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    Results:

    Subject Term: Mortgages

    1 publication with a total of 5 open recommendations including 1 priority recommendation
    Director: Scire, Mathew J
    Phone: (202) 512-8678

    5 open recommendations
    including 1 priority recommendation
    Recommendation: In order to better ensure that servicers are effectively implementing the agency's loss mitigation programs and that distressed borrowers are receiving the assistance they need as early as possible before they become seriously delinquent, the Secretary of the Department of Agriculture should require servicers to report information about their efforts to reach distressed borrowers. For example, servicers could report on their efforts to reach borrowers and whether borrowers have responded to outreach from the servicer regarding early delinquency interventions and are receiving informal foreclosure mitigation actions.

    Agency: Department of Agriculture
    Status: Open

    Comments: In its 60-day response letter, USDA noted that currently, its Rural Housing Service (RHS) guaranteed loan servicers are required to perform outreach and early delinquency intervention and informal mitigation actions within agency-prescribed timeframes. Also, each servicer is required to maintain automated records of these contacts and attempted contacts. According to USDA. RHS will utilize both internal and external means to analyze data obtained periodically through loan servicers. Loan level data outlining foreclosure prevention efforts such as borrower contact, loss mitigation actions attempted, loss mitigation actions implemented, and failed loss mitigation actions will be assessed in order to better evaluate the effectiveness of RHS'foreclosure prevention guidance. Data will be collected from loan servicers via monthly reporting in conjunction with data obtained through compliance reviews conducted by RHS and its program compliance agent. Utilizing these compliance reviews, USDA stated that RHS will perform a management review of the results and will provide feedback to the servicers to increase compliance. In a September 2013 status update, USDA stated that it was developing manual processes that will provide clarity with respect to lender loss mitigation performance as recommended by GAO. USDA currently captures limited loss mitigation data that yields performance results, assisting the program in its efforts to mitigate risk. These manual processes will remain in effect until USDA has completed the build-out of the enhanced electronic data reporting requirements of lenders that participate in the program. In addition, USDA noted that it was finalizing a memorandum of understanding with Ginnie Mae to gain access to their program default data that will provide insight into the loss mitigation retention workout performance of 502 Guaranteed borrowers. This data, which will help evaluate the effectiveness of loss mitigation efforts on both borrower outcome and agency cost bases, will be gathered with the assistance of the consulting team now supporting lender compliance.
    Recommendation: The Secretary of USDA should determine the extent to which distressed borrowers have not been reached and assess whether changes are needed to help ensure servicers are complying with USDA's loss mitigation requirements.

    Agency: Department of Agriculture
    Status: Open

    Comments: In its 60-day response letter, USDA stated that it supported GAO's recommendation to require servicers to report their efforts to reach distressed borrowers and report, on a portfolio level, the extent to which servicers are complying with USDA's loss mitigation requirements. USDA also stated that data will be collected from loan servicers via monthly reporting in conjunction with data obtained through compliance reviews conducted by it Rural Housing Service (RHS) and its program compliance agent. Utilizing these compliance reviews, RHS will perform a management review of the results and will provide feedback to the servicers to increase compliance. In a September 2013 status update, USDA stated that it was developing manual processes that will provide clarity with respect to lender loss mitigation performance as recommended by GAO. USDA currently captures limited loss mitigation data that yields performance results, assisting the program in its efforts to mitigate risk. These manual processes will remain in effect until USDA has completed the build-out of the enhanced electronic data reporting requirements of lenders that participate in the program. In addition, USDA noted that it was finalizing a memorandum of understanding with Ginnie Mae to gain access to their program default data that will provide insight into the loss mitigation retention workout performance of 502 Guaranteed borrowers. This data, which will help evaluate the effectiveness of loss mitigation efforts on both borrower outcome and agency cost bases, will be gathered with the assistance of the consulting team now supporting lender compliance.
    Recommendation: To more fully understand the strengths and risks posed by foreclosure mitigation actions and protect taxpayers from absorbing avoidable losses to the maximum extent possible, the FHA, VA, and USDA should conduct periodic analyses of the effectiveness and the long-term costs and benefits of their loss mitigation strategies and actions. These analyses should consider (1) the redefault rates associated with each type of home retention action and (2) the impact that loan and borrower characteristics have on the performance of different home retention actions. The agencies should use the results from these analyses to reevaluate their loss mitigation approach and provide additional guidance to servicers to effectively target foreclosure mitigation actions. If FHA, VA, and USDA do not maintain data needed to consider this information, they should require services to provide them.

