Transcript Philadelphia Residential Mortgage Foreclosure Diversion

PHILADELPHIA RESIDENTIAL MORTGAGE
FORECLOSURE DIVERSION PROGRAM
Mortgage Foreclosure Negotiation Training for Pro Bono Counsel
Friday, November 30, 2012
Philadelphia VIP
With many thanks to our host
Pepper Hamilton, LLP
WELCOME
• What is Philadelphia VIP?
• Services offered
• Mortgage Foreclosure Diversion Program
WAYS TO VOLUNTEER
MAKE THE DIFFERENCE BETWEEN HOME AND HOMELESSNESS
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Ongoing Volunteer: VIP will refer mortgage foreclosure Diversion cases to
volunteers on an ongoing basis until the matter is out of Diversion. VIP volunteers
will obtain the client file in advance of the next conciliation conference, and that
client will remain the volunteer’s client until the case is out of Diversion.
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Temporary Solution Volunteer: VIP will ask volunteers to help clients for a single
conciliation conference until we can make a referral to a volunteer who is able to
commit to the client until her case is out of Diversion.
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Emergency Volunteer: While we expect that most cases will be given a
continuance to allow VIP to find an attorney -- as lawyers and courts do
consistently for other civil cases that VIP handles -- we know that there will be
cases that lenders will refuse to continue. In those cases, we hope to be able to
utilize volunteer attorneys who work near City Hall and can be available for same
day representation
FORECLOSURE OVERVIEW
• One in eleven mortgages are delinquent and
one in twenty-one are in active foreclosure
• In Pennsylvania, foreclosures are concentrated
in middle and low-income areas
• Most defaults occur because of
unemployment or underemployment and
resulting complications
PA FORECLOSURE PROCESS
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Civil procedure
Act 91
Act 6
Philadelphia’s Diversion Process
BASICS OF FORECLOSURE
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Originator
Servicer
Trustee
Loan Insurers or Guarantors
Loan Types
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FHA
Conventional Prime
Conventional Subprime
Predatory
HOW DIVERSION WORKS
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Notification of homeowner
Housing counseling
Conciliation conferences
VIP Eligibility
VOLUNTEER RESPONSIBILITIES
• Client communication is KEY!
– Fear and distrust
– Lack of education
– Multiple complicating factors
• Do not wait for the client to call you
• Maintain regular contact with client AND
housing counselor
AVAILABLE RESOURCES
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VIP referral packet
On-site legal services attorney
Malpractice insurance
Document’s from lender’s counsel
REPRESENTATION TASKS
• Initial tasks
– Obtain client signature on representation agreement and
borrower authorization
– Discuss status with homeowner and housing counselor
• Case Analysis
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Other debt?
How many conferences?
Savings?
Why delinquent?
How much is owed?
Taxes and homeowner’s insurance?
2nd or 3rd mortgage?
REPRESENTATION TASKS
• Negotiation Tasks
– Reach an agreement and review order
– Ensure all parties understand next steps
• Troubleshooting
– Discuss refusal of continuance with court
administrator and, if necessary, request JPT
– Status conferences
• Concluding Tasks
– Obtain copies of order
– Exchange contact information with all parties
ONGOING COMMUNICATION
• Maintain regular contact with client and
housing counselor
• Check docket regularly
• Follow up with lender’s counsel
• VIP status updates and supports
CLOSING A CASE
• Notify VIP of details
• Send termination letter to client
• Request SD&E for successfully negotiated
cases
HOUSING COUNSELORS
• Most clients referred through Save Your Home
Philly Hotline
• Face to face meeting
• Gather financial information
• Complete required forms
• Submit financial packets for workout options
TYPICAL DOCUMENTATION
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Authorization to speak with borrower
Income verification
Bank statements
Utility bills
Explanation of hardship
List of documents required by specific lender
Additional for HAMP:
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Request for Modification and Affidavit (RMA)
Request for transcript of tax returns (IRS Form 4506-T)
Income verification
Residency verification
CHALLENGES
• Proposal cannot be submitted 10 days before
1st or 14 days before 2nd conference
• Missing or unavailable documents
• Communication challenges
• Postponement refusals
• Delays cause documents to become stale
• Programs are constantly changing
GENERAL RETENTION OPTIONS
• Refinance
• State assistance programs
– HEMAP or PHRP
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Repayment
Forbearance
Partial claim
Reverse mortgage
Loan modification
HAMP
• Making Home Affordable program
• New Tier II program
– Second bite at the apple
– Default on TPP / permanent mod
– Expanded eligibility for unemployment
FHA-SPECIFIC OPTIONS
• Lenders required to follow this waterfall of
options:
– Repayment
– Forbearance
– Special forbearance
– Loan modification
– Partial claim
– FHA-HAMP
NON-RETENTION OPTIONS
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Straight sale
Short sale
Mortgage assumption
Deed-in-lieu
Sherriff’s sale
“Cash for Keys”
PROGRAM OUTCOMES
Retention Outcomes
241 Loan Modifications
46 Reinstatements
19 Bankruptcies
16 Forbearance Plans
13 HEMAP loans
TOTAL: 335
Non-Retention Outcomes
86 Sheriff Sales
31 Market sales, Short
sales, or Deed-in-Lieu
TOTAL: 117
For all VIP clients who had ongoing representation
throughout the duration of the diversion process
and whose outcomes are known, 74% of
homeowners were able to save their homes!
NEXT STEPS
• Sign up to volunteer today!
• Six months to earn CLEs
– Provide ongoing representation to two clients
– Attend three separate conferences as temporary
solution or emergency volunteer
• For questions, concerns, or to request a case,
please contact Homeownership Advocate Susan
Wysor Nguema at [email protected] or
215.523.9569