Ensure Your HAMP Modifications Are Error Free for Prompt Processing
April 1, 2010
Last year Freddie Mac and those servicing our mortgages worked together to help more than 272,000 borrowers stay in their homes or sell their properties, including initiating 129,380 trial modifications under the Home Affordable Modification (HAMP) program. When dealing with the large volume of distressed borrowers, the last thing anyone wants are process or data errors that lead to the delay in instituting a HAMP trial period or conversion of eligible borrowers to a permanent modification.
Avoiding Clerical or Processing Errors
What can you do to avoid delays and rework while processing HAMP modifications?
- Make sure to follow all of our specific servicing requirements for Freddie Mac-owned mortgages, as published in our Single-Family Seller/Servicer Guide and associated Guide Bulletins, and follow our servicing processes from start-to-finish.
- Take advantage of our numerous resources available to you, including our online job aids/webinars, HAMP tools, your Freddie Mac Default Manager and root-cause training sessions.
- Use Workout Prospector® to initially qualify all borrowers, rather than re-entering data into Workout Prospector after gathering it on paper.
- Understand and review any automated data downloaded from Workout Prospector files before changing, as all data must match what we have on record.
- Transmit modifications via Workout Prospector in "HAMP Mod Approved" Status.
- Use our updated Form 1128, Loss Mitigation Transmittal Worksheet that includes necessary HAMP data.
- Ensure that data on the Loss Mitigation Transmittal Worksheet matches the data in Workout Prospector.
- Always keep us informed of any borrower transactions on a timely basis.
Avoiding Common Data or Communication Errors
When you fail to follow the above procedures, critical initial data such as the unpaid principal balance (UPB) may not match Freddie Mac records, causing a cascade of miscalculations with the due date of last paid installment (DDLPI), delinquent interest, delinquent capitalized interest and other crucial data.
Ensuring Error Free HAMP Modifications
To avoid making common errors that affect crucial data, be sure to:
- Sync up with and ensure your internal departments (underwriting, investor reporting, settlement and default reporting) agree on crucial initial data such as UPB calculations and DDLPI.
- Report the gross UPB inserted into the final modification agreement. Do not use the UPB as of the current date.
- The HAMP gross UPB includes all amounts that may be capitalized under Guide Chapter C65.
- The HAMP gross UPB is effective on the first day of the month prior to the month when the first modified payment is due under the final modification agreement.
- Account for adjustable-rate mortgage adjustments in the base calculation of delinquent interest to ensure accurate amounts to be capitalized into the gross UPB.
- Use a time frame of 365 days for the base calculation of delinquent interest, not 360 days (unless the mortgage documents require otherwise).
- Include step rate information (if applicable) on all Loss Mitigation Transmittal Worksheets you submit.
Effective Ways to Proactively Improve your HAMP Pull-through Rate
The most effective ways to find answers to your questions about following our guidelines and procedures, accessing and using Workout Prospector properly, and proactively ensuring you are submitting clean modifications are:
- Consult our Single Family Seller/Servicer Guide and associated Guide Bulletins and make sure to monitor this News Center for updates (bookmark it now).
- Read through our Frequently Asked Questions (FAQs) on our Learning Center.
- Consult your Workout Prospector User Guide.
- Utilize self-service reports from our Manager Series default management applications such as Workout Manager®, Timeline Manager® or Default Reporting Manager®.
- Go to our Learning Center and take our webinars such as: "Underwriting and Processing with Workout Prospector" and "Home Affordable Modification Program Overview."
- Call 800-FREDDIE or contact your portfolio manager.
Freddie Mac is dedicated to ensuring we have the information we need so that all eligible borrowers can pursue a HAMP modification.