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FORECLOSURE – POLICY AND PROCEDURES

Table of Contents

 

Servicing Second Lien Accounts – Rev 10/25/06 *

Foreclosure Tracking Step Report - 58S – Rev 01/15/07 *

58X Report – Rev 01/15/07 *

Applying Reinstatement Funds – Rev 01/15/07 *

Applying Payoff Funds – Rev 01/15/07 *

Applying Reinstatement Funds – Rev 01/15/07 *

Archiving Files – Rev 01/15/07 *

Attorney Performances – Rev 01/15/07 *

Attorney Report Card - Bankruptcy Foreclosure – Rev 01/15/07 *

Bankruptcy Foreclosure Exception Reports – Rev 01/15/07 *

By-Product Customer Verification – Rev 01/15/07 *

By Product Foreclosure Setups – Rev 01/15/07 *

By Product Charge-offs – Rev 01/15/07 *

Processing By Product Payoffs – Rev 01/15/07 *

By Product Transfers To Bankruptcy – Rev 12/15/06 *

By Product Reinstatement Quotes – Rev 12/15/06 *

By Product Transfer to CPI – Rev 12/01/06 *

Caller Identification – Rev 12/01/06 *

Credit Bureau Security – Rev 12/01/06 *

Check Return Procedure – Rev 01/15/07 *

Conflict of Interest – Rev 12/15/06 *

Foreclosure Notification – Commercial Loan – Rev 08/14/06 *

Credit Report – Rev 12/15/06 *

Customer Verification – Rev 12/15/06 *

Custodial Files – Rev 12/15/06 *

By Product Document Retrieval – Rev 12/15/06 *

Foreclosure/Bankruptcy Reports – Rev 12/15/06 *

Foreclosure By Product Setups – Rev 12/15/06 *

Servicing Foreclosed By Product Accounts – Rev 12/15/06 *

Foreclosure Roundtable – Rev 12/15/06 *

Servicing of Foreclosure Accounts – Rev 12/15/06 *

Foreclosure Setups – Rev 12/15/06 *

Foreclosure Sales Results – Rev 11/15/06 *

Foreclosure Transferred to Bankruptcy – Rev 12/15/06 *

HELOAN/Collateral Mortgage/Marine Express Sales Results – Rev 12/15/06 *

HELOC Sales Results – Rev 12/15/06 *

Host Posting Process – Rev 08/14/06 *

Investor Charge Offs – Rev 12/15/06 *

Invoices – Rev 12/15/06 *

Equity Review – Rev 12/15/06 *

Lenstar Contingency Process – Rev 12/15/06 *

Creating Lotus Notes Form – Rev 12/15/06 *

Mail – Rev 12/15/06 *

Managing ELOC Risk – Rev 08/14/06 *

Month-End Reporting - Foreclosure By Products – Rev 12/15/06 *

Monitoring Foreclosure Action – Rev 12/15/06 *

Monitor Foreclosure Action - By Products – Rev 12/15/06 *

Bidding Instructions – Investor – Rev 12/15/06 *

Payoff Quotes – Foreclosure – Rev 12/15/06 *

Reinstatement Quotes – Rev 12/15/06 *

Invalid Foreclosure Sales – Rev 12/15/06 *

Note Sale – Rev 09/15/06 *

Ordering Broker’s Price Opinions – Rev 12/06/06 *

By Product/Mortgage Invoices – Rev 12/06/06 *

Preparing Bidding Instructions – Rev 12/06/06 *

By-Product Property Inspections – Rev 08/14/06 *

Quarterly Exception Reporting – Rev 08/14/06 *

Review - Aged Items – Rev 12/06/06 *

Foreclosure Roundtable – Rev 12/06/06 *

S58J - Loans in Foreclosure – Rev 12/15/06 *

SBO Delinquency Reporting – Rev 11/10/06 *

SBO Foreclosures – Rev 08/14/06 *

VA Buydowns – Rev 12/15/06 *

Year End Procedures – Rev 12/15/06 *

HDPI – Self-audits – Foreclosure – Rev 08/14/06 *

Fair Debt Collection Practices Act Compliance – Rev 08/14/06 *

Debtor Discovery Security Review – Rev 08/14/06 *

Electronic Monitoring – Rev 08/14/06 *

MERS – Rev 12/20/06 *

When and How to Destroy Confidential Information – Rev 03/22/06 *

Foreclosure Departmental Expectations and Standards – Rev 03/01/06 *

Reports – Rev 09/01/06 *

 

Servicing Second Lien Accounts – Rev 10/25/06

FUNCTIONAL OVERVIEW:

When a mortgage is in a second lien position (2nd’s), there are different avenues to be reviewed when servicing the account. The foreclosure specialist must ensure there is sufficient equity, keep abreast of the first lien holder status, payoff, and the status of taxes. It will also be determined whether the action of the first lien holder will be monitored, join their action or commence a separate action.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

10/25/06

PROCEDURE:

Pre-Foreclosure Requirements

An account will be referred to the Foreclosure Department after 30-day demand expires:

all collection efforts have been exhausted

the account is at least 90 days past due

the demand has expired after 30 days

status of first lien, their payoff and tax or coop fee status has been obtained

management/roundtable or the investor approval has been obtained

BPO determines equity/non-equity position - aids in charge-off scenarios.

New Setups Report Loan Review

This report originated from passport generated by the foreclosure manager twice a month on loans setup in the current month. The foreclosure specialist will review this report to verify data integrity and ensure the attorney has received the file. The foreclosure specialist will verify the following information is correct:

FOR1

PROCESSOR - this identifies each specialists portfolio

PROCESS - this code identifies a judicial foreclosure state = 1 or a non-judicial foreclosure state = 2

CLAIM - this code identifies 11 = FHA, 21 = VA and 31 = conventional loans

DFLT - this code identifies the reason the mortgagor defaulted on the loan. The specialist will review the comment codes on DLQ1 and then refer to "Reasons For Default Sheet" to verify the code is correct.

ATTORNEY - the specialist will verify the file was sent to the correct attorney based on the state the property is located, designated counsel, etc (see active Foreclosure Attorney listing sheet)

verify template ID code (see Template Quality Review Sheet)

* Note: When in actively foreclosing a "sec" template will be used. When monitoring the action of the first, a "mon" template will be used.

 

 

FOR3 - verify the following steps where completed when applicable: (9/27/07 – The steps differ now)

Step 665 - "Rcvd Summons & Complaint"

Step 666 - "Atty. Filing Answer"

Step 667 - "Obtain 1st’s Information"

Step 668 - "Notify Inv.. of 2nd position"

Step 669 - "Obtain Inv. Instructions"

Step 001 - "Package sent to Attorney"

Step 002 - "Input all INV/MI screens"

SAF1 - verify the following:

PROCESS stop = 5 "Foreclosure" (9/27/07 – What does this mean and is it relevant now?)

FORECLOSURE stop = 1 "New referral" (9/27/07 – What does this mean and is it relevant now?)

MAS1

COL2 screen - if FNMA loan, verify "status" is 43 and "reason" is reason for delinquency code.

DFRI - if FHLMC account "CD" should be 43 (if actively foreclosing) or 61 (if monitoring the action of the first)

SER1 - if there is money in suspense, the foreclosure specialist will complete the "payment request form" to have the money moved to escrow. If the account is non-escrowed, the funds will remain in suspense.

PL05 - review "attorney letter" special instructions to ensure the attorney was advised to foreclose in the correct entities name (see matrix on who to foreclose in the name of). The specialist will also review the letter to ensure the attorney was correctly advised to foreclose or to file a notice of appearance and monitor the action of the first.

Documentation and Loan Review

When servicing second lien accounts, the foreclosure specialist must be aware of the following

1. Status of the first - i.e., current, in foreclosure, paid in full, etc.

2. First payoff.

3. Status of taxes or Coop maintenance fees - i.e., current, delinquent, paid by first, etc.

4. Value of the property.

All of this information is needed to determine the equity situation. The amount of equity or lack of equity will help determine if the action will continue or if a recommendation to charge-off the account will be made to the investor.

Reinstatement of first lien - if monitoring the action of the first and their account reinstates, the investor will be notified. The foreclosure specialist will need to obtain approval to commence an action. If the investor approves commencing an action, the foreclosure specialist will notify the foreclosure attorney of the same.

Notification of sale - the foreclosure specialist will complete the following:

First sale - if the sale scheduled is the firsts lien sale, the following is done:

Obtain the first payoff statement good through the sale date.

Generate payoff statement through the sale date (refer to Payoff Quotes Procedure).

Order BPO if there is not a current one in the file (refer Bidding Instructions Procedure)

*These items are then faxed to the investor accounts; Form 105 will also be completed and faxed to the investor.

* Refer to "Bidding Instructions" procedure for CPI system maintenance and loan review.

Once the bid has been obtained, a check for 10% of the maximum bid will be generated.

Complete "Corporate Advance" form.

transaction code - 633 - miscellaneous

payee - 01T01 - asset loans

01T02 - investor loans

reason - FMBO (First Mortgage Buyout)

*The form is submitted to investor accounting to generate the check. The check will be given to the foreclosure specialist to send overnight mail along with the bidding instructions to the foreclosure attorney.

Second sale - if the sale scheduled is our sale the foreclosure specialist will complete the following:

Obtain first payoff statement good throughout the sale date.

Generate a payoff statement good through the sale date (refer to Payoff Quotes Procedure).

Order BPO if there is not a current one in the file (refer to Bidding Instructions Procedure).

*These items are then faxed to the investor to prepare a bid. * Note: On FHLMC accounts, Form 105 will also be completed and faxed to the investor.

* Refer to "Bidding Instructions" procedure for CPI system maintenance and loan review.

Once the bid has been obtained, it will be faxed to the attorney’s office.

First Mortgage Buyout

To buyout or payoff the first mortgage, the specialist will complete the same procedure as when the 10% deposit was requested. Must be approved by the Default Manager/Servicing Manager based on signing authority approval.

Surplus Money

If the property was purchased for more than is owed to the first, a surplus will exist. The specialist will complete the following steps:

advise the foreclosure attorney to commence a surplus money proceedings

and contact the attorney on a monthly basis for a status update.

Inspections and Property Preservation Work

When the foreclosure specialist receives notification from Property Preservation Department that a property is vacant or is in need of property preservation work, the following will occur:

Contact the first lien holder to advise them of the situation.

Verify with the first lien holder that they will be completing the required work.

* Note: If the first lien holder will not be completing the required work, the foreclosure specialist approves it to be completed if the amount is within investor guidelines. If the amount is above the allowable, the specialist should contact the investor to seek approval for the additional sums needed to complete the work.

FOLLOW-UP / REVIEW:

N/A

 

 

Foreclosure Tracking Step Report - 58S – Rev 01/15/07

 

FUNCTIONAL OVERVIEW:

The 58S report lists accounts by foreclosure specialist indicating that the scheduled date for steps are past due or will be due during the coming week. The report is run on a weekly basis. Each processor is responsible to contact the attorney to determine why a specific action during the foreclosure process was not completed on time. They will then update the step or add a step depending on the account’s status. An explanation will be entered on FOR2 and the account will continue to be monitored.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/15/06

01/15/07

 

PROCEDURE:

Documentation

The following information is provided on the report: loan number, mortgagors name, loan type, investor code, foreclosure processor, state code, foreclosure stop, schedule date, actual date, step, description, principal balance and PMI Co.

Foreclosure Action

The specialist will review each account’s step from the report on FOR3 and the account’s status on the FOR2 history screen or New Trak. The attorney will be contacted via phone, toss, fax or e-mail to determine why a specific action has not occurred on time. Depending on the attorney’s response, the steps scheduled date may be post dated, or a step may be added describing the action that occurred on the account. For example, the foreclosure may be contested, resulting in a delay in the foreclosure process.

Steps

To change the scheduled date on a step:

To logon input "SSPROD", enter.

Input the seven (7) digit logon ID and the six (6) digit password, enter.

Input Fidelity, enter.

Input the five (5) digit logon ID and six (6) digit password, enter.

Input FOR3, account number, enter.

Tab down to step, input "C"; cursor is positioned under SCHED input new date as MMDDYY and enter.

On next screen input brief message why date is being changed and enter.

Scheduled date has now been changed.

To update the FOR2 screen input FOR2, account number, enter.

Depress F5 key.

Tab to the free format lines and update the account's history with new information and enter.

To add a step to the FOR3 screen:

Tab down to the step where you want the new step to be inserted behind it. Input "1" in the ACT column and enter.

Input new step number and predecessors step number from FOR3 screen. Under column FLT input number of days required to complete current step action and enter.

Input brief description describing step action, enter.

Step has now been added.

Update FOR2 screen as described above.

The step report remains with each specialist when completed.

The step report is a tool for foreclosure specialists and management to utilize to locate accounts with delays in the foreclosure process and initiate immediate action.

FOLLOW-UP / REVIEW:

N/A

 

 

58X Report – Rev 01/15/07

FUNCTIONAL OVERVIEW:

The 58X report is generated on a daily basis as a tool for management to monitor changes to steps on the foreclosure workstation. If a step is added, deleted or the float date is changed it will appear on the report. The foreclosure specialist must input their initials and a brief description for the reason of the step change that appears on the report. Management will review the report and FOR3 screen on the foreclosure workstation to ensure the changes are correct.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/15/06

01/15/07

PROCEDURE:

The report contains the following information:

Account number, processor step, code and description, change type, reason for change and schedule date.

Additions and deletions of steps are reviewed on the FOR2 screen. The information provided here will give a better indication why the change was made.

A change to the float date can indicate a delay to a scheduled event in the foreclosure process. Management will review the account to ensure proper servicing guidelines are being followed by the foreclosure specialist.

* Note: the information and comments contained on the FOR2 screen should mirror the completion of each step on an account.

once the report has been reviewed the manager will initial and date the report. It will then be stored in a cabinet by the manager.

The daily review of the report by management is used as an audit tool to insure accounts are being serviced properly.

FOLLOW-UP / REVIEW:

N/A

 

Applying Reinstatement Funds – Rev 01/15/07

FUNCTIONAL OVERVIEW:

Prior to accepting funds, the foreclosure attorney contacts the bank, to verify the funds are sufficient to reinstate the account. If the amounts are sufficient to reinstate the account, the foreclosure attorney will immediately stop the foreclosure proceedings and accept the funds and forward the funds to the specialist via overnight mail. The foreclosure specialist must process the reinstatement within 48 hours of receipt of the funds.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/16/06

01/15/07

PROCEDURE:

Documentation and System

When the check is received, the foreclosure specialist will complete the following steps:

HIST - on MTC and MCP accounts the check number and amount of the check are notated throughout "EHI" as well as a breakdown of how the funds will be applied. This procedure will update the account’s history. The check information is then entered into the payment logbook by the operations specialist and signed for by the foreclosure specialist.

Home Equity Payments - the foreclosure specialist will obtain the reinstatement quote from the file and complete the home equity payment form according to the quote.

Principal Balance/Interest - input the total payment amount collected from the quote on this line.

Late Charges - input the total amount of late charges collected.

Inspections - input inspection amount, general ledger account number and cost center on form. A credit ticket - 631374/607275 originating cost center is 801576 (other outside services) will be prepared to repay inspections captured from the by products account history.

Broker Price Opinion - input BPO amount, general ledger account number and originating branch of by product cost center on form. A credit ticket - 631721/ 607275 branch cost center will be prepared to repay BPO costs captured from the by products account history.

Administrative Fee - input $100.00 administrative fee on form, general ledger account number. A credit ticket – 631721/607275 will be prepared to credit "M/I - Oth" account.

Miscellaneous Expenses - when funds are advanced to pay property taxes the reimbursed amount is entered on this line. A general ledger credit ticket 638080/ 607275 branch cost center will be prepared to credit "legal" account.

Legal Fees/Expenses - when funds are advanced to pay attorney fees the reimbursed amount is entered on this line. A general ledger credit ticket 631655/607275 /branch cost center will be prepared to credit "legal" account. If funds are received to pay attorney fees and a final invoice hat not been obtained from the attorney. Deposit funds to General Ledger account. When attorney invoice is received, charge the General Ledger account and issue check to attorney.

* Note: on the payoff form write the general ledger and cost center number next to the amount.

Authorization to Process - once all the paperwork has been completed and the system has been documented, the paperwork and tickets are submitted to the foreclosure supervisor for approval to process. After the supervisor has signed the paperwork and tickets, copies will be made.

Processing Reinstatement Funds - the foreclosure specialist will submit the original tickets and forms to the payment processing department to process the reinstatement. Place copies of ticket work in file.

Property Preservation - all property preservation work must be canceled at this time. To do this the foreclosure specialist will complete the "PP Property Cancellation Request Form" on Toss.

Applying ELOC Reinstatement Funds

Refer to the attached procedure "Applying Reinstatement Funds" for mortgages on Fidelity Utilize this procedure to apply reinstatement funds on ELOC’s.

The foreclosure specialist will monitor the account daily to ensure payments have been processed. The date the account reinstated are written on the file. A bill Statement is ordered. The file is placed in a designated area to be sent to archives.

FOLLOW-UP / REVIEW:

N/A

 

 

Applying Payoff Funds – Rev 01/15/07

FUNCTIONAL OVERVIEW:

When the foreclosure attorney receives certified funds to payoff an account, a phone call is made to the foreclosure specialist to verify the funds are sufficient to payoff the account. If the funds received are sufficient to payoff the account, the foreclosure attorney will immediately stop the foreclosure proceedings and will forward the funds to the specialist via overnight mail. The specialist must process the payoff the day it is received.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

11/14/01

08/15/06

01/15/07

PROCEDURE:

Documentation and CPI Maintenance

When the check is received, the foreclosure specialist will complete the following steps:

FOR2 - the check number and amount of the check are notated on FOR2 as well as a breakdown of how the funds will be applied. The check information is then entered into the payment logbook by the operations specialist and signed for by the foreclosure specialist.

Payoff Request Form - the foreclosure specialist will obtain the payoff quote from the file and complete the payoff request form according to the quote.

BPO - if a BPO was ordered through FHLMC, $95.00 will be credited to suspense so a check can be made payable to FHLMC to reimburse the expense of the BPO.

Asset Loans - On asset loans the FOR2 and FOR3 screens must be reviewed to determine if a BPO was ordered and/or a foreclosure sale date is scheduled. The operations specialist must toss the REO Department Manager to cancel the BPO request indicating the reason to cancel the order. Then notate on FOR2 that the REO Manager was notified.

FHA

On FHA loans in investor category 175 the accounts must be reviewed to determine if buyout interest exists. The funds are generated when the loan is bought out of the GNMA pool. The Investor Accounting Department must be notified so they can clear the ledger account.

input FOR1, account number, CORP and enter

review the 3rd party recoverable field on the screen to determine if funds exist

if there is a balance in the 3rd party recoverable field a toss must be generated to notify investor accounting

on toss access for "Buyout Interest Form", indicate account number and if account is being reinstated or paid off

update the FOR2 screen that funds existed in the 3rd party recoverable field and the Investor Accounting Department was notified via toss

Authorization to Process - once all the paperwork has been completed and the system has been documented, the paperwork and check are submitted to payment processing.

Closing Tracking

The next day, the foreclosure specialist will complete the following steps: Refer to QC Review checklist.

verify the account is paid in full by viewing the application of payments and balance on P309.

SAF1 - verify "Paid In Full" stop is a "1" on SAF1.

TSK1 - complete "PMTMSC" task if there is access money in suspense. A check will be prepared made payable to the mortgagors. This task will also be completed if a check will be issued to FHLMC for BPOs.

FOR3 - insert step number 098 (account paid in full).

place a one in the "ACT" field

* Note: Wherever the cursor is placed, the step will be inserted below that point

press enter

type step number in "step" field

type predecessor step number in the "pred" field

type account paid in full and the name of the specialist inserting the step in the "reas" field

press enter

complete the step by typing "C" in the "ACT" field

type date the account paid in full

press enter

FOR2 - document the account has paid in full, tracking will be closed, and the file will be archived.

FOR1 mast - change mancode to the appropriate mancode

FOR1 stat - change status to "C" (completed) and removal code to "08"

Attorney follow-up - the foreclosure specialist will ensure via fax/telephone that the attorney’s invoice has been paid in full and their file has been closed

The foreclosure specialist will monitor the account daily to ensure all balances go to zero. Only then can the documents in the file be transferred.

The documents in the file will then be transferred to a manila file folder. The account number is written on the right side of the file and it is placed in the designated area to be sent to archives.

FOLLOW-UP / REVIEW:

N/A

 

 

Applying Reinstatement Funds – Rev 01/15/07

FUNCTIONAL OVERVIEW:

When the foreclosure attorney receives certified funds, a phone call is made to the foreclosure specialist to verify the funds are sufficient to reinstate the account. If the funds received are sufficient to reinstate the account, the foreclosure attorney will immediately stop the foreclosure proceedings and will forward the funds to the specialist via overnight mail. The foreclosure specialist must process the reinstatement within 24 hours of receipt of the funds.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

11/14/01

08/16/06

01/15/07

PROCEDURE:

Documentation and CPI Maintenance

When the check is received, the foreclosure specialist will complete the following steps:

FOR2 - the check number and amount of the check are notated on FOR2 as well as how the funds will be applied. The check information is then entered into the payment logbook by the operations specialist and signed for by the foreclosure specialist.

Payment Request Form - the foreclosure specialist will obtain the reinstatement quote from the file and complete the "Payment Request Form" according to the quote.

BPO - if a BPO was ordered through FHLMC, $95.00 will be credited to suspense so a check can be made payable to FHLMC to reimburse the expense of the BPO.

Corporate Advance - the "Foreclosure/Bankruptcy Deposits" form will be completed to repay the outstanding corporate advances. To obtain the transaction code, amount, corporate payee, and reason code, the foreclosure specialist will access the "P309" screen or "FOR1 DISB" screen. The foreclosure specialist will also apply the amount that will be paid to the attorney to corporate using the appropriate payee code and reason code.

*Note: This will create a credit, however, when the invoice is paid, there will be a zero corporate balance.

Asset Loans - On asset loans the FOR2 and FOR3 screens must be reviewed to determine if a BPO was ordered and/or a foreclosure sale date is scheduled. The operations specialist must toss the REO Department Manager to cancel the BPO request indicating the reason to cancel the order. Then notate on FOR2 that the REO Manager was notified.

 

 

 

 

 

FHA

On FHA loans in investor category 175 the accounts must be reviewed to determine if buyout interest exists. The funds are generated when the loan is bought out of the GNMA pool. The Investor Accounting Department must be notified so they can clear the ledger account.

- input FOR1, account number, CORP and enter

- review the 3rd party recoverable field on the screen to determine if funds exist

- if there is a balance in the 3rd party recoverable field a toss must be generated to notify investor accounting

- on toss access for "Buyout Interest Form", indicate account number and if account is being reinstated or paid off

Update the FOR2 screen that funds existed in the 3rd party recoverable field and the Investor Accounting Department was notified via toss

Processing Reinstatement Funds - the foreclosure operations specialist will submit the payment registration sheet and check to the payment processing department to process the reinstatement. A copy of all the forms and the tickets are placed in the file.

Property Preservation - all property preservation work must be canceled at this time. To do this, the foreclosure specialist will complete the ‘PP Property Cancellation Request Form" on Toss.

Closing Tracking:

The next day, the foreclosure specialist will complete the following steps: (Refer to QC Review checklist)

- verify the account is current by viewing the due date and application of payments on P309.

- SAF1 - change all stops to 0.

- TSK1 - complete "ANARIN" task to have the account reanalyzed.

- complete "PMTMSC" task (if applicable) to have a:

- check issued to FHLMC for the BPO.

- FOR2 - document the account has reinstated, tracking will be closed, and the file will be forwarded to the vault.

- FOR3 - insert step number 727 (fully reinstated)

- place a one in the "ACT" field

* Note: whenever the cursor is placed, the step will be inserted below that point

- press enter

- type step number in "step" field

- type predecessor step number in the "pred" field

- type account reinstated and the name of the specialist inserting the step in the ‘reas" field

- press enter

- complete the step by typing "C" in the "ACT" field

- type date the account reinstated

- press enter

- FOR1 MAST screen - change the man code to the appropriate man code

- FOR1 STAT screen - change status to "R" (removed) and removal code to "01".

- BILR screen - the screen is used to request monthly billing statements

- tab to "calendar date" ("add a new request")

- enter the date the tracking is being closed

- type loan number

- press enter

- change "N" to "Y" in "select detail history trans" field

- change "number of trans" to 010.

press enter

New Trak

log on to New Trak

click on search accounts

click on account

go to bottom of page

hit drop down and select reason for closing file

click on close

click update

Attorney follow-up - the foreclosure specialist will ensure inter com that the attorney’s invoice has been paid in full and their file has been closed.

The foreclosure specialist will monitor the account daily to ensure all balances go to zero. Only then can the documents in the file be transferred.

The documents in the file will then be transferred to a manila file folder. The account number is written on the right side of the file and it is placed in the designated area to be sent to the vault.

FOLLOW-UP / REVIEW:

N/A

 

Archiving Files – Rev 01/15/07

FUNCTIONAL OVERVIEW:

 

 

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/06/06

01/15/07

PROCEDURE:

1. Prep log sheet:

Fill out top left-hand corner.

Put small box label on top right hand corner of log sheet.

List the seven-digit account number in the 7 digit box.

Put check digit in the 10 digit box (Mod 11 prgm)

Put last name of customer in the mortgagor’s box.

Make two (2) copies of log sheet, put the original and one (1) copy of log sheet in archive box. Save second copy for your records.

Index on KAR. (refer below)

 

 

2. Putting sticker on archive box:

Fill in your cost center number.

Fill in the content box.

Fill in a destruction date.

Attach large label on sticker.

Place sticker on side of box. (where handles are)

3. Indexing on KAR:

Type KAR (enter).

Log in (enter).

Type in KAR7 (enter).

Type in DED (enter).

Enter roll number, tab down to

Starting frame is 1, tab down to

Source is paper, tab down to

Doc type - is whatever doc type you choose for the docs, tab down to (Use "FC" for foreclosure).

Box number - is on label that is on the box (i.e., - 373353), tab down to

Date - is the actual day you are indexing the file (enter).

Index the account numbers on log sheet using a zero (0) as the first number, nine (9) as the third number and the check digit as the last. (i.e. 0129345673)

Hit PF12 to exit.

Type DR (enter) key in 10 digit or 7 digit account number to verify indexing is correct.

Contact retention when boxes are ready to send to archives. (Larry Manney)

Keep a binder for your copy of box log for future reference.

FOLLOW-UP / REVIEW:

N/A

 

Attorney Performances – Rev 01/15/07

 

FUNCTIONAL OVERVIEW:

When issues or delays occur in the bankruptcy or foreclosure process with an attorney, correspondence must be obtained and documented on the account. The issues are resolved, account documented and copies of correspondence placed in a specific file. Files will be maintained to monitor attorney performance more closely by management.

REQUIREMENTS: EFFECTIVE DATE:

12/02/02

08/06/06

01/15/07

Delay occurs in a bankruptcy or foreclosure process at an attorney’s office.

Issue arises over a bankruptcy or foreclosure file at an attorney’s office.

PROCEDURE:

When a bankruptcy or foreclosure specialist is contacted by an attorney or identifies issues or delays with a specific account.

Specialist updates the account on Fidelity & New trak

noting the problem (BNKN/FOR2).

Specialist resolves the problem as required.

CPI updating with the resolution (BNKN/FOR2) & New Trak

Copies of correspondence and of screens updated on Fidelity are made.

Documents are placed in the attorney’s file in a designated cabinet.

Management will review files to determine the efficiency of attorneys and to minimize future delays.

FOLLOW-UP / REVIEW:

N/A

 

 

Attorney Report Card - Bankruptcy Foreclosure – Rev 01/15/07

FUNCTIONAL OVERVIEW:

Every month attorneys handling accounts in bankruptcy and foreclosure for HSBC are provided a list of accounts they completed in the prior month. The list provides pertinent information on each account and length of time to complete the bankruptcy or foreclosure action. Their responses to the reports are directed to the assistant vice president of the Bankruptcy/Foreclosure Department.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/06/06

01/15/07

PROCEDURE:

Bankruptcy

the Fidelity bankruptcy workstation daily activity report (S2B1) is reviewed for accounts that were logged off the bankruptcy workstation the previous month by lift of stay

information is input on a report on Microsoft Excel known as: ATRPRTCRD

from the Fidelity report the following information is input on the report: account number, customers last name, chapter, date logged out of bankruptcy, and current due date

on every account the following information is obtained from reviewing the information on the bankruptcy workstation on Fidelity: attorney ID, date bankruptcy filed, date referred to attorney and accounts due date at time of filing

columns on the report titled months in BK, payments made and relief period are automatically computed once all the data is entered on an account

the accounts are sorted on the report by "attorney ID" grouping accounts with the same attorney ID

each group of accounts associated with a specific attorney code are highlighted and printed on a separate report

within the ATRPRTCRD worksheet is an addition tab labeled variance. From here a graph to go along with each attorneys list of accounts is generated to show how they compare with other attorney firms

a letter to each attorney is printed off of Microsoft Word known as:
ATTYLTR
* Note: a listing of all attorneys and attorney ID’s are on Microsoft Word. The attorney’s name and address can then be cut and pasted on each letter.

the attorney letter, list of their accounts and graph are mailed to each attorney by the fifteenth of every month.

Responses to the letter by the attorneys are directed to the assistant vice-president of the bankruptcy and foreclosure departments.

Foreclosure

a lotus spreadsheet is reviewed for accounts that went to foreclosure sale the prior month. The report is located on Excel as: j:\shared\forclose\bankrupt\ray\atrprtcrd
**Note: this report is formulated by a foreclosure operations specialist monthly

accounts that did not go to foreclosure sale are deleted from the report i.e., reinstatements, paid in fulls and workouts

the following information is contained on the report: account number, mortgagors name, foreclosure attorney, investor, foreclosure setup date, justifiable delays, foreclosure sale date, days in foreclosure, state, investor guide and variance

the accounts are sorted by attorney name

each group of accounts associated with a specific attorney are highlighted and printed on a separate report

two (2) letters for each attorney are printed off of Microsoft Word known as: \shared\manager\bkfcmmyyltr
**Note: a listing of all attorneys and attorney ID’s are on Microsoft Word. The attorneys name and address can then be cut and pasted on each letter.

one attorney letter and list of their accounts are mailed to each attorney by the fifteenth of every month

make a copy of every letter and print two (2) copies of the report

a copy of every letter and the report is sent to the assistant vice president of the Quality Control Department

the remaining letters and copies of the report are saved by month in a designated file cabinet

the Word report that has been altered for this procedure is renamed and saved as: j:\shared\managers\rptmmyy

the "MMYY" will equal the date from the original report

responses to the letter by the attorneys are directed to the assistant vice president of the bankruptcy and foreclosure departments

This procedure enables HSBC to review attorney’s actions that are over HSBC and investors timeframes.

FOLLOW-UP / REVIEW:

N/A

 

Bankruptcy Foreclosure Exception Reports – Rev 01/15/07

FUNCTIONAL OVERVIEW:

To ensure data integrity is maintained on Fidelity within the Bankruptcy and Foreclosure Departments various exception reports are generated every month. The reports are utilized to find and correct data fields containing incorrect information and monitor accounts as they go through the bankruptcy and foreclosure process. This ensures HSBC is servicing accounts within investor guidelines.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/06/06

01/15/07

PROCEDURE:

Foreclosure Operations

The following are exception reports requested by the foreclosure operations supervisor.

Current Accounts with Foreclosure Process Stops

report is run on the second or third business day of the month

report contains the following information: account number, man code, foreclosure status code, foreclosure stop code, foreclosure processor identification, principal balance and process stop code

report is utilized to locate current accounts with foreclosure process stops on file

accounts are corrected by removing the foreclosure process stops

FHLMC Accounts - Designated Counsel

report is run on the second or third business day of the month

report lists all new foreclosure setups from the prior month

report contains the following information: account number, investor ID, foreclosure status code, foreclosure stop code and foreclosure setup date

report is utilized to ensure FHLMC loans are being serviced by the proper FHLMC designated counsel

FNMA Accounts - Designated Counsel

report is run on the second or third business day of the month

report lists all new foreclosure setups from the prior month

report contains the following information: account number, investor ID, foreclosure setup date, principal balance, foreclosure attorney payee ID, alpha state code and foreclosure status code

report is utilized to ensure FNMA loans are being serviced by the proper FNMA designated counsel

Foreclosure Servicing

The following are exception reports requested by the foreclosure servicing supervisor.

 

 

 

SFDMS

report is requested through Passport and run at month-end

report contains the following information: account number, state code, SFDMS date and days, status code, mancode, processor ID, step number and completion date

report is utilized to ensure step number 177 is completed within 30 days of the foreclosure referral date

if step was not completed the account must be reviewed and step corrected

58S

report is run through Fidelity once a week

report contains the following information: account number, incomplete step numbers and processor ID

report is utilized to locate delinquent steps on active foreclosure accounts

the foreclosure supervisor will review the accounts and work with the foreclosure specialists responsible for the account to correct the error

FHLMC - Timeline Manager

report is printed off of the Internet and is produced by FHLMC at the end of every month

report contains the following information: servicer number, servicer loan number, FHLMC loan number, DDLPI, begin date, STD date, control date, days from STD, unit, ST, loan product, principal balance and BK CNT

report is utilized by the foreclosure supervisor to review accounts that are delinquent in the foreclosure process per FHLMC’s records

report is used as a tool to ensure HSBC is in compliance with FHLMC’s timelines

FNMA - BION

report is run on the first of the month by FNMA and sent to HSBC.

report contains the following information: OBS number, FNMA loan number, lender loan number, legal firm name, pass through rate, LPI, state, number months LPI to REF, months referral to FCL goal, months in bankruptcy, chapter, principal balance, cost LPI to referral, cost referral to FCL, cost months in BK and total loss recovery.

report is utilized by the foreclosure supervisor to review accounts that are delinquent in the foreclosure process per FNMA’s records.

report is used as a tool to ensure HSBC is in compliance with FNMA’s timelines.

 

Bankruptcy

All of the following exception reports are requested through Passport by the bankruptcy supervisor.

BK Suspense

report is run on the first business day of the week

report contains the following information: account number, debtor suspense balance, trustee suspense balance and monthly payment amount

report is utilized to locate accounts with sufficient funds in either the debtors or trustees suspense account to apply a monthly payment. Refer to processing bankruptcy payment procedures to apply payment.

* Note - the following reports are requested on the first business day of the month.

FC ARM PI CHG Letters for BK Loans

reports contains the following information: account number, mortgagors name, ARM next P&I effective date, ARM P&I change letter ID, ARM plan ID and letter date

report is utilized to locate accounts in bankruptcy (mancode B) that had an ARM P&I change in the previous month

notification of the P&I change must be forwarded to the mortgagors attorney or trustee

BKVACHECK

report contains the following information: account number, bankruptcy processor ID, bankruptcy notice received date, bankruptcy status code, HI type and LO type

report lists all active VA loans in bankruptcy from a specified time period

The report is checked to make sure the VA was notified of the bankruptcy filing. Letter BK046 is sent to the VA notifying them of the filing.

BKATMMMC

report contains the following information: account number, type bankruptcy filed, post petition due date, relief requested date, relief filed date, relief hearing date, processor ID and investor ID

report is utilized to verify the mortgagee attorney ID is "ATMMMC" on the BNK1 screen if no attorney was assigned to the account

if field is blank and no attorney was assigned to the account then change to "ATMMMC"

 

 

BKTRDT

report contains the following information: account number, bankruptcy processor ID, court ID, debtor attorney ID, mortgagee attorney ID, creditor meeting date, confirmation hearing date and notice received date

report is sorted by processor ID

report is utilized to ensure all fields on the BNK1 screen have been updated

the bankruptcy processors will review the report and update accounts with missing data

DFLTDATA20

report contains the following information: account number, bankruptcy chapter type, mancode, post petition due date, relief requested date, relief filed date, relief hearing date and processor ID

report will list active accounts with a post petition due date greater than 60 days and no motion for relief requested

accounts will be reviewed and forwarded to the attorney to initiate a relief action

DFLTDATA23

report contains the following information: account number, bankruptcy notice received date, next payment due date, relief requested date, relief filed date, relief hearing date and processor ID

report will list all active chapter 7 accounts with a payment due date over 60 days late and no motion for relief has been requested

accounts will be reviewed and forwarded to the attorney to initiate relief action

DFLTDATABNK4

report contains the following information: account number, bankruptcy processor ID, chapter type, next payment due date and process stop code

accounts on the report that are current without a process stop 4 are correct

accounts that are delinquent on the report and no process stops require a process stop 4 be placed on them

DFLTDATABNK5

report contains the following information: account number, bankruptcy processor ID, chapter type, next payment due date, process stop code and pre-petition due date

accounts on the report that are current and have a process stop 4 must have the process stop removed

DFLTDATABNK3

report contains the following information: account number, bankruptcy processor ID, chapter type, next payment due date and process stop code

accounts on the report that are delinquent and have no process stop 4 must have the process stop placed on them

BKFNMA

report contains the following information: account number, investor ID, bankruptcy notice received date, bankruptcy mortgagee attorney ID and processor ID

report is utilized to verify accounts were forwarded to the correct FNMA designated counsel on all FNMA loans in bankruptcy

if the account was assigned to an incorrect counsel then it must be removed from that counsel and forwarded to the correct designated counsel for FNMA accounts (refer to the Foreclosure Attorney Listing)

BKFHLMC

report contains the following information: account number, investor ID, bankruptcy notice received date, bankruptcy mortgagee attorney ID and processor ID

report is utilized to verify accounts were forwarded to the correct FHLMC designated counsel on all FHLMC loans in bankruptcy

if the account was assigned to an incorrect counsel then it must be removed from that counsel and forwarded to the correct designated counsel for FHLMC accounts (refer to the Foreclosure Attorney Listing)

BKNOA

report contains the following information: account number, bankruptcy status code and no notice flag

report is utilized to locate active accounts in bankruptcy that do not have a no notice (A) stop

accounts with a no notice stop (A) must be file maintenanced to add the stop to the account

* Note: the following reports are requested on the last business day of the month.

DFLTDATA16

report contains the following information: account number and bankruptcy status code

report is utilized to locate closed bankruptcy accounts which still have a process stop 4

accounts are reviewed and then the stop is removed

DFLTDATA9

report contains the following information: account number and man code

report is utilized to locate accounts with a zero principal balance and still active on the bankruptcy workstation

accounts are reviewed and the bankruptcy workstation is closed

DFLTDATA8

report contains the following information: account number, man code, first principal balance and bankruptcy status code

report is utilized to locate active accounts on the bankruptcy workstation with no mancode B

active accounts with no mancode B must be file maintenanced to add the "B"

DFLTDATA7

report contains the following information: account number and man code

report is utilized to locate accounts not active on the bankruptcy workstation, with a mancode B should not include SBO accounts

* Note: SBO accounts are in the investor number range A00 to A99.

accounts not on the bankruptcy workstation must be thoroughly investigated to ensure they are not currently in bankruptcy prior to removing the mancode B

DFTLDATABK2

report contains the following information: account number, bankruptcy status code, bankruptcy removal code, bankruptcy removal date, number of units and occupancy code

report is utilized to locate multi unit properties and tenant occupied properties that received a chapter 7 discharge

the accounts must be reviewed to determine if a 1099 form must be requested

DFTLDATABK1

report contains the following information: account number, bankruptcy status code and foreclosure stop code

report is utilized to locate active accounts in bankruptcy with a foreclosure stop still on file

accounts are reviewed and the foreclosure stop is removed

BK No Notice by Removal Code

report contains the following information: account number, man code, no notice flag, bankruptcy removal code, next payment due date, bankruptcy removal date and bankruptcy chapter type

report is utilized to verify the correct no notice stop is on the account. The report pulls all accounts removed from the bankruptcy workstation during a specific month

listed below are the types of no notice stops based on how the account was removed from the bankruptcy workstation
Stop - Reason
B - Normal discharge
C - relief of stay granted
O - bankruptcy case dismissed
O - bankruptcy discharged and reaffirmed

accounts removed during the month are reviewed to ensure the correct no notice stop was placed on the accounts

BK No Analysis

report contains the following information: account number, bankruptcy status code, don’t analyze indicator

report is utilized to locate accounts closed on the bankruptcy workstation that contain a no analysis stop. The accounts must be reviewed and the no analysis stop removed from the account.

BKACTVANALYSIS

report contains the following information: account number, bankruptcy status code and don’t analyze indicator

report is utilized to locate active bankruptcy accounts with a no analysis stops. The accounts must be reviewed and the no analysis stop removed from the account.

BK24Plus

report contains the following information: due date, loan number, mortgagors name, principal balance, investor ID, bankruptcy processor ID, bankruptcy court ID, mortgagee attorney ID, chapter type, filing date, setup date, post petition date, relief requested date, relief filed date and relief hearing date

report is utilized to review aged accounts in bankruptcy to determine if relief of stay has been requested on all types of bankruptcies. On chapter 13 filings accounts are reviewed for repeat filers and if relief of stay should be pursued.

 

 

BKVALOGOUT

1 report contains the following information: account number, bankruptcy processor ID, bankruptcy removal date, bankruptcy status code, Hi type and Lo type

report is utilized to locate VA loans logged out of bankruptcy. Accounts are reviewed to ensure the VA letter was mailed out at the time it was logged out.

