Targeted Loss Mitigation
Quality Control for FHA Payment Supplement and VA Servicing Purchase (VASP) Programs
In today’s complex mortgage servicing landscape, servicers must navigate new loss mitigation programs like HUD’s FHA Payment Supplement and the VA Servicing Purchase (VASP) amid strict regulatory oversight. BridgeRM provides specialized QC services for these programs, helping servicers ensure compliance, reduce risks, and achieve positive outcomes for borrowers.
The Importance of Targeted QC for FHA Payment Supplement and VA Servicing Purchase Programs
The new FHA Payment Supplement and VA Servicing Purchase plans introduce complexities best addressed through targeted QC reviews to:
Ensure Accurate Borrower Handling
- Verify that borrower reviews align with the new plan guidelines.
- For Payment Supplements, confirm contributions are accurately applied, preserving intended benefits.
- Timely assessment for Payment Supplement borrowers who may default during the Supplement period.
Minimize Compliance Risks
- Enhance oversight of TPP, Modification, and MoPR calculations, confirming accuracy and compliance with FHA/VA guidelines.
- Ensure final submission of essential documents to HUD and VA.
- Review reporting accuracy within SFDMS & VALERIfor these new options.
- Ensure all FHA Payment Supplement and VASP plans are executed within the required timeframes, reducing the risk of costly errors or delays.
Focus on Critical Calculations
- Targeted QC reviews address plan-specific calculations, identifying potential gaps that broader QC reviews may miss.
FHA Payment Supplement
1. Documentation and Record Keeping:
- Verify that all Payment Supplement Documents, including the promissory Note, Subordinate Mortgage, and Payment Supplement Agreement, are executed correctly.
- Ensure timely submission of documents to HUD, including the original Payment Supplement promissory Note and recorded subordinate Mortgage.
2. Payment Supplement Calculations:
- Review the calculation of Partial Claim availability and ensure it does not exceed statutory limits.
- Check the accuracy of the MoPR calculations and ensure they meet the minimum requirements.
3. Disbursement and Application of Funds:
- Verify that MoPR funds are disbursed correctly and applied to the principal portion of the monthly Mortgage Payment.
- Ensure that any additional payments from the borrower do not affect the application of the MoPR.
4. Reporting and Communication:
- Check that the servicerreports the use of a Payment Supplement in the Single Family Default Monitoring System (SFDMS) using the correct codes.
- Review the annual and final disclosures sent to borrowers, ensuring they comply with all applicable laws and provide accurate information.
5. Handling of Subsequent Defaults:
- Ensure procedures are in place forreviewing borrowers who default during the Payment Supplement Period and that appropriate loss mitigation options are offered.
6. Termination and Final Accounting:
- Verify that any remaining funds in the Payment Supplement Account are remitted to HUD upon completion ortermination of the Payment Supplement.
- Review the final accounting of the Payment Supplement to ensure accuracy and completeness.
VA Servicing Purchase (VASP)
1. Loan Qualification Criteria:
- Verify that loans meet the VASP qualifying criteria, including delinquency status, owner-occupancy, and lien position.
- Ensure that the borrower and all obligors have a stable and reliable source of income.
2. Trial Payment Plan (TPP) Compliance:
- Review the establishment and execution of TPPs, ensuring they meet the required three-payment duration and other criteria.
- Confirm that TPP payments are correctly calculated and communicated to borrowers.
3. Documentation and Reporting:
- Check that allrequired documents are uploaded into VALERI within the specified timelines.
- Ensure accurate and timely reporting of VASPrelated events, such as TPP Complete and VASP with No TPP events.
4. Loan Modification Terms:
- Verify that loan modifications are drafted with the correct terms, including interestrates and payment schedules.
- Ensure that modifications comply with VA guidelines, especially in cases involving bankruptcy.
5. Servicing Transfer Process:
- Review the servicing transfer process to VA’s contractor, ensuring it is completed within the 122- day timeline.
- Confirm that all escrow funds and necessary documentation are transferred accurately.
- Validate that the VASP Claim was filed appropriately
