The Implementation of the National Mortgage

Settlement

Elizabeth M. LynchStaff Attorney

MFY Legal Services, Inc.

June 28, 201324th Annual Fair Lending Conference – Fair Housing in an Era of Foreclosure and Abandonment

Levin College of Urban Affairs, Cleveland State University

I. Second Mortgage Shell Game

National ReliefBenefits to Date: March 1, 2012 – March 31, 2013

Type of Relief Number of Borrowers

Served

Percentage of Borrowers

Number of People Receiving Relief Under NMS

607,015 --

Number of People Receiving 1st Lien Modification

66,140 10.9%

Number of People Receiving 2nd Lien Extinguishment

196,730 32.4%

Number of People Receiving a Short Sale 174,802 28.8%

Data obtained from Office of the Mortgage Settlement Oversight, available at https://www.mortgageoversight.com/reports/

New York ReliefBenefits to Date: March 1, 2012 – March 31, 2013

Type of Relief Number of Borrowers

Served

Percentage of Borrowers

Number of People Receiving Relief Under NMS

19,601 --

Number of People Receiving 1st Lien Modification

2,917 14.9%

Number of People Receiving 2nd Lien Extinguishment

11,086 56.6%

Number of People Receiving a Short Sale 2,212 11.3%

Data obtained from Office of the Mortgage Settlement Oversight, available at https://www.mortgageoversight.com/reports/

Ohio ReliefBenefits to Date: March 1, 2012 – March 31, 2013

Type of Relief Number of Borrowers

Served

Percentage of Borrowers

Number of People Receiving Relief Under NMS

9,593 --

Number of People Receiving 1st Lien Modification

980 10.2%

Number of People Receiving 2nd Lien Extinguishment

2,525 26.3%

Number of People Receiving a Short Sale 1,777 18.5%

Data obtained from Office of the Mortgage Settlement Oversight, available at https://www.mortgageoversight.com/reports/

California ReliefBenefits to Date: March 1, 2012 – March 31, 2013

Type of Relief Number of Borrowers

Served

Percentage of Borrowers

Number of People Receiving Relief Under NMS

177,164 --

Number of People Receiving 1st Lien Modification

21,953 12.4%

Number of People Receiving 2nd Lien Extinguishment

49,577 28.0%

Number of People Receiving a Short Sale 61,746 34.9%

Data obtained from Office of the Mortgage Settlement Oversight, available at https://www.mortgageoversight.com/reports/

Florida ReliefBenefits to Date: March 1, 2012 – March 31, 2013

Type of Relief Number of Borrowers

Served

Percentage of Borrowers

Number of People Receiving Relief Under NMS

111,913 --

Number of People Receiving 1st Lien Modification

10,400 9.3%

Number of People Receiving 2nd Lien Extinguishment

46,074 41.2%

Number of People Receiving a Short Sale 30,275 27.1%

Data obtained from Office of the Mortgage Settlement Oversight, available at https://www.mortgageoversight.com/reports/

Where’s the Relief?

STATE Percentage of Homeowners Nationally That Received First Lien Permanent Modifications

(As of March 31, 2013)

New York 4.4%

Ohio 1.6%

California 33.2%

Florida 15.7%

First Lien Permanent Modifications Saves Homes.

But Are All States Receiving A Proportional Number of First Lien Modifications?

II. Fair Housing Implications Of The National Mortgage

Settlement

Credit Under the Settlement

Type of Loan Loan to ValueRatio

Credit for Every $1 Forgiven

Portfolio Loan(loans kept on the books)

</= 175% $1.00

LTV > 175% $0.50 (for only the portion of principal forgiven over 175%)

Service for Others Loan(loans sold off – securitized)GSE loans do NOT participate in principal forgiveness)

</= 175% $0.40

LTV > 175% $0.40 (settlement makes no distinction)

First Lien Mortgage Modifications

Type of Relief Credit for Every $1 Forgiven

Second Lien Writedown

Performing Second Lien(0-90 days delinquent)

$0.90

Seriously Delinquent Second Lien(91-179 days delinquent)

$0.50

Non-performing Second Lien(180 or more days delinquent)

$0.10

Short Sale/Deficiency Forgiveness

Deficiency Forgiveness on First Lien Portfolio Loans

$0.45

Deficiency Forgiveness on First Lien Portfolio Loans for Service for Others Loans

$0.20

Credit Under the SettlementSecond Lien Extinguishments & Short Sales

Thank You!

Elizabeth M. Lynch, Staff Attorney, MFY Legal Services, Inc.elynch@mfy.org(212) 417-3779