For additional Hurricane call audio recordings, please link on the following:
FEMA Hurricane Industry Conference Call Recordings

Fannie Mae Update
Fannie Mae Lender Letter 01-06 was released to address current issues breached by the hurricane and recovery efforts. A main focus of the letter was the extension of the moratorium from Feb. 28 to May 31 in specific counties in the FEMA-declared areas.  Counties include: Alabama: Baldwin, Clarke, Mobile and Washington; Louisiana: Cameron, Jefferson, Orleans, Plaquemines, St. Bernard, St. Tammany and Calcasieu; Mississippi: George, Hancock, Harrison, Jackson, Pearl River and Stone; and Texas: Jasper Jefferson, Newton and Orange.

Fannie Mae LL 01-06 Zip Codes

A formal form requesting extension of the moratorium is not required; the moratorium is automatically extended for loans in the counties listed above. 
 
Fannie Mae urges servicers to continue proactive attempts at contacting borrowers using all means and available information. When, despite these efforts, a servicer is still unable to locate a borrower, especially a borrower who owns one of the properties identified by Fannie Mae as likely to have incurred damage, the servicer should submit a request to Fannie Mae for assistance in contacting the borrower. In some cases, Fannie Mae will work with commercial search service providers to perform a comprehensive multi-state search in an attempt to locate the borrower. Servicers that would like to use this service should forward the Fannie Mae loan number and information included in Attachment 1 of Fannie Mae Lender Letter 01-06 in an Excel spreadsheet format to Hurricane_Assistance@FannieMae.com. 

With respect to contacting borrowers who are in bankruptcy when the automatic stay is in effect, servicers are encouraged to consult with their bankruptcy counsel to determine how to permissibly communicate with borrowers regarding these issues. As one alternative, servicers may consider conducting communications through the borrowers’ bankruptcy counsel.

Fannie Mae will not delegate authority to approve short payoffs on disaster-affected mortgages.  Questions on loans with short payoffs can also be directed to Hurricane_Assistance@FannieMae.com.
 
Fannie Mae has a quality control team in place to review underpaid claims (contact and no contact loans) to ensure servicers and borrowers are receiving the maximum amount of recovery from the insurance carrier.
 
Attachment 1 of Fannie Mae Lender Letter 01-06 lists 14 pieces of information that must be submitted to Fannie Mae when requesting Fannie Mae approval to proceed with foreclosure on loans in the affected areas. 
 
FAQ are available for review in the Lender Letter
Any additional questions regarding property preservation efforts and requests should be directed to Property_Preservation@FannieMae.com.
 
Freddie Mac Update
The following is intended as a summary of the conference call and is not a Freddie Mac endorsed release. Servicers should consult the Bulletin or their Freddie Mac representative for any additional or required clarification.

Freddie Mac released Freddie Mac February 10th Bulletin with a "zone" approach to define foreclosure actions in FEMA disaster counties based on the overall extent of damages in the zone. The zone details are as follows:

Zone 1: The properties in these 64 counties had little or no hurricane damage and foreclosures can proceed as usual.
 

Freddie Mac Zone 1 Zip Codes

Zone 2: The properties in these 34 counties were moderately affected by hurricane damage and foreclosures can move forward on a case by case basis.

Freddie Mac Zone 2 Zip Codes

Zone 3: The properties in these 21 counties were highly affected by hurricane damage and the moratorium is automatically extended through May 31, 2006.

Freddie Mac Zone 3 Zip Codes

Properties located in zone 3 that are in some state of foreclosure, but were not damaged by the hurricane are also covered by the moratorium. Freddie Mac will review these loans and work with the servicer on a case-by-case basis.
 
Freddie Mac does not currently have instructions for servicers on handling properties where no contact has been made with the borrower, but they will review the issue.
 
Servicers should notify Freddie Mac of properties where homeowners are requesting or approving their property for demolition. Servicers should send notice of these properties to their Freddie Mac representative or to DistressedProperty@FreddieMac.com.
 
Servicers still have prior approval to change 1 lock at the property to enter and assess the damages.  Servicers requesting to perform additional property preservation work should email their request to DistressedProperty@FreddieMac.com.
 
VA Update
VA is in the process of working on additional guidance for the servicers.
 
Update -  VA released VA Circular 26-06-3 extending the moratorium on initiating new foreclosures an additional 120 days with several contingencies. 
 
VA was asked about how to handle properties when the insurance proceeds do not cover the balance of the loan.  VA plans to review with local offices handling these cases and ensure that individual guidance provided is consistent with its forbearance approach.  
 
Servicers with questions regarding foreclosures in Louisiana should contact Helen Galer helen.galer@vba.va.gov in the VA Houston office.
 
HUD Update
HUD is in the process of working on additional guidance for the servicers. 
 
