Claim Settlement & Property Sales Managing Risk
CMG MORTGAGE INSURANCE COMPANY August 11, 2010 MSA Property 2010 - 1st Half Albuquerque, NM Anchorage, AK Appleton, WI Atlanta-Sandy Springs-Marietta, GA Bakersfield, CA Baltimore-Towson, MD Bellingham, WA Bremerton-Silverdale, WA Bridgeport-Stamford-Norwalk, CT Brunswick, GA Cedar Rapids, IA Cheyenne, WY Cincinnati-Middletown, OH-KY-IN Colorado Springs, CO Columbus, OH Dallas-Plano-Irving, TX Denver-Aurora, CO Denver-Aurora-Broomfield, CO Des Moines-West Des Moines, IA Detroit-Livonia-Dearborn, MI Dubuque, IA
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CMG Mortgage Insurance Company
Delinquency and Claims Manual
Title Transfer Short Sale / Pre-Sale or Acquire Title - REO
Status Reports Certificate Level Portfolio Level
Chrisâ€™s Queries The most important factor of the foreclosure sale bidding decision is knowing the fair market value.
Claim Settlement is may be adjusted if the MI company discovers the property is substantially in disrepair, not in marketable condition. In order to file a MI claim the credit union will need to take title to, and have sold the REO property so that an exact loss is presented at time of filing. After 60 days following the credit union taking title through foreclosure and REO sale does not need MI approval. It is a good practice to foreclose on a 2nd lien, because the Credit Union remains in 1st position on the new title, and it is less expense to foreclose on the 2nd. The borrower hardship is always important to document in a short sale or Deed in Lieu submission.
MI claim settlement allows the credit union to recover all standard foreclosure costs, lost interest, unpaid taxes, unpaid HOA dues, and a portion of the loss in market value. Accepting a DIL on a property without a thorough title or abstract search completed might be a recipe for an extraordinary loss to the credit union. A non-mitigating short sale is the best outcome for the Credit Union in nearly all scenarios.
Claim Settlement •
• • •
Percentage Option Settlement (default date to the claim filing date) – % Coverage multiplied by claim amount, then adjusted by coverage options on certificate Pre-Approved Sale (PAS) – Short sale, Pre-sale and post-foreclosure (REO); Need MI approval Acquisition MI company acquires property; mitigates loss through selling the property Negotiated Settlements – Special Situations Closed Without Payment - Could Not be Perfected – May be reopened - Sale Proceeds Exceed Claim Non-Claimable
Deductible from Claim
HOA late charges
Capital improvements & repairs exceeding
$500 preservation allowance
Hazard Insurance Proceeds not Spent on Repair / Restoration
Buy-down funds or other offsets
*Terms of the applicable master policy apply
Property Disposition – Avoid Foreclosure Short Sale or Pre-Foreclosure Sale Pre-sale sale avoids delinquency, foreclosure cost and delay • Short Sale is a partial payoff at closing. • Sale reflects Fair Market Value • Hardship shown. GSE & MI Approval Needed
Deed In Lieu of Foreclosure Severe hardship • No practical workout possible; • List property of sale • GSE & MI Approval Needed
*Terms of the applicable master policy apply Section 2 N – Mitigating Loss Section 4 F - Conditions for payment of claim
Documentation 1. Hardship Letter 2. Income/expense sheet 3. 2 recent paystubs 4. Last 1040 5. Credit report 6. BPO or Appraisal 7. Sales contract (short sale)
Short Sale – Decision •
Member presents a short sale offer at fair market value - 50% below UPB
Loan is 150 days delinquent. Credit score 585, Two 3 X 60, One 1X90 accounts.
Income statement shows loss of job, unemployment income and some PT work. DTI is 140%.
Hardship – Loss of Income, Recovery Not Possible
Loss Mitigation Decision – Short Sale •
Short Sale presented at fair market value; 26% below UPB.
Loan is current. Credit report shows no delinquent accounts or charge off. 719 score. Member on same job 5 years. Wife has lost 45% of income.
Current PITI is 48%, Total DTI 76%.
Hardship is based on equity loss in area; 5-7 year recovery expected
Loss Mitigation – Deed In Lieu •
Credit Union Accepted a DIL. No preapproval from CMG MI or Fannie.
Borrower Has SS Income – Terminal Illness.
Credit Union Holds a Savings Account; will offset part of loss.
Sold Property in REO Sale – recovered $27,500 of $105,000 Loss on Sale.
Credit Union then decides to accept MI Claim Settlement – let heirs take over property – No FC, No Sale.
File MI claim for Optional Settlement of $86,500 Certificate.
Research shows no delinquency. Borrower hardship not established. Good credit & reserves at time of DIL.
Appraisal and BPO show REO Sale was >15% below fair market value
There is a lis pendis on title due to encroachment .
*Terms of the applicable master policy apply
Thank You! Delinquency, Claim & Loss Mitigation Team 800-909-4264 firstname.lastname@example.org Modification Team – CMG MI Underwriters Fax - 888-763-2264 Mark Carbajal - Sales / Loss Mitigation #2537 Karen Dohrman – Claim Specialist #2581 Trey Matkin - Claim Specialist #2522 Karen Horvot – Claim Specialist # 2542
Nahima Quintana – Claim Specialist #2510 Nick Bray – Supervisor #2531 Chris Eckenroad – Manager #2539 email@example.com
Scott Romesburg Director, Underwriting, Operations & IT #2605
Preserving Homeownership Mitigating Loss CMG MI Team to Support Your Efforts
Course Materials for CMG MI's Loss Mitigation Webinar on 8/11/2010