BKSTAFF

1 report contains the following information: account number, bankruptcy processor ID, customers last name, co-mortgagors last name, bankruptcy co-borrower’s name, chapter type, case number, bankruptcy court, filing date, date notices received, bankruptcy debtors attorney ID, bankruptcy trustee ID, bankruptcy mortgagee attorney ID, post petition due date, next payment due date, relief requested date, relief file date, relief hearing date and investor ID

report is split up and distributed to processors for a listing of their full portfolio

BKDISC

1 report contains the following information: account number, case number, bankruptcy court ID, processor ID, customers name and co-mortgagors name

report lists all accounts with an expected discharge date expiring during the month. Utilized by the staff in conjunction with the S2B3 report.

Management Exception Reports

All of the following exception reports are requested through Passport by the manager of the Bankruptcy and Foreclosure Departments. Reports are run on the last business day of the month.

FC Current Loans with Process Stops

report contains the following information: account number, due date, principal balance, processor ID and process stop

report is utilized to locate current accounts with a process stop still on the account. The manager will correct accounts found with this condition.

 

 

FC Exceptions Current with FC Stops

report contains the following information: account number, due date, principal balance, processor ID and foreclosure stop

report is utilized to locate current accounts with a foreclosure stop still on the account. The manager will correct accounts found with this condition.

FC Lns in WS Without FC Stops

report contains the following information: account number, due date, principal balance, processor ID and stops field

report is utilized to locate accounts active on the foreclosure workstation and no foreclosure stops on the account

the account will be reviewed and then the foreclosure stop added

FC Loans in WS with No Notice Stop

report contains the following information: account number, due date, principal balance, processor ID and no notice field

report is utilized to ensure the process stop field is set to zero on accounts in foreclosure

accounts will be file maintenance to zero if found

FC Setup in WS and No Stops

report contains the following information: account number, due date, principal balance, processor ID and process stop field

report is utilized to locate accounts active on the foreclosure workstation with no process or foreclosure stop flags on the accounts

accounts will be reviewed and the appropriate flags placed on the accounts

FC Mancode and Current

report contains the following information: account number, due date, principal balance, processor ID and man code

report is utilized to locate current accounts that still have a man code F on file

accounts are reviewed and the man code changed to the accounts check digit

FC Suspended on the WS and Current

report contains the following information: account number, due date, principal balance, processor ID and foreclosure workstation status code is "S" (suspended)

report is utilized to locate accounts that are reinstated, paid off or in bankruptcy

accounts status is reviewed and if the above conditions exist the account is removed from the foreclosure workstation

FC Suspended with a 0 LN Balance

report contains the following information: account number, due date, principal balance, processor ID and foreclosure workstation status code is "S" (suspended)

report is utilized to locate accounts that are suspended on the foreclosure workstation and the accounts principal balance is zero

accounts status is reviewed and if the above conditions exist the account is removed from the foreclosure workstation

FC 12 Months

report is run on the first business day of every month

report contains the following information: account number, mortgagors last name, investor ID, due date, principal balance, processor ID and foreclosure setup date

report will list all accounts that have been on the foreclosure workstation greater than twelve months

the foreclosure manager distributes copies of the report to the foreclosure specialists to review their respective accounts

foreclosure specialists must ensure valid situations exist for the accounts length of time in foreclosure

All of the above reports are utilized as tools in the proper servicing of accounts in bankruptcy and foreclosure.

FOLLOW-UP / REVIEW:

N/A

 

By-Product Customer Verification – Rev 01/15/07

FUNCTIONAL OVERVIEW:

Due to privacy-related issues as well as identity theft alerts, we must ensure that the person we are speaking with is the actual borrower(s) or someone authorized to obtain information regarding the account. This can be accomplished via social security verification, password verification, life of loan message or proof of lien position.

REQUIREMENTS: EFFECTIVE DATE:

07/30/02

01/15/07

PROCEDURE:

When a telephone call is received, you must verify who the person is that you are speaking with through one of the methods indicated below. If a call is received through another department, ask the person transferring the call if they have already performed the verification.

Social Security Verification

Ask the caller for the account number.

The social security number(s) can be accessed via the following systems:

CIF – summary screen or the ser1 screen on Fidelity.

ACP – PRI screen

FDR – BS screen

Ask the caller to please verify their social security number.

If it matches the number on the system, thank the customer and continue with the call.

If it does not match the number on the system, advise the caller that you will not be able to release any information regarding the account and that you require the borrower(s) authorization in order to do so.

Proof of Lien Position

At times, another lien holder will contact us in order to obtain information regarding a mutual customer.

Advise the caller to provide you with copies of their loan documents in order to provide any information regarding the account.

Once the documents are received and are valid, proceed with the callers request.

 

FOLLOW-UP / REVIEW:

N/A

 

By Product Foreclosure Setups – Rev 01/15/07

FUNCTIONAL OVERVIEW:

By products recommended for foreclosure must be set up by the operations specialist within 24 hours of receipt of the file. A check list for collaterals and Heloc is followed to ensure the account is setup properly on ACP. The specialist will order a property inspection, verify copies of legal documents are in the file and mail the foreclosure referral package to a designated attorney to initiate the foreclosure action. When completed, the operations specialist will forward the new foreclosure set up to the foreclosure specialist.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

01/15/07

File was approved for a foreclosure action by the Foreclosure Roundtable Committee.

PROCEDURE:

Documentation

Foreclosure Setup - MTC Accounts

Obtain a "By Product Foreclosure Setup Check List" and sign your name and date the list on the second page.

Input the following information on the top of the check list from the collections referral form attached to the file: last name on account, account number, lien position, occupancy status, BPO value, foreclose or monitor the firsts action, attorney, accounts due date, principal balance, interest rate and property address.

* Note: To select an attorney to initiate the foreclosure action or monitor the first lien holders action refer to the chart of New York State. The property’s location in New York determines which attorney to select.

to logon the terminal input "SSPROD" and depress enter

input "ACP" depress enter

input your seven digit logon code and six digit password and depress enter

input "BSSN" depress enter

input your four digit ACP code and four digit password and depress enter

input "CACS" depress enter

input "UPD" ten (10) digit account number, use tab key to position "LOC" and input "ZZ" depress enter

tab to field "SP" and input 10

tab to bottom of screen, input "R" under field labeled "T" then "L41" under field labeled "RTE" and depress enter to move account to the foreclosure call list

input "EHI" then account number, depress enter

input the following information on the free format history screen: operations specialists initials, loan setup in foreclosure, name of attorney file sent to, HSBC Bank’s lien position, notate if we are initiating the foreclosure action or monitoring a foreclosure action, add name of first lien holder, principal balance on account, payoff balance, due date, if first lien holder is paying taxes on property, occupancy status and that "Fidelity" was documented, depress enter.

Note: if the first lien holder is a mortgage we service on "Fidelity" then the account must be documented regarding this foreclosure action.

To access and update Fidelity refer to the following:

on Fidelity, input "S" depress enter

input your five digit logon code and six digit password and depress enter

input "MEM1", seven digit account number and depress enter

use tab key to position cursor under "destination"

input by product account number, date set up in foreclosure, name of attorney, due date, BPO value and date BPO completed and depress enter

depress "ESC", then depress enter. Input "ACP" depress enter, to go back to ACP

input "NOT" then depress enter

input the following on this screen: name of foreclosure attorney account was forwarded to, by products lien position and whether we are foreclosing or monitoring, depress enter

By-Product Loan Review Report

Each by-product is added to the By-Product Loan Review Report located on Lotus as j:\shared\everyone\byreivew.wk4. The following information is input on each account: setup date, account number, customer’s name, foreclosure attorney, BPO value, principal balance and lien position. Each account will be reviewed within 30 to 60 days by the foreclosure specialist to determine if a foreclosure action is warranted or the account will be recommended for charge-off based on HSBC’s equity in the property.

The account has now been properly setup on ACP

CIF

The following are procedures to update the "CIF" system noting the by product is in foreclosure.

on Fidelity, input "RTLTOR" depress enter

input your seven digit logon code and six digit password and depress enter

input "MTC", account number and depress enter

to add a note to the account input 81 and depress enter

input "SERVIC" depress enter

input the following information on the free format screen: date loan setup in foreclosure, do not accept payments, please contact foreclosure specialist indicating name and phone number

depress F5 key to save message

Attorney/Borrower Letters

The following letters are mailed to the foreclosure attorney and borrower. They are located on Word as j:\shared\everyone\4close\byproduct

 

FC Notic - to borrower

FC Notic2 - to attorney

FC Notic3 - to attorney

Workout - to borrower

* Note: the above letters are pre-addressed on Word for attorney Steven J Baum. Letters for attorney Philips, Lytle are labeled with a "PL", Berkman Henoch "BH" and Zucker Goldberg "ZK".

Property Inspection

Refer to the procedures to order property inspections on by products to ensure the property is inspected monthly.

Documents

Prior to mailing the foreclosure package to the attorney ensure copies of all legal documents are present. If not, notate on the attorney’s letter that the documents will follow under separate cover. Refer to the procedures for ordering documents through KAR.

 

Closing

ensure copy of referral sheet and check list are placed in the file

toss the foreclosure specialist on the new foreclosure setup. Indicate in the toss if there are outstanding taxes owing on the account by reviewing the referral sheet

forward the file to the specialist

Foreclosure Setup - MCP Accounts

The same procedures can be followed to setup a HELOC loan in foreclosure as outlined for MTC accounts with exceptions listed below.

ACP

To log on the ACP utilize your logon ID for MCP accounts that differs from MTC. Then follow the same procedures.

on the "PRI" screen, change the call state to C16 for Heloc accounts. Note that no spec can exists on Heloc’s.

FDR

The following are procedures to update the "FDR" system noting the Heloc is in foreclosure and freezing the account’s line of credit. Note the FDR system is updated instead of CIF.

on Teleview, input "FDRCRD" and depress enter

input "FDSN" and depress enter

input your seven digit logon code and six digit password and depress enter

input "BS" space, prefix 782414, then the ten digit account number and depress enter

input NM space CS space, prefix 782414, account number and depress enter. Tab down to the first field flagged with a seven (7). Input "F" and depress enter. This represents the Foreclosure Indicator Code, no payments should be processed by payment processing

input NM space CSR space prefix 78414 account number and depress enter. Tab to field "stmt" and input "W", tab down to the field "Status" and input "E", then tab to "status reason" and input 60 and depress enter

input CHD space prefix 782414 account number and depress enter. Verify the accounts interest rate by reviewing field "APR Cash/Mer"

input BS1 space prefix 782414 account number and depress enter. Verify the accounts principal balance by reviewing field "Cash Bal"

The procedures ensure by products are properly documented and the files referred to the correct foreclosure attorneys.

FOLLOW-UP / REVIEW:

N/A

 

By Product Charge-offs – Rev 01/15/07

FUNCTIONAL OVERVIEW:

As per the FFIEC policy if there is a question as to the amount of equity in a property and if the foreclosure should continue, the foreclosure specialist will complete the "Charge-off Analysis" form. This form outlines the charge-off scenario and the foreclosure/REO scenario. After completing this form, the foreclosure specialist will have a better indication if a charge-off is required. This procedure is completed at the time of roundtable and again when new values are received or if any material expenses are to be incurred (i.e., taxes, maintenance fees).

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/06/06

01/15/07

PROCEDURE:

Potential Charge-off Requirements

When reviewing an account for charge-off, the foreclosure specialist is required to have the following information:

current brokers price opinion (BPO) - (6 months or less in age)

current tax information

current payoff statements on all superior lien holders as well as status of their account - i.e., current, foreclosure, etc. and if their account has Mortgage Insurance (MI).

current credit report (if customers authorization is on application in file).

identify the product by minor code.

Charge-off Analysis

The foreclosure specialist will access the charge-off proposal form which is located on Lotus - j:\shared\everyone\mdreo\choffblk.

PMI - if the first lien holder has private mortgage insurance (PMI), obtain the name of the insurance company, certificate number and percent of coverage. Do not input percent of coverage, notate in comment section.

Principle balance - the foreclosure specialist will obtain from the following areas:

MCP accounts

access BSI screen on FDR

principle balance is located in "cash balance" field

MTC accounts

access "Pri" screen on ACP

principle balance is located in "balance" field

Misc (advances) - this field is used to list all advances that have been paid on the account. This includes BPO’S, attorney invoices, title search, etc. To obtain this amount, the foreclosure specialist will:

access "HIS" screen on ACP

scroll forward (F1S) through the notes to obtain all amounts that have been paid out

add all figures together

input on spreadsheet

Eviction Fees Est - this is the amount needed to complete the eviction process. An estimated amount is $1,500.00.

Property Maintenance and Utilities - this is the amount needed to maintain the property while it is in REO. The average monthly amount is $15.00 per unit.

REO Repairs and Clean out - the average amount required to clean out the property after the eviction is $1,200.00. Specialist will use brokers estimated marketing time to calculate time held in inventory for the purpose of determining holding costs. Eviction and repair time should be taken into consideration as well.

Comments

Explain circumstances on account leading to the recommendation to charge-off.

Charge-off Approval

After the foreclosure specialist determines the account should be charged-off, the file along with the spreadsheet and supporting backup, i.e., first payoff statement, BPO, etc., are given to the foreclosure supervisor to review. The charge-off forms, once signed by the appropriate levels of management (refer to Mortgage Default Servicing Signing Authority Grid), will be referred to the following areas:

MTC accounts - Recovery Manager

MCP accounts - Account Balance Manager

ELOC Charge-Offs

Refer to the attached mortgage procedure "Investor Charge Off’s". Utilize this procedure when a charge off of an ELOC loan occurs.

FOLLOW-UP / REVIEW:

N/A

 

Processing By Product Payoffs – Rev 01/15/07

FUNCTIONAL OVERVIEW:

When the foreclosure attorney receives certified funds to payoff an account, a phone call is made to the foreclosure specialist to verify the funds are sufficient to payoff the account. If the funds received are sufficient to payoff the account, the foreclosure attorney will immediately stop the foreclosure proceedings and will forward the funds to the specialist via overnight mail. The specialist must process the payoff the day it is received.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

01/15/07

PROCEDURE:

Documentation and System Maintenance

When the check is received, the foreclosure specialist will complete the following steps:

HIST - on MTC and MCP accounts the check number and amount of the check are notated through EHI as well as a breakdown of how the funds will be applied. This procedure will update the account’s history. The check information is then entered into the payment logbook by the operations specialist and signed for by the foreclosure specialist.

Home Equity Payments - the foreclosure specialist will obtain the payoff quote from the file and complete the home equity payment form according to the quote.

Principal Balance/Interest - input the total amount of principle and interest collected from the payoff on this line.

Late Charges - input the total amount of late charges collected in the payoff.

Inspections - input inspection amount, general ledger account number and cost center on form. A credit ticket - 631374/607275 (other outside services) will be prepared to repay inspections captured from the by-products account history.

Broker Priced Opinion - input BPO amount, general ledger account number and originating branch of by product cost center of form. A credit ticket - 631721/607275 branch cost center will be prepared to repay BPO costs captured from the by-products account history.

Miscellaneous Expenses - when funds are advanced to pay property taxes the reimbursed amount is entered on this line. A general ledger credit ticket - 638080/607275 branch cost center will be prepared to credit "M/E" account.

Legal Fees/Expenses - when funds are advanced to pay attorney fees the reimbursed amount is entered on this line. A general ledger credit ticket - 631655/607275 branch cost center will be prepared to credit "legal" account.

* Note: on the payoff form write the general ledger and cost center number next to the amount.

Authorization to Process - once all the paperwork has been completed and the system has been documented, the paperwork and tickets are submitted to the foreclosure supervisor for approval to process. After the supervisor has signed the paperwork and tickets, copies will be made. Copy of payoff quote with GL tickets sent to payment processing area to have removed from holdover acct (mcp = 137760/971027, mtc = 137760/985303). Check and GL credit tickets are placed in strike bin in the payment cashiering dept.

ELOC Payoffs

Refer to the attached procedure to payoff a loan on CPI. The same procedure applies to payoff an equity line of credit loan serviced on CPI.

Property Preservation - all inspections and property preservation work must be canceled at this time. Refer to procedures on "Property Inspections" to cancel.

The foreclosure specialist will monitor the account to verify it is closed on the system. The account number and date closed are written on the right side of the file, and it is placed in the designated area to be sent to archive.

FOLLOW-UP / REVIEW:

N/A

 

By Product Transfers To Bankruptcy – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When the foreclosure specialist receives notification a bankruptcy has been filed, the foreclosure action must be stopped and the account transferred to the Bankruptcy Department. The foreclosure specialist has 24 hours to complete the (transfer file to bk).G-Form and transfer the file to the bankruptcy department.

 

REQUIREMENTS: EFFECTIVE DATE:

12/15/06

PROCEDURE:

Documentation and Loan Review

The foreclosure specialist will obtain the following information prior to completing the transfer:

name of the person that filed, i.e. mortgagor, co-mortgagor, etc.

date of filing

chapter filed

case number

district in which the case was filed

trustee's name

debtor’s attorney and phone number (if applicable)

The foreclosure specialist will notify the foreclosure attorney of the bankruptcy via telephone and by faxing a copy of the petition/pacer information, or via Lenstar..

EHI Screen - the foreclosure specialist will notate all of the bankruptcy information on this screen.

on Fidelity input 02 and enter

logon to ACP

in "FUNC" field type in "UPD", in the "DISP" field input "EHI" and "Next Acct" field input account number and press enter

the EHI screen allows for a free format of information on the account. Type in appropriate information and enter

to exit account tab over to "Next Acct", type in "END" and enter

 

 

PRI Screen - the foreclosure specialist will transfer the account to the bankruptcy specialist call state through this screen.

place "R" in the "T" field

tab to "RTE" field

change call state to C17 (MCP accounts) on MTC accounts, depending on region accounts are transferred to R06, L32 or L38

press enter

The foreclosure specialist will complete the "Bankruptcy Transfer" form on Connect The file will then be given to the bankruptcy specialist.

Foreclosure Transferred to Bankruptcy

Refer to the attached procedure "Foreclosure Transferred to Bankruptcy" for mortgages on Fidelity. Utilize this procedure to transfer an ELOC from foreclosure to bankruptcy.

FOLLOW-UP / REVIEW:

N/A

 

 

By Product Reinstatement Quotes – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Once a loan has been referred to the foreclosure attorney the total amount due to reinstate the account is required as well as all outstanding attorney costs and fees. All requests for reinstatement figures should be made through the foreclosure attorney. Only certified funds will be accepted at this time.

REQUIREMENTS: EFFECTIVE DATE:

12/15/06

PROCEDURE:

Documentation and Loan Review

When the foreclosure specialist receives a request from the attorney for reinstatement figures pull the foreclosure file and the account needs to be reviewed for the following information:

ACP - on all byproducts (MTC - MCP) verify the payment amounts due on the "PRI" screen. Only on MTC account does a partial balance field exist and is displayed on the "PRI" screen. If a balance exists the "total due" field balance displayed will be less the amount in the partial balance.

BPO’S - review the file and accounts "hist" note screen for bills paid on all BPO’S. If BPO was ordered and not paid add cost to quote.

Property Preservation - review accounts "hist" note screen for all monthly inspection fees and property preservation costs, i.e., winterize and secure property. Add these costs together. If work in progress and invoices are still outstanding the foreclosure specialist will need to get the amount of what will be invoiced and add this to the quote.

Attorney Fees - review accounts "hist" note screen and file for all attorney bills already paid on the account. The amounts expensed will be added to the reinstatement quote.

Taxes - in some instances HSBC would expense funds to pay taxes due on the property. Review the accounts "hist" notes for taxes paid on the account and add to the reinstatement quote.

 

* Note: on MCP accounts (helocs) a discontinued procedures was to pay the property tax and increase the accounts line as an offset. The tax amount paid is not added to the quote in these instances.

ELOC

Refer to the attached procedure "Reinstatement Quotes" to prepare a quote on an ELOC account.

 

Reinstatement Form

The total costs incurred to reinstate the byproduct are then placed on the "payoff/reinstatement Form" located on Microsoft Excel as: (J.Special/HDPIHBUS/Default/Fcbyproductquote)
* Note: form is also stored on disk.

- input who the quote is being forwarded to, the specialists name and date

- input account number, customers name and date of quote

- input all costs identified on form next to their respective descriptions

- print two (2) copies.

ACP System Maintenance

- update the "hist" screen through "EHI" with all fees and costs identified to reinstate the byproduct. Notate whom reinstatement is being forwarded to and fax number if applicable

 

The foreclosure specialist will notate on the quote for the foreclosure attorney to add all outstanding attorney costs and fees to the quote.

ELOC Reinstatement Quotes

Refer tot he attached "Reinstatement Quotes" procedure for mortgages on CPI to quote reinstatement figures on ELOC’s.

FOLLOW-UP / REVIEW:

N/A

 

 

By Product Transfer to CPI – Rev 12/01/06

FUNCTIONAL OVERVIEW:

When a foreclosed by product (collateral, Heloc, Heloan or MarineExpress) is sold back to HSBC at a foreclosure sale the account is transferred from the ACP to CPI system. Results of the foreclosure sale must be obtained within 24 hours of the sale. The transfer of the account must be completed within 24 hours of notification of the foreclosure sale. Delinquent property taxes must be paid prior to the transfer. When all procedures have been completed the file is transferred to the REO Department.

REQUIREMENTS: EFFECTIVE DATE:

12/01/06

by product reverts back to HSBC at a foreclosure sale

delinquent property taxes have been paid to date

PROCEDURE:

Collateral, Heloan and MarineExpress Transfers

When notified by the foreclosure attorney of the sale results input the information on the accounts HIS screen. Instruct the attorney to place results on Lenst. The following steps must be completed.

Sale Result Form

On Connect locate form titled "Heloc,Heloan Sale Result Transfer to REO.

sale date

account number

customer name

property address and name of county

lien position

occupancy status

property secured and winterized

date of latest BPO and value

status on property taxes

name of successful bidders

print copy of screen

click submit

place screen print in file

 

MTC Closeout

On G-form locate form titled "MTC Closeout" and Complete then send form. Input the following information:

account number

customers name

foreclosure sale date

tran code 337

foreclosure specialist name

phone number

print copy of screen

click submit

place screen print in file

New Loan Setup

The REO New Loan Setup form must be completed to transfer the account. The G- form must be completed with the following information is input on the form:

input account number

input INV/CAT number of account. To determine category on CIF input MTC account number on the summary screen and enter. Place an "X" next to account number and enter. Depress F8 key. Obtain branch number on screen in field labeled "BR". Locate number on "Branch Listing by Branch Number". Make note of district name and region and locate on "District Cost Centers" list. Look up six (6) digit cost center on "Heloc Setup" listing under cost center column and note corresponding INV/CAT number in the column to the right. Input this number on line on spreadsheet.

input foreclosure sale date

mortgagors name

property address

property type

loan origination date

interest rate

debtors social security number

tax map number from title insurance policy in file

original loan amount

term

maturity date

loan payoff. On CIF input MTC, account number, enter. Place "X" next to account and enter. Input 78, enter. Input today's date and enter, then payoff figures can be obtained from screen

input a breakdown of expenses to date on account. Review the "HIS" screen on ACP and file to arrive at costs. Ensure attorney expenses and property taxes are included

input the total of expenses on Expenses line

spreadsheet calculation will arrive at total debt

obtain copy of schedule A from documents in file to accompany spreadsheet

print one copy

click submit

new loans will notify foreclosure specialist with new loan number.

Email REO specialist of the new loan number.

1099A

A 1099A form is completed at this time and placed in the 1099A book for year end reporting.

input debtors social security number

debtor(s) name

address

input loan number on line "description of property"

input "Y" in column next to loan number

input foreclosure sale date in column "date of acquisition"

input principal balance in column "balance of principal"

input current BPO value in column "fair market value"

when completed place 1099A book

Miscellaneous

print copies of all HIS screens from ACP for file

print "Summary Screen" from CIF for file

update the account’s history through the EHI screen on ACP noting all of the above steps that have been completed. Also notate file is being transferred to the REO manager

ensure all documents in file are in order

forward to the REO manager

Heloc Transfers

The procedures to transfer a Heloc account are the same as outlined above with the following changes.

MCP Closeout

On connect locate form titled "MCP Closeout" and double click on form and complete. Then click submit form.

 

FDR System Maintenance

Update the FDR system with the following changes.

on Fidelity input FDRCRD, enter

input FDSN, enter

input logon ID and six (6) digit password, enter

input BS space prefix 782414 and ten (10) digit account number, enter

input CIS, enter

input NS space CSR, enter

tab down to status field and input 61, enter

tab down to special flag code field and delete "F" and enter

input CMA, enter

input specialist three (3) digit initials and tab down to line two (2). Input sale results on free format screen and enter.

These procedures ensure all pertinent information and the proper departments are notified when a by product is transferred to the Fidelity system.

FOLLOW-UP / REVIEW:

N/A

 

Caller Identification – Rev 12/01/06

FUNCTIONAL OVERVIEW:

To protect the privacy of our account holders calling HSBC Mortgage Corporation, specific questions must be posed to identify the caller as an account holder to protect their privacy. Third party callers must be informed that only with written authorization from the account holder will information be released to them. All correspondence with third parties must be updated on the appropriate workstation.

REQUIREMENTS: EFFECTIVE DATE:

12/01/06

 

PROCEDURE:

To identify a caller as an account holder or third party:

identify the name of the caller and phone number

if a third party, explain that HSBC does not release information to third parties

to release information to third parties, HSBC requires written authorization from the account holder allowing HSBC to release any information

written authorization can be faxed or mailed to representative

update workstation (bankruptcy, foreclosure, FOR2, BNKN & New Trak) of third party’s name, name of company and phone numbers; also note reason third party requires information

Employees must be alert to identify possible indicators of parties attempting to obtain information on account holders.

FOLLOW-UP / REVIEW:

N/A

Credit Bureau Security – Rev 12/01/06

 

FUNCTIONAL OVERVIEW:

During the process of servicing mortgage and home equity loans/lines, Associates and Officers in Default Servicing order credit bureau reports on borrowers. The reports are used to qualify borrowers for repayment plans and loss mitigation strategies, skip tracing, checking superior and junior liens etc.

The following procedure is intended to ensure that credit reports are ordered and used only for legitimate business purposes.

Improper use of credit reports by anyone in HSBC Mortgage Corporation can result in termination of employment.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/24/01

12/01/06

PROCEDURE:

Only two people in Default Servicing will have access to run credit bureau reports. Before the employee runs the report, that employee will have a co-worker initial a sign-off sheet stating the necessity of the report. Those individuals who have been granted access to order Credit reports through the Internet using the following process:

Experian

Click on program

Click on Internet Explorer

Input in window: www.experian.com/subservices/index.htm and enter

Click on login

Input your user ID and password and click on sign-in icon

Input the following information in the labeled fields on the screen: customers name, social security number and address

* Note – if there is a co-applicant, scroll down screen to area marked co-applicant and input information

Scroll down to bottom of page and click on "Submit"

Credit report can be scrolled on screen or printed

Click on "Logout" icon when finished

Control and Security:

In order to ensure that credit reports are ordered for HSBC Mortgage Corporation business use only, members of the Default Servicing Management Teams of the Collections, Loss Mitigation and Foreclosure/Bankruptcy Sections have access to RMDS reports in the "COP%" Region. Two reports, tiitled "COP01F.W.EQUIFAX.RCONCIL.MTHLY" and COP0F1.W.EXPERIAN.RECONCIL.MTHLY" are reviewed by each Default Manager monthly to determine that each of the Credit Reports accessed by users in their Section was necessary for business purposes.

A print of the reports will be made for the Users associated with each Section.

Once checked,, the Manager and employee performing the review initial the report and file it for future reference. If no exceptions are noted, there is no need for further activity. If exceptions are noted, a discussion will be held with the employee and user who ordered and accessed the report(s) to determine the reason for the action. If there is no reasonable explanation for the report(s) to have been accessed or if the purpose was clearly for personal reasons or profit, the user will be terminated after proper consultation with Human Resources and preparation of the appropriate Interim Job Discussion (IJD).

Bankruptcy:

Prior to a credit report being ordered a copy of the vault file is ordered to verify that the customer at closing signed a statement on application allowing us to obtain a credit report.

Loss Mitigation:

The Loss Mitigation Financial Statement includes an authorization statement from the mortgagor allowing a Credit Bureau Report to be ordered.

Monthly Report

On the last business day of every month a report is pulled from Experian listing all inquires for that month. The report is forwarded to the department manager for review.

Click on program.

Click on Internet Explorer.

Input in window: www.experian.com/subservices/index.htm and enter.

Click in login.

Input your user ID and password and click on sign-in icon.

Click on tab "Usage Reporting"

Input date range of month being inquired as: MMDDYYYY to MMDDYYYY.

Click on run inquiry.

Print report.

Exit (logout) Experian.

These precautions are taken despite the legal opinion received from General Counsel that the ordering of credit reports on a defaulted loan is considered appropriate under the Fair Debt Collection Act.

FOLLOW-UP / REVIEW:

N/A

 

Check Return Procedure – Rev 01/15/07

FUNCTIONAL OVERVIEW:

When a check is received into the foreclosure area the account is thoroughly reviewed by the foreclosure specialist. Once the review is completed, and the payment cannot be accepted, the payment is mailed back to the mortgagor with a workout package via regular mail and update check number and amount on for2, bnkn.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

01/15/07

PROCEDURE:

Documentation

The following steps are taken when a check is received from the mortgagor.

- account is reviewed on the foreclosure workstation to determine if reinstatement figures were recently issued, funds equal a monthly payment or letter from mortgagor indicates why the payment was submitted

- the foreclosure specialist will take the payment to the Loss Mitigation Department. A Loss Mitigation specialist will review the account for stip plan not completed and all contacts with the mortgagor noted on Fidelity. The Loss Mitigation specialist may contact the investor to obtain an opinion on the payment received from the mortgagor.
* Note: refer to the Loss Mitigation Department procedure manual on their policy regarding this situation.

- if it is determined the payment will be accepted and it is a personal check, the bank the mortgagor’s check was drawn on is contacted. We must ensure sufficient funds are available to cover the check.

- if it is determined the payment will be returned to the mortgagor the check will be mailed back to the mortgagor via regular

- letter number FC012 is ordered through PL05 to accompany the check. The letter informs the mortgagor HSBC is returning their payment and to contact our foreclosure attorney for reinstatement figures.

- letter number XC026 is ordered through the DLQ1 screen. This is the workout package.

- the letter, workout package and payment are mailed to the mortgagor by certified mail. If returned to HSBC as undelivered, it will be re-mailed through regular mail.

- copy of the letter and payment are placed in the foreclosure file

- update FOR2 with payment amount, check number, date received and summary of disposition of payment

This procedure ensures an efficient and thorough investigation is conducted prior to returning the payment.

FOLLOW-UP / REVIEW:

N/A

 

Conflict of Interest – Rev 12/15/06

FUNCTIONAL OVERVIEW:

REQUIREMENTS: EFFECTIVE DATE:

09/13/04

12/15/06

PROCEDURE:

Gifts from Suppliers or Customers

The Bank Bribery Act and other applicable laws prohibit you from seeking or accepting for yourself or any other person anything of value (including services, discounts or entertainment) from customers, suppliers or anyone else in return for any business, service or confidential information of HSBC. The laws expressly prohibit you from accepting cash, checks or gift certificates convertible to cash. There are certain exceptions to the general prohibition against seeking or accepting anything of value as follows:

(i) Lunches, dinners and other customary entertainment (e.g., sports events, golf, etc.) provided in the ordinary course of a supplier's or customer's business and in situations where we would normally reimburse the cost as a proper business expense;
(ii) Services or discounts customarily afforded by suppliers or customers in the ordinary course of their business; and
(iii) Promotional gifts such as lighters, pencils, calendars and the like, routinely distributed by the donor, or gifts in connection with customarily recognized events (e.g., Christmas, promotions, etc.) not exceeding a $50 value.

NOTE: Employees may never accept gifts of cash, checks or gift certificates convertible to cash, regardless of amount. You must report anything of value beyond those items listed above if offered to you, received by you or you anticipate receiving them promptly to the General Counsel's office for appropriate action.

FOLLOW-UP / REVIEW:

N/A

 

 

Foreclosure Notification – Commercial Loan – Rev 08/14/06

FUNCTIONAL OVERVIEW:

During the foreclosure action it may be discovered that HSBC has a commercial loan with the individual(s). If so, it is important to notify the Commercial Loan Department of the pending foreclosure action as well as updating Fidelity with the same information.

REQUIREMENTS: EFFECTIVE DATE:

12/02/02

08/14/06 12/15/06

PROCEDURE:

When information is obtained on the existence of a commercial loan, the following steps must be followed.

Contact the Commercial Loan Department. Provide them with the customer’s name, account number, foreclosure status and the sale date. Call the Business Lending Center at 800-292-4387. They will direct the call to the department handling the account.

* Note – not all commercial loans are located on CIF.

From the commercial loan department, obtain the commercial loan number, servicer’s name and extension so CPI could be updated with this information.

Input the information obtained from the commercial loan department on the FOR2 screen.

Input the same information on the MEM1 screen. When inputting the loan’s expiration date on MEM1, add five (5) years to the maturity date. This will ensure the data will be available on CPI past the loan’s maturity date.

The procedure ensures that proper departments are notified when a foreclosure action is taking place.

FOLLOW-UP / REVIEW:

N/A

 

 

Credit Report – Rev 12/15/06

FUNCTIONAL OVERVIEW:

To obtain specific information on a mortgagor a credit report can be obtained through the "RTLTOR" system. A credit report can be obtained from either the Experian or Equifax companies. The credit report provides a snapshot of a customers financial situation and the information is used as a basis for collection decisions and possible charge off scenarios.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

12/15/06

PROCEDURE:

Documentation

Procedure’s to obtain a credit report.

-input SSPROD, enter.

-input seven (7) digit personal logon ID.

-input six (6) digit password, enter.

-input RTLTOR, enter

-depress clear or pause key to clear screen.

-input FXCS, enter.

-input NY on "state code" line, input MTG on "source" line, seven (7) digit personal ID on "operator" line and XM31 on "default printer" line, enter.

-input FXCE, enter.

-tab cursor to "BUR" and input EXP. Input individuals social security number. Tab to "name" field and input first, middle initial and last name. Tab to "Present ADDR" and input house number, street name, city, state and zip code and enter.
Note: if the inquiry is on a husband and wife tab down to the last line labeled "Spouse" before entering and input first, middle initial, last name and social security number and then, enter.

-depress the F5 key.

-depress pause or clear key to clear screen.

-input FXCT, enter.

-input X by individuals last name then depress F6 key.

-the credit report will print out on the appropriate printer keyed in at the beginning of this procedure.

-depress the F8 key to scroll forward to view the screens and F7 to scroll backwards.

The above procedure is to obtain a credit report from Experian. To access Equifax input EQU on the "BUR" line.

FOLLOW-UP / REVIEW:

N/A

 

 

Customer Verification – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Due to privacy-related issues as well as identity theft alerts, we must ensure that the person we are speaking with is the actual borrower(s) or someone authorized to obtain information regarding the account. This can be accomplished via social security verification, password verification, life of loan message or proof of lien position.

REQUIREMENTS: EFFECTIVE DATE:

07/30/02

08/14/06

PROCEDURE:

When a telephone call is received, you must verify who the person is that you are speaking with through one of the methods indicated below. If a call is received through another department, ask the person transferring the call if they have already performed the verification.

Social Security Verification

Ask the caller for the mortgage account number.

Hit the HOME key and type SER1.

Ask the caller to please verify their social security number.

If it matches the number on the SER1 screen, thank the customer and continue with the call.

If it does not match the number on the SER1 screen, advise the caller that you will not be able to release any information regarding the account and that you require the borrower(s) authorization in order to do so.

Password Verification

At times, borrowers will provide us with a password to be used when calls are received in order to provide information regarding the account. This is documented on the MEM1 screen in the Life of Loan section.

Ask the caller for the mortgage account number.

Hit the HOME key and type FOR1.

The Life of Loan message will appear in the middle window section.

If the password matches what is on the system, continue with the call.

If the password does not match, advise the caller that you will not be able to release any information regarding the account and that you require the borrower(s) authorization in order to do so.

 

 

 

 

 

Life of Loan Message

At times, borrowers will advise us of other parties that they authorize us to speak with regarding their account. This is documented on the MEM1 screen in the Life of Loan section.

Ask the caller for the mortgage account number.

Hit the HOME key and type FOR1.

The Life of Loan message will appear in the middle window section.

If the callers name matches what is on the system, continue with the call.

If the callers name does not match, advise the caller that you will not be able to release any information regarding the account and that you require the borrower(s) authorization in order to do so.

Proof of Lien Position

At times, another lien holder will contact us in order to obtain information regarding a mutual customer.

Advise the caller to provide you with copies of their loan documents in order to provide any information regarding the account.

Once the documents are received and are valid, proceed with the callers request.

 

 

FOLLOW-UP / REVIEW:

N/A

 

 

Custodial Files – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When original loan documents are needed on a file, a task is initiated on Fidelity to order them. The Asset Accounting Department will be responsible for obtaining the documents from the custodian and forwarding to the individual that initiated the task. This procedure covers all investors including private and asset loans.

REQUIREMENTS: EFFECTIVE DATE:

12/02/2002

12/15/06

The original loan documents are needed in a foreclosure action.

PROCEDURE:

To initiate a task on CPI to request original documents:

Logon to Fidelity, input logon ID, password and enter

Input "TSK1" and enter

Input account number and enter

Input "NOTFOR" and enter

Tab to "SRC" and input PR, then your last name and extension, depress enter.

When documents are received, they will be forwarded to individual that requested documents.

Paid in Full – Reinstatement Accounts

When a foreclosure account is paid in full or reinstated, a task must be initiated to obtain the original documents from the foreclosure attorney.

Input "TSK1" and enter

Input account number and enter

Input "FORRET" and enter

Tab to "SCR" and input PR, then your last name and extension, depress enter

The task is a follow-up for the foreclosure specialist to obtain the original documents from the foreclosure attorney.

FOLLOW-UP / REVIEW:

N/A

 

 

By Product Document Retrieval – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Copies of documents on all by products (MTC/MCP) are ordered through the "KAR" system, once the account is setup on the respective systems, i.e. CIF, ACP or FDR.

When filing proof of claims or mailing reaffirmation agreements, copies of specific documents are attached as proof of the debt’s existence.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

12/15/06

PROCEDURE:

KAR System Maintenance

KAR system is option MTC on Teleview.

MTC Accounts

On SSPROD input MTC and press enter

input six digit logon ID, password and press enter

clear screen

input "KC01" and enter

input "DR", enter

input MTC account number and press enter

review screen to determine documents needed from list of filmed items

* Note: MTC account numbers are reusable so it is important to have the accounts opening date from CIF to order the correct documents.

input the number of filmed entries being requested. Example, if requesting entries three (3) through six (6) input as: 3-6.

press the F6 key

press the F3 key

tab over to name of requesting department and type in bankruptcy

tab down to comments line and input the customer’s name and date account was opened. This is important if account number was reused and helps the Records Department locate the correct documents.

press enter

press F3 to exit

* Note: microfilmed copies will arrive in 3 to 5 days.

MCP Accounts

* Note: when ordering documents on MCP accounts, the old account number must be obtained from FDR.

input FDRCRD on SSPROD to access CIF

input six digit logon ID, password and press enter

input "FDSN" enter

input "BS", space, six (6) digit prefix "782414" and ten (10) digit MCP account number,

enter

old account number is located on bottom of screen in "cross reference" number two (2). It is the last ten (10) digits in number two (2).

press "Home" key

input "BS9" enter

obtain "date opened" from lower left side of screen, field labeled "DOP"

To order documents the following procedures are:

on CIF input MCP and press enter

input six (6) digit logon ID, password and press enter

clear screen

input "KC03" and enter

input "DR" and enter

input old MCP account number and enter

review screen to determine documents needed from list of filmed items

* Note: MCP account numbers are reusable so it is important to have the accounts opening date from CIF to order the correct documents.

input the number of filmed entries being requested. Example, if requesting entries three (3) through six (6) input as: 3 - 6

press the F6 key

press the F3 key

tab over to name of requesting department and type in bankruptcy

tab down to comments line and input the customer’s name and date account was opened. This is important if account number was reused and helps the Records Department locate the correct documents.

press enter

* Note: microfilmed copies will arrive in 3 to 5 days.

ELOC Accounts

To order documents on ELOC through CPI the following procedures are:

on Fidelity input CPI and enter

input five (5) digit logon ID, password and enter

input "TSK1" account number and enter

input "RETLOC" and enter

tab to "PR" window and input your last name

tab to "Dept/REP" and input your last name and extension

tab to "RET" and input account number

press the F10 key

input type of documents required from file

press enter
*Note: microfilmed copies will be ready for pickup in the Records Retention Department in three (3) to five (5) days.

The procedures ensure the documents ordered are received in a timely manner.

FOLLOW-UP / REVIEW:

N/A

 

Foreclosure/Bankruptcy Reports – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Specific reports are calendared each month in the Bankruptcy and Foreclosure Departments. The reports are ordered through various screens on CPI and Passport. The reports are utilized for month end reporting to management and monitoring accounts in bankruptcy and foreclosure.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

12/15/06

PROCEDURE:

Documentation

The reports are categorized by department, system requested on, name of report, data on report and purpose of report.

Foreclosure - CPI

Reports ordered through the Foreclosure workstation on the FORR screen.

S58J - Weekly listing of accounts by foreclosure specialist. Refer to procedures on the S58J utilized by the foreclosure specialist.

