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ยป VISIT US ONLINE @ DSNEWS.COM 11 THE TIDE IS TURNING: RMBS LIQUIDATION TIMELINES DECLINE According to a report from Fitch Ratings, liquidation timelines on defaulted mortgage loans may have hit their peak. "While Fitch expects loss severities to decrease and timelines to shorten, we do not expect a rise in ratings on RMBS as these changes are already reflected in our analysis," added Fitch. e analysis said that in 2016, timelines topped out at four years and began to decline with the inventory of severely delinquent loans at the lowest level seen since 2007. Fitch said median timelines have histori- cally been just below the average, but the report indicated "the widening average-median gap represents a long tail of long-timeline loans that continue to elevate the average while the bulk of the timeline distribution has begun to shift lower." "After 10 years of steady increases, liquidation timelines on defaulted RMBS loans have begun to fall as mortgage servicers continue to make progress on their backlog of severely distressed properties," said Sean Nelson, Senior Director, U.S. RMBS, and Fitch Ratings. "Fitch expects loss severities to follow suit, since shorter timelines result in lower costs and higher property sale proceeds." e report noted that even though the national average timeline is down from its peak, timelines differ by state. In judicial foreclosure states, timelines are well above the national average, while timelines in non- judicial states tend to be below. "Distressed RMBS loan inventory is down over 75 percent nationally from the peak in 2010, but progress has varied by state," Nelson said. "California and Florida have vastly outperformed New York and New Jersey in resolving their distressed loans. At the peak, California and Florida combined for over 5 times more distressed loans than New York and New Jersey. Today, the two are roughly equal as New York and New Jersey continue to struggle to make a dent in their distressed inventory." AS HAMP EXPIRES, FANNIE MAE LAUNCHES NEW PROGRAM With the expiration of the Home Affordable Modification Program (HAMP), Fannie Mae designed a foreclosure prevention program, Flex Modification, to help America's families by offering reductions to their monthly mortgage payments. is program was developed in alignment with Freddie Mac at the direction of the Federal Housing Finance Agency (FHFA), according to Fannie Mae. "e new Flex Modification announced by Fannie Mae and Freddie Mac (the Enterprises) today was designed based on lessons learned from crisis-era loan modification programs to help borrowers stay in their homes and avoid foreclosures whenever possible," says Sandra ompson, FHFA Deputy Director. "e Flex Modification also reflects input received over the course of extensive engagement with lenders, mortgage insurers, consumer advocates, and other stakeholders. By avoiding the high costs associated with foreclosures, the Flex Modification will result in significant savings for the Enterprises and taxpayers. And it will provide borrowers who face permanent hardships with a sustainable modification." Fannie Mae added that the Flex Modification is anticipated to provide a 20 percent payment reduction for eligible borrowers. Specifically, the GSE said this would apply to a high percentage of those who are at least 60 days delinquent and could also be an option for those who are current or less than 60 days delinquent on a case-by-case basis. "e Flex Modification is an adaptive program that will allow us to continue to assist struggling homeowners in a changing housing environment and simplify the process for servicers to deliver those solutions," said Bill Cleary, VP of Single-Family Servicing Policy, Fannie Mae. "We believe the program is flexible to adjust for regional and even local differences in housing. It provides the greatest amount of assistance to those areas in need." e new modification will replace the current Fannie Mae Standard and Streamlined Modification offerings on and after October 1, 2017, Fannie Mae announced. Fannie Mae did note, however, that during the interim, it urges servicers to continue to evaluate borrowers for Standard and Streamlined Modifications following the evaluation hierarchy. THE LEADER IN DEFAULT SERVICING NEWS Help shape the next issue of DS News. Drop us a line at Editor@DSNews.com.