Update - HUD released HUD Mortgagee Letter 2006-05 extending the foreclosure moratorium an additional 120 days with several contingencies. 
 
Conveyance
Servicers are awaiting direction from HUD on how to proceed with the conveyance of damaged properties.

HUD is working with the MBA to gather information from the servicers in order to properly evaluate the issue before issuing guidance on conveying damaged properties in the hurricane areas.
 
Demolition Lists
Lists are available on multiple city and municipality websites that list properties slated for demolition, but the lists have not been updated to show if any demolitions have actually been completed. To Safeguard's knowledge, no mass demolitions have begun in any of the FEMA areas.
 
Accessibility
At this time, Safeguard is not aware of any areas with inaccessibility or permanent restrictions. Temporary access restrictions may be encountered in some areas, but nothing permanent.  The challenge in some of the more heavily damaged areas is locating and identifying the actual property.
 
Insurance Claims
Mortgagors and mortgagees have received insurance proceeds to repair properties, but in some areas are unable to obtain building permits from the city to commence the repairs (due to unclear elevation requirements, and undefined revisions of flood maps).  Mortgagors and servicers are not willing to rebuild until the building codes and/or flood maps are revised.  While each municipality sets its own ordinance, the City of New Orleans requires properties to be built to the current building code at the time the permit is issued.
 
Servicers have received insurance proceeds issued in the name of a mortgagor and mortgagee, but are still unable to establish contact with the mortgagor.  Insurance proceeds must be deposited into an escrow account within 30 days, and servicers are unable to do so without mortgagor endorsement.  In this situation, some servicers suggest asking the insurance carrier to issue the check payable in the name of "Escrow Account of ..."
 
Servicers were encouraged by Freddie Mac representatives to file an insurance claim on all loans where there has been no contact with the borrower (current and default loans).
 
Releasing Insurance Proceeds
Hazard and force placed insurance policies require a mortgagee to send notification of their intent to repair a property within 180 days of the date of loss, or the mortgagee can potentially lose the recoverable depreciation.

The majority of damaged properties (85%) were in the light to moderately damaged areas with damages amounting less than $20,000.  Current industry procedure is to release insurance proceeds up to $20,000 without requiring an inspection to verify that repairs have been completed. As a result, homeowners are receiving the full insurance settlement in one payment without being required to provide documentation of completed repairs or a contract to complete the repairs.  One servicer is requesting copies of an adjuster's report and repair estimates before releasing the check.  Another servicer shared that funds are released after review of the loan history to ensure no prior default.

There is proposed legislation, FEMA Louisiana House Bill 7, that will prohibit servicers from holding insurance proceeds in excess of the unpaid balance of the loan.  

  
Short Payments
Investors have not issued guidance for servicers on addressing the balance of the mortgage when insurance proceeds are not sufficient to pay off the loan.  Freddie Mac is asking servicers to request review on a case-by-case basis.
 
One servicer shared that they are releasing the lien if 95% or more of the loan is paid.
 
Mold
Investors and insurance carriers have not issued guidance to servicers on how they are to address mold growth in properties with no contact with the borrower that have not yet been secured. 
 
Servicers are filing insurance claims for all damages present (i.e. wind, water, flood, etc.) and the resulting conditions (i.e. mold and water damage) and seeing an increased number of coverage denials.
 
Environmentally Damaged Properties
Servicers are requesting directions from the investors on properties that may have environmentally issues caused by the hurricane.
 
There are a few published databases of environmentally affected areas:
http://www.deq.louisiana.gov/portal/Default.aspx?tabid=2379

http://www.nrdc.org/health/effects/katrinadata/contents.asp
 
Property Valuations
Determining the values of hurricane-damaged properties is challenging, as no pre-disaster value is available to many appraisers. Much uncertainty exists in determining the value of a property.
 
MBA Efforts and Update
The Baker Bill is no longer being discussed on Capitol Hill, however, several other plans for rebuilding and recovery are being discussed.  There is a proposal for CDBG funds to be used for individual repairs and property buy-outs.  There are proposals for a combination of low-interest loans and grant money to be given to affected homeowners in Mississippi, and a plan similar to the Baker Plan in Louisiana to buy properties and/or repair them for resale to investors.
 
The MBA will be soliciting servicers for information on their attempts to contact borrowers.  The information gathered will be used to refute claims of servicer neglect to take appropriate measures to contact homeowners.
Vicky Vidal of MBA is arranging a call with HUD and will attempt to get answers to many of the servicers questions. Any additional questions can be sent to her at VVIdal@mortgagebankers.org.
 
Credit Reporting
It was recommended that servicers reference investor guidelines on how to report credit deficiencies to the credit bureaus.
 
Servicers would like guidance from investors on how to report the final disposition to credit bureaus when a short payoff of the loan is received.  The code AW should be used to indicate Natural Disaster when servicers do not want to report a delinquency.