Download Default and Claims Servicing Guide

Default and Claims
Servicing Guide
Effective September 17, 2012
Radian
Revision notes
Default and
Claims Servicing
Guide
Revisions for September 17, 2012
The industry’s current focus on improving servicing practices for defaulted mortgage loans, specifically
to address the Fannie Mae and Freddie Mac Servicing Alignment Initiative, presents an opportunity for
Radian to adapt and update our Default and Claims Servicing Guide.
Updates to this Guide are intended to:
•Define the term “Highest Standard of Servicing Performance;”
•Align Radian’s expectations for defaulted loan servicing performance with standard
Fannie Mae and Freddie Mac policies and procedures;
•Establish Radian’s position and the role of the Servicer in the successful management
of loan workout options;
•Clarify claim filing and payment practices.
By aligning Radian’s expectations for defaulted loan servicing performance with the updated
Fannie Mae and Freddie Mac policies and procedures, Radian plans to consolidate and simplify
information contained within the Guide, and focus on Radian specific processes. The format has been
re-designed to include navigation tools which allow for exact location of subject matter references.
Bookmarks are displayed on the left side of the Adobe Acrobat Reader®. All eligibility topics can
be accessed by simply expanding and clicking on the bookmark of the section, chapter or subject
matter you wish to review.
In addition, hyperlinks are provided to take you to another area within the guidelines where you
can find additional information on a particular topic. If you click a hyperlink, you may return to your
previous place by pressing down the alt (Microsoft) or command (Macintosh) key and the back arrow
key at the same time on your keyboard.
Should you have any questions about Radian’s default and/or claims servicing guidelines, please
contact our Customer Care team at [email protected] 877.RADIAN1 (723.4261) or your
Radian representative.
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Rev 20121004
Default and Claims Servicing Guide | Revision notes
Radian
Table of Contents
Default and
Claims Servicing
Guide
Revision notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Revisions for September 17, 2012 . . . . . . . . 2
Navigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
F. Deficiency Judgments . . . . . . . . . . . . . . . . 23
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5 Claim Eligibility . . . . . . . . . . . . . . . . . . . . . . . 25
1 Servicing Standards . . . . . . . . . . . . . . . . . . . 6
A. The Terms and Limiting Conditions
of Radian’s Master Policy . . . . . . . . . . . . . 25
A. Highest Standard of
Servicing Performance . . . . . . . . . . . . . . . . 6
B. Servicer’s Basic Duties
and Responsibilities . . . . . . . . . . . . . . . . . . 7
2 Default Servicing . . . . . . . . . . . . . . . . . . . . . . 8
A. Default Servicing . . . . . . . . . . . . . . . . . . . . . 8
1. Communication with the Borrower . . . . 8
2. Delinquency Prevention
and Management . . . . . . . . . . . . . . . . . 9
3. Collection Procedures . . . . . . . . . . . . . 10
4. Bankruptcy Proceedings . . . . . . . . . . . 10
5. Foreclosure Proceedings . . . . . . . . . . .10
3 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
A. Event Reporting . . . . . . . . . . . . . . . . . . . . . 14
B. Loan Delinquency . . . . . . . . . . . . . . . . . . . 14
1. Initial Notification . . . . . . . . . . . . . . . . 14
2. Recurring Reporting Requirements . . . 14
3. Report Delivery . . . . . . . . . . . . . . . . . . 15
1. Streamlined Information Requirements . 23
1. Limitations of Coverage . . . . . . . . . . . 25
2. Exclusions from Coverage . . . . . . . . . 25
3. Inability to Evaluate a Claim . . . . . . . 26
B. Loan Compliance to Underwriting
Guidelines and Eligibility . . . . . . . . . . . . . 26
1. Delegated and Non-delegated
Underwriting . . . . . . . . . . . . . . . . . . . . 26
