Subject: Re: FW: Moratorium info
Date: Mon, 17 Oct 2005 09:40:30 -0400
From: <leslie_bromer@hud.gov>
To: Dave Cunningham

Dave,

Let me see if we can't clarify your issue.

All outstanding guidance (Handbook 4330.1, Rev-5 & various Mortgagee Letters) from HUD provides that to be covered by a moritorium, the borrower had to be directly affected by the disaster,....either due to property damage with the property being located in a FEMA designated jurisdiction or by a disruption of income (the borrower's employer or source of income was in a FEMA designated jurisdiction and was affected by the disaster). There are plenty of both situations stemming from both Hurricane Katrina and Hurricane Rita.

Now let's review your issue....Someone asked what should they do if the property was in a disaster declared jurisdiction, there had been no contact from the borrower, but a recent exterior inspection conducted did not appear to show any damage. .....Would this case be covered by the moritorium? When I, and several others on the call recommended caution,.... and we all recommended to give the mortgagor the benefit of the doubt, I was assuming that the default and the inability to reach the borrower was reasonably within the window of time that could possibly be due to the disaster. WIth the hundreds of thousands of people that were evacuated, and many still unable to access their homes, even after 6 weeks there are still going to be many loans where you have had no contact.

Most mortgagees have methods that assist you in identifying borrower behavior. It would be simple to identify those borrowers that were impacted by the disaster if the first delinquent payment for the history of the account was the September 2005 installment. Obviously, you need to give those borrowers the benefit of the doubt. But (unfortunately) there are some borrowers that have a pattern of becoming one or two payments behind...and then catching up.....you have to also give the benefit of the doubt to those borrowers that maybe missed the August (and maybe even the July) payment, especially if that borrower has has a similar payment pattern in the past....Especially in the worst hit areas.

What was perhaps missing on the call was some clarity as far as situations that you mentioned in your email. An account that has been vacant since 11/26/03....clearly has had something else as the reason for the default. You didn't state the date of default, but I'd have to guess that it dates back to at least 11/03. Why hasn't foreclosure been completed as yet? Is there a current bar to foreclosure due to either a bankruptcy or some other litigation??? There is obviously some other complication on this case. The default appears not to have been caused or worsened by the disaster, therefore, the moratorium would not apply.

Thanks, Leslie

Leslie Bromer
Office Of Single Family Asset Management
Servicing Team Leader
(202) 708-0614 x 2309
Fax 202-708-5966

From: Dave Cunningham
10/14/2005 01:04 PM
To:<Leslie_Bromer@hud.gov>
Subject:FW: Moratorium info

Leslie,

Would you be able to provide us something in writing indicating what was stated in your call yesterday? We interpreted that HUD wanted a 90 day moratorium on all these loans regardless of what is stated below. Are you indicating that HUD has a different opinion and we should start the FC action on these loans prior to the 90 days expiring?

Thanks

Dave Cunningham
Foreclosure Manager