R58R - Weekly listing of delinquent foreclosure steps by foreclosure specialist. Refer to procedures on the R58R utilized by the foreclosure specialist.

S5L3 - Month end step report for quality control Report lists government loans (FHA/VA) with step numbers 051, 107 and 215. Accounts that entered the foreclosure workstation during the month. Report forwarded to the Quality Control Department.

Reports ordered through the Foreclosure workstation on the FCRW screen.

HSBC Portfolio - Report lists the loan count and principal balances of all accounts in foreclosure. Utilized for month end reporting to management.

Investor Portfolio - Report is divided by investor and lists the loan count and principal balances by investor. Utilized for month end reporting to management.

Report is part of the month end report set.

3FS - Detailed foreclosure report. Lists accounts with the following conditions: new accounts in foreclosure, accounts suspended, accounts reinstated, foreclosure sales, workouts and accounts paid in full. Utilized for month end reporting to management.

Reports ordered through Passport.

Aged Report - Accounts in foreclosure with foreclosure stops 1, 2 or 3. Accounts are listed in order by due date, oldest to most current. Utilized for month end reporting to management.

Attorneys Report - Accounts in foreclosure with foreclosure stops 1, 2 or 3 and grouped by attorney code. Detail of number of accounts serviced by each attorney. Utilized for month end reporting to management.

State Code Report - Accounts in foreclosure with foreclosure stops 1, 2 or 3 and grouped by each state. Detail of accounts in foreclosure by state. Utilized for month end reporting to management.

GNMA Report - Accounts in investors 350 to 355 with a foreclosure stop greater then 2. Report is run on the 15th and 30th of the month. Detailed listing of accounts pending foreclosure and accounts that have gone to foreclosure sale. Report is forwarded to the manager of the Investor Reporting Department.

Investor Report - Accounts in foreclosure with foreclosure stops 1, 2 or 3 and grouped by investor. Report lists account each and principal balances by investor. Utilized for month end reporting to management.

Bankruptcy - CPI

Reports ordered through the bankruptcy workstation on the BNKR screen.

S2B7 - Report run on the last business day of the month. Listing of chapter 13 bankruptcy accounts with no proof of claim or confirmation date fields completed on the workstation. Bankruptcy specialists utilize the report to call the courts and check pacer to obtain the dates and updated each account on CPI.

S2B3 - Report run on the last business day of the month. Listing of chapter 7 bankruptcies not discharged. Accounts are checked on pacer to determine if the bankruptcy has been discharged and can be removed.

S2B4 - Report is run on a biweekly basis. Listing of accounts sorted by attorney that are pending a motion for relief action and have an overdue step on the BNKS tracking screen. Report is faxed to the attorneys for a status on each account.

S2B6 - Report is run on a biweekly basis. Listing of accounts 30, 60, and 90 days delinquent pending review for motion to lift stay.

S2B5 - Report is run on a weekly basis. Listing of accounts requiring follow-up per guidelines set by the specialists.

S2T1/S2T5 - Bankruptcy trial balance report. Listing of all accounts in bankruptcy by investor number run on the last business day of the month. Report S2T4 is forwarded to the manager of the Mortgage Administration Department.

S2BF - Report is run on a weekly basis. Listing of accounts with their MSP suspense accounts out of balance. The account must be reviewed and the out of balance condition corrected.

Reports ordered through the Bankruptcy Workstation on the BRWR screen.

Type 11 - 12 Report - Report is run on the last business day of the month. Listing of accounts and their principal balances by loan types 11 and 12. Report is forwarded to the Quality Control Department.

Type 17 - Report is run on the last business day of the month on loan type 17 and utilized for the same purpose as stated above.

Reports ordered through Passport.

BKSTAFF - Listing of accounts by processor. Report is run every Monday for each processor.

BKDISC - Listing of Chapter 7 bankruptcy accounts to check pacer if accounts were discharged. Report is run the first business day of the month.

BKMULT - Listing of accounts which are multiple filers. Report is run the first business day of the month.

BKFHLMC - Listing of FHLMC accounts in bankruptcy to verify the use of designated counsel. Report is run on the first and fifteenth of the month.

BKFNMA - Listing of FNMA accounts in bankruptcy to verify the use of designated counsel. Report is run on the first and fifteenth of the month.

DFLTDATA20 - Listing of accounts that are delinquent sixty days and greater. Accounts are reviewed for motion of relief. Report is run the last week of the month.

DFLTDATA23 - Listing of chapter 7 bankruptcies that are delinquent sixty days and greater. Accounts are reviewed of motion for relief. Report is run the last week of the month.

DFLTDATABNK3 - Listing of accounts previously current and now delinquent. Accounts will require a processor 4 stop. Report run the last week of the month.

DFLTDATABNK5 - Listing of current accounts that have a processor 4 stop. Accounts will be reviewed to have the stop removed. Report run the last week of the month.

BKCLAIMPOST - Listing of accounts to verify proper credit reporting. Report run the last week of the month.

BANKRUPTCY Credit Reporting - Listing of chapter 13 accounts and their post petition due dates. To verify proper credit reporting to agencies. Report run the last week of the month.

BKATMMMC - Listing of HSBC accounts out for a relief action. Report run the last week of the month.

DFLTDATA16 - Listing of accounts with a processor 4 stop and are not setup on the bankruptcy workstation. Accounts must be researched to determine their bankruptcy status and if the stop should be removed. Report run on the second to last business day of the month.

DFLTDATA9 - Listing of accounts open on the bankruptcy workstation with a zero principal balance. Accounts must be researched and workstation closed. Report run on the last business day of the month.

DFLTDATABK1 - Listing of active bankruptcy accounts with foreclosure stops on file. Accounts must be researched and the foreclosure stops removed. Report run on the last business day of the month.

DFLTDATABK2 - Listing of accounts to review for 1099C forms. Report run the last business day of the month.

DFLTDATABNK8 - Listing of SBO accounts (serviced by others) with a zero bill mode. Report run the last business day of the month.

DFLTDATA8 - Listing of active bankruptcy accounts without mancode B on file. Accounts must be researched and corrected. Report run the last business day of the month.

DFLTDATABNK4 - Listing of accounts in bankruptcy that do not have a processor four (4) stop. Accounts should be current. This report is a cross reference to the BNK5 report listed above. Report run the last business day of the month.

DFLTDATA7 - Listing of accounts not on the bankruptcy workstation but with a mancode B on file. Accounts must be researched and corrected. Report run the last business day of the month.

The reports are run to maintain data integrity on an account level basis and for reporting to management.

FOLLOW-UP / REVIEW:

N/A

 

Foreclosure By Product Setups – Rev 12/15/06

HELOC/HELOAN/ELOC/Collateral Mortgage/Marine Express

FUNCTIONAL OVERVIEW:

When all efforts to cure a loans delinquency have been exhausted and HSBC’s lien position and equity situation have been established, the account is submitted to the roundtable committee for review. Once foreclosure has been approved, the file is given to the operations specialist to move the account into the foreclosure call list on ACP and refer it to legal counsel. Upon receipt of the file from the operations supervisor, the operations specialist has 24 hours to complete the setup. This entails inputting all information on ACP, CIF, FDR (if applicable), completing the referral letters, and forwarding the entire package to the attorney.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

05/31/03

12/15/06

A foreclosure action can not be commenced until the following have occurred:

all collection efforts have been exhausted

the demand has expired

lien position has been established

equity status has been established

roundtable approval has been obtained.

PROCEDURE:

Documentation and Account Review

Prior to sending out the attorney referral letters, the account needs to be reviewed for the following information:

Other related accounts - verify that the print out of CIF is in the file. If the customer has other related accounts, NOT and EHI screens must be notated. If the customer has a mortgage on Fidelity MEM1 screen on CPI is noted. This is done to protect all HSBC’s interests.

Principle balance and due date - verify on CIF that the principle balance is greater than zero and that the account is at least three months/cycles past due. If the account has a zero balance, it has been paid in full and a foreclosure would not be commenced. If it is less than three months/cycles past due, payments were accepted and applied to the account. At this point, the demand letter is not valid and must be reissued.

Active collection activity - by scrolling through the history - HIS screen, the operations specialist must ensure there is no active collection efforts occurring at this time and that it is documented that foreclosure was approved.

 

ACP System Maintenance

The following steps must be taken:

PRI Screen

place R in the "t" field.

change call state to C16 (MCP accounts) or L41 (MTC accounts).

press enter.

EHI and NOT Screens

the operations specialist will document the following information.

name of the foreclosure.

whether the foreclosure attorney is to foreclose on the property or file a notice of appearance and monitor the action of the first.

HSBC’s lien position * Note: if HSBC is in second position, the name of the first lien holder and their payoff amount is noted.

property address.

due date.

BPO value and date.

press enter.

CIF

access the account on CIF.

go to "81" screen to enter a note.

type "service" on the code line.

document that the account is in foreclosure, payments are not to be accepted, and the name and phone number of the foreclosure specialist who will be servicing the account

press PF5.

FDR

if the product type is an MCP, the operations specialist will document the same information on FDR and code the account as in foreclosure.

on Fidelity input "FDR" and press enter.

input "FDSN" and press enter.

logon using your seven digit logon ID and six digit password, press enter.

input "BS" space, then the account prefix 782414 and the ten digit MCP account number, press enter.

press the home key.

type in "CIS", press enter.

type in "CMA", press enter.

input your three digit FDR ID.

tab to line one.

in this free format screen, input the same information entered on the "CIF" screen, press enter.

press the home key.

type in "NM" space "CSR", press enter.

on this screen tab down to the field labeled "status" and input "E", then press enter.

press the home key.

type in "NM" space "CS", press enter.

on this screen tab down to the field labeled "7" and input "F", then press enter.

*Note: the above coding entries will indicate the account is in foreclosure and freeze the line of credit.

press the pause key, then escape, then enter to return to Fidelity

 

Attorney Referral letters

The operations specialist will prepare the attorney referral letters on Word by accessing j:\shared\everyone\4close\byproduc. There are four letters to be prepared.

FC notice - this is the letter that is sent notifying the mortgagor that their account has been referred for legal action and the name of the foreclosure attorney. The original is sent to the mortgagor, one copy is placed in the file and one is sent to the attorney.

FC notice2 - this is the document that the attorney signs confirming receipt of the file. The original is sent to the attorney and a copy is placed in the file.

FC notice3 - this letter is sent to the foreclosure attorney to provide all the account default information that is needed to commence an action. * Note: If any documents are missing from the referral package, it is noted on this letter that they are missing and will follow shortly.

Workout - this letter is sent to the mortgagor in an attempt to initiate a workout such as a repayment plan instead of foreclosure. It outlines what information the mortgagor is required to provide to be considered for a workout.

Documents

The operations specialist must order a copy of the documents if they are missing. Refer to the attached procedures "By Product Document Retrieval" to request the documents. They should be received in three (3) to five (5) days.

Copies of all documents that are being sent to the attorney are made for the servicing file.

The referral package should also include the following information, when available, to assure a valid foreclosure.

documentation indicating that an owner or mortgagor either is or is not in the military.

occupancy status, including the names of the current occupants of the property.

address for the mortgagors and owners, employment information, social security numbers, changes in martial status subsequent to execution of the mortgage, and evidence indicating that a mortgagor/owner is deceased.

all bankruptcy information (i.e., dismissal/discharge notice, etc.).

documentation regarding lien claims or other encumbrances and details regarding substantial damage to the property or pending insurance claims.

The referral package is mailed to the foreclosure attorney. A letter is sent to all parties on the note indicating that a foreclosure action is commencing. This letter should advise the mortgagors the foreclosure attorney’s name, address, and phone number.

The file is then hold punched and all documents are secured in the file. The operations specialist will forward the file to the by product foreclosure specialist to add to the foreclosure report.

ELOC Setups

Refer to the attached mortgage "Foreclosure Setups" procedure to place the ELOC by product on Fiselity.

HDPI

On a monthly basis a percentage of the transactions processed by HDPI are reviewed for quality control. Accounts are reviewed for accuracy and to ensure they are being serviced within investor and HSBC guidelines.

Attorney Acknowledgment

Within two days of sending the referral to the foreclosure attorney, the operations specialist will check lenstar to make sure the attorney acknowledge the file, if not they will follow-up via telephone with the attorney’s office to confirm they received the file. The operations specialist will document on EHI on ACP screen the date the attorney received the file and who they spoke to in the attorney’s office.

FOLLOW-UP / REVIEW:

N/A

 

Servicing Foreclosed By Product Accounts – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When a by product (MCP/MTC) is in a second lien position, there are different avenues to be reviewed when servicing the account. The foreclosure specialist must ensure there is sufficient equity, keep abreast of the first lien holders status, obtain a payoff and determine the status of property taxes. The combination of the above will determine whether the action of the first lien holder will be monitored, join their action, commence a separate action or if insufficient equity recommend charging off the debt. The foreclosure specialist will utilize the ACP systems "call list" and lotus report to monitor and update the accounts.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

12/15/06

An account will not be referred to the Foreclosure Department until demanded 45th day of default have occurred:

all collection efforts have been exhausted

the account is at least 120 days past due

the demand has expired

status of first lien and their payoff has been obtained

BPO determines equity/non-equity position-aids in charge-off scenarios

status of property taxes

PROCEDURE:

New Setups Report Loan Review

Two separate reports are reviewed once a month on loans setup in the current month. On Helocs (MCP’S) the "Heloc 60 plus DPD" report is reviewed and on collateral's (MTC’S) the "ILS Home Equity’ report is utilized. Both are generated by HSBC. The specialist will review the report to ensure all loans are captured for updates. The specialist will verify the following information is correct:

MTC’S (Collateral's)

foreclosure specialist will verify the "PRI" screen on "ACP" is setup correctly. The call state must be "L41" and spec con is set at 10

specialist will ensure the account is 120 days past due and no payments were applied since the demand letter was mailed to the customer

on the "HIS" screen the specialist will verify the following information is displayed: foreclosure setup date, the date account was referred to the attorney, property address, BPO was ordered, file reviewed for possible charge-off scenario and foreclosure attorney

on the "NOT" screen the specialist will verify the following information is displayed: foreclosure setup date, the date account was referred to the attorney, name of first mortgagee (if any), principal balance, payoff on first mortgage, contact name, BPO value, date completed and property address

specialist will access account on "CIF" and on account summary screen will input tran code 81 and depress enter. Input "SERVIC" and depress enter. Specialist will input a note indicating loan is in foreclosure and not to accept payments, then depress enter

MCP’S (HELOC’S)

foreclosure specialist will verify the "PRI" screen on "ACP" is setup correctly. The call state must be C16

specialist will ensure account is 4 cycles down and no payments were applied since the demand letter was mailed to the customer.

* Note: refer to the above procedures on MTC’S to verify information on the "HIS" and "NOT" screens.

specialist must log onto "FDR" on their Fidelity menu to update this system using their same logon ID and password

input "BS" space prefix 782414, 10 digit account number and depress enter

input "CIS" then depress enter

input "CMA" then depress enter

input specialists initials by blinking cursor. Tab down to free form message screen. Input note that loan is in foreclosure and not to accept payments, depress enter

input "NM space CSR" space, account number as stated above and depress enter

tab to statement and input "W" tab to external and input "E" and finally tab to status and input "60" and depress enter

input "NM space CS" space, account number as stated above and depress enter

tab down to special "Flag" field input "F" and depress enter

The above procedures ensure the account is properly coded on "FDR". This system is primarily used by HSBC.

Documentation and Loan Review

When servicing by products (second liens) the foreclosure specialist must be aware of the following:

status of the first - i.e., current, in foreclosure, paid-in-full, etc.

first payoff

status of taxes - i.e., current, delinquent, paid by first, etc.

value of the property

occupancy status

All of the information is needed to determine the equity situation. The amount of equity or lack of equity will help determine if the action will continue or if a recommendation to charge-off the account.

reinstatement of the first - if monitoring the action of the first and their account reinstates, the foreclosure specialist will need to obtain management's approval to commence the action. The foreclosure specialist will notify the foreclosure attorney of the same.

notification of sale - the foreclosure specialist will complete the following after placing the sale date on the sale calendar.

first sale - if the sale scheduled is the firsts sale, the following is done:

obtain the firsts payoff statement good through the sale date

generate a payoff statement on the by product good through the sale date (refer to payoff quotes procedure)

order a BPO if there is no current one in the file (refer to Ordering BPO Procedures)

the bid package is given to the REO Department for bidding instructions for both the firsts foreclosure sale or HSBC

Once the bid has been obtained, a check for 10% of the maximum bid will be generated.

complete the "we credit" ticket

complete the "check requisition form"

complete the "debit general ledger ticket". The general ledger account to debit is 185199/972050

submit the above tickets to investor accounting to generate the check

the check will be given to the foreclosure specialist to send overnight mail along with the bidding instructions to the foreclosure attorney

Second Sale - if the sale scheduled is our sale the foreclosure specialist will complete the following:

obtain firsts payoff statement good through the sale date

generate a payoff statement good through the sale date (refer to Payoff Quotes Procedure)

order a BPO if there is no current on in the file (refer to Ordering BPO Procedures)

forward above documentation to the REO Department

Once the bid has been obtained, it will be faxed to the attorneys office.

First Mortgage Buyout

To buyout or payoff the first mortgage, the specialist will complete the same procedures as when the 10% deposit was requested.

Surplus Money

If the property was purchased for more than is owed to the first, a surplus will exist. The specialist will complete the following steps:

advise the foreclosure attorney to commence a surplus money proceeding

contact the attorney on a monthly basis for a status update

Inspections and Property Preservation Work

When the foreclosure specialist receives notification from the Property Preservation Department that a property is vacant or is in need of property preservation work, the following will occur:

contact the first to advise them of the situation

verify with the first that they will be completing the required work

* Note: if the first will not be completing the required work the foreclosure specialist will approve it to be completed if the amount is within HSBC’s guidelines. If the amount is above the allowable, the specialist will ask management for approval for the additional sums needed to complete the work.

Foreclosure Action

When HSBC is initiating the foreclosure action the following guidelines must be adhered to:

ensure attorney is in receipt of foreclosure file within 2 days of sending thru Lenstar or Newtrak

attorney files complain within 30 days of receiving the file, Or 5 days if a designated attorney was used.

judgment is entered within 60 to 90 days of service being completed

sale is scheduled within 30 days of judgment being entered

foreclosure sale must be completed within 300 days to ensure clear title

The foreclosure specialist will receive monthly status reports from the attorneys. The specialist will review the progress of each account on the reports and update the accounts history screen on ACP. If the specialist receives no status report from an attorney or no activity is noted on a specific account the specialist will place a phone call to the attorney. It is imperative a status is obtained on every account to ensure the foreclosure action is progressing to a sale date.

Delays in the Foreclosure Action

When a situation occurs such as service problem, contested foreclosure, title problem, etc. which will cause a delay in the foreclosure action, management will be notified and, if applicable, a request will be made for additional files and costs to resolve the issue.

Service Problems

When notification is received from the foreclosure attorney that there is a problem completing service the foreclosure specialist will complete the following:

request additional fees and costs from management, if applicable

notate the "HIS" screen on MTC/MCP accounts of the service problem

when management approval has been obtained for the additional sums the foreclosure attorney is notified via fax and phone to proceed with the action and the amount of the approved sums.

Contested Foreclosure

When a foreclosure action is being contested the specialist will complete the following:

update the "HIS" screen noting the reason the foreclosure is being contested

a copy of the summons and complaint, the answer and the letter from the attorney requesting additional fees and costs. Obtain approval from management for additional funds over the guidelines allowable.

investor approval - upon receipt of approval from management, the specialist will complete the following:

fax and call the foreclosure attorney to advise to proceed with the action and the amount HSBC is allowing to cure the situation

update the "HIS" screen noting above action is being taken

the specialist will monitor the account closely to ensure the contested matter is litigated in a timely fashion

Bankruptcy Filed

When a foreclosure specialist receives notification that a bankruptcy has been filed, the following actions occur:

obtain a copy of docket or pacer printout

on ACP update the HIS screen with the following: filing was joint or individual, district filed in, filing date, case number and type of bankruptcy filed. Also update HIS that the bankruptcy specialist was tossed information on filing and that file is being transferred to the by product bankruptcy specialist.

* Note: the call state will be changed by the bankruptcy specialist to place the account in the bankruptcy call list.

notify the foreclosure attorney of the bankruptcy filing via fax and telephone to place foreclosure action on hold.

 

 

Receiving File from Bankruptcy

When a file is being transferred from the Bankruptcy Department to the Foreclosure Department, the foreclosure specialist will complete the following:

receive toss from bankruptcy specialist stating file is being transferred to foreclosure

notify the foreclosure attorney via fax to continue the foreclosure action

change the accounts call state on the PRI screen. On MTC’S place account in call state L41 and on MCP’S place in call state C16

update the accounts HIS screen noting the file has been transferred back to foreclosure, date file received, attorney notified via fax to continue foreclosure action and call state has been changed.

Notification of a Foreclosure Sale

When the foreclosure specialist receives notification from the foreclosure attorney of a sale date on an account the specialist will complete the following:

on ACP the HIS screen will be updated that a foreclosure sale date has been scheduled

* Note: the foreclosure specialist is notified of a sale date via a phone call or fax from the attorney.

the foreclosure specialist will send a toss to the REO Department requesting bidding instructions. The toss form name is "REO Asset Bid Request Follow-Up". The following information is included: customers name, account number, product type and request date.

Postponement of a Sale

A foreclosure sale can be postponed in the following situations:

a bankruptcy is filed

a workout has been approved. Obtain a final bill from the foreclosure attorney and advise attorney to close the file.

* Note: approval to postpone a sale must be obtained from a job a supervisor or investor.

Once approval to postpone the sale has been obtained, the foreclosure specialist will complete the following:

update the HIS screen that approval has been obtained to postpone the sale. It should be noted who gave the approval and how long the sale should be postponed for

send a toss to the REO Department notifying them that the sale was postponed

place a call to the foreclosure attorney to notify them of the postponement

print a copy of the toss to the REO Department, mark the calendar and place the bid package in the file

Notification of Vacant Property

When the foreclosure specialist receives notification that a property is vacant, the following steps are taken:

update the HIS screen that the property is vacant, date inspected and any additional comments concerning the properties condition

should HSBC be in the second lien position it would be the first mortgages responsibility to have the property secured and winterized to protect their interest in the property

should HSBC be in the first lien position with equity in the property, the property will be secured and winterized

complete the PP Maintenance Request form on toss to notify the Property Preservation Department to have the property secured and winterized.

Returning Checks

If the foreclosure specialist receives a check from the customer or if a branch accepts less then the full payment due to reinstate the account, the check will be returned to the customer. Only a certified check or money order should be accepted.

the HIS screen is updated noting a payment was applied to the account

the foreclosure specialist will toss a specific individual in the Transaction Processing Department instructing them to reverse the payment applied to the account and issue a check payable to the customer

when the payment is reversed the check is given to the foreclosure specialist

the specialist will calculate the amount needed to reinstate the account. Refer to "Reinstatement Procedures for By Products"

the reinstatement form and check are then forwarded to our attorney

on the HIS screen document the amount of the check, breakdown of amounts needed to reinstate the account and that a check and reinstatement is being forwarded to our attorney

ELOC Foreclosure Action

Once the lien position of a ELOC loan is determined, the loan will be serviced in one of two (2) ways. If the loan is in first position refer to the attached procedure "Monitoring Foreclosure Action". If the loan is in second position refer to the attached procedure "Servicing Second Lien Accounts".

These are comprehensive procedures to service HSBC by products within HSBC’S servicing guidelines.

FOLLOW-UP / REVIEW:

N/A

 

Foreclosure Roundtable – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Representatives from the Foreclosure and Bankruptcy, Litigation, Collections, and Loss Mitigation Departments meet on a scheduled basis to evaluate asset accounts over 90 days delinquent either foreclosure or charge-off candidates. Additionally, other accounts may be presented for charge off consideration based upon UPB, property condition, unpaid taxes, or other risk creating criteria. Accounts reviewed are first mortgages from HSBC’s asset portfolio $350,000 and under $40,000 and all and HSBC’s Home Equity products. Pertinent information must be reviewed on each account to ensure the credit loss to HSBC is minimalized. Information such as collection history, lien position, property taxes and property valuation are obtained on each account to determine if a foreclosure action is warranted or the account should be charged-off based on HSBC equity position. Accounts approved for foreclosure are then forwarded to the Foreclosure Department, or if no equity exists in the property, they are recommended to senior management for charge-off.

REQUIREMENTS: EFFECTIVE DATE:

12/01/02

08/26/02

06/25/03

08/14/06

12/15/06

To accurately determine if a loan should be approved for a foreclosure action:

the charge-off/foreclosure comparison form is properly completed, or,

the foreclosure referral form is properly completed

a payoff of the first lien holder (if applicable) is obtained

if taxes are delinquent, the amount(s) and year(s) owing are listed

property taxes are verified before file is submitted

if the property is a co-op, the status of the co-op fees owing must be noted on the form

PROCEDURE:

Documentation and Review

The committee must determine, based on the information provided, if sufficient equity exists in the property to pursue a foreclosure action. The proposal form (see exhibit) must contain the following: unpaid principal balance, lien position of HSBC, current property value (BPO), status of property taxes, co-op fees (if applicable), payoff of first lien holder (if applicable), due date, current status any superior lien.

HSBC’s equity position will determine if the account is approved for a foreclosure action or charged off

if the first lien holder is currently pursuing a foreclosure action and there is equity in the property, the committee will recommend HSBC monitor the superior lien’s foreclosure action

if the first lien holders account is current and equity exists in the property, the committee will approve a foreclosure action

if sufficient equity does not exist in the property, the account will be recommended to senior management as a charge-off

BPO

A loan may be rejected by the committee if there are inconsistencies or the value is questionable as provided by the BPO. The committee will recommend that a second BPO must be ordered by the REO Department and the account will be reviewed at the next meeting.

Taxes

It is important to obtain and note the status of property taxes on the proposal.

if a tax sale is imminent and equity exists in the property, HSBC may advance funds to pay the taxes to avoid a tax sale.

if property taxes are delinquent and no sale is imminent, appropriate actions will be discussed and recommendations made accordingly

if no equity exists and taxes are in arrears, the account will be recommended as a charge-off

From time to time, taxes may become delinquent on current accounts. The Tax Manager, upon notice of pending sale, will order a lien search from Collection Department. If HSBC is in second lien position, Tax Department will contact the superior lien holder to determine their strategy. If they are not going to pay or HSBC is in first position, Tax Department will request a BPO from the REO Department.

Upon receiving the value, Tax Manager will present to Collection Manager for foreclosure recommendation analysis as above.

Co-Ops

When the property is a co-op, the status of the co-op fees must be obtained prior to submitting the account to the committee.

if the management company is in the process of a foreclosure action because of delinquent co-op fees and sufficient equity exists, HSBC may advance funds to pay the delinquent fees to avoid the foreclosure sale

if co-op fees are delinquent and there is no foreclosure action being taken, then the delinquent fees are noted on the proposal

if no equity exists and there is a foreclosure action in process, the account will be recommended as a charge-off

FHA/VA

On HSBC and GNMA investor loans in the FHA/VA portfolio, the following will apply:

mortgages with a principal balance of $3,000.00 or less must be presented to foreclosure roundtable

Meeting Criteria

To ensure proper review and signoff on all products:

Meeting must be attended by at least on AVP of the Default Servicing unit

committee will review accounts in a room with servicing system access

three days prior to the meeting, a list of loans scheduled for review will be prepared and circulated to all committee members

a member from each Default department must signoff on a referral

the Collection Department manager will review and signoff on lien position and status of property taxes

charge-off form will require the signatures of three managers

Collection or Bankruptcy/Foreclosure manager (dependent on status of account)

Loss Mitigation Department manager, attesting all options reviewed

First Vice President

Sign-off

When a file is approved for foreclosure, the manager submitting the account will sign and date the proposal form. The foreclosure supervisor will also sign and date the form acknowledging the file is transferred to the Foreclosure Department. Accounts in the second lien position must have the First Vice President’s approval signature. The account must be set up on the foreclosure workstation within 24 hours.

FOLLOW-UP / REVIEW:

N/A

 

Servicing of Foreclosure Accounts – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When an account has been referred to an attorney to commence a foreclosure action, it is the responsibility of the foreclosure specialist to ensure that the foreclosure action is completed in a timely manner. This is accomplished by reviewing the monthly attorney status reports, working the S58J report (total loans in foreclosure) by processor once a month, the S58S report (foreclosure loans with steps past due by processor) weekly aged report twice a month, Lenstar and the new foreclosure setup report twice a month. The specialist will also place telephone calls to the attorneys office for a status to reflect the progression of the foreclosure action and ensuring state time lines are being met.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

06/28/01

12/02/02

08/14/06

12/15/06

COPY OF ACT/DEMAN LETTERS: EFFECTIVE DATE:

01/15/06

The account will be demanded in collection before coming to the foreclosure department. Once the demand expires the collection area will move the file to the foreclosure department.

 

When the operation staff receives the new foreclosure set up they will make sure the demand has expired.

If the specialist receives a call from the attorney stating all parties were not demand, we want the attorney to contact HSBC to verify that all parties were not demanded. This request should be sent to Sandra Tobin and CC to Linda Massett.

If all parties were not demanded we will advise the attorney to demand the additional parties after our investigation.

 

PROCEDURE:

New Setups Report Loan Review

Produced from a passport by the foreclosure manager twice a month. The foreclosure specialist will review this report to verify data integrity and ensure the attorney has received the file within three to five business days. The foreclosure specialist will verify the following information is correct:

FOR1

verify loan is delinquent; the next date due appears on the FOR1 screen

processor – this identifies each specialists portfolio (see Portfolio Splits Sheet)

process code – this code identifies a judicial foreclosure state = 1 or a non-judicial foreclosure state = 2

claim – this code identifies 11 = FHA, 21 = VA, and 31 = conventional loans

DFLT Damg – this code identifies the reason the mortgagor defaulted on the loan. The specialist will review the comment codes on DLQ1 and then refer to (Reasons for Default Sheet) to verify the code is correct

attorney – the specialist will verify the file was sent to the correct attorney based on the state the property is located, designated counsel, etc.

FOR3 - verify the following steps were completed:

step 001 - "Package Sent to Attorney"

step 002 - "Input all Inv/MI screens"

SAF1 - verify the following:

verify man code is "F"

process stop = 5 "Foreclosure"

foreclosure stop = 1 "New Referral"

DLQ5 – if there is Mortgage Insurance (MI) on the loan, verify the foreclosure start date is filled in "F/C start" field.

MAS1

COL1 screen – if HUD loan, verify SFDMS "status" is 43 and date is the date of the setup was completed

COL2 screen – if FNMA loan, verify status is 43 and reason is reason for delinquency code

DFRI – on FHLMC account "CD" should be 43 and "Event Dt" should be the date the foreclosure setup was completed

SER1 – if there is money in suspense, the foreclosure specialist will complete the "Payment Request Form" to have the money moved to escrow

*if there is money in restricted escrow, the amount is notated on FOR2 the "Property Inspection Warning Report" is reviewed daily

PL05 – review "Attorney Letter" special instructions to ensure the attorney was advised to foreclose in the correct entities name

when first legal is filed (complaint), the following screens must be updated:

on "DFRI" input "A" in the column labeled "A"

input "68" in column "CD"

depress enter

on MAS1/COL1 tab down to the "status" field and input "68", press enter

Loss Mit

The foreclosure specialist will contact the mortgagor by phone and offer loss mitigation options at the time the summons and complaint are filed and again at time of service as a follow-up. A workout package can be mailed to the mortgagor.

Reports Used by Foreclosure Specialist

S58S report – "Foreclosure loans with steps due" – the foreclosure specialist will work this report weekly. This is a report of all accounts that have outstanding steps due as well as all that will have steps due within the next week. Updates obtained and noted on FOR2 and step updated on FOR3

Aged report – the foreclosure specialist will work this passport report twice a month. This report captures all accounts with a due date of 18 months or older. Updates in a current status are obtained twice a month.

S58J report – "Loans in Foreclosure" – this report, which includes the specialists entire portfolio will be worked by the specialist at least once a month. Obtain an update or current status on every foreclosure loan monthly.

Status reports – the foreclosure specialist will obtain an update from the foreclosure attorney’s monthly status report.

Newtrak – the foreclosure specialist will obtain an update from an inter com via New Trak.

Delays in the Foreclosure Action

When a situation occurs such as service problem, payment is received, contested foreclosure, title problem, etc., which will cause a delay in the foreclosure action, the investor will be notified and, if applicable, a request will be made for additional fees and costs to resolve the issue.

Payments

Should funds be received from the mortgagor as the account is being referred to foreclosure, the following procedures must be adhered to.

If an account is referred to foreclosure, a promise to pay exists and funds are received in the allotted time frame

The foreclosure action must be stopped, payments applied to the account and any legal fees incurred to date are absorbed by the department accepting the promise to pay

If funds are received on a new referral, the demand has expired and funds are received before the 10th of the month

Legal fees will be deducted first from the funds received

The remaining funds will be applied as payments to the account

A letter is mailed to the mortgagors advising of the application of funds and providing additional time to pay the remaining payments

A form on Lotus Notes is completed advising the Collections Department of the account’s status

The account is coded on CPI for transfer from foreclosure to the normal servicing portfolio

*Note – the account will not be referred to the Loss Mitigation Department

If funds are received after the 10th of the month, equals 3/4th of the arrears, then the funds are referred to the Loss Mitigation Department. They will attempt a workout program with the mortgagor for the remaining arrears.

The account will remain in the foreclosure workstation during this time period

Service problems

When notification is received from the foreclosure attorney that there is a problem completing service, the foreclosure specialist will complete the following:

FOR3 - insert step 032 "Service Problem"

request additional fees and costs from the investor, if applicable

notate FOR2 of the service problem

when investor approval has been obtained for the additional sums, the foreclosure attorney is notified via fax and phone to proceed with the action and the amount of the approved sums

Contested Foreclosures

The foreclosure specialist will complete the following:

FOR3 - insert step 090 - "Contested FCL Action"

place a one in the "act" field

* Note: whenever the cursor is placed, the step will be inserted below that point.

press enter

type in step number "090" in "step" column

type predecessor step in "pred" column; the step number prior to inserted step

type "30" in the "flt" field

type in reason foreclosure is contested and the name of the specialist inserting the step in the "reas" field

press enter

if the account is in a Freddie Mac account, the following screen must be updated:

on "DFRI" input "A" in the column labeled "A"

input "33" in the "CD" column

input the contested date in the "EVENT DT" column

press enter

*Note: once the contested matter is resolved, input the following data:

input "A" in the "A" column

input "43" in the "CD" column

input original date of foreclosure in "EVENT DT" column

press enter

complete step number 090 by entering the date the answer was received

a copy of the summons and complaint, the answer, and the letter from the attorney requesting additional fees and costs are faxed to the investor to obtain approval for additional funds over the guideline allowable

* Note:  on FHLMC accounts, a 105 form will also be faxed to the investor

FOR2 – all action taken will be notated on FOR2

Investor approval – upon receipt of approval from the investor, the specialist will complete the following:

insert step number 628 - "MSJ granted"

fax and call the foreclosure attorney to advise to proceed with the action and the amount the investor is allowing to cure the situation

document FOR2

the specialist will monitor the account closely to ensure the contested matter is litigated in a timely fashion

Bankruptcy Filed

When the foreclosure specialist receives notification that a bankruptcy has been filed, the following actions occur:

obtain a copy of docket or pacer printout

document FOR2

insert step on FOR3 i.e., step number 801 "Chap 7 Bankruptcy filed", ensure you review FOR3 for previous bankruptcy filings to guarantee you select current step

* Note: for a comprehensive list of all steps, refer to R58D, "Step File Report" on CPI.

notify the foreclosure attorney of the bankruptcy filing via fax and telephone and place on hold

give the docket or pacer printout to the operations specialist to suspend the foreclosure tracking and transfer the file to the bankruptcy department

Receiving File from Bankruptcy

When a file is being transferred from the bankruptcy department to the foreclosure department, the foreclosure specialist will complete the following:

receive Toss from operations specialist

review FOR3 to ensure the proper steps were inserted

review PL05 to ensure BK038 letter was sent advising the foreclosure attorney to proceed with the action

review SAF1 to ensure the "Process Stop" is a "5" (foreclosure)

review DFRI (if FHLMC) to ensure the date the file was removed from bankruptcy coincides with the date being reported that the file was transferred to foreclosure

notate FOR2 that the account has been reviewed

Scheduling of Sales

Notification of Sales

When the foreclosure specialist will complete the following:

FOR2 – document the sale date

FOR3 – update step "sale date scheduled" by inputting a "C" in the "action" field and typing in the date notice of sale was received in the "actual" field

TSK1 – complete "FORSAL" task

input sale date in "Sale Date" field

type "PR FOR" in "SRC" field

type "FOR" and specialists name in "Contact Dept/Rep" field

type account number in "FOR" field

press enter

DFRI (if FHLMC) –

type "A" in "A" field

type "071" in "CD" field

type sale date in "Event DT" field

press enter

DLQ5 – (if MI)

type sale date in "Sale Schedl" field

Toss – send mail item to the operations specialist including the following information:

mortgagor’s name

account number

sale date

investor

mortgage insurer – if applicable – if not applicable – state "No MI" (FHLMC) DFRI note change

SAF1 – verify the foreclosure stop has changed to a "3"

Postponement of Sales

A foreclosure sale can be postponed in the following situations:

a bankruptcy is filed

the investor or MI company postpones the sale

a workout has been approved

*Note: Written approval must be obtained from the investor or MI company. On asset loans, approval to postpone a sale must be obtained from a job grade 12 specialist/supervisor or higher.

Once approval to postpone the sale has been obtained, the foreclosure specialist will complete the following:

FOR2 – document that approval has been obtained to postpone the sale; it should be noted who gave the approval and how long the sale should be postponed for. Specialist must complete a postpone sale g-form.

FOR3 – insert step 560 "Sale Postponed 1st time"

* Note: for a comprehensive list of all steps, refer to R58D, "Step File Report" on CPI.

place a one in the "ACT" field

* Note: wherever the cursor is placed, the step will be inserted below that point.

press enter

type step number in "step" field

type in predecessor step number in "pred" field

type in the number of float days in "flt" field, i.e., if the sale is being postponed 28 days, 28 is entered in this field

type in the reason the sale is being postponed and the name of the specialist inserting the step in the "reas" field

press enter

complete stop number 560

type "C" in "ACT" field

type date sale was postponed in "Actual" field

press enter

Toss – send mail item to foreclosure operations specialist notification of sale postponement

DLQ5 – remove sale date from "sale date scheduled" field

The operations specialist will print a copy of the toss, mark the calendar, and place the bid package in the file.

Changing Scheduled Dates

The foreclosure specialist will change the scheduled date on FOR3 only when confirmed dates have been received, i.e., if the scheduled date for judgment hearing is 03/31/98, however, the specialist receives notification from the foreclosure attorney that the hearing date will be on 04/03/98, the specialist will change the scheduled date by completing the following actions:

type "C" in "ACT" field next to applicable step

type new date over the "scheduled" date

press enter

Inserting Steps on FOR3

When applicable, the foreclosure specialist will insert the necessary steps on FOR3 by doing the following:

place a one (1) in the "act" field above the line where the step is to be inserted

press enter

type step number in "step" field

type predecessor step number in "pred" column the step number prior to the inserted step

type in the number of float days in "flt" column

type in the reason the step is being inserted and the name of the specialist inserting the step in the "reas" field

Deleting Steps on FOR3

The foreclosure specialist will delete any steps that are not applicable to the loan in the following manner:

change predecessor step of all other steps that have the step number to be deleted as a predecessor

place "c" in "act" field

press enter

tab to "pred" field

type applicable predecessor step number

type reason for changing predecessor step number and the name of the specialist changing it in "reas" field

press enter

delete step

place "d" in "act" field

press enter

type reason for deleting step and the name of the specialist deleting the step

press enter

Notification of Vacant Property

When the foreclosure specialist receives notification that a property is vacant, the following steps are taken:

FOR2 – notate property is vacant

TSK1 – complete HAZVAC task

type "PR Property Vacant" in "src" field

type "FOR" and specialist’s name and extension in "contact dept/rep" field

press enter

complete "PP Maintenance Request" form on Toss

Returning Checks

If the foreclosure specialist receives a check from the mortgagor that is not sufficient to reinstate the account, the check will be returned to the mortgagor. Only a certified check or money order should be accepted.

PL03 - generate "FC012" letter

type "FC012" in "enter letter ID or letterset" field

type mortgagor’s name on line number V001

type check number or checking account number on line number V014

type check amount on line number V016

press enter

workout package – send a workout package to the mortgagor

FOR2 – document amount of check and that the check is being returned to mortgagor with a workout package.

These are comprehensive procedures to maintain loans in compliance within investor and state guidelines.

FOLLOW-UP / REVIEW:

N/A

 

Foreclosure Setups – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When all efforts to cure a loans delinquency have been exhausted, the account is submitted to the roundtable committee for review. Once foreclosure has been approved, the file is given to the operations specialist to activate the foreclosure workstation on CPI and refer the account to legal counsel to commence a foreclosure action. Upon receipt of the file from the operations supervisor, the operations specialist has 24 hours to complete the setup. This entails inputting all information on Fidelity, completing the referral letters and forwarding the entire package to the attorney.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00 11/14/01

08/14/06

12/15/06

A foreclosure action can not be commenced until the following have occurred:

all collection efforts have been exhausted

the demand has expired

investor approval has been obtained, if applicable

the insurer/guarantor approval has been obtained, if applicable or requirements have expired, i.e., HUD1, NOI/NOD

PROCEDURE:

Documentation and Loan Review

Prior to sending out the attorney referral letters, the account needs to be reviewed for the following information:

Other related accounts - verify that the print out of CIF is in the file. If the customer has other related accounts, MEM1 on CPI must be notated. This is done to protect all HSBC’s interests.