2. Delegated Mortgage Insurance . . . . .26
C. Servicing Performance . . . . . . . . . . . . . . . 26
6 Initiation of a Claim . . . . . . . . . . . . . . . . . . . 27
A. Claims Filing . . . . . . . . . . . . . . . . . . . . . . . . 27
1. When to File . . . . . . . . . . . . . . . . . . . . 27
2. Claims Filing Format . . . . . . . . . . . . . . 28
3. Automated Document Notification . . .28
4. Timeline Summary . . . . . . . . . . . . . . . . 28
7 Perfected Claim . . . . . . . . . . . . . . . . . . . . . . . 29
A. Components of a Perfected Claim . . . . . . 29
C. Loan Workout/Modification Reporting . . 15
1. Required Documentation . . . . . . . . . . 29
2. Document Submission/Receipt . . . . . . 30
D. Liquidation Reporting Requirements . . . . 15
B. Inability to Evaluate a Claim . . . . . . . . . . 31
4 Loss Mitigation . . . . . . . . . . . . . . . . . . . . . . . 16
C. Action During the Claim Filing Period . . . 31
A. Radian Delegation . . . . . . . . . . . . . . . . . . 16
B. Retention Workout . . . . . . . . . . . . . . . . . . 16
1. Delegated Non-Modification Options . 16
2. Delegated Modification Options . . . 17
3. Non-Delegated Modification Option . . 18
C. Liquidation Workout . . . . . . . . . . . . . . . . . 19
1. Eviction of Tenants . . . . . . . . . . . . . . . 31
2. Filing of Claim before Eviction . . . . . . 31
D. Sale of REO Property/
Duty to Cooperate . . . . . . . . . . . . . . . . . . . 31
1. Listing the Property For Sale . . . . . . . . 31
2. REO Purchase Offers . . . . . . . . . . . . . 32
1. Delegated Liquidation Options . . . . . 19
2. Non-delegated Liquidation Options . 21
3. Terms/Conditions . . . . . . . . . . . . . . . 21
4. Components of Review . . . . . . . . . . . .22
5. Evaluation Guidelines . . . . . . . . . . . . 22
8 Claim Review/Evaluation . . . . . . . . . . . . . 33
D. Loan Charge Off . . . . . . . . . . . . . . . . . . . . 23
1. Investigative Timeline . . . . . . . . . . . . . 33
2. Investigation Process . . . . . . . . . . . . . . 33
E. Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . 23
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G. Documentation/Financial Forms . . . . . . . 23
Default and Claims Servicing Guide | Table of Contents
A. Review Requirements . . . . . . . . . . . . . . . . 33
B. Claim Review Timeline . . . . . . . . . . . . . . . 33
1. Access to the Property . . . . . . . . . . . . 33
C. Claims Investigation . . . . . . . . . . . . . . . . . 33
9 Claim Disposition . . . . . . . . . . . . . . . . . . . . . 35
Default and
A. Factors in Rescissions . . . . . . . . . . . . . . . . 35
B. Timing of Claim Settlement
Under Structured Pool Policies . . . . . . . . . 37
Claims Servicing
B. Appeal of Rescission . . . . . . . . . . . . . . . . . 36
C. Calculation of Claim Liability . . . . . . . . . . 38
Radian
Guide
1. Explanation of Benefits (EOB) . . . . . . 38
2. Claims Adjustments . . . . . . . . . . . . . . . 38
3. Return of Paid Claim Funds . . . . . . . . 39
4. Claim Curtailment . . . . . . . . . . . . . . . . 39
10 Claim Settlement . . . . . . . . . . . . . . . . . . . . . 37
A. Timing of Claim Settlement . . . . . . . . . . . . 37
1. Additional Documentation . . . . . . . . . 37
2. Access . . . . . . . . . . . . . . . . . . . . . . . . . 37
3. Acquisition . . . . . . . . . . . . . . . . . . . . . . 37
4. SIU and Default Servicing
Investigations . . . . . . . . . . . . . . . . . . . .37
5. Late Payment . . . . . . . . . . . . . . . . . . . . 37
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Default and Claims Servicing Guide | Table of Contents
Radian Default and Claims
Contact Information . . . . . . . . . . . . . . . . 40
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Radian
Introduction
Default and
Claims Servicing
Guide
This guide is intended to provide assistance designed to enable a loan servicer to meet the
expectations of Radian for servicing a delinquent or defaulted loan with active Radian mortgage
insurance coverage.
