program = Rate to 1%; Match term/forbearance; Rate Match at 5 years

Modification Example

DTI = 43.6%

Modification Example

End of 5 Years Principal Balance = $177,998.93

includes $1K annual performance principal reductions (borrower incentive) Reduced Credit Union Exposure $213,680.10 - $177,998.93 = $35,681.20

Interest Rate Reset Table Prevailing FHLMC Rate at time of Modification = 5.375% Start of Year 6 = 3.25% Start of Year 7 = 4.25% Start of Year 8 = 5.25% Start of Year 9 and remaining term = 5.375% Credit Union Lost Revenue (Interest Income) Years 1 – 5 = $42,025.23

Year 6 = $6,417.60

Year 7 = $4,118.56

Year 8 = $2,889.83

Year 9 = $2,637.31

Year 10 = $2,573.43

(Years 1 – 10 = $60,661.96) Credit Union Revenue Opportunity Initial Servicer Incentive = $1,000 + $500 (if was current) Years 1 – 3 Servicer Incentives = $3,000 Initial Investor Incentive = $1,500 (if was current) Years 1 – 5 Investor Cost Share = $7,314.60

($1,463.00 - $1,219.18 = $243.82 ÷ 2 x 60) $13,314.00

Document Flow Day 1-10

Borrower Outreach Counseling and Pre-Qualification Eligible Yes Transmit Eligible Loans To LLN Key-Value-Pair Format

Day 11

Prepare Campaign Documents Packaging And Delivery Fulfillment

Day 13 - 20

Borrower Follow-Up Call Center Campaign Receive Documents Yes Documents Received No Refer to Servicer No

Day 21 - 25

Borrower Eligibility Review Yes Complete No Borrower Follow-Up Complete Eligible Yes Countersign HMP Trial Period Agreement No Prepare Campaign Documents Packaging And Delivery Fulfillment Document Management Receive Faxed, Uploaded, or Courier Delivered Documents Provide Imaging / Indexing Services

Document Preparation and Packaging

Firm Offer Package Executed HMP Package Redraw and Deliver any Package $19.25

$21.00

$9.00

Borrower Follow-Up Call Center Campaign

Borrower Follow-Up $85.00

Eligibility Review

Eligibility Review/Correction $195.00

Document Custodial Services

Document Management

Imaging and Custodial Indexing $.40

$.85

Day 30 - 120

Trial Period Surveillance (Borrower Reminder Calls) Payment Processing (Trial Period Payments) Trial Period Success?

Transmit Final Modifcation Data to LLN in Key-Value-Pair Format

Day 120 - 150

Prepare Modification Agreement Packaging And Delivery Fulfillment Borrower Follow-Up Receive / Verify Final Modification Package

Final Modification Agreement Fulfillment

Doc Prep, Packaging, Follow-up $135.00

Third-party pricing from LenderLive Network, Inc .