Principle balance and due date - verify on DLQ1 on CPI that the principle balance is greater than zero and that the account is at least three months past due. If the account has a zero balance, it has been paid full and a foreclosure would not be commenced. If it is less than three months past due, payments were accepted and applied to the account. At this point, the demand letter is not valid and must be reissued. The following applies to other loan types:

jumbo loans (over $150K balances) default at 60 days

second mortgage and ELOC’S (loan type 33) default at 75 days

co-ops can be current but HSBC will foreclose on delinquent maintenance fees or delinquent taxes. HSBC will foreclose if the co-op has begun a foreclosure action or maintenance fees are three to six months in arrears.

Active collection activity - by scrolling through DLQ7 notes, the operations specialist must ensure there is no active collection efforts occurring at this time and that it is documented that foreclosure was approved.

Loan documents - verify mortgage accounting ordered via DLQ1/LMTL notes original notes in the following states: CO, DC, FL, MD, MO, VA. In MN, the original note is only ordered if it is a VA loan. The original note and mortgage are ordered in CT and IL.

Man code - check DLQ1 to verify if the man code was an "M" (modified), "E" (Eloc), "K" (coop) or a "P" (seconds). If the account was in one of these man code, FOR2 must be notated what the man code was prior to setup.

Second Liens - (853 accounts, loan types 33 and 38) - verify DLQ1 notes if the investor requests the account to an active foreclosure or if the action of the first should be monitored. This information must be notated on FOR2 as well as on the attorney’s referral letter.

Suspense - check DLQ1 to verify if there is money in suspense. If the money came in before the loan was demanded, it can be applied to escrow. If the money was put in suspense after the loan was demanded, the foreclosure specialist that will be handling the file will need to be notified via toss as the funds may have to be reversed off the account and returned to the mortgagor.

ELOC

If a loan has a loan type of 33, 38 or second lien, it must be added to two (2) Heloc spreadsheets. One spreadsheet is located on Lotus as: j:\shared\everyone\heloc2001.

click on lotus

open file, click on protect to access file

input the following data: last name, loan type, account number, lien position and property address

click on save and close file

The second spreadsheet is located on Excel as: j:\shared\everyone\4close\byview.

click on Excel

open file

input the following data: BPO value of property, principal balance, loan number and last name

click on save and close file

Fidelity System Maintenance

The following steps must be taken:

FOR1

change process on stat screen to 1 - judicial status, 2 - non-judicial

input correct specialists processor code on stat screen

input claim type (claim 11 is for FHA, 21 is for VA, and 31 is for conventional type)

input disposal code ( 1 = HSBC, SONYMA and other investors, 2 - FHA, VA 3 = FHLMC, FNMA)

input default code (this code is a brief description of the reason for default)

input the foreclosure attorney’s AT code on FORE screen.

FOR2

click on MACRO. Log code "FCSET" on FOR2 will update property occupancy status on FOR2. Will generate letter "XF992" to mortgagor. Obtain letter from printer and mail.

*Note – above steps will automatically update the first two templates on FOR3.

update account with log code FCset - setup in foreclosure, mailed attorney referral

if designated counsel is used, update account with log code FCdesi (Designated Counsel was used)

update account with occupancy status - this is obtained from PIR1 screen.

update BPO value and date of BPO on HSBC loans

NON-ESCROW

if the account is non-escrowed or missing water/sewer tax data, a task must be set up for the tax department

input log code "FCTAX" on FOR2

click on MACRO to initiate task

to verify account is non-escrowed review screen SER1 and ANA1

MAS1/USR2

only on asset loans update date of BPO in "upd prp valu at" field

update value of property in ‘upd prp valu" field

*Note - by updating USRZ will automatically update the APR1 screen.

FOR3

update all steps pertaining to the foreclosure setup by putting a "C" in the "ACT" field and the date the setup was completed in "Actual" field

on FHA accounts in quick foreclosure states such as: AL, AK, AZ, GA, MI, MO, NC, NH, RI, TN, TX and WY verify on PLO5 that the XC518 (occupancy) letter was sent - then fill in that step with the date the letter was sent.

SER1

verify if there is money in restricted escrow. Document FOR2 with log code FCResc (checked SER1 for restricted escrow). If there is money in restricted escrow send a toss mail item to the foreclosure processor and print P195 screen for the file.

 

 

SAF1

verify process stop is a five and foreclosure stop is one then remove any expiration dates on low balance loans in order to pay taxes

zero out the expiration date if one exists

if file released from bankruptcy, the no notice stop must be "O". If lift of stay, a "C" and "B" for discharge.

DLQ5

if the account has private mortgage insurance the "F/C Start" field is automatically updated when FOR3 is maintenance

MAS1

on COL1 screen, verify HUD status code 43 and date foreclosure started

verify default cause code is correct

on COL2 screen, verify FNMA status code is 43 and reason code is correct

on screen MAS1/SLH1, screen print if there is a second lien holder. If so, send copy of screen print with referral package and notate FOR2.

On screen MAS1/NOT1, review screen if loan coded with flag for recourse, which means back to HSBC. Notify bidding procedure operations specialist, then ensure attorney is instructed to put title in name of HSBC at the time of a foreclosure sale.

 

DFRI

on FHLMC accounts, verify status code is a 43 and reason code is correct

* Note - if the action of the first is being monitored, a status code 61 is used instead of a 43.

FORA

when counsel is not on New Trak or Lenstar

press enter and PF11 twice

in "include optional insurance" field, type "Y"

press enter and PF11

change date in "total to reinstate by" field - increase the date by one month

press enter and PF11

place an "X" next to all documents, which will be included in the referral package. If any are missing, complete "RETFOR" task to order them

press enter and PF11 twice

type the following on the "attorney letter notes" screen:

whose name the attorney should foreclose in, i.e., HSBC, SONYMA, etc. *Note: on State Street Bank, Ryland, Bank of America, Norwest, Nations Banc and independent investors, the operations specialist should refer to the foreclosure approval letter in the file as to whose name to foreclose in (refer to matrix)

if second lien (853 accounts or ELOC’S loan type 33), should the attorney foreclose or monitor the action of the first

if title is not in the appropriate parties name, i.e., HSBC, attorney should notify us at once

at the time of sale, whose name the assignment of bid should be prepared in (if applicable)

if the foreclosure is in the state of MA, MD, DC or CA, whose name the third party deed will be done in (*Note: in these states, we do not assign the bid.)

status reports are due by the third of the month

if the foreclosure is contested or a bankruptcy is filed, attorney should notify us at once

the name of the mortgage insurance company (if applicable)

the name and phone number of the foreclosure specialist who will handle the file

the name of the investor and their seller servicer number (applicable if FHLMC or FNMA loan)

if any documents are missing, let attorney know which ones and that they will follow shortly

press enter and PF11

BPO

The operations specialist will order a Broker’s Price Opinion – BPO – only on FHLMC 2nds (853 accounts) or if there is an EPA issue as determined by inspection. Refer to procedures on ordering BPO’S.

SONYMA Loans

If we are foreclosing on NON-OWNER OCCUPANCY status, please put this information in the body of the FORA LETTER. HSBC requires the foreclosure attorney to verify occupancy status be requesting a copy of utility bills and drivers license proving this before accepting reinstatement fund.

Instructions for the referral letter on

 

log into Reflections

enter LID and password

log into CPI

enter password

type FOR2 and enter the account number you are working on

 

log into Lenstar

click on order entry

enter your first name

hit the tab key

this will prompt you to enter your password

a menu of process will appear:

* Foreclosure Bankruptcy relief

Deed In Lieu POC/Reorganization

Eviction

click on Foreclosure

click on Start Data Entry

*subnote – ensure loan is active on the foreclosure workstation

screen scraping (coping) will occur on CPI system

four page headers will appear: Page 1, Page 2, Page 3 and Page 4

Page 1 will automatically default and open up

there will be 2 items to pick on this page:

Vendor (attorney or sub of trustee)

Investor

a drop down window to pick from will appear:

i.e. FHLMC

FHLMC DESIGNATED

FNMA RECOURSE

FNMA WHOLLY OWNED

OTHER

click on confirm data

Page 2 will appear

just click confirm data (always the same information is pulled, nothing to update)

Page 3 will appear

click calculate tracking (always pull in a template, if no template pulled speak with a supervisor)

click Time Frame/Fees

chose Time Frame and Allowable Fees

FHA DAYS 300 FHA FEES 1100

VA DAYS 240 VA FEES 850

FNMA DAYS 300 FNMA FEES 1175

FHLMC DAYS 300 FHLMC FEES 900

SERVICER DAYS 300 SERVICER DAYS 300

click select

only on FHA’s will you have to input First Legal Date (always use 30 days from the date of setup

click confirm data

Page 4 will appear

enter pertinent info on who to foreclose in the name of and any other special documentation (Seller Servicer number, MI company, etc)

Special Notes:

foreclose in the name of ?

if an 853 or 2nd lien position account we might just be monitoring the action of the 1st lien holder (state if this is the case or not)

at the time of sale prepare an assignment of bid to ? (if applicable)

if foreclosing in states of MD, DC and CA, complete a 3rd Party Deed to ? instead of an assignment of bid

no deed shall be recorded in the name of ? (depends on who we are foreclosing in the name of ?) Investor (FHLMC or FNMA)

Mortgage Insurance Company is ? (if applicable)

the investor is ? The seller servicer number is ? (applicable if a FHLMC or FNMA loan)

documents have been mailed to your office today along with a payoff. OR Please obtain court certified copies of documents.

click build Instructions (Letter wording will appear)

click Save

click Ok

click save Order

Save Order will appear

click Yes

File Saved will appear

click Ok

system will bring you back to the main order entry screen

 

 

 

 

Asset Loans

The file must be reviewed to determine if a BPO is in the referral file. If none, update the FOR3 screen with step number 893 "BPO is not included". Do not input a date in the step, just insert the step. Then toss the Foreclosure Department manager the account number and indicate no BPO was in the file.

FHA Loans

The FHA check list is used for HUD audits and must be placed in every FHA file.

input the account number on the form

verify the file contains a letter from the FHA confirming 1st legal action (HUD B) letter

place a check mark in the column "in file’ and initial in column "rep" next to heading "SFDMS Letter/Confirmation"

place form in file

Co-Ops

The following procedures are followed if the account is a Co-op.

verify on DLQ1 man code is a K indicating a Co-op

input on FOR2 screen that man code was a K

review DLQ1 screen notes and referral file for the following information: name of Co-op association, phone number, contact and outstanding fees

input all information found above on the FOR2 screen

request copies of documents from record(s) retention by completing task "RETFOR" for the foreclosure specialist

complete task "NOTFOR" for copies of proprietary lease and stock certificate from records retention.

Taxes

The account must be reviewed to determine if it is escrowed and notify the tax department to search for delinquent taxes.

input SER1, account number and in window "ANA1" and depress enter

review screen to determine if account is escrowed. Review screen if water/sewer charges are being paid

if not paying water/sewer charges a task (TAXFOR), must be completed for the Tax Department to do a search for any delinquent water/sewer bills (refer to procedures to do a Task).

instruct the Tax Department to pay all delinquent water/sewer charges and to pay all future charges on an ongoing bases

notate on FOR2 that a task was completed to the Tax Department

if determined the account is not escrowed to pay taxes, then in the task (TAXFOR) instruct the Tax Department to follow the same procedures outlined above and notate on FOR2

if the account is escrowed to pay water/sewer charges no action has to be taken.

Special Investor Requirements

On Bank of America loans, the original file from Bank of America needs to be ordered via the "custodial release form" the operations specialist will verify with the default reporting manager via a toss mail item that is has been ordered.

Foreclosure Referral Package

Once all the system work has been completed and all the letters have been printed, the operations specialist is ready to complete the referral package. The referral package includes all of the following documents:

screen print of DLQ1

confirmation notice of file receipt

foreclosure referral sheet

payoff screen

Pennsylvania accounts require PA Act letters and a copy of the certificate of mailing. Accounts in New Jersey, Minnesota, Louisiana and Maine require a copy of the demand letter and certificate of mailing.

note

mortgage/stock certificate/deed of trust

title policy

notice of acceleration letter

abstract, if applicable

assumption documents, if applicable

modification documents, if applicable

arm riders, if applicable

Copies of all documents are to be made for the servicing file. If original documents are being sent to the attorney, the package should be sent certified mail/return receipt requested.

The referral package should also include the following information, when available, to assure a valid foreclosure:

Documentation indicating that an owner or mortgagor either is or is not in the military.

Occupancy status, including the names of the current occupants of the property.

Addresses for the mortgagors and owners, employment information, social security numbers, changes in martial status subsequent to execution of the mortgage, and evidence indicating that a mortgagor/owner is deceased.

All bankruptcy information.

Documentation regarding lien claims or other encumbrances and details regarding substantial damage to the property or pending insurance claims.

The referral package is mailed to the foreclosure attorney. A letter is sent to all parties on the note indicating that a foreclosure action is commencing. This letter should advise the mortgagors the foreclosure attorney’s name, address, and phone number.

Attorney Acknowledgment

Within one week of sending the referral to the foreclosure attorney, the operations specialist will follow-up via telephone with the attorney’s office to confirm they received the file. The specialist utilizes a passport report run every Monday listing all accounts set up in foreclosure the prior week. The operations specialist will document on FOR2 the date the attorney received the file and who they spoke to in the attorney’s office. The operations specialist will then go to FOR3 and complete the "attorney acknowledgment" step with the date the attorney received the file.

 

These procedures must be adhered to for the proper information to be input on the foreclosure workstation.

FOLLOW-UP / REVIEW:

N/A

 

 

Foreclosure Sales Results – Rev 11/15/06

FUNCTIONAL OVERVIEW:

Once a foreclosure sale has taken place the operation specialist has 24 hours from the date of the sale to report the results to the investor. The attorney faxes the results immediately after the sale has occurred. The operation specialist updates the account on CPI and then forwards the file to either Post-Foreclosure or REO. A sale result check sheet is followed for the entire process.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

11/14/01

08/14/06

11/15/06

PROCEDURE:

Standard Loan Documentation on all Foreclosure Sale Results

PIR1 - press PF4 key. Print screen and place in file.

Property Inspections are canceled on FHLMC and FNMA by using the Property Preservation toss form.

A Foreclosure sale result toss form will be completed notifying REO, Post Foreclosure, Investor Accounting and Tax Escrow (i.e., escrow for account with interest on escrow).

Notation of the sale result will be placed on FOR2 and MEM1 screen.

FOR2 - press PF5 - now update screen with the following: sale date, title to investor accounting notified, FOR3 and MEM1 updated, 1099A completed, loans investor/category number and file directed to Post or REO. Press enter.

MEM1 - input in Destination All, expiration date should be at least five years after the sale date. Tab to notation lines and input: sale date, title to, dollar amount of sale, principal balance, inerest amount to foreclosure sale date, investor accounting notified, property name, specialists name and extension. Press enter.

FOR3 - must be updated with all applicable steps pertaining to the foreclosure sale and result.

input step "054" on all third party sales

input step - "062" file to REO on all HSBC Asset Loans

SAF1 - on third party sales a disbursement stop "2" is placed on disbursement field, this is done to insure taxes will not be paid

YEND/YFBL - a 1099A form must be completed on every sale. If there are two borrowers insured the 1099 is done on both individuals.

verify information on screen

input sale date

input "Y" for yes, borrower is responsible

input debt outstanding (principal balance)

input BPO value for amount satisfied

use investors TIN number

on FNMA/FHLMC input servicer code and investor loan number. On all other investors leave blank.

fill in property address

PF6 to update

* Note: on VA loans the 1099C must also be completed for the Buydown amount and is only required on one of the borrowers.

MAS1 - COL1 - verify credit bureau code is a 94 for a foreclosure stop four (4) or a 87 on foreclosure stops number one to three (1 - 3).

Sale Result - fax sales result on all private investors. Notate on FOR2 and fax number of investor.

Bank of America - verify original note is in file.

Specific Investor Reporting Requirements Pertinent to the Sale Result

FHLMC Sales Results

DLQ5 - update the sale held field if there is MI

DFRI - verify the proper status code "71’ is being reported

Freddie Mac Foreclosure sales are transmitted via MIDANET.

A form 105 is used on all third party sales that did not go total debt. This form is used to request Freddie Mac to charge-off the difference owed to them. The operations specialist will follow up with FHLMC within one hour to receive charge-off approval.

To transmit a sale result to Freddie Mac:

on a designated terminal logon to MIDANET

input logon ID as "M237" and password, which changes periodically and depress enter

input "Master" "Master" again and six digit seller servicer account number from Freddie Mac 1076 form and depress enter

input "2" and depress enter

input "6" and depress enter

input "1" and depress enter

input "A" in function and depress enter

input the following data from the 1076 sales result form on the "foreclosure sale" screen. The fields that require updating are highlighted

Freddie Mac Loan Number, servicer loan number, sale date, sale result is one (1) for Freddie Mac and two (2) for sold 3rd party, number of units, property address, occupancy status, open bid amount, actual bid amount, BPO value, clear title received, deficiency rights preserved, MI Co. and MI % if applicable, winterized, FHA/VA/N, foreclosure attorney and phone number, tax service name, phone number is all 9’s, REO contact is Default Manager and phone number

depress enter

input "Y" and depress enter

input REO contact name and phone number and depress enter. Whoever is inputting data.

press F10 key to return to menu

input "4" depress enter

input "2" depress enter

tab down to line "foreclosure sale/DIL data" input "X" and depress enter

input REO contact name and phone number and depress enter. Whoever is inputting data.

press "N" key and press enter. The information is transmitted at this point

To verify Freddie Mac received the sale result and copy the screen for our records:

press F10 key

input "2" and depress enter

input "6" and depress enter

input "1" and depress enter

input "B" in function then FHLMC loan number and sale date then depress enter

verify status field has "XMTD" next to it, which means they received the transmission

print three (3) copies of the screen. One copy goes into the file second to sales result binder and last to investor reporting

press "X" key to exit the system

input "logout" and depress enter to logoff the terminal

FHA Sales Results

MAS1/COL1 must be coded for proper SFDMS reporting.

1. If non third party sale use status code 45 and the sale date.

2. If third party sale use status code 30 and the sale date.

Locate the FHA check list in the foreclosure file. Ensure the following documents are in the file: copy of the mortgage/note, bankruptcy information if applicable, summons and complaint, letters from the attorney stating any problems or delays that may have occurred in the foreclosure process and SFDMS letter from HUD confirming first legal action (HUD B letter). Place a check mark in the column "in file" and initial in column "rep" next to each document listed above that has been located in the file. If a copy of the mortgage/note is not in the file, toss the Records Retention Department to provide a copy. For copies of the summons and complaint, attorney letters or bankruptcy information, call, toss or fax the attorney to provide us copies of these documents for the file.

FNMA Sales Results

DLQ5 updated sale held field if there is MI.

MAS1/COL2 verify the proper status code and reason code are filled in.

FOR1/MAST is updated with the FNMA laser code;

70 - no MI

71 - third party sale

72 - with MI

** If the loan went third party and has MI use code 71 for third party.

FNMA foreclosure sales are transmitted MORNET. This is called a datagram.

Third party sales are transmitted on the Loss Mitigation workstation only if they did not go total debt.

Third party sales that go total debt are not transmitted.

FNMA FHA are not transmitted.

FNMA FHA third party are not transmitted.

Fannie Mae Mortgage Links

click on network application

click on mortgage links

double click on "Mortgage Links REO Notification"

input the specialist’s ID and password

click on add

input date from sale result on spreadsheet

when completed, click on save – this will transmit date to Fannie Mae

system will return to REO Notification

click on reports to verify transmission

input the seller servicer number – the transmitted report will appear

click on print report to make two copies

log out of mortgage links

Mornet

Mornet is used only when a Fannie Mae loan is sold to a 3rd party and less than total debt. To transmit a sale result through a designated terminal on MORNET:

input logon ID as "m238" and password which changes periodically and depress enter

input "MORNET" and depress enter

tab to "rev/fc" and press "R" key and depress enter

tab to "REOGRAM" and press "O" key and depress enter

cursor will be blinking on "add/date" and depress enter

press enter to begin input on "add/update" screen

input the following information from the FNMA "notice of property acquired" form:

Fannie Mae Loan number, lender loan number, borrower name and social security number, lien type is "F", loan type is "C", last paid installment date, occupancy status, property type. Press "Page Down" key for next screen. Input liquidation date, foreclosure attorney, phone number, hazard claim pending, last property inspection, original appraiser name, appraisal amount, appraisal date, property address on legal description line.

* Note: if the mortgage does not have private mortgage insurance (PMI), press the F2 key to transmit the sale result. On accounts with PMI press the page down key and continue.

input MI Company Code, company name, contact person, phone number, certification number, type coverage code and MI percent coverage

press F2 key to transmit

use the Page Up and Page Down keys to go back to the first screen and depress the Print Screen key. Make two (2) copies of each screen

one (1) copy is placed in the file and the second copy in the sales results binder

to logoff MORNET press the Escape key then "Y" key. Repeat this procedure three (3) times to exit

input logout then depress enter to logoff terminal

Foreclosure Tracking

Lenstar

log on to New Trak

click on search ICON

enter account number

click on start search

click on servicer close date

input comments "sale held mmddyy close file"

click on save

click on up load to CPI

FHA/VA - loans stay in man code (F) processor (GPW) - file is pulled, out card inserted, file and copies of all screens updated are placed in file and forwarded to Post Foreclosure.

FNMA/FHLMC/Private - loan is put in man code (D) processor (GPW) - file is pulled, out card inserted, file and copies of all screens updated are placed in file and forwarded to Post Foreclosure.

HSBC and Investor Third Party - loan changed to man code (D) and processor (GPW) on screen FOR1 - MAST. File to Post Foreclosure. * Note: following investor loans with MI are forwarded to MI Claims Department. HSBC, Bankers Trust, First Union, Bank of America, SONYMA and Norwest.

HSBC Loans - without MI are changed to man code (R) and tracking is closed with a removal code of C-05.

Bankers Trust - without MI are changed to man code (F) and processor (GPW). File to REO Department same on First Union and Bank of America.

Foreclosure check list is initialed, dated and placed in file. Verify all copies of screens are in foreclosure file before forwarding.

FOLLOW-UP / REVIEW:

N/A

 

Foreclosure Transferred to Bankruptcy – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When the Foreclosure Department is notified of a bankruptcy filing, the account is transferred to the Bankruptcy Department. When a bankruptcy is filed at the time of a foreclosure sale, it must be determined if the sale was valid or invalid. If the sale was invalid the investor must be notified of the filing, foreclosure workstation updated to a suspended foreclosure status and account setup on the bankruptcy workstation. The foreclosure attorney must be notified of the filing and the account must be transferred within twenty-four (24) hours of notification of filing.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

11/14/01

08/14/06

12/15/06

PROCEDURE:

Rollback

The operations specialist will review the status of the account in foreclosure prior to transferring to the Bankruptcy Department. Utilizing the foreclosure to bankruptcy check list the following will be reviewed.

Determine when the bankruptcy was filed. Review the foreclosure workstation screens. If the bankruptcy was filed after a foreclosure sale the sale is still good and the file is not transferred. Review the FOR2 and FOR3 screens.

If the bankruptcy was filed prior to the sale date, then the foreclosure tracking is suspended and file transferred.

Input date of bankruptcy filing and date of foreclosure sale, if applicable, on check sheet.
** Note - review account to determine if the foreclosure sale was invalid and if the account should be transferred to bankruptcy.

If the foreclosure sale was invalid contact the foreclosure attorney and confirm.

Obtain the supervisors approval and have it notated on FOR2.

When the foreclosure sale is invalid, initiate a toss to the foreclosure specialists listed on FOR1 stating the sale was voided.
** Note: call foreclosure specialist and inform that sale was voided.

Delete the 1099A on the YFBL screen. Depress the F6 key to delete the 1099A record. Depress the F3 key and a message will appear indicating record was deleted.

If the loan type is VA delete the 1099C record in the same manner.

On a VA loan the VA office must be called to inform them the property will not be conveyed due to a bankruptcy filing. Fax the bankruptcy information to the VA office. To obtain the VA’s office fax number input MIP1, account number and enter. The VA office number is located on the screen. Next input VADD and enter, then input the VA’s office number from the MIP1 screen and enter. The screen will then display the VA office phone and fax number.

On FHA loans input on the MAS1/COL1 screen code 68, which indicates back to first legal action.

On FHLMC loans form 105 must be completed indicating sale voided and provide bankruptcy information. Fax to number (703) 760-2715.

On all other investor loans either call or fax the investor of the accounts status. Notate on FOR2 the name of the person spoken to or the fax number used to send this information.

On FNMA Loans - We must notified Investor via e-mail.

The following steps must be completed when a sale occurred and the foreclosure workstation was updated for transfer to the Post Foreclosure Department. Due to the bankruptcy filing these items must be reviewed and changed.

SAF1

input "o" in late charge stop

input "o" in disbursement stop

input "oooooo" to remove expiration date
* Note: toss the foreclosure manager and inform if stops not removed.

DLQ1

Check to ensure late charges were placed back on the system by the post foreclosure manager. If not toss and inform the manager.

FOR1

Input foreclosure specialist ID from prior to transfer to post foreclosure.

FOR2

Obtain old investor/category number from the FOR2 screen and write on checklist.

 

 

G-Form

complete the "REO Rollback" form on Connect

FOR3

print FOR3 screens prior to updating

add step "Foreclosure Sale Voided" (680) to FOR3 screen after "Sale Held" step

Check FOR3 screen if there were multiple bankruptcy filings. Indicate yes or no on checklist.

PIR1

check occupancy status on the PIR1 screen and indicate occupied or vacant on checklist.

MAS1/COL1

input a pound sign (#) in the "INDIC" field and in the "STAT" field place a "ZZ" and then tab over to the "COMM" field and depress the space bar two (2) times to clear data in field and enter. This will initiate the correct credit bureau reporting code.

 

 

 

Asset Loans

on loans owned by HSBC, if the file was forwarded to Dyke O’Neal we must inform them of the bankruptcy filing to stop the deficiency judgment action.

SAF1

if the loan will remain in the Foreclosure Department ensure the proper stop is coded on SAF1. The "foreclosure stop" should be changed to either a "1" foreclosure initiated or "2" first legal field.

 

Normal Foreclosure to Bankruptcy Transfer

Documentation

When a foreclosure specialist is notified of a bankruptcy filing a copy of the pacer report or petition must be obtained from the attorney. The foreclosure specialist will toss the operations specialist with the information and will complete the following steps to transfer the account to the Bankruptcy Department.

 

G-Form

The "FC to BK" g-form will be completed with the following information: account number, bankruptcy type, case number, date, district , attorney, phone number, trustee and phone number.

SAF1

To log on to Fidelity:

input SSPROD, enter

on Fidelity input CPI, enter

input five (5) digit identification and six (6) digit password and enter

input SAF1, account number, enter

input "4" in process stop

input "A" in no notice stop

input "0" in foreclosure stop and enter

FOR1

input FOR1, account number, enter

tab to man code and input "B"

input "S" in STAT

input "02" in removal and enter. This will suspend the file on the foreclosure workstation.

FOR2

input FOR2, account number, enter

depress F5 key

input log code "FCTOBK", enter

if a VA loan, notate "Follow up VA cutoff date when out of bankruptcy".

FOR3

Update the FOR3 screen with the correct step relating to the type of bankruptcy filed. Step 801 is for a chapter 7, 811 is for a second filing and 821 a third. Chapter 13 is step 803, a second filing is 813 and 823 a third.

input FOR3, account number, enter

tab down to last completed step, input "A" and enter

input proper bankruptcy step, predecessor step, enter

input brief description of step, enter

tab down to step, input "C", tab to first open field and input date filed as MMDDYY and enter

 

PL03

The attorney letter is generated to notify the foreclosure attorney to stop the foreclosure process due to the bankruptcy.

input "PL03", account number, enter

input "FC004", enter

select the bankruptcy attorney from the Active Foreclosure Attorney List. Input the attorneys address, chapter, case number, filing date and depress enter to generate letter.

mail letter

New Trak

When a file is on New Trak it must be put on hold when a bankruptcy is filed. To update New Trak:

log onto New Trak

click on Foreclosure

go to the hold field

choose bankruptcy filing

in comment section input message that file put on hold due to bankruptcy filing

click on save

click on upload to Fidelity

 

Bankruptcy Workstation

update the BNK1 screen with the information contained on the bankruptcy petition

input "A" in status, processor ID, chapter, filing date, case number, court, templates depending on type of filing and account status, "BD7" on delinquent chapter 7’s, "BD13" on all chapters 11 an 13. Also input date of creditors meeting, proof of claim filing date, confirmation hearing date, trustee and debtor’s attorney.
* Note: leave the "mortgage Attorney" field blank.

BNK1/MAST up date the credit bureau field with who filed bankruptcy.
* 0 = Both
* 1 = Mortgagor
* 2 = Co-Mortgagor

Up date the BNKN screen with the following information: input log code "BKTRAK" and specialist’s name on second line, then type in case number, date filed, chapter, name of person(s) filed and type of bankruptcy document (i.e. bankruptcy petition or verbal information from attorney). Also notate if property is a co-op.

MAS1/PYT1 - change stop bill field from N to Y and notate this on BNKN and MEM1. Utilize the following phrase "changed stop bill on MAS1/PYT1 from N to Y due to bankruptcy filing".

Check List

The foreclosure to bankruptcy check list is forwarded to the bankruptcy specialist with each transfer.

obtain a new check list, initial and date

check off all steps completed in this procedure

forward with copy of pacer or petition to the bankruptcy specialist

The procedures will ensure the foreclosure workstation has been properly suspended and the bankruptcy information forward to the Bankruptcy Department.

FOLLOW-UP / REVIEW:

N/A

 

 

HELOAN/Collateral Mortgage/Marine Express Sales Results – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When a foreclosure sale is held, the foreclosure specialist must obtain the sales results from the foreclosure attorney within 24 hours after the sale occurred.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00 08/14/06

12/15/06

PROCEDURE:

Documentation and System Maintenance

Complete the "Heloc/Heloan/Sales result/ Transfer to REO form on Connect. This form notifies the REO manager and foreclosure manager of results of the sale.

Complete MCP/MTC Close out form:

Customer’s name and account number.

transaction code to be used - 337 (refinance/transfer balance)

General ledger (GL) account to offset - 180299/972153 (ORE RES) Account Receivable (A/R) - the foreclosure specialist should specify that this account should be offset for both the principle and interest amounts so the account has a zero balance.

Do not issue a discharge - the account will be set up on Fidelity to market the property.

* Note: The mortgage accountant in the investor accounting department will be included in on all toss forms that are sent to ensure that all monies are moved to the correct accounts.

Payoff of First - If there is a first lien on the property, the superior lien holder will be paid off at this time.

Prepare debit ticket for payoff amount from GL account 185199/972050 (ORE RES) (A/R).

Prepare a we credit ticket for payoff amount - 713-00016-3 (the manual checking account).

Prepare requisition for ticket made payable to the first lien holder or their attorney, if applicable.

Obtain management's signature authorizing the request (refer to Mortgage Default Servicing Signature Authority sheet).

Make three copies.

one for file.

one for sales results book.

one for investor accounting.

Submit the tickets to investor accounting.

When check is received, make three copies and send it to the first or their attorney airborne.

one for file

one for sales results book

one for investor accounting.

Closed loan setup sheet and REO new loan setup sheet – Complete g-form on connect (Heloc/Heloan 1st mtg reo setup).

 

ACP EHI screen - access EHI screen. Document sales results and all previous steps that have been completed.

Foreclosure file - a copy of all tickets, the loan setup sheets, and all ACP history is placed in the file, The entire file is then forwarded to the REO specialist.

1099-A - The foreclosure specialist will complete the 1099-A form to be input on disk at the end of the year and forwarded to the IRS (refer to 1099 procedure).

Follow-up - Within 48 hours after the request has been made to have the account closed off of ACP and set up on CPI, the foreclosure specialist will verify that these requests have been completed.

CIF - access account on CIF. The account should have a zero balance.

CPI - access LSCH screen.

type in mortgagors name.

scope the system to verify the account has been setup.

access SER1 screen to verify the due date and principal balance were correctly input from the closed loan setup sheet.

access DLQ1 screen to verify the mortgagors name and property address is correct.

* Note: If a third party was the successful bidder, the foreclosure specialist will document the account, toss REO manager, and monitor the account for receipt of our proceeds within 30 days. The account will not be setup on Fidelity.

FOLLOW-UP / REVIEW:

N/A

 

HELOC Sales Results – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When a foreclosure sale is held, the foreclosure specialist must obtain the sales results from the foreclosure attorney within 24 hours after the sale occurred.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

PROCEDURE:

Documentation and System Maintenance

Complete the "HELOC transfer to REO" form on Connect (g-forms) This form notifies the REO manager and foreclosure manager of the results of the sale.

E-Mail item to transaction processing manager requesting the account is closed off of FDR. The following must be included in the toss:

Customer’s name and FDR account number.

FDR - access "NM CSR" screen.

verify internal status code is "E" - evoked.

change status reason code to "61" - foreclosure completed.

document CIS screen that the foreclosure sale has been completed and the account is being set up on CPI to market the property.

Payoff of 1st - if there is a 1st lien on the property, the superior lien holder will be paid off at this time.

Prepare debit ticket for payoff amount from GL account 185199/972050 (ORE RES) (A/R).

Prepare we credit ticket for payoff amount from the manual checking account 713-00016-3 (manual checking account).

Prepare requisition for ticket made payable to the 1st lien holder or their attorney, if applicable.

Obtain management's signature authorizing the request (refer to Mortgage Default Servicing Signature authority sheet).

Make three copies.

one for file.

one for sales results book.

one for investor accounting.

submit the tickets to investor accounting

Copy To REO

 

Closed loan setup sheet and REO new loan setup sheet - some information to complete these forms is obtained from various forms in the file. These forms are completed within 24 hours after the sale has occurred.

ACP EHI screen - access EHI screen. Document the sales results and all the previous steps that have been completed.

Foreclosure file - a copy of all the tickets, the loan set up sheets, and all ACP history is placed in the file. The entire file is then forwarded to the REO manager. One copy of the tickets and the loan set up sheets is forwarded to the mortgage accountant in investor accounting and one is placed in the sales results book.

1099-A - The foreclosure specialist will complete the 1099-A form to be input on disk at the end of the year and forwarded to the IRS (refer to 1099 procedure).

Follow-up within 48 hours after the request has been made to have the account closed off of FDR and set up on Fidelity, the foreclosure specialist will verify that these requests have been completed.

FDR - access CIS CPO screen. The account should have a zero balance.

access NM CSR screen.

change status reason code to "62" - file transferred to REO.

Fidelity - access LSCH screen

type in mortgagors name.

scope the system to verify the account has been set up.

access SER1 screen to verify the due date and principal balance were correctly input from the closed loan setup sheet.

access DLQ1 screen to verify the mortgagors name and property address is correct.

ELOC Sale Results

Refer to the attached mortgage procedure "Foreclosure Sale Results". Utilize this procedure when a foreclosure sale result is obtained on an ELOC loan.

*Note: If a third party was the successful bidder, the foreclosure specialist will document the account, toss REO manager, and monitor the account for receipt of our proceeds within 30 days. The account will not be set up on Fidelity.

FOLLOW-UP / REVIEW:

N/A

 

 

Host Posting Process – Rev 08/14/06

FUNCTIONAL OVERVIEW:

This process takes the data input by the bankruptcy, foreclosure processors and attorneys and updates the Fidelity system with the information. The process must be done periodically three to four times a day. This ensures timely updates are given to Fidelity to update accounts.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

PROCEDURE:

Documentation

click on network applications

click on reflection file folder

log on to reflections using your seven digit logon and six digit password

input "FOR10000001" then enter

click on icon to minimize screen

click on "HOST POST"

check mark items to post

click on start

this process will continue to run on the terminal until all items have been posted to Fidelity

*Note– depending on volume the process can take minutes up to an hour.

Report

A report is run after every posting to locate and correct any errors in the posting process.

click on file clerk

click on reports

locate error report and click on it

click on print report

review report for accounts that did not post to Fidelity

report is filed in a specified binder for the host posting process

The host posting process is critical to the daily updating of Fidelity

FOLLOW-UP / REVIEW:

N/A

 

Investor Charge Offs – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Once a determination is made there is no equity in the property the mortgage is prepared for charge-off. The foreclosure specialist may recommend charging off the debt to the investor or the investor will instruct HSBC to charge off the debt via letter upon review of the file. The foreclosure specialist will complete the charge-off form and submit to management for review and sign off. The foreclosure workstation will be updated and closed and a letter will be mailed to the mortgagor instructing them to whom to forward mortgage payments and that they are responsible to pay the taxes on the property.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

05/31/03

08/14/06

12/15/06

A BPO is ordered to determine the property’s value. Refer to procedures on how to order a BPO. Factors that may lead to charging off the debt:

- No equity in property. (Amount of debt exceeds the property’s value)

- Property condemned by local government

- Lien not recorded

- Hazard insurance claim pending. (Proceeds of claim applied against debt and remaining balance charged-off)

- Outstanding IRS liens against mortgagor

- Delinquent property taxes, water and sewer charges

- Coops - outstanding maintenance fees exceed debt

 

PROCEDURE:

Asset Loans

The charge-off form is located on Excel as: j:\shared\everyone\mdreo\fcbids\newblk.wk4. The foreclosure bid analysis form is completed with pertinent account information. In the comments section a scenario of the properties condition and reasons for charge-off must be noted. Saved forms are on the "u" drive.

Reserve and Charge-off Request

The reserve and charge-off request is completed by the foreclosure specialist. The form is located on Excel as: j:\shared\everyone\4close\byproduct\chrgoffs.wk4. The following information is input on the form: specialists name, date, investor/category, account number, account name, cost center, charge-off amount and reason for charge-off. Once completed, it is forwarded with the foreclosure bid analysis form to management.

Request for ORS Input-Mortgage

This form is completed by the foreclosure specialist to provide information for input on the ORS recovery system. This form is located under the same file name as listed above with the Reserve and Charge-off Request form. The following information is input on the form: specialist’s name, date, extension, X principal charge-off, account number, cost center, principal, expenses, interest, late charges suspense (corporate advances), reason for charge-off and interest rate. This form will also be forwarded with the charge-off request.

Mortgagor Letter

The foreclosure specialist will forward letter number requested through PL05 to the mortgagor. The letter notifies the mortgagor that HSBC will no longer advance funds to pay real estate taxes, homeowners insurance premiums and any other escrowed items. It provides the address of the current tax authority for the mortgagor to contact. Letter must be signed by the assistant vice president.

Close Tracking

- Notate on FOR2 that file has been prepared for charge-off and submitted to management for approval

- Notate letter mailed to mortgagor and place copy in file

- On FOR3 add step number 093 indicating "charge-off" Account

- To close the foreclosure workstation on FOR1 input "C" under stat field and "21" under RMVL field and enter

ELOC Accounts

When a "LOC" loan type is being charged off, the following screen must be updated.

Input ELUC, account number and enter

Tab down to field titled "ELOC STATUS", input "C" and enter. This entry will close the line.

Freddie Mac

On Freddie Mac accounts a letter will be forwarded to HSBC approving the charge-off of the debt. The FOR2 history screen will be updated noting the letter was received approving the charge-off and the following steps will be completed.

- Complete toss "Freddie Mac Charge-off" form

- Call and fax foreclosure attorney instructing them to stop the foreclosure action, close the file and forward a final attorney invoice for payment

- Toss a specific Loss Mitigation specialist to order the original note from Freddie Mac

- Complete task (VLTFOR) on CPI ordering the accounts file from Records Retention

- When the file is received from records retention pull the mortgage agreement out of the file

- Examine the mortgage to determine if HSBC Mortgage Corporation (aka Marine Midland) is last on title

- A copy of the mortgage agreement must be forwarded to the Document Tracking Department instructing them to prepare an assignment from HSBC Mortgage Corporation (Marine Midland) to Freddie Mac

- Complete sections A, B, C and E on the Multi Purpose Loan Servicing Transmittal form number 105 for Freddie Mac

- Ensure the note is received from Freddie Mac, the assignment is completed and returned by Document Tracking and form 105 has been completed

- Mail the following documents to Freddie Mac overnight express: original note, original mortgage, assignment, form 105 and copy of letter forwarded to customer notifying them of the change in servicers.

- Update all activities completed on the FOR2 history screen

- Forward the file received from records retention along with copies of all documents to the Post Foreclosure Department

Fannie Mae

On Fannie Mae accounts a letter will be forwarded to HSBC approving the charge-off of the debt. The FOR2 history screen will be updated noting the letter was received approving the charge-off and the following steps will be completed.