The Servicing Standards provided in this guide define and outline Radian’s expectations for servicing
performance. In order to promote efficiency, Radian’s expectations for defaulted loan servicing
performance are closely aligned with those of Fannie Mae and Freddie Mac, therefore, the GSE
servicing guidelines should be considered a part of Radian’s guide. The information provided in the
Default Servicing section highlights those requirements.
The focus of this Guide is to present Radian’s practices, requirements and procedures which
are identified in detail throughout the Guide. This includes a review of:
•Loss mitigation options and corresponding delegated authority;
•Factors which impact and influence the claims process, as well as the details necessary
to navigate this process.
In addition to the information in this Guide, please consult Radian’s Master Policy and any
endorsements or Radian’s Pool Policy as applicable, to identify specific terms and limiting conditions
under which Radian mortgage insurance is issued. These documents provide additional details
regarding the insured lender’s and Radian’s respective rights and responsibilities.
This Guide is reviewed and updated on a regular basis. In the event a policy or process change is
implemented prior to the next scheduled Guide revision, the details will be communicated in the form
of a Radian Servicer Alert. Radian Servicer Alerts can be located on the Servicer page of our website
at www.radian.biz. As a courtesy, Radian maintains an active list of servicer contact information so that
Servicer Alerts can be sent to key personnel in the servicer’s organization. Requests for additions,
deletions or changes to Radian’s Servicer Alert email distribution list may be sent to our Customer Care
team at [email protected].
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Default and Claims Servicing Guide | Introduction
Radian
1 Servicing Standards
Default and
Claims Servicing
Guide
Radian mortgage insurance is issued under the terms and conditions of Radian’s Master Policy. This
Policy specifically requires that those responsible for servicing mortgage loans adhere to the highest
standard of servicing performance. The following guidance is intended to ensure Radian’s servicing
performance expectations are met.
A. Highest Standard of Servicing Performance
Radian defines the term “Highest Standard of Servicing Performance” as:
•Servicer operation and performance in compliance with all Fannie Mae and/or Freddie Mac
requirements as published in the Servicing Guides and related publications. This includes
applicable requirements of the Federal Housing Finance Authority’s Servicing Alignment
Initiative, as they become effective.
•Adherence to all rules and regulations specific to mortgage loan servicing imposed by the
Consumer Financial Protection Bureau (CFPB).
Implied and expressed within, is the servicer obligation to:
•Comply with the terms and requirements of the applicable Purchase and Sale, Master Servicer,
Servicer or Sub-Servicer contracts (“Lender Contract”) under which loan servicing is
performed; and
•Utilize industry best practices. Implement and maintain processes and procedures used
throughout the industry to minimize losses and maximize opportunities for a borrower to
retain their home.
•Comply with the terms and requirements of applicable government/Servicer agreements
such as, but not limited to, the AG Settlement and resulting legislation.
Radian’s servicing performance expectations do not exceed those established by GSE published
requirements and/or government mandates. Therefore a servicer in compliance with applicable
government mandates and published GSE servicing policy will meet Radian’s Master Policy
requirement for Highest Standard of Servicing Performance. In the event Fannie Mae/Freddie Mac
requirements differ, applicable GSE guidelines apply. Mortgage loans not purchased or securitized
by either Fannie Mae or Freddie Mac, may follow the requirements of either GSE, so long as they
are consistently followed. GSE published servicing policy is readily available and is incorporated
herein by reference. This Guide does not duplicate this information in the discussion of Servicing
Performance. However GSE policy highlights are provided for subject matter reference.