    Agency: Department of Housing and Urban Development: Federal Housing Administration
    Status: Open
    Priority recommendation

    Comments: FHA agreed with this recommendation. In November 2012, FHA revised the types of mitigation actions and manner in which the actions are offered. FHA officials have begun to evaluate the effectiveness of these changes. Specifically, FHA is analyzing the redefault and failure rates associated with its various loss mitigation options. HUD contracted with the Urban Institute to conduct a comprehensive study of FHA's loss mitigation program which was completed in December 2016. To fully implement this recommendation, FHA needs to use the results of a HUD-commissioned 2016 Urban Institute study of FHA's loss mitigation program and internal evaluation of early interaction with delinquent borrowers to reevaluate its loss mitigation approach and, as appropriate, provide guidance to mortgage servicers to effectively target foreclosure mitigation actions.
    Recommendation: To more fully understand the strengths and risks posed by foreclosure mitigation actions and protect taxpayers from absorbing avoidable losses to the maximum extent possible, the FHA, VA, and USDA should conduct periodic analyses of the effectiveness and the long-term costs and benefits of their loss mitigation strategies and actions. These analyses should consider (1) the redefault rates associated with each type of home retention action and (2) the impact that loan and borrower characteristics have on the performance of different home retention actions. The agencies should use the results from these analyses to reevaluate their loss mitigation approach and provide additional guidance to servicers to effectively target foreclosure mitigation actions. If FHA, VA, and USDA do not maintain data needed to consider this information, they should require services to provide them.

    Agency: Department of Veterans Affairs
    Status: Open

    Comments: VA agreed with this recommendation but has not yet fully implemented it. Specifically, VA plans to collect and analyze data on redefault rates and determine how those results could inform its loss mitigation approach and guidance to servicers. In August 2016, VA told GAO that it had configured a server to process program data and was in the process of procuring statistical analytic software to conduct analyses. After VA procures the software, it plans to process data files, develop the analytical framework for identifying redefault rates of modified loans, and validate and run the models. VA's target completion date to report preliminary results is mid-2017.
    Recommendation: To more fully understand the strengths and risks posed by foreclosure mitigation actions and protect taxpayers from absorbing avoidable losses to the maximum extent possible, the FHA, VA, and USDA should conduct periodic analyses of the effectiveness and the long-term costs and benefits of their loss mitigation strategies and actions. These analyses should consider (1) the redefault rates associated with each type of home retention action and (2) the impact that loan and borrower characteristics have on the performance of different home retention actions. The agencies should use the results from these analyses to reevaluate their loss mitigation approach and provide additional guidance to servicers to effectively target foreclosure mitigation actions. If FHA, VA, and USDA do not maintain data needed to consider this information, they should require services to provide them.

    Agency: Department of Agriculture
    Status: Open

    Comments: USDA agreed with this recommendation but has not yet fully implemented it. Specifically, USDA indicated that it plans to conduct periodic analyses of the effectiveness and long-term costs and benefits of its loss mitigation strategies and actions. USDA representatives stated that it had allocated funding to build monthly data gathering and analysis capability. USDA representatives also told GAO that the agency completed the basic development and internal testing of the new software in December 2015 and began testing and implementing the software with lenders in September 2016. USDA representatives have identified April 2018 as their tentative implementation date.