- Complete toss "Fannie Mae Charge-off" form

- Call and fax foreclosure attorney instructing them to stop the foreclosure action, close the file and forward a final attorney invoice for payment

- Toss a specific Loss Mitigation specialist to order the original note from Fannie Mae

- Complete task (VLTFOR) on CPI ordering the accounts file from Records Retention

- When the file is received from records retention pull the mortgage agreement out of the file

- Examine the mortgage to determine if HSBC Mortgage Corporation (aka Marine Midland) is last on title

- A copy of the mortgage agreement must be forwarded to the Document Tracking Department instructing them to prepare an assignment from HSBC Mortgage Corporation (Marine Midland) to Fannie Mae

- Ensure the note is received from Fannie Mae, the assignment is completed and returned by Document Tracking

- Mail the following documents to Fannie Mae overnight express: original note, original mortgage, assignment, and copy of letter forwarded to customer notifying them of the change in servicers.

- Update all activities completed on the FOR2 history screen

- Forward the file received from records retention along with copies of all documents to the Post Foreclosure Department

SONYMA

On SONYMA accounts a letter will be forwarded to HSBC approving the charge-off of the debt. The FOR2 history screen will be updated noting the letter was received approving the charge-off and the following steps will be completed.

- Complete toss "SONYMA Charge-off" form

- Call and fax foreclosure attorney instructing them to stop the foreclosure action, close the file and forward a final attorney invoice for payment

- Toss a specific Loss Mitigation specialist to order the original note from SONYMA

- Complete task (VLTFOR) on CPI ordering the accounts file from Records Retention

- When the file is received from records retention pull the mortgage agreement out of the file

- Examine the mortgage to determine if HSBC Mortgage Corporation (aka Marine Midland) is last on title

- A copy of the mortgage agreement must be forwarded to the Document Tracking Department instructing them to prepare an assignment from HSBC Mortgage Corporation (Marine Midland) to SONYMA

- Ensure the note is received from SONYMA, the assignment is completed and returned by Document Tracking

- Mail the following documents to SONYMA overnight express: original note, original mortgage, assignment, and copy of letter forwarded to customer notifying them of the change in servicers.

- Update all activities completed on the FOR2 history screen

- Forward the file received from records retention along with copies of all documents to the Post Foreclosure Department

Private Investors

On Private Investor accounts a letter will be forwarded to HSBC approving the charge-off of the debt. The FOR2 history screen will be updated noting the letter was received approving the charge-off and the following steps will be completed.

- Complete toss "Private Investor Charge-off" form

- Call and fax foreclosure attorney instructing them to stop the foreclosure action, close the file and forward a final attorney invoice for payment

- Toss a specific Loss Mitigation specialist to order the original note from the investor

- Complete task (VLTFOR) on CPI ordering the accounts file from Records Retention

- When the file is received from records retention pull the mortgage agreement out of the file

- Examine the mortgage to determine if HSBC Mortgage Corporation (aka Marine Midland) is last on title

- A copy of the mortgage agreement must be forwarded to the Document Tracking Department instructing them to prepare an assignment from HSBC Mortgage Corporation (Marine Midland) to the investor

- Ensure the note is received from the investor’s, the assignment has been completed and returned by Document Tracking

- Mail the following documents to the investor overnight express: original note, original mortgage, assignment, and copy of letter forwarded to customer notifying them of the change in servicers.

- Update all activities completed on the FOR2 history screen

- Forward the file received from records retention along with copies of all documents to the Post Foreclosure Department

Once approval is received from the investor to charge-off a loan the above procedures ensure the proper steps are followed in the Foreclosure Department.

FOLLOW-UP / REVIEW:

N/A

 

 

Invoices – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Invoices received in the Bankruptcy and Foreclosure Departments are reviewed and prepared for submission to the Mortgage Accounting Department for payment. The amount of the invoices must be thoroughly researched to ensure payment is within the various investor guidelines. Proper payee and description codes must also be placed on the invoices. All invoices must be prepped for payment within 24 hours of receipt.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

12/02/02

08/14/06

12/15/06

PROCEDURE:

The following procedures ensure manual invoices are reviewed and properly coded for payment. All other invoices should be reviewed through NewInvoice.

place the "Invoice Approval" stamp in the lower right hand corner of the invoice

on CPI input P740, vendor name and enter. The screen will display the various payee codes and name and address of vendors. Obtain the correct payee code that matches the invoice. Place payee code on first line of invoice approval stamp.

input FOR2, account number and enter. On the top of the screen obtain the investor number, loan type and state. Place this data on the second line of the invoice approval stamp.

to determine if counsel is designated review the notes on the FOR2 screen. It will be indicated in the notes. Also the attorney matrix report can be reviewed. Indicate "yes" or "no" on the invoice approval stamp.

to determine the allowable on CPI input "FOAT" and enter. Input the two (2) digit state code and enter. Depending on loan type, this screen will display the allowable amount that can be paid for a specific investor, type of action and allowable value for the action. Refer to the "Allowable Fees" section for further documentation.
* Note: matrix report 5SFE can also be utilized to obtain the same information.

Input proper allowable fee on invoice approval stamp.

Input total allowable paid to date on invoice approval stamp. This is further defined in the "Allowable Fees" section of this procedure.

Input SAF1, account number and enter. If the account is in foreclosure obtain the foreclosure stop number from this screen and place on foreclosure stop line on stamp. The foreclosure stop can also be found on the top right hand corner of the FOR2 screen.

Input current date prepared on stamp.

Input name of specialist preparing invoice. Place first initial, last name and telephone extension on prepared by line on stamp.

The approval by line will be utilized by the department manager; the date paid line by Mortgage Accounting.

On accounts in foreclosure update the FOR2 screen and bankruptcy BNKN screen with the following data: name of vendor, invoice number, amount paid, investor number, date of invoice and forwarded to mortgage accounting.

on chapter 13 bankruptcies, make two copies of the invoice; one for the file and give one to the specialist

Allowable Fees

On allowable fees further investigation is required to determine the exact amount to be paid and if a prior invoice was paid.

determine if counsel is designated or not; if designated, all fees will be paid to that counsel

On Fidelity input P309, account number and enter. Input /S2 and enter. Use the F7 and F8 key to scroll the transaction history.

review this history to determine if any prior fees were paid to counsel

on accounts in foreclosure review all (630) transaction codes and for accounts in bankruptcy code (633) with sequence number 90

Make sure fee being billed on invoice does not exceed the allowable
* Note: this process is important because a duplicate or partial invoice may have been paid in the past.

*Note: no account can be approved over the allowable without proper approval by management.

on investor loans the approval to pay over the allowable must be obtained in writing from the investor and document the account on CPI with this information

On HSBC accounts the attorney must put their request in writing. The request must clearly state why the amount exceeds the allowable and provide the billed amount

on HSBC and private investor invoices, the manager of Bankruptcy/Foreclosure must approve them

if allowable fees were previously paid, add up the amounts and place on paid to date "PTD" line on invoice approval stamp

once the above steps have been completed and the amount of the invoice can be paid the process to prep the invoice can continue

on the invoice highlight the mortgage account number

Itemize Invoice

When an invoice contains multiple billing charges each one must be identified with a disbursement type and transaction code description.

Input the correct disbursement type that matches the billable item. Example title exam is disbursement code 632.

Obtain the proper description to match the billable item from the "DDCC" screens on CPI and place next to the disbursement code.
* Note: the correct disbursement and description codes must be listed next to each billable item on the invoice.

Reducing Fees/Costs Billed

If an invoice will be paid for less than the amount billed the following will apply:

Draw a line through the amount on the invoice.

Write the reduced amount to be paid to the right of it.

If multiple charges on invoice, draw a line through the total and write in revised total.

Write the reason the amount billed was reduced next to the item.

circumstances in which a cost may be cut on an invoice:

*documents mailed Federal Express

*photo copy charges

If items are court ordered then they must be paid.

* Note: if any other charges reduced other than listed above refer to supervisor.

The Loss Mitigation Department may reduce a charge from a designated attorney. The Loss Mitigation Specialist will list the reason on the invoice.

Bankruptcy Invoices

The bankruptcy specialists will scope all invoices and initial the invoice in the top right hand corner before submitting for payment.

Attorney bills on conditional orders will indicate a split in the general ledger accounts to debit to pay the bill.

The non-recoverable amount will be charged against "02N60 - Legal Fee". For the remaining amount follow instructions outlined in this procedure.

Attorney bills on VA loans are paid normally.

Loans Paid Off

Once a loan has paid off and an invoice is received, it is very important to determine where the funds are or will come from to pay the invoice. A thorough review of all screens on CPI must be completed.

Should funds to pay the invoice be in escrow or suspense on CPI then a task must be initiated.

Notate on the invoice task "CORFLP" to be completed.

should the funds to pay the invoice be non recoverable one of the following must be noted on the invoice. Invoices are then forwarded for approval and payment.

*02N60 - Legal Fee

*02N65 - Appraisal

*634543/801049 - General Ledger - servicing error

These procedures will provide for a thorough and accurate review of all invoices prior to submission for payment.

FOLLOW-UP / REVIEW:

N/A

 

Equity Review – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Asset loans that have a 50% decline in value from origination and/or $50,000 loss in value are reviewed, via the reserve report. Accounts will be reviewed monthly by management to ensure the proper reserves are maintained. All options will be examined to minimize potential losses to HSBC.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

PROCEDURE:

Procedures to review accounts are as follows:

- Accounts will be reviewed at the round table meeting if the potential loss is in excess of $50,000.00 or a 50% decline in value and the account is three (3) years old or newer. This is the difference between the accounts principal balance and the current Brokers Price Opinion (BPO).

- The REO Department manager will request the reserve report monthly and provide copies to all default managers.

- The Foreclosure Department manager will review the accounts identified from the round table meeting and review the reserve dollars required to cover a potential loss to HSBC.

- Accounts that match the criteria are added to the spreadsheet titled "riskjumbo.wpd". The spreadsheet is located on Excel as: j:\shared\everyone\riskjumbo.wpd.

- The following information is input on the spreadsheet: account number, name, original date of loan, loan amount, original value, principal balance and current value.

- If the account file is needed from records retention to review the original appraisal the Foreclosure Department manager will initiate a task to order the file.

*Note: If the BPO and/or information contained on it vary significantly from the original appraisal a second BPO may be requested.

- The original appraisal is reviewed and, if applicable, the file may be forwarded to the manager of the Quality Control Department for review. A cover letter will be composed by the Foreclosure Department manager to accompany the file.

- The Quality Control Department will analyze the original appraisal and underwriting to determine if the properties value at the time the loan closed was accurate.

- If the Quality Control Department determines there have been errors, inaccuracies or mistakes the foreclosure manager will be notified.

- The foreclosure manager will then request the Quality Control and/or the Compliance Departments to exercise the enforcement of any remedies available under the representations and warranties of the contract with the broker/originator.

- The Loss Mitigation Department reviews the risk report. The manager reviews each account and makes every effort to formulate a workout plan or modification with the mortgagor. Every attempt is made to avoid the foreclosure process and minimize potential losses to HSBC.

- When the file is returned from the Quality Control Department copies of the mortgage note and appraisal are made. The original file is returned to the vault and copies of the documents are placed in the foreclosure file.

- The BPO value is updated on the MAS1-USR2 screen. By updating this screen information will be pulled by a SAS report to generate a report titled "Specific Reserves Conventional Loans". This report is prepared by the Risk Management Department to monitor reserves for potential losses.

*Note: A BPO is ordered every six months on asset loans to monitor the property’s value. The value is updated on the spreadsheet to monitor the percent of loss.

- The foreclosure action will continue on the account unless a workout is approved at which time the action will be placed on hold.

- The SAS report "HSBC Reserve Loss Model" is generated at month end. It lists all HSBC accounts with a difference of (loss in value) $50,000.00 or greater between the accounts principal balance and the BPO value extracted from the USR2 screen.

FOLLOW-UP / REVIEW:

N/A

 

Lenstar Contingency Process – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Should a communication problem occur with Lenstar and data cannot be transmitted to the attorneys, alternate procedures must be followed. Information can be communicated to the attorneys via phone, fax and mail. CPI must be updated manually by the bankruptcy and foreclosure specialists. This procedure will be followed until Lenstar becomes available.

REQUIREMENTS: EFFECTIVE DATE:

06/28/01

08/14/06

12/15/06

PROCEDURE:

N/A

FOLLOW-UP / REVIEW:

N/A

 

 

Creating Lotus Notes Form – Rev 12/15/06

FUNCTIONAL OVERVIEW:

The procedure to create a form on Lotus Notes, edit the form and to access it at a future date.

REQUIREMENTS: EFFECTIVE DATE:

12/02/02

08/14/06

12/15/06

The need to utilize a form to receive or forward data on Lotus Notes.

PROCEDURE:

Create a Form

Sign on to Lotus Notes

Click on mail tab

Double click on the TOSS on Notes box

Click on New Form box

In the "Category Field", input the name of the area the form is to be housed in (i.e. Foreclosure, Bankruptcy, etc.)

Input the name(s) of the individual(s) the form is to be forwarded to

*Note – if field is left blank, the user can input name(s) as needed

Input name(s) of the form’s editor(s). The individual(s) can make changes to the form.

Input the name of the form in "Form Title" field

Input the information that is being provided or requested in the "Form Body" section

When completed, click on the "Save" button then click on the "Close" button

Create a Table

When a table must be added to a form, the following steps apply:

Click on the "Create" option in the toolbar while in the form body section

Click on "Table"

A box will appear. Choose the number of rows and columns needed for the form

Click on "OK" once the correct number have been selected

To insert a row or column, click on "Insert" on the toolbox. Note – the cursor must be in the area of the form body where the row or column is to be added.

To delete a row or column follow the above procedure and click on "Delete" in the toolbar

To change the size and/or color of the rows and columns click on the "Table" option in the toolbar

Click on "Table Properties". The cursor must be in the area of the form body where changed are being made

When table is completed, click on the "Save" button then click on the "Close" button

Edit Lotus Notes Form

To edit a form, the individual must be listed as an editor when the form was originally created.

Open form

Click on the "Edit" button

Make necessary changes to form

Click on the "Save" botton

Click on the "Close" button

Accessing Lotus Notes Form

Sign on to Lotus Notes

Click on Mail Tab

Double click on TOSS on Notes box

*Note – there are several methods to locate a form

Scroll to find the category the form is housed in

Click on the triangle to the left of the category name. A list of the names of forms housed in this category will drop down

Double click on the form to access it

If the name of the category the form is housed in is not known, perform the following steps:

On the left side of the screen click on the "Forms" option

Select "All Documents" and all forms will be listed in alphabetical order

Double click on the form needed

Click on the "Fill Out Form" option

If the form is not addressed to anyone, input an e-mail address or NetMoves fax number to forward. The NetMoves fax number sequence is: 1 Fax number @netmoves.com. There are no spaces or dashes in address.

Procedure ensures the proper steps to create a Lotus Notes form.

FOLLOW-UP / REVIEW:

N/A

 

Mail – Rev 12/15/06

FUNCTIONAL OVERVIEW:

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

07/02/04

08/14/06

12/15/06

PROCEDURE:

Mail is delivered to the mailroom. The mailroom will be responsible to open all Collections, Loss Mitigation, Foreclosure, & Bankruptcy mail items. They will open and scan all mail, except checks, into IAW. Checks received are logged in the check log excel form broken down by department, delivered and signed for by the responsible department &/or specialist. All mail received must be scanned/distributed the same day. Each specialist will review their mail daily via the appropriate queue in IAW.

Managing ELOC Risk – Rev 08/14/06

FUNCTIONAL OVERVIEW:

Because any principal balance greater than the Appraised value of an ELOC is unsecured, it is important to identify potential overlimit situations at an account level and take immediate and effective steps to prevent or minimize the overlimit amount.

REQUIREMENTS: EFFECTIVE DATE:

08/23/01

03/19/04

08/14/06

PROCEDURE:

There is a two-pronged strategy to manage ELOC Risk.

Strategy 1

A daily report has been developed to track Advances and Payments over $10,000 as well as Payment Reversals over $5,000

The report is reviewed to determine potential situations or patterns that may cause the principal balance on any account to go over limit. Examples are:

Large payments followed by large advances that would create an over limit if the payment would be reversed due to NSF or Stop Payment

A single large payment or a series of payments that create a negative principal balance, thus providing the appearance of available credit greater than the approved line amount. The potential would then exist for an over limit balance equal to the line amount plus the overpaid amount if the payments were to be reversed.

Any large advance(s) that put the account balance over limit.

Upon review of the report in the morning, if a potential risk situation is detected due to large payments, a copy of the instrument(s) used to make the payment(s) is requested through Cashiering. Attempts are made to contact the Bank on which the check was drawn to verify that sufficient funds are currently available to pay the amount and that there are no Stops for the check. If verification is positive, no further action is necessary. If, however, the account is short of funds or there is a Stop on the check, an ELOC Advance Stop C (Fraud Investigation) is placed on the account (with a 3 business day expiration) to prevent any advances until the customer is contacted and the situation satisfactorily resolved. If no contact is made, the Advance Stop will allow sufficient time for the returned item to be posted to the account, thereby increasing the Principal Balance.

It is also necessary to review the report for any activity that would indicate possible money laundering, any suspicious activity is to be reported to the compliance officer at the mortgage center, via the G-form titled "ELOC Suspicious Activity".

Upon review of the report, 2 members of management are required to sign and date the report signifying that they have reviewed this report.

Strategy 2

On Demand report "P5471-1AE" will be reviewed each day. The report shows each ELOC debit/advance transaction on every account each day. The report displays the updated Principal balance after the advance as well as the approved credit limit.

The updated principal balance is compared to the available line to determine if the ELOC is in an overlimit condition.

If there are no accounts in an overlimit condition that day, no further action is required.

If any account shows a current overlimit condition it will be investigated to determine the cause for exceeding the credit line and why an advance was paid over the available credit.

Depending on the circumstances for the balance being over the credit line, an Advance Stop "F" will be placed on the account in order to prevent any additional advances. The Advance Stop will not be placed if there was a decision made to accommodate a customer or if a servicing error caused the account condition.

The account will be referred to Collections to make contact with the borrower, determine their financial situation and make arrangements to bring the balance below the line in the shortest possible time.

If the borrower indicates a hardship, or will be unable to cure the over limit situation quickly, the account may be referred to Loss Mitigation for Modification. Loss Mitigation will seek to modify the Note and Mortgage to secure the amount over limit, as well as the amount up to the approved credit line, with a new closed end mortgage.

 

Tracking/Reporting

All incidents resulting from the above Strategies will be placed, tracked, updated and reported through the appropriate Tab on the Excel Worksheet which is located in: J\Special\Collect\Informat\ELOC risk.

Unsecured amounts greater than $10,000 will be brought to the attention of the Asset Accounting Manager for inclusion on the Reserve report until resolved through payment or loan modification.

FOLLOW-UP / REVIEW:

N/A

 

 

Month-End Reporting - Foreclosure By Products – Rev 12/15/06

FUNCTIONAL OVERVIEW:

At the end of each month a lotus spreadsheet is updated to reflect the status and principal balance of all by products in foreclosure. New accounts are added and completed foreclosures are removed from the report. A "Totals" tab in the spreadsheet is updated to reflect the count and principal balances broken down by product type and delinquency within each type. The report is submitted to management for month-end reporting.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

Lotus spreadsheet is located on lotus as: j:\shared\everyone\reports\mmyyhefc.wk4. The prior months spreadsheet is saved as the current reporting months date. Update the "mmyy" to reflect the current reporting month.

Update the status of all accounts located in the tab "By Product F/C". Each account must be reviewed and all pertinent information changed or added to the report.

Add all new foreclosure accounts to the report in the "By Product F/C" tab.

Remove all accounts that have been transferred out of foreclosure in the "By Product F/C" tab.

PROCEDURE:

Documentation

To update the count and principal balances on the "PBS" tab the following procedures are:

Open tab labeled "PBS".

Account numbers and principal balances are listed within four (4) product types: Collateral, Heloan, Heloc and Marine Express.

To change an accounts principal balance locate the account and tab over to the principal balance column and change the accounts balance.

* Note: when the balance is changed in this tab it automatically changes the totals in the "Totals" tab.

Repeat the above procedure on every account that had a balance change during the month.

To add a new account insert a row in the corresponding product type. Input the account number and principal balance.

To remove an account, locate the account number and delete the row.

* Note: the addition and deletion of accounts in the "PBS" tab automatically updates the "Totals" tab.

New and Conculed

Open tab and clear all accounts from prior months reporting.

Change date in heading to the current month being reported.

Add all new accounts on the left side and all concluded foreclosures on the right.

Save File

Update "Footer" in "Page Setup" to reflect the current reporting month.

Save data input into spreadsheet and close file.

Month-End Reporting - Foreclosure - ORS - By Products

By product foreclosure accounts on ORS are reported to management every month. The exact same procedures listed above are followed to update the report. It is located on lotus as: j:\shared\evryone\reports\mmyyors.wk4.

The above procedures ensure the proper reporting to management on all by products in foreclosure.

FOLLOW-UP / REVIEW:

N/A

 

 

Monitoring Foreclosure Action – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Once a foreclosure action is initiated, the foreclosure attorney will provide monthly statuses to the foreclosure specialist. The FOR2 and FOR3 screens will be updated with the information. The foreclosure specialist utilizes CPI reports and Lenstar to review each account and contact the attorney for an update on the action. It is important to note that some attorneys have access to CPI and are capable of updating the accounts FOR2 and FOR3 screens each month. For these accounts the specialist must review each update.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

PROCEDURE:

Documentation

There are two CPI reports that can be utilized to ensure each specialists account is reviewed and updated. The 58J report lists all accounts in foreclosure by attorney. The 58S report lists accounts with delinquent steps and is in loan number order. This report is generated weekly while the 58J is generated once a month.

The foreclosure specialist will call the attorney for a status on each account they are handling.

* Note: the 58S report is best utilized because accounts not within the time frame of the foreclosure action are on the report.

The foreclosure specialist will update the accounts FOR2 history screen with the status. The appropriate step on the FOR3 screen will be completed with the date the action was completed.

* Note: An action may have occurred on an account requiring a step to be added to the FOR3 screen or a scheduled date has to be changed if an action was delayed. Refer to the procedures "58S Report" to add a step.

On attorneys out of state a phone call or fax can be utilized to obtain a status.

Note: On all asset loans ensure a brokers price opinion (BPO) is ordered every six (6) months on the property This is required to monitor the properties value and determine HSBC’s equity in the property. Refer to the procedures on how to order a BPO.

 

 

 

 

 

 

Co-ops

When the account being serviced in foreclosure is a Co-op additional steps must be taken to determine the status of the monthly fees due the Co-op association or management company. It is important that the association does not foreclose prior to our action that can eliminate our lien. An agreement can be reached with the association resulting in HSBC foreclosing and then paying off the association.

To determine if the property is a Co-op input MAS1, account number, enter. Then at the cursor input PRP1, enter. The PROP TYPE field will contain "COP" indicating Co-op.

To obtain the name and address of the association or management company again input MAS1 and at the cursor SLH1 then enter. Review this screen to obtain the information. Update the FOR2 screen with information found on SLH1.

*Note: Also review the foreclosure file to determine the name, address and phone number of the association and update FOR2 with it.

Contact the association or management company to determine the status of the monthly fees and HSBC’s intent to foreclose.

If the monthly fees are current continue to monitor each month and update FOR2.

On asset accounts, owned by HSBC, a letter may be forwarded to the association requesting they hold off foreclosing allowing HSBC to foreclose and then payoff the association.

If the monthly fees are delinquent determine amount due and follow procedures to request a check to pay. Request a monthly billing be sent to HSBC and setup a payee header to pay on a monthly basis.

On investor loans the investor must be contacted for approval to pay delinquent or current fees. Update FOR2 on all actions taken per the investor request.

The foreclosure attorney will sent a certified letter to the association informing them of our intent to foreclosure on the Co-op. The customer and occupant of the Co-op are also notified of the foreclosure action. Update the FOR2 screen with attorney status on the foreclosure process.

Attorney does a search on the UCC1.

Attorney will publish once the UCC1 search is completed.

Attorney will schedule a foreclosure sale date.

Foreclosures on Co-ops are non-judicial which takes approximately 45 days.

Sale results are handled by the operations group.

A status on all accounts must be obtained monthly to ensure the foreclosure action is proceeding within investor guidelines.

 

 

FOLLOW-UP / REVIEW:

N/A

 

 

 

Monitor Foreclosure Action - By Products – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When HSBC’s loan is in second, third or fourth position, the first lien holder is in the process of foreclosing and equity exists in the property HSBC will monitor the firsts foreclosure action. The equity is determined by inputting data through the charge-off model to determine if sufficient equity exists. Once a foreclosure sale date is set, bidding instructions are prepared and forwarded to our foreclosure attorney. Pending the outcome at the sale, HSBC could be paid off by the first lien holder. When the funds are received the loan is paid off and the file archived.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

To determine if HSBC will monitor the first lien holders foreclosure action.

Obtain payoff statement from the first lien holder

BPO on property

Status of property taxes

Input data through charge-off model to determine if equity exists in the property

Review results with management

PROCEDURE:

Documentation

Once it is determined to monitor the firsts foreclosure action inform our foreclosure attorney of HSBC’s intentions. The procedures are as follows:

Each month during the foreclosure process out attorney will provide HSBC with a status on the firsts foreclosure

Update the accounts HIS screen on ACP with the attorneys status

Order a broker price opinion (BPO) on the property every six (6) months to review the properties value

* Note: It is important the properties value does not decrease. The charge-off model is utilized with the new value to determine if HSBC will continue to monitor the foreclosure or charge-off the account.

When the attorney provides HSBC with the foreclosure sale date update the accounts HIS screen on ACP with the information.

A bid package will be prepared and forwarded to the REO Department to prepare bidding instructions immediately after we are notified of the sale date.

The following information is retrieved for the bid package:

*accudata search

*all BPO’s in the file

*original appraisal (if applicable)

*copy of mortgage, promissory note on MTC accounts. Copy of line agreement, mortgage on MCP accounts.

*payoff statement from first lien holder

*prepare payoff statement on by product (refer to by product payoff procedures)

*prepare "Heloc/Heloan Foreclosure Bid Checklist"

*all safeguard inspections

*screen print the "summary screen" on CIF on both MTC and MCP accounts

*screen print the "PRI" screen from ACP on both MTC and MCP accounts

*on MCP accounts screen print the "CIS" note screen on the FDR system

The above documents make up the bid package to forward to the REO Department.

When bidding instructions are received from the REO Department forward the instructions to our attorney and update the "HIS" screen with the bidding instructions.

ELOC Foreclosure Action

Refer to the attached procedure "Monitoring Foreclosure Action" on mortgages located on CPI. Utilize this procedure to monitor ELOC’S on Fidelity.

Foreclosure Sale

Once the foreclosure sale has occurred the attorney will forward HSBC the results. The first lien holder will payoff subordinate liens to ensure sole title to the property.

When the payoff funds are received ensure our attorney forwards a final invoice for their fees and costs

Follow the procedures "To Payoff a Byproduct"

Forward the file to archiving

Charge-off Accounts

As noted in this procedure a BPO is ordered every six months to monitor the properties value. The information is updated through the charge-off model. When the model indicates a loss to HSBC attributed to a decrease in the properties value the account will be recommended for charge-off to management. This may occur at any point during the foreclosure process.

Refer to the procedures to "Charge-off a By product"

Inform the foreclosure attorney via fax to close the file and submit a final invoice

It is important to monitor the first lien holder’s actions and value of the property to protect HSBC’s interest in a property.

FOLLOW-UP / REVIEW:

N/A

 

Bidding Instructions – Investor – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When a foreclosure sale date has been set, a bid must be prepared and provided to the foreclosure attorney. Bidding instructions will vary according to the mortgage insurer and investor - the insurer will take precedence over the investor, in most cases. It is the responsibility of the operations specialist to order the BPO and prepare the bid, obtain all appropriate approvals, and communicate the bid to the foreclosure attorney.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

12/02/02

08/14/06

12/15/06

PROCEDURE:

Notification of Sale Date

The foreclosure attorney will notify the foreclosure specialist of a sale by fax or telephone at least 30 days prior to the actual sale date. Once the foreclosure specialist receives notice of the sale, the following steps must be taken:

FOR2 - document the sale date.

FOR3 - update step "sale date scheduled" by inputting a "c" in the field and typing in the date notice of sale was received in the actual field.

TSK1 - complete "FORSAL" task (see Task procedures)

Toss - send mail item to foreclosure operations specialist including the following information.

customers name

account number

sale date

investor

mortgage insurer - if applicable - if not applicable - state "no MI"

Documentation and Loan Review

The operations specialist will perform the following upon notification of the sale:

G-form - print a copy of the G-from the foreclosure specialist notifying of the sale date.

calendar - write customers account number, investors name and if there is MI or not, on the appropriate date on the calendar.

TSK1 - close FORSAL task (see Task procedures).

DLQ5 - if there is MI, verify the sale date is input on DLQ5 screen in "sale date scheduled" field - the actual sale date is input here.

SAF1 - verify that the foreclosure stop has changed to a "3".

BPO’s - review the file to determine if there is a current BPO.

 

On FHLMC accounts being handled by designated FHLMC attorney’s the attorneys are responsible to order the BPO. They in turn will forward the BPO and bill to the operations specialist. To determine if designated counsel is handling the foreclosure action refer to the "Active Foreclosure Attorney Listing". Designated counsel will be noted in the comments column. This is also verified by viewing the FOR1 screen for the name of the attorney. On FHLMC accounts being handled by non-designated counsel the operations specialist will order the BPO as described below. Fannie Mae requires one BPO be ordered on loans with private mortgage insurance, on a Fannie Mae form, 30 days prior to the sale date. Chase Manhattan requires an appraisal to be ordered as well as a BPO. IndyMac requires BPO and appraisal.

to order a BPO, the operations specialist will complete the following:

On FHLMC accounts, form 1127, is completed and faxed to FHLMC. Note - Only on accounts handled by counsel not designated by FHLMC.

all other investors, a request is faxed to the approved BPO company

REO orders BPO’S and appraisals on asset loans.

FOR3 - complete "BPO ordered".

Type "C" in "Act" field and date BPO was ordered in "actual" field.

Upon receipt of the BPO, complete "BPO received" step.

Type "C" in "Act" field and date BPO was received in "actual" field.

MAS1 NOT1 - the operations specialist will check the "recourse flag" field to verify if the loan has recourse. If there is a P in this field, there is recourse and the operations specialist will need to obtain the bid from the correspondent. To determine the correspondent, the operations specialist will access P10L screen and review the alpha code from the "corr code" field and cross reference with the correspondent code sheet. MAS1/AQN1 will give name of correspondent.

FOR2 - document everything that has been done on this screen. PF5 - opens up lines for documentation - type and press enter.

DFRI - if the investor is FHLMC, the foreclosure sale date must be input on this screen.

input "A" in "A" field.

type in "71" in "CD" field.

type in date the account is scheduled for sale in the "event dt" field.

input BPO value.

type A in "A" field.

type 74 in "CD" field.

 

Obtaining Bid

Asset Loans, Bankers Trust, Ryland, Security Pacific and REMIC - the operations specialist will toss the REO manager notification of the sale and will request that a bid is prepared.

Once the bid is received from the REO Manager, the operations specialist will update MAS1 USR2 screen with the date of the BPO in the "upd prp valu at" field and the amount of the value of the property in ‘upd prp valu" field.

First Union - the operations specialist will fax the current BPO and PAY4 screen with a date through the sale date to the investor. The investor will then prepare the bid and fax it back to the operations specialist.

Chase Manhattan - the operations specialist will fax the current BPO, the appraisal, and the PAY4 screen with a date through the sale date to the investor. The investor will fax the bid back in approximately two weeks.

SONYMA - when the account has mortgage insurance (MI), the operations specialist will contact the MI company to obtain the bid. If the MI company refers the specialist to the investor, SONYMA will allow the operations specialist to bid total debt. The investor will need to be notified of this.

Norwest - the operations specialist will fax the investor the current BPO and PAY4 screen with a date through the sale date. The investor will prepare the bid and fax it back.

American Home Funding - the operations specialist will fax the investor the current BPO and PAY4 screen with a date through the sale date. The investor will prepare the bid and fax it back.

FNMA Insured - if there is MI on the account, the operations specialist will contact the MI company to obtain a bid. If the MI company refers the operations specialist to the investor, the specialist will refer to the investors guidelines on bidding procedures - refer to Allregs (Part VIII, Chapter 1, Section 104.05). In most states utilize the "90 TO 120 day, as is value" on the BPO. In Kansas, Minnesota, North and South Dakota and Wyoming the bid is always total debt.

FNMA Noninsured - the operations specialist will prepare the bid letter as follows: start the bidding at 80% of the total debt, if a 3rd party is bidding, then bid competitively up to the total debt, including attorney fees and costs. The bid letter is then faxed to the attorney.

North Fork - the operations specialist will fax the investor a current BPO and PAY4 screen with a date through the sale date. The investor will prepare the bid and fax it back to the operations specialist.

FHA - the operations specialist will bid total debt on FHA loans unless the HUD office has advised that a deficiency judgment will be pursued. If a deficiency judgment is being pursued, the HUD office will instruct the operations specialist how to bid. If the bid is total debt, the bid letter will be prepared immediately.

* Note – The operations specialist must seek approval from HUD to pursue a deficiency judgment. The operations specialist will request approval from HUD if the mortgagor has more than one property - this information will be noted on MEM1 and the foreclosure specialist will also toss the operations specialist.

FHLMC - if there is MI, contact MI company for bid. If the MI company refers the operations specialist to the investor, the specialist will bid fair market value obtained estimated from the BPO 1. if value greater than total debt or total debt plus attorney fees and costs - which ever is the value less if less than total debt.

FHLMC Noninsured - on loans with no mortgage insurance the operations specialist will prepare the bid letter as follows: when the BPO value is greater than the total debt the bid will be for total debt plus attorney fees and costs. When the BPO value is less than the total debt the bid will be specified i.e.,; the value of the BPO.

*Note – If the difference between the BPO value and total debt is $10,000.00 or more, prepare the bid per Freddie Mac servicing guidelines.

Forward an e-mail to a designated individual at Freddie Mac notifying them a difference exists. Include a copy of the bid instructions. Request in the e-mail if Freddie Mac disagrees with the bid, to notify HSBC as soon as possible.

Print a copy of the e-mail for the bid pack.

Citimae, Citibank, Met Life, CIGNA, and Shawmut - the operations specialist will fax the investor the PAY4 screen with a date through the sale date and the current BPO. The investor will prepare the bid and fax it back to the operations specialist.

Independent National - the BPO for this investor is ordered by designated counsel at the time they file the complaint. A copy is then faxed to the operations specialist. Thirty days before the sale date the operations specialist will order a drive-by appraisal. When the hard copy appraisal is received, the specialist will overnight Independent National the following documentation: drive-by appraisal, BPO, screen prints of all DLQ1, FOR2, BNKN, LMTN notes, screen print of PIR1 and payoff screens. The documentation is overnighted to them at: 155 N Lake Avenue, Pasadena, CA , 91101, attention REO Department. Independent National will then fax bidding instructions to the operations specialist. They will also instruct HSBC as to whose name to foreclose in on every bid.

Keybank - when the operations specialist obtains a sale date, they will then complete Keybank’s form requesting payoff figures and a BPO will be ordered for bidding instructions. The form is titled "Request for Pre-Foreclosure Market Analysis". The form is then faxed to a specific department at Keybank as listed on the form. Keybank will order the BPO and then fax HSBC bidding instructions. The specialist will then prepare the bid letter.

Strict Foreclosures

On strict foreclosure sales in the state of Connecticut a foreclosure bid will be prepared for management’s review.

On accounts with mortgage insurance call the MI company and notify them of the sale date.

Prepare the bid as explained in this procedure.

Submit bid to management for review and to approve the bid amount.

Input the approved bid amount on the MAS1/USR2 screen in the BPO value field.

Note: On strict foreclosures there is no bidding on the property. If not individual attempts to purchase the property on a specific law day then the property reverts back to the mortgagee on the final law day.

Place bid package in file.

VA - thirty days prior to the sale, the operations specialist will call the VA to verify they have the 567 form - status of loan account foreclosure, the appraisal, the notice of default, and the notice of intent. If the VA is missing any of these items, the operations specialist will toss the foreclosure specialist to provide them to the VA.

* Note – To find out which VA office is handling the account the operations specialist will perform the following:

access "MIP1" screen to obtain three digit VA office code.

access "VADD" screen.

type in three digit code in office number field and press enter - the VA office address and phone number will appear.

on VA loans in Pennsylvania the 567 form must include delinquent water and sewer advances. The phone number for water/sewer in Pennsylvania is (215) 686-6880.

The VA will fax back the bidding instructions. When the VA does not specify a bid amount (no bid) it is usually due to the appraisal amount is less than the un-guaranteed debt owed on the loan. The operations specialist will then refer the account to the foreclosure specialist to determine if a no bid will be accepted or if a buy down will be completed. Once this determination has been made and approval has been obtained, the foreclosure specialist will refer the file back to the operations specialist to prepare the bid letter to the attorney. Notate FOR2 bid instructions recieved, fill in FOR3, if not a buy down delete steps pertaining to buy down. If a buy down change FOR1 from "N" to "Y" - specialist puts buy down amount on FOR3.

Recourse Loans - specific screens must be reviewed to determine if the loan has recourse. This is important for bidding instructions and to foreclose in the correct investors name.

access the MAS1/NOT1 screen. Verify if a "P" is in the "flag" field

if a "P" exists, then access the MAS1/AQN1 screen. The screen will indicate the name of the investor

contact a specific individual in the Investor Accounting Department to obtain a contact name and phone number for the investor. This information may already be available in the Foreclosure Department

if the recourse is to HSBC contact a specific person in the Mortgage Administration Department to verify recourse is to HSBC

on Freddie Mac loans that indicate recourse exists, again, contact the person above. If recourse is to Chase Manhattan further assistance may be required since Chase is reluctant to purchase a loan

RMIC - On accounts with private mortgage insurance with RMIC.

* Note: If the loan has recourse, the bid is obtained form the correspondent. If the loan has MI, the bid is obtained from the MI company. If the loan has neither, the bid is obtained from the investor.

Postponement of Sales

A foreclosure sale can be postponed in the following situations:

a bankruptcy is filed.

the investor or MI company postpones the sale.

a workout has been approved.

* Note: Written approval will need to be obtained from the investor or the MI company. On asset loans, approval to postpone a sale must be obtained from a job grade 12 specialist/supervisor or higher (refer to Mortgage Default Servicing Signing Authority Grid).

damaged properties (see Claims Manager for instructions)

Once approval to postpone the sale has been obtained, the foreclosure specialist will complete the following:

FOR2 - document that approval has been obtained to postpone the sale. It should be noted who gave the approval and how long the sale should be postponed for.

FOR3 - insert step number 560; "sale postponed 1st time", 561; "sale postponed second time" etc. - as applicable. * Note: For a comprehensive list of all steps, refer to R58D, "Step File Report" on CPI.

place a 1 in the "ACT" field.

* Note: Wherever the cursor is placed, the step will be inserted below that point.

press enter.

type step number in "step" field.

type in predecessor step number in "pred" field.

type in the number of float days in "flt" field, I.e., if the sale is being postponed 28 days, 28 is filled in this field.

type in the reason the sale is being postponed and the name of the specialist inserting the step in the "reas" field.

press enter.

complete step number 560.

type "C" in "ACT" field.

type date sale was postponed in "actual" field.

press enter.

Toss - send mail item to foreclosure operations specialist notification of sale postponement.

DLQ5 - remove sale date "sale date scheduled" field.

The operations specialist will print a copy of the toss, mark the calendar, and place the bid package in the file.

 

Preparing the Bid Letter

To prepare the bid letter, the operations specialist will complete the following steps:

access FORA screen.

press F4 key

on specified bids only - tab down to "other fees" field.

type specified bid and bid amount.

* Note: If the bid is total debt, this step is not completed.

tab to "interest due from 00/00/00 through sale date of" field.

type in foreclosure sale date.

* Note: On FHA accounts, the operations specialist will input the first of next month after the sale date i.e., sale date is 3/5/98 - the specialist will input 4/1/98.

PF7 - notes to attorney to add amount to total debt for inspections

press F8 key

tab to first blank line in "individual letters" field.

type "Y" on first line.

type "XF111" on second line.

change 1 to 0.

press enter and PF12 to initiate the letter.

The operations specialist will fax the attorney the following documents:

bid letter. Through FORA screen put in attorney fax number (using 8 for out of state, 9 for local) in the mail field PF4 fill in same as bid letter, PF8 type "Y" XF333 "0", press enter, then PF12 to send fax.

FOR2 - FOR2 is documented that the bid was faxed to the attorney and the amount of the bid.

FOR3 - "Bid to attorney" step is updated by typing a "C" in the "ACT" field and placing the date in "Actual" field.

The operations specialist will then place the entire bid package in the bid binder. They are filed in there according to sale date.

FOLLOW-UP / REVIEW:

N/A

 

Payoff Quotes – Foreclosure – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Once a loan has been referred to the foreclosure attorney and payoff figures are requested, the foreclosure specialist will generate a payoff letter. They are then faxed to the foreclosure attorney to add all outstanding costs and fees. The attorney will provide the figure to the mortgagor. All payoffs must be in the form of certified funds.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

11/14/01

05/31/03

08/14/06

12/15/06

PROCEDURE:

Documentation and Loan Review

When a request is received by the foreclosure specialist for payoff figures, the account needs to be reviewed for the following information:

Suspense - check SER1 to verify if there is money in suspense, if so, it can be deducted from the payoff.

Escrow - verify on SER1 the amount of escrow advance or the escrow balance. The foreclosure specialist will make sure this amount is reflected correctly on the payoff screen.

Corporate advances - check FOR1 CORP screen to ensure the mortgagor recoverable amount is reflected in the quote.