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Default and
Claims Servicing
Guide
B. Servicer’s Basic Duties and Responsibilities
A Servicer is contracted to perform basic duties and accept specific responsibilities for proper
servicing of a mortgage loan, to include the requirements of any other party that may have an
interest in the way the mortgage loan is serviced. These requirements include but are not
limited to:
•Employment of properly trained and knowledgeable staff;
•Fully documented and current written procedures;
•Establishment and maintenance of adequate internal audit and management control systems
to ensure that the mortgage loans are serviced in accordance with established procedures
and with sound mortgage banking and accounting principles;
•Establish and maintain policies and procedures to guard against dishonest, fraudulent, or
negligent acts;
•Establish and maintain policies, procedures and insurance coverage to guard against
errors and omissions by officers, employees, or others;
•Adhere to the legal requirements of each jurisdiction in which it operates and not knowingly
or through negligence breach its Lender Contract;
•Use prudent professional judgment in the performance of servicing duties;
•Perform all professional functions and take all necessary steps to protect the collateral securing
the mortgage loan insured by Radian;
•Implement and maintain a viable business continuity and disaster plan.
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Default and Claims Servicing Guide | Servicing Standards
Radian
2 Default Servicing
Default and
Claims Servicing
Guide
The efficient and successful servicing of a delinquent loan may minimize the potential loss resulting
from a borrower default. The required standard for Delinquent Loan Servicing is established by the
Radian Master Policy which states, in pertinent part:
“Every Loan insured under this Policy shall be serviced in a reasonable and prudent manner and
consistent with the highest standards of servicing in use in the residential mortgage industry.”
Claim eligibility is contingent upon existence of the following controls/procedures and execution of the
following tasks in compliance with the Master Policy, GSE guidelines and certain timeline requirements.
A. Default Servicing
In order to achieve the Highest Level of Servicing Performance, a servicer must employ a welldocumented control system for those areas that represent the greatest risk exposure and potential
for losses. Therefore a servicer must establish a system, compliant with GSE requirements, for
successfully servicing delinquent mortgage loans to include, at a minimum, the following:
•System controls that provide early detection of delinquent accounts, and the ability to alert
the appropriate department that a mortgage loan is delinquent and in need of attention;
•A collection department staff that is trained, competent and familiar with all investor
procedural and reporting requirements as well as federal and state collection laws;
•Policies and procedures to ensure the availability of counseling to advise borrowers
how to avoid or cure delinquencies;
•Training and system controls that enable timely and accurate analysis of each
delinquency leading to early intervention to mitigate loss;
•Instructions and adequate controls that adhere to federal and state laws regarding
consumer contact with respect to delinquency notices, assessing late charges, returning
partial payments, maintaining and recording collection and default servicing activities,
reporting delinquencies to credit bureaus, etc.;
•Regular and consistent management review of procedures designed to evaluate the
circumstances surrounding each default, potential loss mitigation opportunities, or the
determination to start appropriate proceedings;
•Establish a method to regularly review and audit the servicer’s own delinquency and
foreclosure ratios in comparison with the industry standard practices.
1. Communication with the Borrower
Direct, thoughtful, and relevant communication with the borrower is identified within the industry
as a best practice for servicing delinquent mortgages. Therefore the servicer must ensure that
its staff is trained and knowledgeable in all aspects of collection and foreclosure prevention
strategies and able to effectively communicate with borrowers and/or representatives and
agents authorized by borrowers. This requires having processes and procedures in place to:
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•Provide initial and continuous training and monitoring of servicing personnel.
Default and Claims Servicing Guide | Default Servicing
Radian
Default and
Claims Servicing
Guide
•Follow Quality Right Party Contact (QRPC), a uniform standard for communicating
with the borrower regarding the resolution of a mortgage delinquency.
•Respond, in a timely manner, to all inquiries received from borrowers about the terms
of their mortgage loans, the status of their accounts, and any actions taken or not taken
in servicing their mortgage loans.
•Ensure that borrowers have an effective means to communicate with the servicer about
disputes and that procedures are in place to facilitate resolution of the dispute.
•Escalate complaints or disputes to an independent staff that has resolution authority.
