Summary of Sept. 19th Industry Conference Call:
 
Thank you to all participants for taking time out of your busy schedules to contribute to these conversations.  It is evident by the number of participants on these calls (over 200 per call) that the industry is united in efforts to not only protect the collateral assets, but to assist the borrowers and displaced families in rebuilding their homes and lives. 
 
We discussed conducting a follow up conference call on Monday September 26th.  However, as a result of recent communication with HUD, Fannie Mae, VA, and Freddie Mac, we will schedule the follow up conference call for later in the week.  The additional time will allow the investors and insurance carriers to gather concrete answers to the outstanding issues and questions from the servicers. 
Call scheduled for Thursday September 29th at @ 1pm ET (12pm CT/ 11am MT/ 10am PT).
 
Call Summary:
 
FEMA:  Jan Mares from the department of Homeland Security participated on the call and offered to take questions back and provide answers at a later date.  He will advise on the following:
1) Clarification on the difference between individual and public assistance
2) The servicers would like direct access to FEMA information on properties (whether they are demolished, inaccessible, collapsed, etc.). This information will help speed up the insurance recovery process.
3) Establishing a direct DHS liaison to the mortgage servicing industry

HUD:   has two mortgagee letters drafted but not yet approved. One addresses the expansion of loss mitigation procedures and the second addresses property preservation issues.  Nothing is official at this time, however HUD is reviewing the following:
 1) Reviewing the second bid process to reduce the delays of completing work
 2) Clarifying the requirements for 25/35 day inspections in the disaster areas
 3) Reviewing additional allowables for FEMA inspections for current and delinquent loans
HUD clarified that at this time the moratorium in effect is for all presidential declared areas; not differentiated between individual or public assistance areas.
 
HUD is not considering placing properties in habitable condition due to contractual agreements with the M&M's.
 
HUD:  Servicers currently see some delays with bid approvals falling outside of the 5 or 10 day turn around time.  HUD advised that servicers need to forward examples to the GTR when they see delays beyond 5 days.
 
HUD: Requests for second bids will cause these delays as well.  Servicers would like special guidelines for the bid process in the disaster affected areas.

HUD: Servicers requested that if and when moratoriums are extended, they should specify if the extensions will apply to individual assistance, public assistance, or both.
 
All:  Emergency funds (pre-approval) should be granted to servicers to protect the property; specifically for tarping/patching roofs, boarding, and pumping water from basements.
 
All:  Cost increases in plywood, gasoline, and other materials is going to result in more bids, and more bids will result in further delays and possible insurance claim denials. 

All:  The definition of "vacancy" needs to be clarified.  Vacant (secure), abandoned (unsecure). Servicers need clarification on how to proceed with protecting these different types of vacant properties.

HUD:  The clarification of the vacancy definition should also include pre-sale versus post-sale instructions.

HUD: clarification that once the moratorium is lifted the FTV (first legal) will begin from the  FTV date after the moratorium suspension.
 
All:  Servicers would like instruction for how to proceed with claims for reimbursement if borrowers choose not to rebuild and the insurance claims recovered do not cover the balance of the loan.
 
HUD:  The moratoriums called for a halt to credit reporting in the affected areas.  HUD advised servicers to continue reporting for current borrowers; and only discontinue the reporting to credit bureaus that would adversely affect borrower's credit.

VA: The moratorium and request for forbearance is extended to borrowers directly affected and indirectly affected (loss of job, intake of family that has lost homes, etc.) by the disaster.  Also, the moratorium for VA is on the initiation of new foreclosures, but if a foreclosure had already started prior to the disaster, then it should be processed unless there are issues with court delays, ability to appraise the security prior to sale, or delays in resolving insurance settlements under the mortgagee clause.
 
VA: The moratorium and forbearance is in effect for all declared areas, regardless of individual or public assistance. 
VA has issued a new circular 26-05-5 available at www.homeloans.va.gov that clarifies this and other issues.  It is crucial to clearly document why forbearance was given with details when filing the claim.  VA recommended that the application for forbearance be included with the claim as supporting documentation.   VA will adjust cutoffs due to delays beyond control of servicers. 

VA:(latest update 9/27/05) Mortgagees are to reference http://www.homeloans.va.gov/servicers.htm for concerns regarding the VA policy of extending "every possible forbearance to borrowers in distress through no fault of their own" in wake of Hurricane Rita. 
VA requests servicers distribute to all VA loan borrowers the "VA Bulletin for Borrowers" that appears on page 4 of the VA policy statement.
 
All: There is a liability concern entering vacant properties and not knowing if the property is vacant, abandoned, or vacant because of forced evacuation.  The industry would benefit from clear instruction on how to proceed with necessary repairs.

FHLMC: Freddie Mac is extending the same type of mortgage obligation relief and protections provided under SCRA and our Single-Family Seller/Servicer Guide (Guide) Chapter 82 to National Guard members on active state duty deployed for Hurricane Katrina response efforts.   Freddie Mac released clear provisions regarding the release of insurance loss proceeds for borrowers who suffered property damage from Hurricane Katrina.  Click on the following link http://www.freddiemac.com/singlefamily/hurricanekatrina.html for reference.
 
FHLMC has Webcast training available on their website http://www.freddiemac.com/dlink/html/LearningCenter/ClassDescription.jsp?crsNum=Katrina_Custom to give servicers an overview of their Katrina Policy; including processing interest and principal payments through and reimbursements.
 
FHLMC: The moratoriums apply to Mortgages secured by property located in MDA's qualifying for "individual" assistance, or "individual and public" assistance. The key word is "individual". Servicers may extend forbearance for up to 12 months for Mortgages secured by properties located in MDAs qualifying for public assistance, as well as those borrowers outside the declared disaster area impacted by Katrina; each circumstance must be assessed on a case by case basis.  
 
Fannie Mae recently released servicing guidelines to address servicer concerns.  Click on the following link to review the release, Fannie Mae Lender Letter (LL) 01-05 Hurricane Katrina.  Special relief measures specifically state "individual assistance areas".
 
Fannie Mae encourages servicers to work with their sales rep or portfolio manager to develop procedures and processes for handling the affected properties.  They will address unique situations (borrowers that do not want to rebuild, current loans, extending moratoriums to indirectly affected borrowers, etc.) on a case by case basis.  Fannie Mae is encouraging servicers to exercise fairness and compassion, and err on the side of caution to address special circumstances.  Servicers are reminded that documentation will be the key to claiming reimbursement.
 
Hazard Claims Insurance Recovery
 
Denial of claims is going to cause significant delays and result in further deterioration of the property.  How are the servicers to file insurance claims?  There needs to be clear direction from the insurance carriers.

Servicers will not know which event happened first, wind, flood, water, or fire.  The insurance carriers on the call advised that the key is documentation and encouraged the servicers to provide as much detail as possible.  All parties would benefit if FEMA were to issue directives to the insurance carriers and servicers on how to handle the disaster.
 
Inspectors should not be entering pre-sale properties that are found vacant due to liability issues, thus the discovery of mold damage (and other interior damages) will be delayed.  Servicers should not be held liable for mold damages where access was not gained.

Tarping and boarding of properties does not allow air to circulate which may cause mold to grow at a rapid rate.  Directives should be issued on how to address these situations.
 
It was recommended that the servicers file a "change in risk" with the forced placed carriers as soon as they are aware of vacancy.  Claims can be denied if the servicer fails to advise the carrier of the change in risk.
 
Follow Up
 
Safeguard has had communication with reps in the field that entire areas might be demolished due to environmental hazards.

This call, along with the prior calls were recorded and are available for review by clicking on the following link.

Hurricane Katrina Conference Calls