Restricted escrow - check SER1 for any money in "restricted escrow". If there is money in there, it will be deducted from the payoff.

Other fees - on SER1, check the amount due in "oth fees" field. Then go to PIR1, HIST, hist screen and see if any outstanding inspections listed, if so add to quote.

FOR2 - check FOR2 to verify that there was not any additional property preservation work or BPOs ordered with the invoice still outstanding. If this is the case, the foreclosure specialist will need to get the amount of what will be invoiced and add it to the quote.

 

 

 

Fidelity System Maintenance

PAY1

- type the name of the foreclosure attorney the quote will be sent to in "mail to" field and press enter.

- PF1 to access PAY2 screen.

PAY2

- type date figures were requested through in "as of" field and press enter. On FHA loans, payoffs can only be quoted through the first day of the following month.

- type Y in the "revi" field and press enter.

- PF1 to access PAY3 screen.

PAY3

- type in the amount and description of any additional fees that need to be added to the quote in the "additional fees" field. If any fees such as a fax fee to be waived, this can be done by changing the "n" to a "y" in the "waive" field.

PF1 to access PAY4 screen.

additional fees to check for: attorney co-op fees, recording fees (CA) refer to California matrix and additional late charges.

PAY4

- press enter on this screen.

- print this screen.

FOR2

- notate the amount of the payoff and the date the figures are good through on FOR2.

HDPI

HBUS feeds HDPI work by scanning relevant documents into the Image System. HDPI has written procedures for the above-mentioned process located in: J\Special\HDPIHBUS\Default\DefaultProcedure\NameofProcedure.

On a monthly basis a percentage of the transactions processed by HDPI are reviewed for quality control. Accounts are reviewed for accuracy and to ensure they are being serviced within investor and HSBC guidelines.

The foreclosure specialist will notate on the quote for the foreclosure attorney to add all outstanding attorney costs and fees to the quote. It is then faxed to the attorney, hole punched and placed in the file for future reference.

FOLLOW-UP / REVIEW:

N/A

 

Reinstatement Quotes – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Once a loan has been referred to the foreclosure attorney, the total amount due to reinstate the account is required as well as all outstanding attorney costs and fees. Partial reinstatements will be considered on a case by case basis and must be approved by the investor prior to accepting the funds. All requests for reinstatement figures should be made through the foreclosure attorney. Only certified funds will be accepted at this time.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

PROCEDURE:

Documentation and Loan Review

When the foreclosure specialist receives a request from the attorney for reinstatement figures, the account needs to be reviewed for the following information:

Suspense - check SER1 to verify if there is money in suspense. If there is money in suspense, this will be deducted from the total amount due to reinstate.

Escrow - verify on SER1 if the amount of escrow being recovered through the reinstatement will be sufficient to cover the escrow advance balance. If it is not, add the shortage to the reinstatement quote. The foreclosure specialist will also verify on ANA1 any new disbursements that will be made within the next month are accounted for in the reinstatement. If there will not be enough funds to cover the future advances, the foreclosure specialist will reflect the amount in the quote. To calculate if there will be a shortage, input the first of the next month in the window on ANA1 and enter.

- to calculate the amount being recovered, the foreclosure specialist will add all escrow collected on past due payments. This can be found on page 2 of the reinstatement quote that is a breakdown of payments due. If the amount to be collected is less than the escrow advance, then there is no need to add additional amounts to the quote.

Corporate advances - check FOR1 CORP screen to ensure the mortgagor recoverable amount is reflected in the quote.

- non-recoverable balances are reviewed on a case by case basis to determine if they are collectable

Other fees - on SER1 check the amount due in "oth fees" field. Then go to PIR1 HIST screen and add up all of the inspections. If this amount is higher than the amount on SER1, subtract the other fees from the PIR1 HIST amount. This figure is the total of additional inspections not reflected in the "FEE1" screen. The foreclosure specialist will add the difference to the quote as "inspections".

FOR2 - check FOR2 to verify that there was not additional property preservation work or BPOs ordered the invoice still outstanding. If this is the case, the foreclosure specialist will need to get the amount of what will be invoiced and add this to the quote.

Fidelity System Maintenance

The following steps must be taken:

Rein

- once on this screen, PF8 to access the "new quote calculation" screen

- type in the date the figures were requested through in "reinstate on" field and press enter

- type "Y" in the "include optional insurance" field and press enter. Note: this may change the total due if the account has past due life or A&H insurance.

- type in the description i.e., inspections under "other fees" field and amount of anything that needs to be added to the figure and press enter. Note: if an amount is being deducted a "-" in typed in front of the amount.

- print this screen

- PF8 to access the breakdown of payments due

- print this screen

- PF7 to go back to previous screen

- PF4 to save the quote

FOR2

- notate the amount of the reinstatement and the date the figures are good through on FOR2

The foreclosure specialist will notate on the quote for the foreclosure attorney to add all outstanding attorney costs and fees to the quote. * Note: Asset loans are in investor number 001-100. It is then faxed to the attorney, hold punched and placed in the file for future reference.

FOLLOW-UP / REVIEW:

N/A

 

Invalid Foreclosure Sales – Rev 12/15/06

FUNCTIONAL OVERVIEW:

When notification is received that a foreclosure sale is not valid, this could be the result of a bankruptcy filing prior to sale or unperfected service. The operations specialist will verify the issue that invalidated the sale and must notify Post REO and the investor that the sale is not valid due to the reason stated above and a rollback will be completed. This requires the account to be moved back into the original investor and category numbers, reporting must be changed (SFDMS, DFRI), the 1099A and 1099C must be deleted, and all steps pertaining to the sale must be deleted or returned to blank states. (FOR3) Steps must be inserted to document the reason and the account is transferred to bankruptcy or remains in pre foreclosure. Rollbacks must be approved by a Grade 12 Supervisor or higher. The operation specialist must verify with the foreclosure attorney that the sale was not valid.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

11/14/01

08/14/06

12/15/06

PROCEDURE:

Documentation and Loan Review

When the operations specialist receives notification that a bankruptcy was filed, a determination will be made if it is to be a rollback.

FOR3 - the operations specialist will access this screen to obtain the "sale held" date. This is the date the foreclosure sale occurred. If the bankruptcy was filed after the sale held date, the bankruptcy notice is forwarded to the REO or Post foreclosure specialist servicing the account to place in the file, and a rollback will not occur. If the bankruptcy was filed prior to the sale held date, the foreclosure sale is not valid and a rollback will occur. * Note: If the notice received is a notice that a case was converted (i.e., chapter 13 converted to a chapter 7) the operations specialist will proceed to MEM1 screen. If relief has already been obtained on this case number, a rollback will not occur even if the filing was prior to our sale.

System Maintenance

If a rollback will occur, the operations specialist will complete the following.

FOR2 - access this screen to obtain the original investor and category numbers. If the loan is a VA loan, it must be noted that a new VA cutoff date will need to be obtained when the account is out of bankruptcy. The Bankruptcy Department will report to the VA by means of the BK046 letter. Otherwise foreclosure will notify the VA.

G-Forms - the "REO Rollback" G-Form will be completed. This form is located under "FC Forms" and is sent to the managers of mortgage accounting, post foreclosure, REO and foreclosure. The operations specialist will also send a toss mail item and call the post foreclosure or REO specialist servicing the account notification about the sale being voided. The operations specialist will also complete the "Bankruptcy Referral" form to notify the bankruptcy manager of the new account being transferred to the area. This form is located under "public forms" on Toss.

FOR3 - screen print FOR3.

after step "sale held" (051), add step "foreclosure sale voided" (680)

Remove the completed dates from the following steps:

sale held

obtain sales results

completed 1099A-form

refer file to Post or

refer file to REO

* Note: If necessary remove the completed dates from the post foreclosure steps if necessary:

sale/remp inspection result received

final attorney invoice received

review for pool insurance

case file sent to investor

cancel HAZ insurance/SAF1 D stop

investor claim filed

* Remove completed date by placing a "C" in the "ACT" field and pressing the space bar through the entire actual date.

After step bid to attorney "046" insert step "680" sale voided. The step will be inserted by completing the following:

place the number one (1) in the "ACT" field by step number "046"

press enter

* Note: whenever the cursor is placed, the step will be inserted below that point

type step number in "Step" field

type in predecessor step number in "pred" field

* Note: the predecessor step will be the last completed step.

type in the case number, chapter, date filed, and name of the specialist inserting the step in the "reas" field

press enter

complete the step that was inserted

type "C" in the "ACT" field

type date the sale was voided in the "actual" field

press enter

After the sale voided step has been entered. You must add the bankruptcy step see the same steps above, however, there are different steps for each bankruptcy. They are the following:

Step 800 = Chapter 12

801 = Chapter 7

802 = Chapter 11

803 = Chapter 13

FOR2 - update system with chapter, case number, file date, attorney name and phone number. Also notate the bankruptcy specialist was notified by means of a toss mail item.

FOR1 - change mancode to "B"

access "FOR1 MAST" screen

tab to "MAN" field

type "B"

press enter

suspend foreclosure tracking

* Note: this is done only when the account is being serviced in post foreclosure

change "STAT" to "S"

change "RMVL" code to 02

SAF1 - change process stop to four (4 = bankruptcy)

input no notice stop A (A stops delinquent notices from generating)

change foreclosure stop to zero

1099A - this form must be deleted

access "YFBL" screen

tab to the form

place a "X" next to the statement

PF3

tab to "acquisition date" field

type zeros over the date

PF7

Dyke O’Neil is called and faxed that the mortgagor filed bankruptcy and we need to hold up on the deficiency pursuit

105 Form - on FHLMC accounts, a form 105 is completed and faxed to FHLMC. It is noted on the 105 form that the account is now in bankruptcy.

Lenstar – when a file is on Lenstar, it must be put on hold when a bankruptcy is filed. To update Lenstar:

log onto Lenstar

click on "HOLDICON" in Lenstar

double click on "SUBJECT"

choose bankruptcy filing

in comment section, input message that file put on hold due to bankruptcy filing

click on save

click on upload to Fidelity

logout of Lenstar

The file is then given to the bankruptcy department to obtain relief of stay.

FOLLOW-UP / REVIEW:

N/A

 

Note Sale – Rev 09/15/06

FUNCTIONAL OVERVIEW:

At any time HSBC may be contacted by an investor(s) interested in buying our interest in an asset or serviced mortgage. If approved, HSBC would endorse the Note to the investor, draw up an assignment and close-out the mortgage on CPI. The sale of the note must be reviewed and approved by management since a loss may be incurred. On all loans serviced for various investors HSBC must obtain their approval to do a note sale. The mortgage is closed out on CPI but no satisfaction is issued.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

09/15/06

HSBC is contacted by an investor interested in buying out the interest in a mortgage.

PROCEDURE:

Documentation

The procedures listed below are followed on asset and investor loans.

Asset Loans

foreclosure specialist receives a call from an investor regarding a property

specialist will update FOR2 with the information

a payoff statement with all fees and costs will be generated (refer to Foreclosure Payoff procedures)

a disbursement stop "2" two will be placed on the account once approved

the foreclosure file and payoff statement are submitted to the REO manager to determine at what price HSBC will sell the note


Should the investor accept the price set by HSBC the foreclosure specialist will complete the following steps:

specialist will obtain original documents from the Records Retention Department via a task

the original note will be endorsed over to the investor

the original documents will be forwarded to our attorney handling the foreclosure to draw up an assignment agreement

when the payoff check is received from the investor the specialist will forward to the Discharge Department to payoff the loan on CPI as a "note sale"
* Note: the Discharge Department will not issue a satisfaction of mortgage.

the specialist will update the FOR2 screen with all pertinent information regarding the sale and close tracking

specialist will order letter "FC020" through PL05 on CPI. The letter informs the mortgagor that HSBC will no longer be servicing their mortgage and paying their property taxes. It provides the name of the taxing authority and due date for next payment

the balance of documents from the file will be placed in a designated location to be archived

FNMA/Freddie Mac

FNMA/Freddie Mac require a total debt payoff on a note sale.

On loans serviced for FNMA and Freddie Mac, their approval for a note sale must be obtained.

foreclosure specialist will provide the Loss Mitigation Department with the investors proposal and payoff figures. Loss Mitigation Department will contact the investor (FNMA/Freddie Mac) with the information and be advised if the investor will approve the sale

if approved, the same procedures outlined under "asset loans" are followed to payoff the loan and have the assignment prepared

SONYMA

Sonyma requires a total debt payoff on a note sale. The same procedures apply as outlined for FNMA/Freddie Mac.

Private Investors

Each investor must be contacted to determine if they will approve a note sale.

This procedure ensures proper approval is obtained from an investor to complete a note sale.

FOLLOW-UP / REVIEW:

N/A

 

Ordering Broker’s Price Opinions – Rev 12/06/06

FUNCTIONAL OVERVIEW:

Broker’s Price Opinions are property valuations ordered by the Default Servicing Department. They are ordered on Conventional HSBC Asset loans, Fannie Mae’s, Freddie Mac, private investors and HSBC by products. The Brokers Price Opinions (BPO) are obtained as part of the process to determine a bid amount for a foreclosure sale or the equity on a by product.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/06/06

Prior to ordering a BPO a determination must be made if one was previously ordered. If one has been ordered, make sure the value obtained is in the file and verify the date on which it was prepared. If a BPO cannot be located, the company that provided the valuation can be contacted for a second copy.

PROCEDURE:

Documentation

The following are procedures for ordering BPO’S on the various investors HSBC services.

Fannie Mae With Mortgage Insurance

input "SSPROD" and depress enter

to logon to Fidelity input the seven (7) digit ID and six (6) digit password

input "Fidelity" and depress enter

input the Fidelity five (5) digit ID and six (6) digit password and depress enter

verify a BPO was not previously ordered. On FAS Input "FOR1", account number and tab to window and input "LMTH" and depress enter. Review screen if BPO was ordered

ALL BPO’S FOR FNMA MUST BE ORDERED ON FAS

input "FOR2", account number and depress enter. Review history to determine if a BPO was ordered and received

input "FOR3", account number and depress enter. Review steps to determine if a BPO was ordered. All three (3) of the above screens are reviewed to verify no BPO was ordered. BPO’S are good for three (3) months from date completed.

to complete form access the "PIR1" screen, as described above, to verify and obtain property address, property type and occupancy status.

*Note: Since vendors utilized by HSBC may change periodically, no specific vendor will be identified in this procedure. Utilize vendors currently used by the Foreclosure Department.

fax the BPO request to the respective company

place BPO request form in BPO binder

input account number, "FOR2" and depress enter. Depress F5 key. Input "FCORBP" then type in phrase that BPO was ordered on Fannie Mae form and the name of the vendor, depress enter key

input account number, "FOR3" and depress enter. Tab down to step number 037. Input date BPO was ordered and depress enter

input account number, "FOR1", tab to window and input "mark" and depress enter. Tab to "cma order" and input date BPO ordered, "follow up date" input a date seven (7) days from date BPO’S ordered, tab to "realtor" input vendors name and depress enter key

Fannie Mae Without Mortgage Insurance

On FANNIE MAE loans without private mortgage insurance a BPO is not ordered.

We would just prepare a bid, per FNMA guidelines.

BPO’S Received

Update the following screens when the BPO(s) are received.

verify property address on BPO(s) is correct

input account number, "FOR2" and depress enter. Depress F5 key. Tab to free form lines. Input date BPO was completed, input lowest "as is" value from BPO and input date BPO is good through, which is three (3) months from completed date. Depress enter key

input account number, "FOR3" and depress enter. Tab to step number 041 and input date BPO was received and depress enter

input account number, "FOR1", tab to window and input "mark" and depress enter. Tab to "received date" and input date BPO was completed, tab to "amount" and input "as is" value from BPO, tab to "repaired amount" input value and depress enter key

Freddie Mac

BPO’S on Freddie Mac accounts are ordered through their website on the Internet. Should a value already exist on the website then just a screen print can be utilized in lieu of a BPO.

click on connect AT&T.

click on Netscape Communicator.

input their website name as: HTTP://BPOFREDDIEMAC.COM and enter.

input name and password. For name input "User BPO", for password "5387TyCh" and enter.
* Note: when inputting password type the "T" and "C" in upper case.

input the nine (9) digit Freddie Mac loan number assigned to the account. Then click on window beneath number on screen.

click on window "Select purpose of value request".

click on "Foreclosure bidding instructions".
* Note: At this point if a value exists it will appear on this screen. Click on print screen and close the website. If no value exists continue this procedure.

click on window "Continue - check order status".

click on window "Click here if you are ordering a Drive by - BPO".

click on first line under window "Foreclosure bidding instructions".

click on window "Continue - check address".

on the next screen verify the property address that appears is correct then click on window "click her to place a Drive by order".

input the following data to complete the request and then enter: order source, order type, property type, servicer contact, servicer phone number, servicer fax number, HSBC’s E-mail address which is: HSBCDEFAULT@WORLDNET.ATT.NET and foreclosure sale date.

close website.

BPO Received

Update the same screens when the BPO is received as described in the Fannie Mae procedures.

when updating FOR2 use the "as is" value and the BPO is good four (4) months from the date completed.

* Note: when updating FOR1/MARK screen, specific information automatically updates the "DFRI" screen

Private Investors

When ordering a BPO on private investor loans request one standard BPO. Follow the same procedures as stated in the Fannie Mae section for completing the request form and updating the system. Note the BPO will be good for three (3) months from date completed.

Key Bank

On loans that the investor is Key Bank a specific BPO request form is completed and faxed to Key Bank. They in turn order the BPO.

the Key Bank account number must be placed on the request form. Input "MIP1", account number and depress the enter key. Depress F1 key. The Key Bank account number is located on this screen (refer to Exhibit B).

fax the request form to a specific individual at Key Bank. The fax number is 216-689-7479.

update the system following the Fannie Mae procedures.

Independent National Mortgage

On loans that the investor is Independent National Mortgage a BPO and drive-by appraisal must be ordered.

place a call to the foreclosure attorney instructing them to order a BPO

order a drive-by appraisal from current vendors. Complete the request form and fax it to their office

when the BPO and drive-by appraisal are received, print a copy of the payoff screen reflecting payoff figures good to the foreclosure sale date

mail the BPO, appraisal and copy of the payoff screen to a specific individual at: Independent National Mortgage, 155 North Lake Avenue, Pasadena, CA 91101

update the system following the Fannie Mae procedures

These procedures allow for the proper ordering and updating of an accounts file when BPOs are requested.

FOLLOW-UP / REVIEW:

N/A

 

 

By Product/Mortgage Invoices – Rev 12/06/06

FUNCTIONAL OVERVIEW:

Invoices for services rendered by outside vendors are paid daily. The majority of disbursements concern attorney fees, title searches, property inspections and BPOs. On by products invoices are sent to the Accounts Payable Department, accounts are updated on the system and copies of invoices are filed. Invoices on accounts in bankruptcy and foreclosure are reviewed by the specialists, payee codes placed on the invoice and forwarded to management for approval. They are then forwarded to Cash Control Accounting for payment.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/06/06

invoice matched to proper account

verify service rendered

verify not a duplicate payment

PROCEDURE:

Documentation

Once the above criteria is met the accounts originating branch cost center must be obtained to charge through General Ledger.

On all by products inquire through CIF to locate the "Branch Number". The branch number on MCP’S is located on the account summary screen as "ABR00000". On MTCS input "32’ in the "Go To" field on the summary screen and enter. The branch number then appears as "NBR0000" on the following screen

refer to the "Branch Listing by Branch Number" to locate the branch using the branch number from the CIF inquiry

verify the district name and region branch is located in on report

refer to "District Cost Centers" listing to match the branches district and region to the district/region on the listing. Write the six digit cost center on the report.

Check Request Procedures

stamp invoices with the "approved to pay" stamp

input the following information within the lines on the approved to pay stamp: loan number, customers name, cost center, general ledger number, dollar amount being paid and remit to (name of vendor)

forward invoices to department manager for approval

make a copy of the approved invoices

mail approved invoices via interoffice to the Accounts Payable Department, 19th floor in the HSBC center. Mail code 05.

from the copy of every invoice update the system the loan is serviced on with the following data: name of vendor, type of service rendered, invoice amount and comment that invoice was forwarded to the Accounts Payable Department to be paid

if the loan is still being serviced place the copy of the invoice in the file

if the bankruptcy has been completed, key hold punch the invoice and place it alphabetically in the invoice binder

if the account has been charged-off still notate the system and forward the invoice to the Operations Department, 2nd floor, Stanton Building, mail code 06 and attention operations supervisor. Indicate on a note to have the invoice placed in the file.

Bankruptcy - Foreclosure Invoices

The Bankruptcy and Foreclosure Departments receive invoices to be paid from attorneys and other vendors. They must ensure the invoices were not previously paid by reviewing the disbursement history on the accounts before submitting for payment.

invoices received by the bankruptcy and foreclosure specialists are reviewed on the FOR1/DISB screen to ensure the invoice was not paid prior

specialist will review the amount of the invoice to make sure the amount to be paid is within the allowable guidelines set by the investors

if the amount billed is over the limit set by the investor then HSBC will only pay the amount the investor allows. The specialist will change the invoice amount.

the payee code is obtained from the attorney listing or from the P224 inquiry and written on the invoice. Every attorney is assigned a payee code.

if the account is in foreclosure the foreclosure stop is written on the invoice

the specialist will forward the invoice to management for approval

the following are signing limits on invoices:

*Supervisor - up to $ 500.00

*Manager - up to $1,000.00

*Vice President - over $1,000.00

the BNKN or FOR2 screen is updated noting the type of invoice, amount, payee code and that it was submitted to management for approval and payment.

invoices are forwarded to Cash Control Accounting for payment

These guidelines are for paying invoices on by products and mortgages.

FOLLOW-UP / REVIEW:

N/A

 

Preparing Bidding Instructions – Rev 12/06/06

FUNCTIONAL OVERVIEW:

When a foreclosure sale date has been scheduled on asset loans or on investor loans (AA Remics only) in which HSBC will market the property, REO will be notified and will prepare the bid.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

11/14/01

08/14/06

12/06/06

PROCEDURE:

Notification of Sale Date

Once the foreclosure operations specialist receives notice of the sale, the "REO Asset Bid Request" form is completed on Toss. This form notifies the REO manager of the sale and requests that a bid is prepared.

Documentation and Preparation

The REO manager will print a copy of the Toss form and will forward it to the REO Operations Specialist. The REO Operations Specialist will also access the bid log spreadsheet on Lotus. The REO Operations Specialist will update the following on the spreadsheet:

input date of sale only

name

loan number

address

city

state

REO – the assigned specialist’s initials are entered here

zip

bid log – the operations specialist will access this spreadsheet and will input the "date received" – this is the date REO was notified of the sale and the sale date

obtain a copy of the original appraisal, all previous BPO’S, and any previous sale bid packages (if applicable) from the file

the copy of the original appraisal and the "appraisal request" form are faxed to the current appraiser to request an appraisal is completed

FOR1 Appr screen – the operations specialist will enter the date the appraisal was ordered in the "order" field and a three day follow-up date is entered in the "follow-up" field. The appraiser’s name is filled in the "appraiser" field. The printed toss form and copy of the original appraisal are forwarded to the assigned REO marketer to prepare the bid analysis within 24 hours. * Note: The REO manager will assign the marketer based on the location of the property. When the appraisal comes in, the operations specialist will fill in the "As Is" value of the property, the date the appraisal was received in the "appr date" field, and the values of the first, second and third comparables. These values will be entered in the "1st comr", "2nd comr", and "3rd comr" fields. The current appraisal is then forwarded to the assigned REO marketer.

FOR1/MARK - the marketer will order a BPO. To do this, the copy of the original appraisal and the "Broker Priced Opinion Request Form" are faxed to the agent. The "CMA Order" field is completed with the date the BPO was ordered. A five-day "follow up" date is entered in the "Follow-up" field. The name of the agent’s company is entered in the "Realtor" field. When the BPO is received, the "as is" field is completed along with the date the BPO is received in the "CMA Date" field.

input log code "FCVAL" on FOR2 to ensure all outstanding sums due in case of a payoff or reinstatement request prior to paying an invoice

when a BPO is ordered, log code "FCBPO" is used should a quote be given prior to paying an invoice

Payoff – the marketer will print a payoff with a date through the sale date. This is done as follows:

access "PAY1" screen

press PF1 twice

enter sale date in "As of" field

press PF1

change "N" in waive" field to "Y" for the payoff fax fee and accumulated late charges; this will include these fees in the payoff quote

press PF1

screen print the "PAY4" screen

P190 - the marketer will also print a copy of this screen

MIP1 - the marketer will access this screen to determine if there is mortgage insurance (MI) on the loan. If there is MI, the marketer will contact the MI company to obtain the rate of coverage and the bid

P172 - the marketer will print this screen to obtain the tax information

 

Foreclosure Bid Analysis Preparation

The REO specialist will access the "Foreclosure Bid Analysis" form on Lotus. It is located under v:\shared\everyone\mdreo\fcbids\newbkl.wk4. The marketer will access this form and save it under the mortgagor’s account number.

Prop type – the marketer will input the property type in this field - i.e., condo, SF (single family), etc.

Total debt – the marketer will enter the total debt amount from the "total to payoff" field from the "PAY4" screen.

*Note: if HSBC is in second position, the total debt will be a combination of our payoff and the firsts payoff. On the line under that amount, the first payoff is input. HSBCS payoff will be entered on the next line. It will also be noted next to the sale date whether the sale is the firsts or seconds (HSBCS) sale.

PMI Bid $ Amount – if there is MI on the loan and the MI company has provided the marketer with a bid, the bid amount will be entered here. On accounts with MI coverage through "RMIC" refer to Exhibit C1. Follow instructions on exhibit to contact RMIC for bidding instructions.

Est. Selling Price – the marketer will estimate what the property will sell for based on all the comparables provided. The marketer will take into consideration the condition of the property, size of the property, location of the property, and condition of the neighborhood.

Eviction – the marketer will enter $1,500.0 in this field. * Note: This is an average amount; some areas will be more expensive while others will cost less. Based on semi annual review by REO manager.

Utilities – the marketer will enter $50.00 per unit for condo/coop, $100 for single family or multi family, "per month" field. Ex. $30.00 will be entered in this field for a two unit property.

Condo/Coop Fees – if the property is a condo or a coop, the monthly maintenance fee is entered in the "per month" field. If the fees are delinquent, this amount is entered in the "Delq Fees" field. Must provide a breakdown of amounts delinquent.

Taxes – the monthly tax amount is entered in the "per month" field. This amount is obtained from the ANA1 screen. If there are any delinquent taxes due, this amount is entered in the "Delq Taxes" field.

Repairs – the marketer will enter in the estimated cost to do repairs in the "Repair" field. This field is only completed if there are specific repairs that need to be done an amount of zero is to be entered if the "as is" value is selected.

Clean out – the marketer will enter an estimated clean out fee in this field. For a condo/coop, a fee of $500.00 is entered. For other property types, a fee of $750.00 per unit is entered here.

Bid Price – will be left blank, entered by Management.

MI – if there is MI on the loan, the rate of coverage is entered in the "PMI Proceeds" field. The marketer will also need to call the MI company to advise them of the recommended bid. The MI companies approval will be needed on any bid. The amount the MI company tells the marketer to bid is placed in the "PMI Bid $ amount" field.

Comments – the marketer will explain how the bid was arrived at in the "comments" field. The marketer will describe such things as the property, the neighborhood, the location of the property, and the marketability of the area. Everything needed to justify the bid will be explained here.

*Note: copy of bill is provided to REO Specialist and REO Inspector.

The bid packet is then given to the REO manager to review. It is due to the manager at least one week prior to sale. The REO manager will review the bid with the Vice President of Mortgage Default Servicing and the Senior Vice President of Mortgage Servicing. The bid will be signed based on the signature matrix. The approved bid packet is given back to the marketer. The marketer will made a copy of it and forward the original along with the "Attorney Foreclosure Sales Results Checklist" to the foreclosure operations specialist. Any bids resulting in the buyout of a senior lien requires credit authority, SVP.

Strict Foreclosures

On strict foreclosure stales in the state of Connecticut a foreclosure bid will be prepared for management's review.

On accounts with mortgage insurance call the MI company and notify them of the sale date

Prepare the bid as explained in this procedure.

Submit bid to management for review and to approve the bid amount.

Input the approved bid amount on the MAS1/USR2 screen in the BPO value field.

*Note: On strict foreclosures there is no bidding on the property. If no individual attempts to purchase the property on a specific law day then the property reverts back to the mortgagee on the final law day.

Place bid package in file.

FOLLOW-UP / REVIEW:

N/A

 

By-Product Property Inspections – Rev 08/14/06

FUNCTIONAL OVERVIEW:

When a by-product becomes 120 days delinquent, an inspection is requested to verify occupancy and condition at the onset of Bankruptcy/Foreclosure. The loans are added to the "HELOC/HELOAN Report" located on Lotus. Inspections are requested and canceled on this report. All loans will be inspected monthly until canceled. Inspection results are noted on the history screen for all accounts.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

PROCEDURE:

System Maintenance

The report is located on Lotus in j\shared\everyone\HELOC2000.wk4.

Inspection Requests

tab down to the section labeled "additions", at the end of the report

input the following data: last name, product MTC, MCP or ELOC, account number, street address, city, state and zip code, repeat as necessary

to save data use mouse and click on file

click on "protect"

click on "get", then "ok"

click on "file", then "close", and then "save" to save updates to report

Cancellations

All accounts being inspected are listed alphabetically by customers last name on the report. Inspections are canceled if the account is paid off, charged off, becomes current or the bankruptcy is closed. Accounts with the last scenario are transferred back to collections.

to cancel an inspection type all of the customers last name in capital letters

to save data use mouse and click on file

click on "protect"

click on "get", then OK

click on "file", then "close" and then "save" to save updates to report

 

Vacant Property

When an inspection indicates the property is vacant and must be secured and winterized HSBC’s lien position and equity must be determined. Prior to securing the property written permission must be received from the customers bankruptcy attorney to do so.

The letter requesting permission to secure the property is located on Microsoft Word as: (buf-102\wrk\us)\allfiles\secure. Letter is also on a disk.

Input attorneys name and address. Customers name, case number, and account number.

Input date in letter five days from current date allowing attorney time to respond to our request.

Sign letter and fax to attorney. Document actions on ACP or CPI for ELOC’S.

If attorney responds giving permission to secure the property, forward letter to supervisor to initial. Then toss the Property Preservation Department to secure and winterize the property. Document account on ACP or CPI for ELOC’S and place letter in file.

If attorney responds denying HSBC’s request document account on ACP or CPI for ELOC’S as to the reasons given and place in file.

Report is reviewed for condition of property. Based on conditions we may opt to charge-off.

The inspection report must be updated by the 15th of the month. The disk is then forwarded by the Property Preservation Department to Safeguard Properties Inc. via Federal Express.

FOLLOW-UP / REVIEW:

N/A

 

 

 

Quarterly Exception Reporting – Rev 08/14/06

FUNCTIONAL OVERVIEW:

On a quarterly basis a report is compiled for senior management identifying loans that are exceptions to HSBC’s credit policy. The report includes all of HSBC’s asset loans and by products i.e., Collaterals, Marine Express and Heloc loans. Mortgages over 120 days delinquent and by products over 150 days are extracted from three separate reports and reported as exceptions. Once completed and approved by Risk Management the report is forwarded to senior management at HSBC and HSBC Mortgage Corporation.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

PROCEDURE:

Documentation

Three separate reports are utilized to locate accounts that are exceptions.

Mortgage T341 report from Risk Management

two (2) "SAS" reports on Collateral and Heloc accounts from Risk Management

accounts meeting the exceptions guidelines must be identified and listed on the report

the report is broken down by product: Mortgage, Collateral's and Helocs

each account is listed on the report with the following: account number, last name, product type, actual days delinquent, number days past due, principal balance and comments.

When completed the report is faxed to Risk Management at HSBC for approval

Once approved, a cover memo is prepared and copies are forwarded to Senior Risk Managers at HSBC and to the senior managers at HSBC Mortgage Corporation.

Each completed report is maintained on a disc by the Foreclosure Department manager. The exceptions report is a requirement of the Federal Bank Auditors.

FOLLOW-UP / REVIEW:

N/A

 

 

Review - Aged Items – Rev 12/06/06

FUNCTIONAL OVERVIEW:

Each account will be reviewed to evaluate the risks to HSBC and investor accounts. Recommendations will be directed to management should the equity in the property or property conditions warrant a possible charge-off of the debt. The report is given to a specialist to review, work accounts and evaluate.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/06/06

Twelve month plus report is generated through passport on a monthly basis.

PROCEDURE:

Documentation

The twelve month aged report contains the following information on each account: due date account number, customers name, principal balance, investor, state, stop code, date set up in foreclosure or bankruptcy, processor and attorney code.

each account will be scrutinized on Fidelity to determine if specific conditions exist.

the FOR2 and BNKN screens will be examined to determine the condition of the property from monthly inspections. The PIR1 screen will also be reviewed to further evaluate the conditions and occupancy status on the account. A property may be vacant, in poor condition or possibly a vacant lot.

the FOR2 or BNKN screens must be updated with the condition of the property and what factors contributed to the properties current condition.

review FOR2 or BNKN for pending insurance claims. Also review the HAZN screen on the hazard workstation.

should the accounts status require monitoring, the account must be added to the special attention report. It is located on lotus as: j:\shared\everyone\filefolder dd\specattn.

the PL05 screen will be examined to determine if Loss Mitigation efforts are occurring on the account. The FOR2 and BNKN screens will also be reviewed for Loss Mitigation efforts.

each account will also be reviewed for current values and mitigating circumstances which may result in recommendations to senior management to charge-off the account.

the findings by the manager and supervisors will be noted on the FOR2 and BNKN screens.

Recommendations

Once all the accounts have been reviewed senior management will be notified in writing of those accounts which have been selected for charge-off. Should the account be that of an investor, senior management's approval must be obtained prior to notifying the investor of HSBC’s recomendations.

The review of aged accounts on a quarterly basis provides a tool to identify accounts meeting specific conditions that warrant a stoppage of the foreclosure action.

FOLLOW-UP / REVIEW:

N/A

 

Foreclosure Roundtable – Rev 12/06/06

FUNCTIONAL OVERVIEW:

This document summarizes the procedure to be followed when reviewing a loan for foreclosure approval. This memo is the second revision to those submitted on March 16,1999 and May 14, 1999 respectively.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/06/06

PROCEDURE:

Areas of Concern Noted within Existing Format:

1. We are required to formally review in a group setting all non-performing loans in the held portfolio. Many files need not be reviewed in this format due to obvious loan characteristics that easily justify a decision to pursue the collateral via foreclosure. We have attempted to set reasonable parameters in the next section that will allow us to exclude certain loans from unnecessary group review.

2. There have been cases when we were required to charge off loans when the foreclosure process had already started, including some that had progressed to the point of sale bid review. We have offered parameters that should limit these cases and save unnecessary foreclosure expenses.

3. There was some concern that files that we decided to charge off, and sue on the note, were not being serviced in the Consumer Finance Division (CFD) to the extent we hoped. We have suggested ways to better communicate our previous servicing efforts, and make recommendations to CFD that will maximize our recovery in these cases.

Foreclosure Roundtable Format:

1. Frequency:

Weekly (exception: no files to review for the week)

As needed on last 2 business days of the month.

As needed in other "critical" situations.

2. Regular Attendees:

Foreclosure (leadership role)

REO (leadership role)

Loss Mitigation (leadership role)

Collections (leadership role)

1 AVP from the 4 Default Units (rotation basis)

Specific appearances from Bankruptcy and SBO leadership positions may attend as needed.

Substitutions may be assigned due to conflicts.

At minimum a representative from Loss Mitigation, REO, and the department generating the referral (collections, loss mitigation, SBO, bankruptcy) must attend.

Efforts to be made to rotate department staff members for the purpose of training.

3. Loans to be reviewed – Bank/Mortgage Corp. Held Loans, and REMIC loans only:

All conventional loans on COOP’s (with copy of original appraisal).

All conventional loans on condominiums.

All conventional loans with liens junior to 1st position on title.

All loans originated under CRA program (as information is available).

All home equity loans regardless of type and lien position.

Un-insured conventional loans with BPO value < $40,000.

Insured conventional loans with BPO value < $25,000.

All loans (including FHA/VA) that have principal balance < $3,000.

All loans with unpaid principal balance > $500,000.00, regardless of value.

All loans with money in restricted escrow that is 50% or more of the unpaid principal balance.

All loans with major structural damage.

 

4. Charge off Forms – The following loans will need to have the HSBC Mortgage Corporation, REO/Bankruptcy/Foreclosure Charge off Proposal form completed:

All loans with liens junior to 1st position on title.

All home equity loans, in 1st lien position, with BPO value less than $40,000.

Additional cases when the committee member and/or committee deem the format necessary (COOP Fees delinquent, taxes severely delinquent, damaged property, etc.).

 

5. Value Consideration – We will continue to use an exterior Broker’s Price Opinion to assign a "90 Day As Is" value to the property being reviewed for foreclosure. In the following cases we will require that a second opinion of value be ordered:

The charge off form generates a picture that justifies charge off or foreclosure, yet the variance in the 2 scenarios is within $3,000.

Poor quality of the BPO.

All files must have a BPO in the file at time of foreclosure review, unless the following exception occurs:

* It is the last business day of the month, and the foreclosure roundtable agrees that the foreclosure should be started due to obvious loan characteristics (i.e.. PMI, PIR1 value supports, etc.). In these rare cases the foreclosure template will include a "Step" that indicates no value has been obtained. This step will be monitored until the actual completion date is entered.

 

 

 

6. Reasons Not to Foreclose:

The net realizable value of the foreclosure action is negative. The total cost of acquiring and re-marketing the collateral will be greater than the total cost of charging off the loan balance today.

There is an obvious opportunity for loss mitigation. Loss mitigation will be pursued throughout the entire default process. However, if a file already has a loss mitigation "lead" at the time the committee is in session, the committee may decide to forestall foreclosure initiation until efforts are exhausted.

7. Suing on the Note:

Recommendation will be made to sue on the note in all cases where we approve charge-off, unless we have evidence that indicates recovery will be impossible.

In those cases where the mortgagor/maker has been discharged of debt via bankruptcy, the file should be marked as "Do Not Attempt Recovery/Bankruptcy".

In cases where previous efforts to settle have been made with a borrower, and no agreement can be reached, the suit on note recommendation should clearly spell out the reasons for denial, including any pertinent information relevant to a further attempt at recovery.

This communication should include any borrower financial information, comments on previous negotiations, and any property specific information.

8. Reporting:

After the conclusion of each Foreclosure Roundtable session, the committee will submit a report to the department Vice President summarizing the following:

Date of Roundtable

Loan Number

Loan Type

Property Type

Address

Occupancy

Lien Position

Principal Balance

BPO Value

If Q/C review was suggested

Roundtable Decision with any relevant comments.

This report will be saved as follows:

j:\shared\everyone\dd\roundrepfcrdtble

9. Exceptions to Signing Authority

Per HSBC credit policy the department Vice President must signify his/her approval when recommendation has been made to foreclosure on loans not in 1st lien position, home equity lines of credit, and home equity loans.

10. Exception for Loans with Total Indebtedness of Under $1,000.

On these loans the costs associated with foreclosure are too high to justify recovery by pursuing the loan collateral. If all normal collection and loss mitigation efforts have been exhausted, an automatic decision to charge off and sue on the note will be made.

FOLLOW-UP / REVIEW:

N/A

 

S58J - Loans in Foreclosure – Rev 12/15/06

FUNCTIONAL OVERVIEW:

The S58J report contains all the accounts serviced by each foreclosure specialist. The accounts are listed in loan number order by state code within each investor. Each specialist can utilize the report to ensure every account is being reviewed during the month. The report is run on a weekly basis.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

PROCEDURE:

Documentation

The report contains the following information: specialists name, state code, investor number, loan number, loan type, mortgagors name, foreclosure status, critical step description, principal balance, escrow balance and attorney name (refer to exhibit).

Updating Accounts

The foreclosure specialist will review every account from the report on the foreclosure workstation once a month and problem accounts 2 to 3 times a month. To obtain a current status the attorney will be contacted via New Trak, phone, e-mail, toss or fax and the FOR2 and FOR3 screens will be updated with the information obtained.

To update FOR2 and FOR3:

Input "SSPROD", enter.

Input logon ID and six (6) digit password, enter.

Input Fidelity, enter.

Input Fidelity logon ID and six (6) digit password, enter.

Input FOR2, account number, enter.

To update the FOR2 account history screen depress F5.

Tab to free format lines to update account history and enter.

The accounts history has now been updated.

It may not be necessary to update the FOR3 screen on every account. To update FOR3 refer to the procedures in the "58S Step Report".

It is the foreclosure specialists responsibility to ensure every account they are responsible for is proceeding through the foreclosure process. This report provides a listing of those accounts.

 

S58J - Loans in F/C by Processor

 

Weekly – All loans in each persons portfolio.

Done Weekly – Total Loan count in state order, by investor all active accounts.

Purpose – Insure each loan was reviewed in month at least once.

Look at FOR2 and FOR3 on each account.

Updated status for, month if not,

Call attorney for status, toss or fax.

Then update FOR2 - and change or add step in FOR3

Problem accounts 2 - 3 times a month if in litigation or title problem.

To look at every account once a month for audit purposes.