•Identify inefficiencies or problems within the process and take appropriate corrective action.
a. Communication Objective
The objective of borrower communication is to obtain or deliver the information
necessary to successfully resolve the default: This includes:
•Borrower’s ability and willingness to pay;
•Reason for default;
•Borrower’s intent to retain or dispose of the property;
•The existence of a temporary or permanent hardship;
•Workout options;
•Consequences of default;
•Counseling services.
b. Confidentiality of Radian Practices and Procedures
The borrower is not a party to, nor a beneficiary of the mortgage insurance contract
(Master Policy). It is not appropriate to disclose to any uninsured third-party the conditions
under which Radian is willing to waive any rights established under the Master Policy
and/or to accept a claim via the approval of a requested workout. The borrower,
realtors, borrower’s attorney and other uninsured third parties are not to be provided
with communications between Radian and its insured or the servicer representing the
insured. Radian’s feedback and communications are confidential and meant for the
servicer and/or the insured only.
2. Delinquency Prevention and Management
Radian supports all reasonable delinquency prevention and management efforts which help
to avoid or cure a delinquency as quickly as possible. These practices should align with those
identified by Radian as providing Highest Standard of Servicing. Key efforts are identified below:
•Establishing quality right party contact (QRPC).
•Assessing late charges.
•Accepting Partial Payments.
•Using an attorney to collect payments and/or establish contact with a borrower.
•Collection under an assignment of rent.
•Reapplying Principal Prepayments.
•Listing Property for Sale/Rental.
•Referring to Counseling Agencies.
•Offering Early Delinquency Counseling.
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Claims Servicing
Guide
3. Collection Procedures
The Servicer is expected to follow all applicable collection procedures allowed by law and
required to meet Highest Servicing Standards. The primary goal should be to bring delinquent
mortgage loans current as quickly as possible. The GSE required collection procedures are
specific to each stage of delinquency and Radian supports those practices. For collection
procedure details and requirements, please refer to the GSE Servicing Guide(s).
4. Bankruptcy Proceedings
In the event a borrower files for protection under bankruptcy, the servicer must take all actions
necessary to protect the security investment. This includes a number of steps that will need to
be taken once notice is received that a bankruptcy filing has taken place, as well as over the
course of the bankruptcy proceedings.
The servicer must report to Radian the initiation of bankruptcy proceedings in accordance
with GSE requirements after it learns that the borrower has filed for bankruptcy (even if the
mortgage loan is current).
Bankruptcy Management Process
A servicer must have procedures in place to manage Chapter 7, 11, 12 and 13 bankruptcies,
including a system to control and monitor bankruptcy proceedings. A servicer must document
in accordance with GSE policy that all required actions were taken to manage a specific
bankruptcy in a timely and appropriate manner. These actions include:
•Confirm Bankruptcy Information.
•Establish and maintain files to document servicer activity during the Bankruptcy.
•Refer Case to Bankruptcy Attorney.
•Suspend Debt Collection Efforts.
•Notice of Appearance Filing/Bankruptcy Notices.
•Obtain and Review Statements/Schedules/Reorganization Plans.
•Prepare and File the Proof of Claim.
•Attend Initial Meeting of Creditors.
•Monitor Borrower Payments and Critical Dates.
•Communicate with Borrower’s attorney regarding workout options.
Radian may request documentation to confirm the activities listed above.
5. Foreclosure Proceedings
In the event loan retention or other liquidation workout options are not appropriate, Radian
expects that foreclosure proceedings be initiated in accordance with the requirements of the
Master Policy, and no later than six months after the Insured is permitted to do so under the
loan documentation and applicable laws.
Link to Loss Mitigation
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Default and Claims Servicing Guide | Default Servicing
a. Foreclosure Overview
Radian
The servicer shall timely commence and diligently pursue appropriate foreclosure
proceedings in accordance with appropriate state laws and GSE guidelines. Once
foreclosure has been initiated, its completion must be pursued diligently. If the borrower
contests the foreclosure or files suit, Radian must be notified on the monthly delinquency
report (MDR).
Default and
Claims Servicing
Guide
b. Foreclosure Expectations
•Radian expects a timely referral after a borrower defaults, as well as a sustained and
reasonable effort to complete the foreclosure according to state requirements listed below.