FOLLOW-UP / REVIEW:

N/A

 

SBO Delinquency Reporting – Rev 11/10/06

FUNCTIONAL OVERVIEW:

Loans serviced by various services for HSBC that are delinquent, in bankruptcy or foreclosure are tracked, monitored and balanced each month through a series of Lotus reports. Delinquency reports from all services must be received by the fifth (5th) business day of the month covering the prior months activity. The reports provide a detail broken down by loan type and delinquency of 30, 60, 90, 120 days, bankruptcy, and foreclosure. If a detailed report is not provided, it may be necessary to contact the servicer for specific information. These figures are extracted from each servicer report and placed on a Lotus spreadsheet to compile a master report. Accounts in bankruptcy and foreclosure are tracked on separate reports providing a monthly status on their activity. Accounts which have gone to sale or have had a workout completed are also tracked separately. The reports provide an accurate balancing mechanism for monthly delinquency reporting.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

11/10/06

All delinquency reports are due by the fifth (5th) business day of the month. Reports are sent via mail, overnight express, faxed or indicate whether or not there are delinquencies. If a report is not received a phone call is made to the servicer instructing them to forward their report.

PROCEDURE:

Documentation

The serviced by others (SBO) portfolio is broken down between the "on-line" and the "off-line" accounts. "On-line" means the accounts are on HSBC’s CPI system where as "off-line" means the accounts are not on HSBC’s system. The on-line accounts are first liens and the off-line accounts are first and second liens.

Updating Month/Year on Reports

Each report reflects the current month and year being reported in three (3) separate locations. These locations are as follows:

Actual file name

Top left hand corner of border

Left hand of footer

The following procedures are to update month/year in the file name in the footer:

Open file to be updated.

Take mouse and click on file.

Take mouse and click on heading "save as" in window displayed.

Take mouse and click on file name showing in upper left hand corner of window.

Type in the month/year currently being reported over the month/year being displayed.

* Note: It may be necessary to delete month/year that was being displayed.

Take mouse and click on box labeled "ok".

The following procedures are to update month/year in the top border:

Take mouse and click on file.

Take mouse and click on open.

Take mouse and click on name of file to be opened.

Locate cell in border that contains the month/year being reported.

Depress PF2 key to edit the month/year.

Type in the month/year currently being reported over the month/year being displayed.

Depress enter.

Take mouse and click on file.

Take mouse and click on save.

SBO Servicer List

A report of all servicers is located on Lotus j:\shared\everyone\report\sbolist.wk4. The report provides the agent number, investor number, and agent name, contact, phone, address and wire/check. It is used as a reference tool to verify the investor number on every servicer. Each servicer may have more then one group of loans are identified by the investor number.

 

On-Line Delinquency Portfolio

Report Maintenance - Wholly Owned/Participation

Loans that are wholly owned are identified by investor numbers A01, A02 A10, and all. Participation loans are identified by investor number A03 and A12, and adjustable rate loans (ARM’s) are investor A11. As each servicers delinquency report is received the data provided is transferred to the report located on Lotus (prior month) as j:\shared\everyone\reports\(mmyy)on.wk4 Please note that the investor number HSBC books on the system may be different from the investor number utilized by the servicer when reporting to HSBC. The report is broken down by dollar amount (principal balance) and number of units. It is further segregated by delinquency periods of 30, 60, 90, 120, foreclosure, and bankruptcy. The types of loans Conventional, FHA/VA and ARM are reported within their own delinquency periods. For example, loans 30 days late will be identified by loan type, then dollar amount and unit count.

The lotus report consists of five (5) different tabs. Each tab contains a list of servicers in alphabetical order by investor number. A servicer may have one or more investor numbers and an investor number may have one or more categories.

The five (5) tabs are as follows:

*Wholly Owned Delinquency/Foreclosure (red tab; name "WO dlq.fc")

*Participation Delinquency/Foreclosure (white tab; name "PART dlq.fc")

*Wholly Owned Bankruptcy (red tab; name "WO bk")

*Participation Bankruptcy (white tab; name "PART bk")

*Differences (blue tab; name "Differences")

To update the report for each servicer:

Take the mouse and click on the "WO dlq.fc" tab.

Take the mouse and click on "edit".

Click on "find & replace" in column displayed.

Type in the name of the servicer and click on "OK".

Verify the servicer and investor number on the screen match the report received. Since a servicer may have more then one investor number, it may be necessary to continue the search by clicking on "next" until the correct investor number is located.

* Note: This procedure will search all tabs. To indicate which tab is being searched a white border will appear around the tab.

Once the correct servicer and investor number is located, the report can be updated. There can be up to four (4) different scenarios encountered.

Report Received; No delinquencies

indicate this on the report by tabbing to the "y/n" column and input "n*" next to the applicable servicer and investor number. Ensure all dollars and units reflect zero on the report.

Report Received; Delinquencies

indicate on report as described above, by inputting a "y*" in the "y/n" column. Depress the arrow key to the appropriate days delinquent and loan type to input the dollars and units from the servicers report.

No Report Received: No delinquencies

indicate on report by inputting a "n**" in the "y/n" column. Ensure all dollars and units reflect zero on the report.

No Report Received; Delinquencies

indicate this on the report by placing a "y**" in the "y/n" column. Ensure all dollars and units reflect zero on the report.

The above procedures are repeated for every servicer listed on the report.

Bankruptcy - Wholly Owned/Participation

The bankruptcy report is updated for every servicer following the same procedures described above. The tabs are red for wholly owned "WO bk" and white for participation "PART bk".

* Note: On this report the delinquency periods are reported by under 30, 30, 60, 90 and 120 days. Loan types remain the same.

Explanation of Differences

To access this report take the mouse and click on the blue tab "Differences". This report is utilized to identify specific circumstances on a loan which merit attention. The report is updated monthly to monitor specific accounts which prompt a phone call to the servicer to discuss the account. For example a loan may be reported as an active bankruptcy under 30 days delinquent one month and then the proceeding month the same account was reported as an active bankruptcy 60 days delinquent. This indicates an error in reporting the accounts status by the servicer. The account is added the report and a phone call is made to the servicer to review the account.

The report contains the following information on each account: servicers name, investor number, HSBC’s number/servicers number, loan type, principal balance and comments.

The information is added to the report alphabetically by the servicers name.

The comments section provides an explanation of the problem.

When a difference arises in reporting a status of a loan from month to month the account is added to the report and researched. This includes loans at various stages of delinquency, bankruptcy or foreclosure.

When the problem in reporting is resolved the account can be removed from the report the following month.

 

Bankruptcy Report - Wholly Owned/Participation

When a loan is reported as an active Bankruptcy by a servicer, the account is placed on a detailed report maintained to track the status of the account. This report is located on Lotus as j:\shared\everyone\report\(mmyy)onbk.wk4. Please note that the month and year are changed to reflect the current month and year being reported.

Adding Accounts to Bankruptcy Report

The following procedures are to add an account to the bankruptcy report:

When a servicer reports a new account in bankruptcy locate report on lotus as j:\shared\everyone\report\(mmyy)onbk.wk4.

Take mouse and click on white tab named "New and Concluded".

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column B. Input account number in column C.

Take mouse and click on green tab "OnLine BK’s".

The detailed information on the loan is placed on this report in alphabetical order by the name of the servicer/investor number.

Locate the position to place loan and input /WIR. Using the down arrow key highlight four (4) rows and depress enter key.

Please note, depending on the position where the four (4) lines were added, it may be necessary to remove shading. To remove shading, take mouse and highlight the row(s) for which the shading needs to be cleared. Now depress the shift and the colon key at the same time. Input FSC.

Input the following: last name, space initial, property address, servicer’s name/investor number, contact name/phone number, MMB account number, servicer account number, loan type, lien position, first’s name if applicable, first’s payoff quote, value/date, chapter of bankruptcy/date filed, case number, district court, date proof of claim filed, if applicable, due date on loan, principal balance and comments.

The comments section is utilized to report the prior month’s activity.

Renumber the accounts.

Take mouse and click on the blue tab "PB’s".

The account’s principal balance is added to the "PB’s" in the same position as the account appears on the report.

Arrow to the position below where the principal balance is to be added.

Input /WIR. This entry adds a row.

Input the principal balance, ensure the amount is in the format of US Currency with two (2) decimals.

Renumber the principal balances in the column.

Arrow down to the total principal balance figure.

Take mouse and click on icon "sum". This will re-add principal balance column.

Take mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’s" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’s" tab.

 

Removing Account(s) from Bankruptcy Report

The following procedures are to remove an account from the bankruptcy report:

When a servicer reports an account has been removed from bankruptcy locate report on lotus as j:\shared\everyone\report\(mmyy)onbk.wk4.

Take mouse and click on tab "New and Concluded"

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current months reporting.

Input last name in column E. Input account number in column F. Input reason for removal in column G.

Take mouse and click on green tab "OnLine BK’s".

The detailed information on the loan is deleted from this report.

Place cursor on line and input /WDR. Using the down arrow key highlight four (4) rows to be deleted and depress enter key.

Renumber the accounts.

Take mouse and click on blue tab "PB’s".

Locate account’s principal balance.

Place cursor on account’s principal balance and key in /WDR.

Renumber the principal balances in the column.

Take the mouse and click on icon "sum". This will re-add principal balance column.

Take the mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

Foreclosure Report - Wholly Owned/Participation

When a loan is reported as an active foreclosure by a servicer the account is placed on a detailed report maintained to track the status of the account. This report is located on Lotus as j:\shared\everyone\report\(mmyy)onfc.wk4. Please note that the month and year are changed to reflect the current month and year being reported.

 

 

 

Adding Accounts to Foreclosure Report

The following procedures are to add an account to the foreclosure report:

When a servicer reports a new account in foreclosure locate report on lotus as j:\shared\everyone\report\(mmyy)onfc.wk4.

Take mouse and click on white tab named "New and Concluded".

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column B. Input account number in column C.

Take mouse and click on green tab "OnLine FC’s".

The detailed information on the loan is placed on this report in alphabetical order by the name of the servicer/investor number.

Locate the position to place loan and input /WIR. Using the down arrow key highlight four (4) rows and depress enter key.

Please note, depending on the position where the four (4) lines were added, it may be necessary to remove shading. To remove shading, take mouse and highlight the row(s) for which the shading needs to be cleared. Now depress the shift and the colon key at the same time. Input FSC.

Input the following: last name, space initial, property address, servicer’s name/investor number, contact name/phone number, MMB account number, servicer account number, loan type, lien position, first’s name if applicable, first’s payoff quote, value/date, due date on loan, principal balance and comments.

The comments section is utilized to report the prior month’s activity.

Renumber the accounts.

Take mouse and click on the blue tab "PB’S".

The account’s principal balance is added to the "PB’S" in the same position as the account appears on the report.

Arrow to the position below where the principal balance is to be added.

Input /WIR. This entry adds a row.

Input the principal balance, ensure the amount is in the format of US Currency with two (2) decimals.

Renumber the principal balances in the column.

Arrow down to the total principal balance figure.

Take mouse and click on icon "sum". This will re-add principal balance column.

Take mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

 

 

 

 

 

Removing Account(s) from Foreclosure Report

The following procedures are to remove an account from the foreclosure report:

When a servicer reports an account has been removed from foreclosure locate report on lotus as j:\shared\everyone\report\(mmyy)onfc.wk4.

Take mouse and click on white tab "New and Concluded"

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column E. Input account number in column F. Input reason for removal in column G.

Take mouse and click on green tab "OnLine FC’S".

The detailed information on the loan is deleted from this report.

Place cursor on line and input /WDR. Using the down arrow key highlight four (4) rows to be deleted and depress enter key.

Renumber the accounts.

Take mouse and click on blue tab "PB’S".

Locate account’s principal balance.

Place cursor on account’s principal balance and key in /WDR.

Renumber the principal balances in the column.

Take the mouse and click on icon "sum". This will re-add principal balance column.

Take the mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

Sale Held/Completed Workout - Wholly Owned/Participation

Accounts which have gone to foreclosure sale or which have gone through a workout program are monitored through this report. The account(s) will remain on this report until the servicer removes the account(s) from its report and HSBC has received all funds it is entitled to. The report is located on Lotus as j:\shared\everyone\reports\(mmyy)oncp.wk4. Please note that the month and year are changed to reflect the current month and year being reported.

 

Adding Accounts to Sale Held/Workout Report

The following procedures are to add an account to the report:

When a servicer reports a new account for which a foreclosure sale was held or for which a workout has been completed locate report on Lotus as j:/shared/everyone/reports/(mmyy)ffcp.wk4.

Take mouse and click on white tab named "New and Concluded".

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column B. Input account number in column C.

Take mouse and click on green tab "Sale.Workout".

The detailed information on the loan is placed on this report in alphabetical order by the name of the servicer/investor number.

Locate the position to place loan and input /WIR. Using the down arrow key highlight four (4) rows and depress enter key.

Please note, depending on the position where the four (4) lines were added, it may be necessary to remove shading. To remove shading, take mouse and highlight the row(s) for which the shading needs to be cleared. Now depress the shift and the colon key at the same time. Input FSC.

Input the following: last name, space initial, property address, servicer’s name/investor number, contact name/phone number, MMB account number, servicer account number, loan type, foreclosure sale held, redemption expires, due date on loan, principal balance, and comments.

The comments section is utilized to report the prior month’s activity.

Renumber the accounts.

Take mouse and click on the blue tab "PB’S".

The account’s principal balance is added to the "PB’S"

in the same position as the account appears on the report.

Arrow to the position below where the principal balance is to be added.

Input /WIR. This entry adds a row.

Input the principal balance, ensure the amount is in the format of US Currency with two (2) decimals.

Renumber the principal balances in the column.

Arrow down to the total principal balance figure.

Take mouse and click on icon "sum". This will re-add principal balance column.

Take mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

 

Removing Account(s) from Sale Held/Completed Workout Report

To remove an account from sale held/completed workout report:

When a servicer reports an account has been removed from sale held/completed workout locate report on lotus as j:\shared\everyone\report\(mmyy)oncp.wk4.

Take mouse and click on white tab (mmyy) "New and Concluded"

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column E. Input account number in column F. Input reason for removal in column G.

Take mouse and click on green tab "Sale.Workout".

The detailed information on the loan is deleted from this report.

Place cursor on line and input /WDR. Using the down arrow key highlight four (4) rows to be deleted and depress enter key.

Renumber the accounts.

Take mouse and click on blue tab "PB’S".

Locate account’s principal balance.

Place cursor on account’s principal balance and key in /WDR.

Renumber the principal balances in the column.

Take the mouse and click on icon "sum". This will re-add principal balance column.

Take the mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

The procedures listed above allow HSBC to accurately balance and monitor the monthly reporting of loans serviced by various servicers.

Off-Line Delinquency Portfolio

 

Report Maintenance - Firsts (Held), Seconds, Investor

As each servicers delinquency report is received the data provided is transferred to the report located on Lotus (prior month) as j:\shared\everyone\reports\(mmyy)off. Please note that the investor number HSBC has assigned to the servicer may be different from the investor number utilized by the servicer when reporting to HSBC. The report is broken down into three (3) categories.

The three (3) categories are as follows:

*Firsts - Servicers which service loans for HSBC that are in a first lien position.

*Seconds - Servicers which service loans for HSBC that are in second lien position. This category contains a sub section of formulas used to calculate the total amount of delinquencies, foreclosures, and bankruptcies that are 90 or more days delinquent. Please note that this calculation only consists of units/dollars from the Firsts and Seconds.

*Investor - HSBC is a master servicer where in Knutson Mortgage is a sub-servicer for HSBC’S separate Freddie Mac portfolio.

Each category is broken down by dollar amount (principal balance) and number of units. Each category is further segregated by delinquency periods of 30, 60, 90, 120, foreclosure, and bankruptcy. The types of loans Conventional, FHA/VA and ARM are reported within their own delinquency periods. For example, loans 30 days late will be identified by loan type, then dollar amount and unit count.

The lotus report consists of three (3) different tabs. Each tab contains a list of servicers in alphabetical order by investor number. A servicer may have one or more investor numbers and an investor number may have one or more categories.

The three (3) tabs are as follows:

*OffLine Delinquency/Foreclosure (red tab; name "DLQ.FC")

*OffLine Bankruptcy (white tab; name "BK")

*Differences (blue tab; name "Differences")

To update the report for each servicer:

Take the mouse and click on the red tab "OffLine Dlq.FC".

Take the mouse and click on "edit".

Click on "find & replace" in column displayed.

Type in the name of the servicer and click on "OK".

Verify the servicer and investor number on the screen match the report received. Since a servicer may have more then one investor number, it may be necessary to continue the search by clicking on "next" until the correct investor number is located.

* Note: This procedure will search all tabs. To indicate which tab is being searched a white border will appear around the tab.

Once the correct servicer and investor number is located, the report can be updated. There can be up to four (4) different scenarios encountered.

Report Received; No delinquencies

Indicate this on the report by arrowing to the "Y/N" column and input "N*" next to the applicable servicer and investor number. Ensure all dollars and units reflect zero on the report.

Report Received; Delinquencies

Indicate on report as described above, by inputting a "Y*" in the "Y/N" column. Depress the arrow key to the appropriate days delinquent and loan type to input the dollars and units from the servicers report.

No Report Received; No delinquencies

Indicate on report by inputting a "N**" in the "Y/N" column. Ensure all dollars and units reflect zero on the report.

No Report Received; Delinquencies

Indicate this on the report by placing a "Y**" in the "Y/N" column. Ensure all dollars and units reflect zero on the report.

The above procedures are repeated for every servicer listed on the report.

 

 

 

 

 

Bankruptcy - Firsts (Held), Seconds, Investor

The bankruptcy report is updated for every servicer following the same procedures described above.

* Note: On this report the delinquency periods are reported by under 30, 30, 60, 90 and 120 days. Loan types remain the same.

Explanation of Differences

To access this report take the mouse and click on the blue tab "Differences". This report is utilized to identify specific circumstances on a loan which merit attention. The report is updated monthly to monitor specific accounts which prompt a phone call to the servicer to discuss the account. For example a loan may be reported as an active bankruptcy under 30 days delinquent one month and then the proceeding month the same account was reported as an active bankruptcy 60 days delinquent. This indicates an error in reporting the accounts status by the servicer. The account is added the report and a phone call is made to the servicer to review the account.

The report contains the following information on each account: servicers name, investor number, HSBC’s number/servicers number, loan type, principal balance and comments.

The information is added to the report alphabetically by the servicers name.

The comments section provides an explanation of the problem.

When a difference arises in reporting a status of a loan from month to month the account is added to the report and researched. This includes loans at various stages of delinquency, bankruptcy or foreclosure.

When the problem in reporting is resolved the account can be removed from the report the following month.

Bankruptcy Report - Firsts (Held), Seconds, Investor

When a loan is reported as an active Bankruptcy by a servicer, the account is placed on a detailed report maintained to track the status of the account. This report is located on Lotus as j:\shared\everyone\report\(mmyy)offb.wk4. Please note that the month and year are changed to reflect the current month and year being reported.

Adding Accounts to Bankruptcy Report

The following procedures are to add an account to the bankruptcy report:

When a servicer reports a new account in bankruptcy locate report on lotus as j:\shared\everyone\report\(mmyy)offb.wk4.

Take mouse and click on white tab named (mmyy) "New and Concluded".

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column B. Input account number in column C.

Take mouse and click on green tab "OffLine BK’s".

The detailed information on the loan is placed on this report in alphabetical order by the name of the servicer/investor number.

Locate the position to place loan and input /WIR. Using the down arrow key highlight four (4) rows and depress enter key.

Please note, depending on the position where the four (4) lines were added, it may be necessary to remove shading. To remove shading, take mouse and highlight the row(s) for which the shading needs to be cleared. Now depress the shift and the colon key at the same time. Input FSC.

Input the following: last name, space initial, property address, servicer’s name/investor number, contact name/phone number, MMB account number, servicer account number, loan type, lien position, first’s name if applicable, first’s payoff quote, value/date, chapter of bankruptcy/date filed, case number, district court, date proof of claim filed, if applicable, due date on loan, principal balance and comments.

The comments section is utilized to report the prior month’s activity.

Renumber the accounts.

Take mouse and click on the blue tab "PB’s".

The account’s principal balance is added to the "PB’s" in the same position as the account appears on the report.

Arrow to the position below where the principal balance is to be added.

Input /WIR. This entry adds a row.

Input the principal balance, ensure the amount is in the format of US Currency with two (2) decimals.

Renumber the principal balances in the column.

Arrow down to the total principal balance figure.

Take mouse and click on icon "sum". This will re-add principal balance column.

Take mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

Removing Account(s) from Bankruptcy Report

The following procedures are to remove an account from the bankruptcy report:

When a servicer reports an account has been removed from bankruptcy locate report on lotus as j:\shared\everyone\report\(mmyy)offb.wk4.

Take mouse and click on tab (mmyy) "New and Concluded"

Arrow to titles under columns B and E and change month\year to the month\year being reported. Clear accounts listed under "mmyy removals" and "account number and where."

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current months reporting.

Input last name in column E. Input account number in column F. Input reason for removal in column G.

Take mouse and click on green tab "Off Line BK’S".

The detailed information on the loan is deleted from this report.

Place cursor on line and input /WDR. Using the down arrow key highlight four (4) rows to be deleted and depress enter key.

Renumber the accounts.

Take mouse and click on blue tab "PB’S".

Locate account’s principal balance.

Place cursor on account’s principal balance and key in /WDR.

Renumber the principal balances in the column.

Take the mouse and click on icon "sum". This will re-add principal balance column.

Take the mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

Foreclosure Report - Firsts (Held), Seconds, Investor

When a loan is reported as an active foreclosure by a servicer the account is placed on a detailed report maintained to track the status of the account. This report is located on Lotus as j:\shared\everyone\report\(mmyy)offf.wk4. Please note that the month and year are changed to reflect the current month and year being reported.

Adding Accounts to Foreclosure Report

The following procedures are to add an account to the foreclosure report:

When a servicer reports a new account in foreclosure locate report on lotus as j:\shared\everyone\report\(mmyy)offf.wk4.

Take mouse and click on white tab named (mmyy) "New and Concluded".

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column B. Input account number in column C.

Take mouse and click on green tab "Offline FC’s".

The detailed information on the loan is placed on this report in alphabetical order by the name of the servicer/investor number.

Locate the position to place loan and input /WIR. Using the down arrow key highlight four (4) rows and depress enter key.

-Please note, depending on the position where the four (4) lines were added, it may be necessary to remove shading. To remove shading, take mouse and highlight the row(s) for which the shading needs to be cleared. Now depress the shift and the colon key at the same time. Input FSC.

Input the following: last name, space initial, property address, servicer’s name/investor number, contact name/phone number, MMB account number, servicer account number, loan type, lien position, first’s name if applicable, first’s payoff quote, value/date, due date on loan, principal balance and comments.

The comments section is utilized to report the prior month’s activity.

Renumber the accounts.

Take mouse and click on the blue tab "PB’S".

The account’s principal balance is added to the "PB’S" in the same position as the account appears on the report.

Arrow to the position below where the principal balance is to be added.

Input /WIR. This entry adds a row.

Input the principal balance, ensure the amount is in the format of US Currency with two (2) decimals.

Renumber the principal balances in the column.

Arrow down to the total principal balance figure.

Take mouse and click on icon "sum". This will re-add principal balance column.

Take mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

Removing Account(s) from Foreclosure Report

The following procedures are to remove an account from the foreclosure report:

When a servicer reports an account has been removed from foreclosure locate report on lotus as j:\shared\everyone\report\(mmyy)offf.wk4.

Take mouse and click on white tab (mmyy) "New and Concluded"

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column E. Input account number in column F. Input reason for removal in column G.

Take mouse and click on green tab "OffLine FC’S".

The detailed information on the loan is deleted from this report.

Place cursor on line and input /WDR. Using the down arrow key highlight four (4) rows to be deleted and depress enter key.

Renumber the accounts.

Take mouse and click on blue tab "PB’S".

Locate account’s principal balance.

Place cursor on account’s principal balance and key in /WDR.

Renumber the principal balances in the column.

Take the mouse and click on icon "sum". This will re-add principal balance column.

Take the mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

 

Sale Held/Completed Workout - Firsts (Held), Seconds, Investor

Accounts which have gone to foreclosure sale or which have gone through a workout program are monitored through this report. The account(s) will remain on this report until the servicer removes the account(s) from its report and HSBC has received all funds it is entitled to. The report is located on Lotus as j:\shared\everyone\reports\(mmyy)offc.wk4. Please note that the month and year are changed to reflect the current month and year being reported.

Adding Accounts to Sale Held/Workout Report

The following procedures are to add an account to the report:

When a servicer reports a new account for which a foreclosure sale was held or for which a workout has been completed locate report on Lotus as j:/shared/everyone/reports/(mmyy)offc.wk4.

Take mouse and click on white tab named (mmyy) "New and Concluded".

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column B. Input account number in column C.

Take mouse and click on green tab "Sale.Workout".

The detailed information on the loan is placed on this report in alphabetical order by the name of the servicer/investor number.

Locate the position to place loan and input /WIR. Using the down arrow key highlight four (4) rows and depress enter key.

Please note, depending on the position where the four (4) lines were added, it may be necessary to remove shading. To remove shading, take mouse and highlight the row(s) for which the shading needs to be cleared. Now depress the shift and the colon key at the same time. Input FSC.

Input the following: last name, space initial, property address, servicer’s name/investor number, contact name/phone number, MMB account number, servicer account number, loan type, foreclosure sale held, redemption expires, due date on loan, principal balance, and comments.

The comments section is utilized to report the prior month’s activity.

Renumber the accounts.

Take mouse and click on the blue tab "PB’S".

The account’s principal balance is added to the "PB’S" in the same position as the account appears on the report.

Arrow to the position below where the principal balance is to be added.

Input /WIR. This entry adds a row.

Input the principal balance, ensure the amount is in the format of US Currency with two (2) decimals.

Renumber the principal balances in the column.

Arrow down to the total principal balance figure.

Take mouse and click on icon "sum". This will re-add principal balance column.

Take mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’S" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’S" tab.

 

 

Removing Account(s) from Sale Held/Completed Workout Report

To remove an account from sale held/completed workout report:

When a servicer reports an account has been removed from sale held/completed workout locate report on lotus as j:\shared\everyone\report\(mmyy)offc.wk4.

Take mouse and click on white tab (mmyy) "New and Concluded"

Arrow to first line under the title (mmyy) "New" in column B. Clear all information in column B and C starting from this position.

Arrow to first line under the title (mmyy) "Concluded" in column E. Clear all information in column E, F, and G starting from this position.

* Note: Please note it is only necessary to clear the information under "New and Concluded" columns one time, for the current month’s reporting.

Input last name in column E. Input account number in column F. Input reason for removal in column G.

Take mouse and click on green tab "Sale.Workout".

The detailed information on the loan is deleted from this report.

Place cursor on line and input /WDR. Using the down arrow key highlight four (4) rows to be deleted and depress enter key.

Renumber the accounts.

Take mouse and click on blue tab "PB’s".

Locate account’s principal balance.

Place cursor on account’s principal balance and key in /WDR.

Renumber the principal balances in the column.

Take the mouse and click on icon "sum". This will re-add principal balance column.

Take the mouse and click on red tab "Totals".

The units and dollars within the tab are calculated by formulas. The formulas are totaling the information located within the "PB’s" tab. You must ensure that these formulas are adjusted to reflect any addition(s) or deletion(s) of a row(s) on the "PB’s" tab.

The procedures listed above allow HSBC to accurately balance and monitor the monthly reporting of loans serviced by various servicers.

FOLLOW-UP / REVIEW:

N/A

 

 

 

SBO Foreclosures – Rev 08/14/06

FUNCTIONAL OVERVIEW:

Servicers are required to notify HSBC Mortgage Corporation of their intention to refer any account to foreclosure by utilizing the SBO Foreclosure Referral Form. The online wholly owned and participation accounts will be set up on the CPI foreclosure workstation and on the working foreclosure report located on lotus as v:\shared\everyone\reports\(mmyy)onfc.wk4 and updated monthly, or as needed, via servicers’ monthly status report to track the foreclosure action. Off-line accounts are set up as a lotus file and on the working foreclosure report located v:\shared\everyone\reports\(mmyy)offf.wk4 and updated monthly, or as needed, via servicers’ monthly status report to track the foreclosure action. For a foreclosure sale on all FHA/VA/PMI loans the servicer is to obtain the bidding instructions from the applicable entity for a foreclosure sale. On all conventional wholly-owned asset loans HSBC will provide the servicer with bidding instructions for a foreclosure sale. On all conventional participation asset loans HSBC must review the governing servicing agreement in order to determine which entity provides bidding instructions for a foreclosure sale.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

HSBC receives from the servicer a completed SBO Foreclosure Referral Form as either notification of foreclosure initiation on a FHA/VA/PMI loan or as the servicer’s request for foreclosure authorization on a conventional uninsured loan.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will indictate whether or not HSBC has the right to do/request the above.

PROCEDURE:

Off Line Wholly-Owned/Participation Foreclosure Accounts

The following procedures are followed once the foreclosure referral form is received by HSBC:

The loan type and lien position are verified on all accounts. On all off-line accounts HSBC should be in first lien position.

Verify if the account is wholly-owned or a participation.

Email retention for the vault file.

Participation accounts

*The servicer or an other participant, if applicable, is in possession of the legal documents.

*Note: On FHA/VA/PMI loans the servicer does not need HSBC’s approval to initiate the foreclosure action. The foreclosure referral form forwarded to HSBC by the servicer serves as notification to HSBC of foreclosure initiation and servicer’s request for original documents, if applicable.

Servicer is to adhere to FHA/VA/PMI guidelines on all FHA/VA/PMI loans.

.

Original Documents

If the account is wholly owned or a participation, one of the following will be completed:

Once the original documents are received from the vault copies must be made for the file. The foreclosure referral form will be completed approving the foreclosure action and specifying which counsel the servicer is to retain to handle the foreclosure action. A letter will be generated to accompany the original documents and referral form. It will provide a check list of documents and space for the servicer to acknowledge and return the letter once the package is received. Page two (2) of the letter must be completed by the servicer and returned. The above documents are mailed utilizing the overnight, two day delivery service.

When a foreclosure action can proceed without the original documents, a letter and the approved referral form are to be sent to the servicer. The letter will indicate the original documents have been ordered. The letter and referral form will be forwarded as described in the above procedure.

On participation loans the servicer or another participant, if applicable, will be in possession of the legal documents. A letter will be generated and forwarded along with the referral form.

* Note: In all three (3) scenarios the FOR2 history screen will be updated noting the documents and approved referral form were mailed to the servicer. Will include the method of mailing along with the airborne number.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will dictate whether or not HSBC has the right to do/request the above.

 

Foreclosure Status Report

To the extent required by the agreement the servicer will complete the foreclosure status report on every account in foreclosure on a monthly basis and forward the same to HSBC with the month end delinquency report. Once received, pertinent information is used to update the account’s FOR2/FOR3 screen and the working foreclosure report located on lotus as: j:\shared\everyone\reports\(mmyy)onfc.wk4.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will dictate whether or not HSBC has the right to do/request the above.

Foreclosure Sales

When a servicer is notified an account has a foreclosure sale date scheduled, servicer will provide this information to the SBO Loss Mitigation Specialist at HSBC. The sale date is to then be reflected on the account’s FOR2 and FOR3 screen and on the working foreclosure report located on lotus as: j:\shared\everyone\reports\(mmyy)onfc.wk4. A letter will be sent to the servicer on HSBC asset loans requesting the following information:

Total debt figure on serviced loan to include all paid/unpaid attorney fees/costs

Name of PMI company, certificate number/guaranty number, and percentage insured

Copy of most recent BPO

Copy of most recent inspection report

Yearly tax amounts along with indication of whether or not taxes are current or delinquent; if delinquent, the amount/dates

Servicer’s recommendation of bidding instructions.

Wholly-owned by HSBC or participation loan; if participation loan, name of all participants and percentage owned.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will dictate whether or not HSBC has the right to do/request the above.

Conventional Uninsured Loans

Once a sale date is set on a conventional loan the SBO bidding and value request is completed via toss. The toss is sent to the REO Manager for the purpose of obtaining bidding instructions for the pending sale. On all conventional participation asset loans HSBC must review the governing servicing agreement in order to determine which entity provides bidding instructions for a foreclosure sale.

Conventional Insured Loans

Once a sale date is set on a conventional loan with PMI, the servicer is to obtain bidding instructions from PMI company. The servicer is then required to provide the SBO Loss Mitigation Specialist at HSBC with a copy of the PMI’s bidding instructions. The REO Manager at HSBC will review the bidding instructions and provide additional approval.

FHA/VA

HSBC does not provide bidding instructions to the servicer on FHA/VA loans. The servicer is required to bid as per the applicable guidelines.

VA No Bid

When a servicer is notified that the VA will not be providing bidding instructions for an account, the servicer is required to prepare and provide to the VA a VA no bid analysis. Once approved by the VA, the servicer must forward a copy of the VA no bid analysis along with the VA’s approval to the SBO Loss Mitigation Specialist at HSBC.

Foreclosure Sale Results

Once the foreclosure sale has occurred the servicer will notify HSBC of the results.

A specific form will be utilized by the servicer to provide sale results to HSBC.

The information from the sale results form will be transferred to the account’s FOR2 and FOR3 screen as well as the lotus report: j\shared\everyone\reports\(mmyy)onfc.wk4.

The "F/C Notification Notice" form on toss must be completed with the sales results and sent to the applicable party setup in the header of the toss form.

Foreclosure tracking to remain open on all FHA/VA loans for which HSBC/Servicer was successful bidder and loan is to be conveyed to FHA/VA. Tracking will be closed upon HSBC’s receipt of claim proceeds and settlement of servicer’s request for reimbursement of advances.

Foreclosure tracking to remain open on all loans for which a third party was successful bidder. Tracking is to be closed once HSBC has received the third party proceeds and paid any applicable claim from servicer.

Foreclosure tracking to be closed and file to be transferred to the REO Department on all conventional insured/uninsured loans for which HSBC/Servicer was successful bidder.

* Note: REO Department will monitor all PMI claims. REO Department will receive all PMI claim proceeds from PMI company/servicer and ensure any applicable claim to HSBC by servicer is paid. The SBO specialist will verify all foreclosure costs on PMI claims for the REO Department. Refer to the REO Departments procedure on processing claims.

On all loans for which a foreclosure sale has been held the account is transferred from the working foreclosure report located on lotus as: j:\shared\everyone\reports\(mmyy)onfc.wk4 to the working sale held report located on lotus as: v:\shared\everyone\reports\(mmyy)oncp.wk4. The account is removed as indicated in the above situations.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will dictate whether or not HSBC has the right to do/request the above.

Charge-offs

When the foreclosure charge-off proposal form indicates no equity exists, the file is submitted to management for charge-off approval. The following are to be included with the file when submitted to management for charge-off approval:

*Supporting payoff quote of serviced loan.

*Supporting payoff quote of any/all superior lien holders.

*BPO/Appraisal performed within the last 6 months.

*Foreclosure/Charge-off proposal form.

*The form "Request for ORS Input - Mortgage".

*The form "SBO Reserve and Charge-off Request".

Upon management’s charge-off approval, the following steps are to then be completed:

FHA/VA/Conventional Loans

A letter is forwarded to the servicer advising that HSBC has approved the charge-off of the loan.

A copy of all signed documents approving the charge-off is to be forwarded to the SBO Accounting Department. A copy of the same is to be given to the Assistant Vice President of the Foreclosure/Bankruptcy Department.

The file along with all of the above information/documentation is to be forwarded to the Recoveries Department. The Recoveries Department will attempt to collect on all conventional loans set up on ORS. All FHA/VA loans that are set up on ORS are dormented and no recovery attempts are made.

The account is removed from the foreclosure lotus report.

The account’s lotus file is removed from the foreclosure sub-directory and placed in the charge-off approved sub-directory.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will dictate whether or not HSBC has the right to do/request the above.

 

 

 

a check list of documents and space for the servicer to acknowledge and return the letter once the package was received. Page 2 of the letter will also be completed by the servicer and returned. The above documents are mailed utilizing the overnight, two day delivery service.

When a foreclosure action can proceed without the original documents, a letter and the approved referral form are to be sent to the servicer. The letter will indicate the original documents have been ordered. The letter and referral form will be forwarded as described in the above procedure.

On participation loans the servicer or another participant, if applicable, will be in possession of the legal documents. A letter will be generated and forwarded along with the referral form.

* Note: In all three (3) scenarios the account’s lotus file will be updated noting the documents and approved referral form were mailed to the servicer. Be sure to include the method of mailing along with the airborne number.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will dictate whether or not HSBC has the right to do/request the above.

 

Conventional Uninsured Loans

Once a sale date is set on a conventional loan the SBO bidding and value request is completed via toss. The toss is sent to the REO Manager for the purpose of obtaining bidding instructions for the pending sale. On all conventional participation asset loans HSBC must review the governing servicing agreement in order to determine which entity provides bidding instructions for a foreclosure sale.

Conventional Insured Loans

Once a sale date is set on a conventional loan with PMI, the servicer is to obtain bidding instructions from PMI company. The servicer is then required to provide the SBO Loss Mitigation Specialist at HSBC with a copy of the PMI’s bidding instructions. The REO Manager at HSBC will review the bidding instructions and provide additional approval.

FHA/VA

HSBC does not provide bidding instructions to the servicer on FHA/VA loans. The servicer is required to bid as per the applicable guidelines.

VA No Bid

When a servicer is notified that the VA will not be providing bidding instructions for an account, the servicer is required to prepare and provide to the VA a VA no bid analysis. Once approved by the VA, the servicer must forward a copy of the VA no bid analysis along with the VA’s approval to the SBO Loss Mitigation Specialist at HSBC.

Foreclosure Sale Results

Once the foreclosure sale has occurred the servicer will notify HSBC of the results.

A specific form will be utilized by the servicer to provide sale results to HSBC.

The information from the sale results form will be transferred to the account’s working lotus file as well as the foreclosure lotus report located on lotus as: j\shared\everyone\reports\(mmyy)offf.wk4.

The "F/C Notification Notice" form on toss must be completed with the sales results and sent to the applicable party setup in the header of the toss form.

The foreclosure report located on lotus as j:\shared\everyone\reports\(mmyy)offf.wk4 must be updated on all FHA/VA loans for which HSBC/Servicer was successful bidder and loan is to be conveyed to FHA/VA. The account is to be removed from the lotus foreclosure report and placed on the sale held/completed workout report located on lotus as v:\shared\everyone\reports\(mmyy)offc.wk4. Move the account’s lotus file from the foreclosure sub-directory to the REO sub-directory. Continue to update the account’s lotus file until HSBC’s receipt of claim proceeds and settlement of servicer’s request for reimbursement of advances.

The foreclosure report located on lotus as j:\shared\everyone\reports\(mmyy)offf.wk4 must be updated on all loans for which a third party was successful bidder. The account is to be removed from the lotus foreclosure report and placed on the sale held/completed workout report located on lotus as j:\shared\everyone\reports\(mmyy)offc.wk4. Move the account’s lotus file from the foreclosure sub-directory to the REO sub-directory. Continue to update the account’s lotus file until HSBC has received the third party proceeds and paid any applicable claim from servicer.

REO new loan setup sheet must be completed on all conventional insured/uninsured loans for which HSBC/Servicer was successful bidder. The foreclosure report located on lotus as j:\shared\everyone\reports\(mmyy)offf.wk4 must be updated. The account is to be removed from the lotus foreclosure report and placed on the sale held/completed workout report located on lotus as j:\shared\everyone\reports\(mmyy)offc.wk4. Move the account’s lotus file from the foreclosure sub-directory to the REO sub-directory. There will be no need to update the account’s lotus file as the loan will be setup on CPI and monitored by the REO Department. Continue to update the sale held/completed workout report located on lotus until an REO closing has taken place. The file will then be removed from the sale held/completed workout report.

*The original new loan setup form is to be forwarded to the new loan setup department. A copy of the new loan setup sheet is to be placed in the file being transferred to the REO Department.

* Note: REO Department will monitor all PMI claims. REO Department will receive all PMI claim proceeds from PMI company/servicer and ensure any applicable claim to HSBC by servicer is paid. The SBO specialist will verify all foreclosure costs on PMI claims for the REO Department. Refer to the REO Department procedures on processing claims.

* Note: HSBC must be aware at all times of the percentage HSBC owns. This will dictate whether or not HSBC has the right to do/request the above.

*The form "SBO Reserve and Charge-off Request".

Upon management’s charge-off approval, the following steps are to then be completed:

 

 

.

FOLLOW-UP / REVIEW:

N/A

 

VA Buydowns – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Buydown means that the Bank must "buy" a bid, as to not obtain custody of the property after the foreclosure sale. This situation occurs when the VA has opted to not supply the Bank with a bid. When the value of a property is less than the unguaranteed portion of the debt, the VA will not specify an amount to bid at the foreclosure sale resulting in a no bid.

Upon receipt of "no bid" letter that no amount will be specified for credit to the indebtedness, HSBC may waive or satisfy a portion of the indebtedness to reduce it to an amount which would require the VA to provide a specified amount and acquire the property. The waiver may take the form of a reduction of the principal balance, credit to escrow or unapplied funds account, forgiveness of unpaid accrued interest or a combination of these credits. The operation specialist refers the file to the foreclosure specialist to calculate the buydown amount.

Our options in a no bid:

HSBC can calculate the buydown amount, submit it to the VA on a 567 form, and hope the VA will accept the offer and supply us with a specified bid.

Not to take the buydown and to re-market in house.

 

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

12/02/02

05/31/03

08/14/06

12/15/06

PROCEDURE:

Documentation and Loan Review

Prior to calculation the buydown amount, the foreclosure specialist is required to obtain the following documents:

VA appraisal

VA cutoff date/sale date

Buydown letter from VA

Loan Guarantee Certificate (LGC)

To calculate the buydown amount, the foreclosure specialist will complete the VA "No Bid" analysis worksheet, which is located on Lotus under j:\shared\everyone\4close\vabd.

MIP1

The foreclosure specialist will obtain the VA loan Indicator number from the loan guarantee certificate, then verify this number on the MIP1 screen.

FOR3

The cut off date will be obtained from the VA regional office or the VA bid letter. Then the foreclosure specialist will update FOR3, not all loans have a cutoff date. The VA may not issue a cutoff date, due to the fact that there may not be any loss or delay.

Obtain cutoff date from regional office or VA bid letter. Then update FOR3.

P190

Prior to completing the FONB screen, the foreclosure specialist will obtain the original loan amount, interest rate, DDLPI (due date of last paid installment or due date minus one month), and unpaid principal balance, and escrow advance from this screen.

Loan Guarantee Certificate

The LGC% is obtained from this certificate if not available, call the VA to verify.

Print a copy of the PAY3 and PAY4 screens.

FONB

The foreclosure specialist will then complete the "FONB" screen.

Input "2" in "MSP Principle Balance" field.

Input sale date/cutoff date in "interest to" field.

Input "0" in "escrow" field.

Input "0" in "CORPADU" field.

Input LGC% in "% of loan guarantee" field.

Press enter.

Press PF5 to save.

Press PF8.

Input appraisal date and amount in "VA appraised value (date) field.

Input "VA cost to market (11.87 %) "this figure is obtained from the VA buydown letter and is subject to change as the VA directs.

Input amount of buydown from the analysis worksheet in "amount saved" field.

FOR1

Change no-bid field from "N" to "Y" when notified by the VA the loan is a no-bid.

Press enter.

Press PF5 to save.

Management Buydown Evaluation

When the foreclosure specialist is notified by the VA of a buydown, they will complete the buydown worksheet for management to determine if HSBC will convey the property to the VA or market it internally.

The foreclosure specialist will input basic information on a Lotus Notes form.

The name of the form is "VA Buydown Calculation Form".

Click on attachment to open form.

Update form.

Save form on Excel once completed, utilizing the mortgage account number as the name.

Save form in Excel in j:\\FC\FC\FC\VABIDS

The spreadsheet is then forwarded to the REO manager to review.

A BPO will be ordered by the REO Department to ensure they have an accurate value of the property.

All buydowns will be reviewed to determine if the loss would be less if the REO Department marketed the file versus being conveyed to the VA. This is based on the difference between the value of the property and total debt due on the loan.

The BPO value, VA bid and buydown amount (if bid contains a buydown) are reviewed.

Foreclosure specialist handling the account will review the file and make recommendation prior to roundtable.

File will be reviewed at roundtable to determine if HSBC will bid and not convey or if the loss is less we will take the buydown and convey.

File will either be given to REO to prepare a bid or just issue the VA bid.

*Note – once notified of a buydown scenario by the VA time is critical because the time between the sale date and being notified by the VA is minimal.

Should the property be marketed by HSBC, the Post Foreclosure Department will submit the required documents to the VA to receive payment under the VA guarantee. The property will then be marketed by the REO Department.

Buydown Approval and Authorization

The following buydown package is then forwarded to the foreclosure supervisor for review and authorization:

VA appraisal

Buydown letter from the VA

VA "No Bid" analysis worksheet

LGC

PAY4 and PAY3 screen – the date used is the sale date/cutoff date

FONB screen

The analysis worksheet is signed off on by management within the Default group. Make a copy of the worksheet to keep in the foreclosure file and forward the original to the manager of the following departments: Investor Accounting, Post Foreclosure, Foreclosure and designated foreclosure specialist.

On the fourth 4th day prior to the sale and after all appropriate internal authorization has been received, a new 567 form is faxed to the VA office with a copy of the P309 history screen. The P309 screen will indicate to the VA the buydown was taken.

The VA will then fax a specified bid for the net value amount, which was given in the buydown letter. Upon receipt of the specified bid letter, a bid letter is prepared and forwarded to the foreclosure attorney.

To create a bid letter:

Update the step on the FOR3 screen, "Buydown Request to the VA".

Input a "C" in the ACT field.

Input date the request was made to the VA.

Input the buydown amount in the "Cost" field and enter.

Bid letter will be printed.

 

Buydown Reversal – Bankruptcy

If a bankruptcy was filed before or after a foreclosure sale occurs, then the VA buydown must be reversed. The loan’s principal balance must reflect the balance owed prior to the buydown.

A foreclosure operations specialist will send a lotus note to the manager of the Payment Processing Department requesting the VA buydown be reversed from the loans principal balance and placed in suspense.

*Note – the funds will remain in suspense until the loan is released from bankruptcy and the foreclosure action continues.

Reapplication of Buydown

A foreclosure operations specialist will send a lotus note form "BK to FC". This will inform the foreclosure specialist to reapply the buydown form suspense.

The foreclosure specialist will update the previous VA buydown analysis form and resubmit to the manager of the Payment Processing Department.

*Note – depending on the time the loan remained in bankruptcy, the VA may require HSBC to buydown an additional amount. It would require this VA buydown procedure to be reinitiated from the beginning.

FOLLOW-UP / REVIEW:

N/A

 

Year End Procedures – Rev 12/15/06

FUNCTIONAL OVERVIEW:

Throughout the year 1099A & 1099C’s are completed on a daily basis depending on the loan type. They are completed and done within the Foreclosure Sale Result Procedures.

Cancellation of debt or IRS Form 1099C is a report of mortgagors’ debt canceled by the lender.

The IRS requires the lenders which secure real estate debt to report, a 1099A the acquisition or abandonment of that real estate for the calendar year in which the acquisition or abandonment occurred.

REQUIREMENTS: EFFECTIVE DATE:

12/01/00

08/14/06

12/15/06

1099A is completed upon completion of a foreclosure sale result. 1099C is completed upon completion of a VA foreclosure is a buydown was taken.

PROCEDURE:

Fidelity Maintenance

YFBL - a 1099A form must be completed on every sale. If there are two borrowers insured the 1099 is done on both individuals.

verify information on screen

input sale date

input "Y" for yes, borrower is responsible

input debt outstanding (principal balance)

input fair market value or amount satisfied (purchase amount/bid), whichever is the lesser of the two

use investors TIN number

on FNMA/FHLMC input service code and investor loan number. On all other investors leave blank

fill in property address

PF6 to update

* Note: on VA loans the 1099C must also be completed for the Buydown amount and is only required on one of the borrowers.

VA Loans only

YCDL - a 1099C form must be completed on buydown sales. 1099 needs to be completed on one borrower only.

-verify information on screen

-input sale date by date canceled

-input buydown amount for canceled amount

-input ".00" for interest

-input appraisal amount

-use investors tin number

-input property description

Review of Reports

P103 (Daily Suspense Report)

-Suspense reports must be worked on a daily basis. Suspense money must be removed from the loans in foreclosure, to ensure a correct 1098 statement will be received by mortgagor.

-If for some reason suspense can not be applied until after year end. You must use a supress code, make any corrections changes, apply suspense money in January. Then remove the supress code and generate a correct 1098 statement for the customer.

-The supress code (F) is placed on the MAS1 IRS1 screen, under the field "Do Not Prt Stmt In YE". This will prevent a 1098 statement from generating.

-A Passport report can be created to see which accounts in mancode (F) and stop (1, 2, or 3) have no interest reporting. Once this report is ran, the Foreclosure manager/supervisor can manually supress any accounts to eliminate a 1098 statement from generating.

-When and if the Foreclosure department is ready to send a new 1098 statement a Task "RESYES" is completed on the account once the supress indicator has been removed from the SPR screen. See procedures on "Task Tracking". Or you can bring up the year end statement on PL05, select the statement by placing an "X" on it. Then PF3 to browse the statement. PF3 again to update and make any corrections. Place a "Y" in the field to offset an year end adjustments. Then PF3 to send.

-

-S2SP Report (Year End Statement Supress Print Indicator) will pull all loans with the foreclosure supress stop (F). These loans will be reviewed to ensure a 1098 statement will not be printed or generated.

-

-ZZ92 (IRS 1098-1099 Tape File Listing Report)

-Six months prior to month end Foreclosures reviews the ZZ92 (IRS 1098/1099 tape file listing report). The VA 1099C’s and 1099A’s are checked for accuracy. The Foreclosure manager insures the proper fields are filled in.

-When requesting a follow up ZZ92 report after maintenance has been completed on the 1099C’s or 1099A’s, it must be requested one business day after the correction was made.

-Samples of the 1099C’s and 1099A’s are forwarded to supervisor or Foreclosure manager for review. We ensure that the numbers on the sample copies match the data on the CPI system. This quality control check is made on a random sample of loans. If the sample forms are ok, approval is given to year end coordinating supervisor. He/She in return will give the ok to the vendor to print the statements.

-

T-3DT Report (Tax Identification Number Report)

-This report identifies the tax identification number associated with each investor or non investor number on the CPI system. It is mainly reviewed by the investor accounting area. However the Foreclosure unit assist with the review.

-Sometimes the report will reflect tin numbers but will be missing the name of the investor. The Foreclosure manager or supervisor will help assist to identify the proper Investor name.

-We will also notify the Supervisor of the Investor Accounting Department, when a new Investor tin number must be added to the CPI system in order to properly complete 1099A’s or 1099C’s.

ByProducts - Year End Procedures

1099A and 1099C information and calculations are prepared in the same manner for Helocs (Home Equity Lines of Credit) and Heloans (Home Equity Loans). the 1099A & 1099C documents however are produced manually due to the fact that these products are not serviced on the CPI System. Special software is produced annually for this purpose.

The Foreclosure Manager coordinates with the Application Support Department to order the software (usually in the 4th quarter of a given year. Application Support forwards this software and the information that accompanies it, to the Foreclosure Department upon receipt. The software is then loaded by the Application Support Department onto 1 PC in the Foreclosure Department and onto 1 PC in the Loss Mitigation Department. The software includes detailed instruction for data entry.

The Loss Mitigation Supervisor completes all 1099A and 1099C documents by the 2nd week of January. A copy of the document is printed and sent to the mortgagor by the 2nd week of January. The 1099A and 1099C information is produced by the software and forwarded to the IRS via Magnetic Media (disc). The 1096 Annual Summary and Transmittal of US Information Returns document produced by the same software and is signed by the Default Manager (VP). This form is enclosed with the disc and forwarded to the IRS via overnight mail. Loss Mitigation retains copies of all Loss Mitigation 1099A and 1099C documents.

 

 

 

 

 

Suspense Review

Throughout the year the loans in mancode L & S with suspense balances (see exhibit #5) are reviewed daily and payment applications are made by the Loss Mitigation Operations Specialist. The Loss Mitigation Supervisor will ensure all funds in Suspense that are sufficient to apply as payments, are applied to the loan prior to Year-end. If Loss Mitigation is unable to apply these funds due the specific nature to the deal negotiated, the Loss Mitigation Supervisor will apply a Suppress Code (see exhibit #6) to suppress the 1098 reporting. Once suppressed, the Loss Mitigation Supervisor will insure the 1098 information is manually corrected to ensure the mortgagor receives a correct 1098 within the required time frame.

Loan Purge Review

In December, the Loss Mitigation Supervisor will submit an Application Support Work-order to prepare a Passport to clear LM Condition Codes (C or R) on zero balance loans as shown on the P5471-4zx RMDS Report. The removal of these codes in required to allow the loans to purge at year-end.

FOLLOW-UP / REVIEW:

Quality control review of 1% of the 1099A’s and 1099C’s printed by the vendor.

 

HDPI – Self-audits – Foreclosure – Rev 08/14/06

FUNCTIONAL OVERVIEW:

On a monthly basis, HDPI will do a ten percent (10%) quality control check on the functions they perform. The accounts are reviewed to ensure they are being serviced within investor and HSBC guidelines. The accounts are listed on the Foreclosure Quality Review Report. The information is forwarded to the HBUS foreclosure manager to incorporate into their monthly self-audit report.

REQUIREMENTS: EFFECTIVE DATE:

02/13/03

08/14/06

Mortgage foreclosure accounts are obtained from the daily log journals

Functions – foreclosure setup, reinstatement / payoff , foreclosure to bankruptcy transfer and MTC/MCP setups

Foreclosure quality review forms are located on Excel as: j\shared\manager\foreclosure\audits\form.wk4

PROCEDURE:

The processor’s name and current date are placed at the top of the foreclosure processor quality review form

Accounts (10%) are randomly selected from the daily logs and written across the top of the columns

Each account is thoroughly reviewed through Fidelity workstation windows listed on the review form

If a discrepancy exists on an account, the problem will be notated on the form

If no problems are detected on an account, it is noted on the form

ALL discrepancies must be corrected and noted as such on the report. A response can be written next to each account

When completed, the self-audits are faxed to the foreclosure manager

 

FOLLOW-UP / REVIEW:

N/A

 

Fair Debt Collection Practices Act Compliance – Rev 08/14/06

FUNCTIONAL OVERVIEW:

REQUIREMENTS: EFFECTIVE DATE:

11/26/2003

08/14/2006

PROCEDURE:

HSBC Mortgage Corporation has previously always been in compliance with other Sections of the Act dealing with unfair and deceptive practices and harassment. However, the recent passage of State laws and purchase of Servicing Rights on loans already delinquent have eliminated the exemption from the Act previously enjoyed by HSBC Mortgage Corporation on a segment of the loans being serviced. As of October 20, 2003, it has been determined that HSBC Mortgage Corporation will comply with the "Borrower Notification" Sections of the Federal Fair Debt Collection Practices Act (FDCPA). In order to ensure compliance with respect to this small segment of accounts, a comprehensive policy has been adopted.

Correspondence: All default letters (except bankruptcy letters) will now include the phrase commonly known as the "mini-Miranda" informing the recipient that: "This is an attempt to collect a debt. Any information obtained will be used for that purpose".

Verbal Communication: All default staff will comply with the following policy on telephone communication:

All inbound and outbound telephone contacts with our borrowers must include a verbal "mini-Miranda" as soon as we have verified that we are speaking with a responsible person on the account.

The "mini-Miranda" notification will be in the following form:

"This is an attempt to collect a debt.

Any information obtained will be used for that purpose."

The requirement to comply with FDCPA and provide the debt collection statement contained in the Note below is not in effect for discharged bankrupt accounts. These accounts have a "No Notice Stop B" (which will also provide a message in the middle of our DLQ1 screen in white print.) placed on them when they are removed from the Bankruptcy workstation. They will not be included in the dialer queues but handled in manual outbound campaigns.

For discharged bankrupt accounts, we shall advise the borrower of the status of the loan (i.e. due for 2 payments) and ask what their intention is with respect to retaining the property. If the borrower intends to retain the property, we provide the amount needed to bring the account current to avoid any foreclosure action.

We cannot advise a discharged bankrupt borrower that we are attempting to collect a debt.

That would be a violation of the automatic stay provided under the Bankruptcy law.

Please note, however, that reaffirmed bankrupts are to be treated as though no bankruptcy had been filed and the "mini-Miranda" statement must be provided.

FOLLOW-UP / REVIEW:

N/A

 

 

 

Debtor Discovery Security Review – Rev 08/14/06

FUNCTIONAL OVERVIEW:

REQUIREMENTS: EFFECTIVE DATE:

11/25/2003

08/14/2006

PROCEDURE:

BACKGROUND:

Debtor Discovery is a web-based tool used by Mortgage Default to

skip-trace borrowers

obtain current telephone numbers

get names and telephone numbers of neighbors at a borrower’s mailing or property address,

locate assets

research lien position.

Each User is assigned a User ID and Password, which is required to gain access to the web site and perform the inquiries desired.

The User ID also allows designated "Administrators" or supervisory personnel to obtain reports on the inquiries performed by each User in their Team.

In order to ensure that the Debtor Discovery tool is used only for business purposes, Administrators for each Team will perform the following self-audit.

 

AUDIT STEPS:

An Administrator will log into Debtor Discovery using his/her User ID and Password. This will grant access to the selection on the Main Menu labeled Administrative.

Click on the Administrative selection. The Administrative Main Menu will appear.

Under Account Review, on the right side of the menu, select Date Range Report.

A screen will pop which also will allow the Administrator to select a report based on a date range and can sort by User ID.

Depending on typical request volumes, the Administrator may choose to obtain reports for various numbers of days (weekly, monthly, bi-weekly, etc.). Once the desired date range has been selected, the Administrator will click on Submit.

In order to review the requested report, the Administrator will return to the Administrative Main Menu and select Administrative Results from the bar at the top of the menu.

The Administrative Results Manager screen will appear with a list of any results for each date-range report requested in the past 24 hours by the Administrator.

On the Administrative Results Manager page the "Status" of each report requested will display on the right of the line for each report listed. The status will either be "Pending" or "Available".

When the "Status" of a report displays as "Available", the report is ready for review by the Administrator.

The Administrator will click on the word "Available" for the desired report.

The report will be displayed, sorted by User ID and will show the Date, Time, User ID, Transaction (type of inquiry), Search Criteria (SSN, Address, Name, etc.) and Amount (Price for the inquiry results). There will be a subtotal indicating the number of inquiries and total Amount for each User ID during the date range selected. The Administrator will print the report.

For purposes of the Security Review, the Administrator may randomly select 20% of the inquiries (minimum of 5 weekly, if applicable or maximum 20).

For each selected inquiry, the Administrator will use the Search Criteria (SSN, Name, address, etc.) to view CIF to determine if there is an appropriate Mortgage or Home Equity account that would indicate that the transaction was for a legitimate business purpose.

The Administrator will highlight the selected accounts on the report printout and document that the inquiry was reviewed and the account number and name associated with the inquiry.

If no CIF match is obtained, the situation will be discussed with the HSBC Human Resources Representative and a determination will be made as to disciplinary action to be taken against the employee.

The printed report containing the Administrator’s review documentation will be placed on file for a minimum of 6 months.

FOLLOW-UP / REVIEW:

N/A

 

 

Electronic Monitoring – Rev 08/14/06

FUNCTIONAL OVERVIEW:

In order to provide training and feedback, as well as ensure compliance and quality service to our customers, the Company periodically monitors and/or records certain employee telephone conversations. Employees and customers must be notified of telephone monitoring and monitoring must only be used for business purposes.

This policy applies to all HSBC employees.

REQUIREMENTS: EFFECTIVE DATE:

09/15/04

08/14/06

PROCEDURE:

Policy Guidelines

Employee conversations will be monitored for legitimate business purposes

Personal calls may be recorded, but should never be monitored; if you identify a personal call in the course of monitoring an employee, the monitoring should be discontinued immediately.

Telephone conversations may be recorded for use in monitoring at a later time; recorded calls are destroyed on a regular basis.

When permitted by state laws, violations of company policies or applicable laws detected during monitoring may be grounds for disciplinary action, up to and including terminations.

Monitoring is done through the use of extension telephone or other means supplied by a common carrier.

All new employees must sign the Electronic Monitoring Agreement, even if their positions are not currently subject to telephone monitoring

The following list are persons that may perform telephone monitoring:

Department managers

Supervisors

Senior level employees

Associates (for training purposes)

Company business partners

Electronic Monitoring Agreement

Employee notification - Employees should know that:

Telephone calls may be recorded at management’s discretion, provided that both the employee and customer have consented to being taped.

Employees may not electronically monitor or record conversations in the workplace without first disclosing their intent to monitor and receiving management consent.

In locations where telephone monitoring is performed, a sign notifying the employees of the monitoring should be posted. In the collections area they are located in the front and back of the rows in the isles.

The sign reads as follows:

Employee Electronic Telephone Monitoring Policy: Your business telephone call may be monitored for training purposes to ensure compliance and quality service to our customers. In order to monitor business calls at a later time, all telephone conversations may be recorded.

FOLLOW-UP / REVIEW:

N/A

MERS – Rev 12/20/06

FUNCTIONAL OVERVIEW:

MERS represents Mortgage Electronic Registration System. It is used by many lenders to simplify the process of assignment in the Foreclosure process. It streamlines the lien release since it guarantees the end of a chain of titles. Therefore, reducing time and recording fees. As a lender, MERS would be the Nominee and HSBC would also be identified on the document, using Fannie Mae and Freddie Mac approved language. A MIN Number (Mortgage Identification Number) is issued and included it on the closing documents, and completes the registration of the loan on MERS. This simplifies the lien release process by avoiding delays because of missing or incorrect prior assignments. The chain of title will always start and stop with MERS.

MERS also reduces paperwork as a result of the other assignments needed in other parts of the industry. With MERS as the Mortgagee of Record, you don't need additional assignments - ever. The unrecorded assignments needed for interim funding and loan sales are costly. With MERS you save an estimated $3 per loan on unrecorded assignments.

MERS does not replace the role of the trustee in Deed of Trust states. HSBC would perform just as they do without MERS except that they prepare these documents via a Corporate Resolution from MERS since MERS is the Mortgagee of Record.

MERS serves two purposes. First, it is a national electronic registry for tracking servicing rights and beneficial ownership interests in mortgage loans. Second, MERS acts as nominee (a form of agent) for HSBC Mortgage Corp., USA and beneficial owner of a mortgage loan in the public land records. MERS is designed to operate within the existing legal framework in all U.S. jurisdictions and did not require any changes to existing laws.

MERS is appointed as the mortgagee of record on all loans that they register on the MERS System. This appointment eliminates the need for any future assignments when servicing rights are sold from one MERS Member to another. Instead of preparing a paper assignment to track the change in the county land records, all subsequent transfers are tracked electronically on the MERS System.

MERS does not create or transfer beneficial interests in mortgage loans or create electronic assignments of the mortgage. MERS eliminates the need for subsequent recorded assignments. The transfer process of the beneficial ownership of mortgage loans does not change with the arrival of MERS. Promissory notes still require an endorsement and delivery from the current owner to the next owner in order to change the beneficial ownership of a mortgage loan.

REQUIREMENTS: EFFECTIVE DATE:

12/20/06

PROCEDURE:

How does MERS become the Mortgagee of Record?

MERS becomes the Mortgagee of record in two ways:

By an assignment from a lender or HSBC to MERS. This method is associated with bulk servicing transfers.

The lender names MERS as the mortgagee of record as nominee for itself (and its successors and assigns) in the original security instrument at the time the loan is closed. This option is called "MOM", which stands for MERS as Original Mortgagee.

Fannie Mae, Freddie Mac, and Ginnie Mae have each approved the use of MERS as original mortgagee as nominee for a lender on the security instrument for loans sold to them and registered on the MERS System.

In order to make MOM work, changes were made to the uniform security instruments allowing MERS to be named as the mortgagee in a nominee capacity for the lender.

Ensuring that the promissory note and mortgage were tied together properly, the recital paragraph names MERS, solely as nominee for Lender, as beneficiary.

It is then made clear that the originating lender rather than MERS is defined as the "Lender". This change was made so that everyone understands that MERS is not involved in the loan administration process.

As mortgagee of record, MERS needs to have the authority to release the lien of security instrument, or if necessary, foreclose on the collateral on behalf of the lender. Such authority is provided by adding a paragraph to the security instrument informing the borrower that MERS holds only legal title to the interests granted by the borrower. It also informs the borrower that, if necessary MERS may exercise the right to foreclose and sell the property and may take any action required of the Lender to release or cancel the security instrument.

Once MERS is named, the document is then recorded in the appropriate public land records. From this point on, no subsequent assignments of the mortgage to a MERS member needs to be recorded. MERS remains in the land records, as mortgagee, throughout the life of the loan so long as servicing is not sold to a non-MERS member. All subsequent transfers of ownership in mortgage loans and servicing rights for that loan are tracked electronically between MERS members through the MERS System. This process eliminates the opportunity for a break in the chain of title.

Unless HSBC transfers servicing rights to a loan registered on the MERS System to a non-MERS member, the loan stays on the system until it is paid off. The process to transfer servicing rights between HSBC requires an electronic confirmation from the buyer. It begins with the seller entering loan transfer information into the system that includes MIN, the new servicer organizational identification number, the sale date, and the transfer effective date. The buyer then must submit a confirmation acknowledgment to the system. HSBC and the new servicer are still required to notify the homeowner in writing when loan servicing is traded as required under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq. A loan is removed from MERS only if its servicing rights to a loan are transferred to a non-MERS member.

Why Foreclose in the Name of MERS

The mortgage establishes the remedy to foreclose and sell the property if the borrower does not pay back the amount loaned to the borrower according to schedule. Typically, HSBC, as the mortgagee of record, is the party that initiates the foreclosure proceedings on behalf of the investor. When MERS is the mortgagee of record, the foreclosure can be commenced in the name of MERS in place of HSBC. For another entity to foreclose, an assignment is required from MERS to the other entity.

Establishing MERS as mortgagee of record will not cause any significant changes to current foreclosure practices in any state when the beneficial owner wants to proceed with foreclosures in the name of MERS.

JUDICIAL FORECLOSURES

Mortgages are typically foreclosed judicially. MERS local counsel advises that a loan can be foreclosed in the name of MERS. When MERS has been assigned the mortgage, the caption of the complaint should state Mortgage Electronic Registration Systems, Inc. as the plaintiff. However, this changes slightly if MERS is the original mortgagee of record, meaning that MERS is named on the mortgage in a nominee capacity for the originating lender. The caption should then state MERS as nominee. The key is how MERS is named as the mortgagee of record.

The body of the complaint should be the same as when foreclosing in the name of HSBC. MERS stands in the same shoes as HSBC to the extent that it is not the beneficial owner of the promissory note. An investor, typically a secondary market investor, will be the ultimate owner of the note. (Even though HSBC has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note.)

The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require a blank endorsement of the promissory note when the seller/HSBC sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced unless it is legally required to be endorsed to the foreclosing entity and not just the preferred method. If it is required to endorse the promissory note to the foreclosing entity, then the note may need to be endorsed to MERS. However, we have not found it a requirement in Florida that the Note needs to be endorsed to the foreclosing entity.( Even though HSBC has physical custody of the note, custom in the mortgage industry is that the investor (Fannie Mae, Freddie Mac, Ginnie Mae or a private investor) owns the beneficial rights to the promissory note)

An officer of HSBC will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution from MERS. In other words, the same individual that signs

The documents for HSBC will continue to sign the documents, but now as an officer of MERS.

After a foreclosure judgment to MERS is entered, a public sale is held. The Plaintiff (MERS) has the option of assigning the foreclosure bid either prior to the foreclosure sale or in the ten (10) day period between the sale and the issuance of the Certificate of Title. The assignment is done with a motion filed with the court, and a court order is entered. If the bid is assigned, the certificate of title is issued directly to the assignee. This is the same method that is used when HSBC forecloses in its own name. Because the MERS recommended procedure follows the same procedure that is used when HSBC foreclosures in its name, no additional recording or transfer taxes are incurred by foreclosing in the name of MERS.

MERS temporarily suspended FC actions in the name of MERS in Florida pending an appeal of an adverse ruling issued by the 6th Judicial Circuit Court. An appeal was filed contesting the ruling, which held that only a party that has a beneficial

Ownership interest in a promissory note can foreclosure on the note. MERS is appealing the decision because, as a matter of case law, MERS has rights to foreclose as a note holder or as an authorized agent. During this temporary suspense, HSBC should assign the mortgage instrument from MERS to an entity designated by the investor before initiating the foreclosure suit. Several states have contemplated following suit.

HSBC’s conservative approach has been based on Florida’s litigation.

Florida, Illinois and New York

These states have some unique practices outside of the normal judicial MERS procedures. In these situations, it is recommended to review the website for recent updates in case laws and MERS policy

www.mersinc.org

 

FLORIDA

MERS encountered recent challenges to its standing to appear s plaintiff in foreclosure actions in Florida. MERS participated in several Show Cause hearings. In the cases the judges issued final orders of dismissal with prejudice based upon the contention that MERS must plead and show that it is the beneficial owner of a promissory note in order to have standing in the foreclosure, and that MERS cannot have standing as a nominee for the note owner. Both Florida’s statutory and common law expressly rejects the judge’s contention regarding the necessity of ownership for standing.

In the meantime, MERS has temporarily suspended allowing MERS members to name MERS as the plaintiff in foreclosure actions in Florida. An assignment is prepared by the servicer or outsource company, properly executed and notarized by the MERS designated signing officer and delivered to the foreclosure firm at referral of the foreclosure proceedings. A faxed copy of the assignment is sufficient. The foreclosure will be prosecuted in the name of the service.

Effective January 19th, 2006, any member who forecloses in the name of MERS, is subject to sanctions of $10,000.00 per violation.

ILLINOIS

The results of recent litigation in Florida and recently filed class action case against MERS, has affected how Illinois continues their foreclosure servicing. An assignment is prepared by the servicer or outsources company, properly executed and notarized by the MERS designated signing officer and delivered to the foreclosure firm at referral of the foreclosure proceedings. A faxed copy of the assignment is sufficient. The foreclosure will be prosecuted in the name of the service.

NEW YORK

The results of recent litigation in Florida and recently filed class action case against MERS, has affected how New York continues their foreclosure servicing. The foreclosure will be prosecuted in the name of the servicer. An Assignment is prepared by the servicer or outsource company, properly executed, notarized by the MERS designated signing officer and delivered to the foreclosure firm at referral of the foreclosure proceeding. A faxed copy of the assignment is sufficient.

 

 

NON-JUDICIAL FORECLOSURES

Mortgages are foreclosed non-judicially under power of sale. A foreclosure can be brought in the name of MERS. Notice of the foreclosure sale is published with MERS named as the foreclosing entity instead of the HSBC Mortgage Corp., USA.

An officer of HSBC will be certifying officers of MERS. This means they are authorized to sign any necessary documents as an officer of MERS. The certifying officer is granted this power by a corporate resolution of MERS. In other words, the same individual that signs the documents for the HSBC will continue to sign the documents, but now as an officer of MERS.

The agencies (Fannie Mae, Freddie Mac and Ginnie Mae) require the promissory note be endorsed in blank when the seller/HSBC sells a mortgage loan to them. Therefore, the note should remain endorsed in blank when the foreclosure is commenced in the name of MERS. However, we have been advised that sometimes there is an endorsement of the promissory note to the HSBC prior to foreclosure. The agencies’ policies must be followed.

At the foreclosure sale, the certifying officer will instruct the foreclosing attorney regarding the bid to be entered on behalf of MERS. If the bid is the highest bid, then the auctioneer will be instructed to deed the property directly to the investor. We have been advised that this is the same procedure followed when foreclosing in the name of the HSBC. The MERS recommended procedure follows the same procedure that is used when the HSBC forecloses in its name; no additional taxes are incurred by foreclosing in the name of MERS.

The trustee, who is typically a title company, commences the foreclosure by executing and recording the Notice of Default. The Notice of Default is filed and published the same way with the same required information except that Mortgage Electronic Registration Systems, Inc. (MERS) will be named as the foreclosing entity. At the foreclosure sale, an "offset bid" is entered on behalf of MERS who is acting in the capacity as "agent" for HSBC. Local counsel advises that the

Ownership. (If the "offset bid" is not accepted, then the trustee’s deed may need to be granted to MERS. If MERS takes title to the property, a subsequent deed should be executed to the investor as soon as possible.) In that instance, if HSBC is successful at the foreclosure sale, the trustee’s deed will be issued directly to HSBC.

Beneficiary’s Declaration of Default can be modified to describe the relationship of MERS and HSBC. This should enable HSBC, instead of MERS, to be the named grantee of the Trustee’s Deed. HSBC can then issue a deed to the investor. This procedure is consistent with the current two-deed foreclosure practice.

While initially there may be some hesitation to accept an "offset bid" by HSBC, MERS local counsel states that usually a title company is willing to recognize the substance of who actually owns the loan rather than the form of the record

 

Connecticut, Rhode Island and New Hampshire

These states have some unique practices outside of the normal non-judicial MERS procedures. In these situations, it is recommended to review the website for recent updates in case laws and MERS policy

www.mersinc.org

 

 

Connecticut

The foreclosure will be prosecuted in the name of the servicer. An Assignment is prepared by the servicer or outsource company, properly executed, notarized by the MERS designated signing officer and delivered to the foreclosure firm at referral of the foreclosure proceeding.

Rhode Island

The foreclosure will be prosecuted in the name of the servicer. An Assignment is prepared by the servicer or outsource company, properly executed, notarized by the MERS designated signing officer and delivered to the foreclosure firm at referral of the foreclosure proceeding.

New Hampshire

The foreclosure will be prosecuted in the name of the servicer. An assignments is prepared by the servicer or outsource company, properly executed, notarized by the MERS designated signing officer and delivered to the foreclosure firm at referral of the foreclosure proceedings.

 

 

EVICTIONS

Evictions are handled the same way they are handled when HSBC commences the foreclosure as the foreclosing entity. If it is an FHA-insured loan and an eviction is necessary, then the auctioneer deed can be issued to the HSBC. This way, the eviction can be brought in the name of the HSBC. Once the eviction is completed, then the HSBC can issue a deed to HUD. Again, you should follow the same procedures you follow when foreclosing in the name of the HSBC.

 

NOTIFICATION & UPDATING MERS

 

There are five different ways a loan is considered and MERS should be updated.

Mortgagor pays off loan

DIL

Short Sale

Charge Off

Sale to 3rd party ff loan

This will be updated by Fidelity.

 

There are 3 times during the foreclosure action MERS needs to be update. This is automatically completed when updating FOR3

1st legal

When loan reinstates or modify

F/C sale

 

 

In the beginning of the F/C action we will have an assignment prepared from MERS to HSBC and send to the attorney to have recorded. This is very important….

WHEN A LOAN REINSTATES OR MODIFY WE NEED TO COMPLETE A ASSIGNMENT BACK TO MERS. THIS IS ONLY IF THE ATTORNEY DID RECORD THE ASSIGNMENT. SOME ATTORNEYS WAIT UNTIL SALE TO RECORD.

 

When and How to Destroy Confidential Information – Rev 03/22/06

FUNCTIONAL OVERVIEW:

Employees must dispose of Confidential Information in their possession after it serves its intended purpose and in accordance with business unit record retention policies and management direction.

REQUIREMENTS: EFFECTIVE DATE:

03/22/06

PROCEDURE:

Destruction of Paper Documents

All employees are responsible for the appropriate destruction of paper documents containing Confidential Information, in accordance with management direction. Contact Facilities for information regarding the paper shredding or recycling options available at each location.

Recycling Bins are to be emptied by employees daily into the locked bins.

Handling Confidential Information

This section describes Standards for handling confidential information.

Workspace Security

All employees must ensure that Confidential Information is not stored in areas where it may be compromised or subject to unauthorized access.

All employees must follow workspace security policies and procedures established by Key Management.

All employees who use HBUS network and computing resources must lock their PCs when unattended. Contact your local system support group for assistance.

All employee users of HBUS network and computing resources must log off their PCs at the end of the workday.

Workspace Security Do Checklist

DO

􀂉 Sign in and escort visitors to the assigned interview area.

Example: follow your work site procedures for visitors.

􀂉 Use screen savers with passwords to unlock the PC or workstation.

Example: use strong passwords for your PC. A strong password is one that is at least six characters, includes a combination of letters, numbers, and symbols, and is easy for you to remember but difficult for others to guess.

􀂉 Log off the PC or terminal at the end of the day.

Example: log off and power down the PC.

􀂉 Challenge people when you do not see an ID badge.

Example: wear your ID badge so that it is easily visible.

􀂉 Report unusual events or items to Corporate Security.

Example: advise Corporate Security of unescorted visitors.

DO

􀂉 Respect limited access work areas.

Example: do not enter restricted work areas, e.g. testing labs.

􀂉 Review access lists for work areas.

Example: revoke access when someone leaves the department.

􀂉 Secure and store equipment properly.

Example: use locking cables for laptops.

􀂉 Dispose of confidential waste correctly.

Example: use locking confidential waste containers to dispose of confidential paper documents.

 

DON’T

􀂉 Admit visitors to the work area when they are not escorted by staff.

Example: balance courtesy with safety and escort the visitor to the staff person and work area.

􀂉 Allow people to piggyback (walk in behind you without using a security pass) and enter a secure area.

Example: do not use your ID Badge to allow a stranger to enter an area.

􀂉 Disable your screen saver program.

Example: do not tamper with PC/laptop settings.

 

 

Foreclosure Departmental Expectations and Standards – Rev 03/01/06

As a department, we face the challenge of meeting and adhering to the guidelines and standards set within the Mortgage Banking industry, specifically as communicated by the various Investors and Insurers.

COMPLIANCE IS NOT AN OPTION – BUT RATHER A REQUIREMENT.

This is to formally inform you of the Foreclosure Department’s performance standards and expectations. These standards apply to all of the related processes required to be performed by the Foreclosure Department. Each individual’s performance is vital to both the department and HSBC as a whole – it ensures our success.

Your contribution and commitment is essential as we forge ahead towards our ultimate goal of 100% compliance.

The Following are the Foreclosure Department’s Full Compliance Standards and Expectations:

As a Foreclosure processor, your position’s accountability includes the diligent, accurate and thorough servicing of each loan in your assigned portfolio(s). Diligent Servicing can be defined as the review of an individual loan at least once every 10 days, or as business requires, with the specific review/results properly and fully documented on the appropriate screen(s) (i.e. FOR1, FOR2, FOR3, DLQ5, etc.).

Thorough and timely loan review is required. System notation must be timely, consistent and accurate. Servicing files must contain all required documents and data.

Full Compliance and adherence with all investor and departmental guidelines.

Prescribe to a "DO IT RIGHT THE FIRST TIME" methodology. Share suggestions for change and ideas for process improvement with your Supervisor/Manager.

General Foreclosure Department Diligent Servicing Requirements

All new loans are to be assigned to and reviewed by the appropriate processor on a daily basis.

Maintain .05 "delinquent" Foreclosure Steps at all times.

Proper Foreclosure Steps, Stops, Man-codes, Process Stops, Disbursement Stops, SFDMS and DFRI codes must be maintained on a loan-level basis.

Proper portfolio management and movement during the entire Foreclosure process (FOR3-template).

Verify loan at setup for suspense funds or restricted escrow and act accordingly.

Contact mortgagor by phone to actively solicit Loss Mit opportunities.

All phone calls and e-mail requests are responded to within 24 hours of receipt.

Foreclosure Representatives are expected to utilize ALL resources available to them - AllRegs, Navigator, Attorney firms etc. – prior to seeking an answer from management (as applicable).

Problem Solving - The processor is expected to fully review a given problem and derive your own proposed answer. Processors are expected to come to Management with a suggested answer to a question, rather than just seeking the answer from Management.

Think a problem through – always utilize and apply common-sense business practices.

 

Investor/Insurer Specific Servicing Requirements

FNMA (Federal National Mortgage Association) (FANNIE MAE):

1) Verify Mas1/COL1 is reporting correctly.

2) Follow investor guidelines for bidding.

3) Notify investor of delays, such as service problem, contested action, etc and the fees involved with resolving the delay.

FHLMC (Federal Home Loan Mortgage Corporation) (FREDDIE MAC):

4) Verify DFRI is reporting correctly, at both the time of setup and when first legal is filed.

5) Follow investor guidelines for bidding.

6) Notify investor of delays, such as service problem, contested action, etc and the fees involved with resolving the delay.

Mortgage Insurance:

Verify DLQ5 is reporting correctly

Follow MI guidelines for bidding.

The above timeframes represent HSBC’s desired completion timeframes. Adherence to these timeframes is expected. The HSBC timeframes are believed to be attainable, and are set in such a fashion as to provide that the Investor/Insurer specified timeframes are not exceeded or compromised.

FHA (Federal Housing Administration):

 

VA (Veterans Administration):

 

MISC. Investors: Strict adherence to EACH Investor’s specific guidelines is required.

 

 

 

 

 

NEW FILE SET-UP/RECEIPTS:

Newly received files are to be set-up and activated in the FC Workstation within 24 hours of receipt.

CASH APPLICATIONS:

All reinstatement and payoff proceeds and related cash applications are to be completed no later than 24 hours of payment receipt.

All applicable cash-application forms are to be utilized in full.

Applications are to be reviewed daily to verify all funds applied and all fees, including corp and outstanding attorney fees and costs are paid.

Any loan discovered to have improper/unjust cuts is to be reported to the appropriate Servicer and Supervisor.

Any checks not submitted for processing must be LOCKED within the departmental FIREPROOF cabinet for safekeeping until the next day business day.

VI. Every effort must be made to ensure that ALL loans are serviced within HSBC and/or Investor mandated timeframes. Anything that is outside of the timeframes must be brought to the attention of your Supervisor. Late steps should be noted upon your weekly Status Report along with a valid explanation as to why the particular step was late etc.

VII. Any/All deadlines, which cannot or will not be met, are to be communicated/discussed with Management PRIOR to non-compliance.

VIII. PROBLEMS are to be brought to Management’s attention immediately.

IX. Processors are expected to service their assigned portfolio(s) with the best interest(s) of the Investor/Insurer in mind at ALL times. Decisions are to be made based upon sound business judgment.

X. Courteous and professional Customer Service is expected at all times. Customer Service applies to both internal as well as external customers, vendors, peers, etc.

 

Reports – Rev 09/01/06

Exhibit for report matrix detailing all departmental reports used to manage and gauge related loans/portfolios.

 

 

 

 

 

 

Exhibit for the related Fidelity Workstation reports.