•Radian requires that it be notified of any extenuating circumstances beyond the Insured/
Servicer’s control which prevents a foreclosure action from being completed within the
required time frame, a sample of which is provided below.
State
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Method of
Foreclosure*
From LPI** to
Foreclosure Sale
(# of Days)
State
Method of
Foreclosure*
From LPI** to
Foreclosure Sale
(# of Days)
Alabama
Non-Judicial
270
Nebraska
Non-Judicial
330
Alaska
Non-Judicial
300
Nevada
Non-Judicial
360
Arizona
Non-Judicial
300
New Hampshire
Non-Judicial
270
Arkansas
Non-Judicial
280
New Jersey
Judicial
750
California
Non-Judicial
300
New Mexico
Judicial
450
Colorado
Non-Judicial
330
New York City
Judicial
990
Connecticut
Judicial
690
New York
Judicial
820
Delaware
Judicial
480
North Carolina
Non-Judicial
300
District of Columbia
Non-Judicial
300
North Dakota
Judicial
405
Florida
Judicial
660
Ohio
Judicial
450
Georgia
Non-Judicial
270
Oklahoma
Judicial
420
Guam
Non-Judicial
500
Oregon
Non-Judicial
330
Hawaii
Judicial
500
Pennsylvania
Judicial
480
Idaho
Non-Judicial
440
Puerto Rico
Judicial
720
Illinois
Judicial
480
Rhode Island
Non-Judicial
330
Indiana
Judicial
480
South Carolina
Judicial
420
Iowa
Judicial
480
South Dakota
Judicial
360
Kansas
Judicial
330
Tennessee
Non-Judicial
270
Kentucky
Judicial
420
Texas
Non-Judicial
270
Louisiana
Judicial
390
Utah
Non-Judicial
330
Maine
Judicial
570
Vermont
Judicial
510
Maryland
Non-Judicial
485
Virgin Islands
Judicial
510
Massachusetts
Non-Judicial
350
Virginia
Non-Judicial
270
Michigan
Non-Judicial
270
Washington
Non-Judicial
330
Minnesota
Non-Judicial
270
West Virginia
Non-Judicial
290
Mississippi
Non-Judicial
270
Wisconsin
Judicial
480
Missouri
Non-Judicial
270
Wyoming
Non-Judicial
270
Montana
Judicial
360
*The Method of Foreclosure column reflects the preferred method of foreclosure for each jurisdiction.
**Last Paid Installment
Default and Claims Servicing Guide | Default Servicing
Radian
Default and
Claims Servicing
Guide
c. Foreclosure Mitigation
While timely foreclosure processing is important, foreclosure alternatives should still
be considered throughout the entire process. If appropriate, Radian will authorize
postponement or even cancellation of foreclosure sales to mitigate losses. Radian is
flexible in the time frames for completion of the foreclosure proceedings, provided that the
Insured/Servicer pursues effective and sustained loss mitigation efforts and documents how
these efforts resulted in the foreclosure delay. If reasonable loss mitigation efforts and proper
documentation are not provided, Radian will enforce the provisions of the Master Policy.
d. Foreclosure Documentation
Radian may request copies of all documents with regard to foreclosure. This includes
the pre-foreclosure title search, foreclosure deed (which need not reflect recordation),
foreclosure complaints, and other notices and decrees. Radian may also request
information on whether the foreclosure was judicial or non-judicial and the names
of all parties involved in the foreclosure.
Foreclosure sales results are to be sent to Radian via email [email protected]
within 48 hours after the foreclosure sale is held. Foreclosure sales results are to include the
Radian certificate number, bid amount, foreclosure sale date, and the successful bidder.
e. Foreclosure Bid Price
For Radian-insured loans owned by Fannie Mae, Radian has approved Fannie Mae’s
foreclosure bidding instructions dated 01/31/03 and presented in Fannie Mae’s
current Servicing Guide. For all other loans, and in the absence of specific foreclosure
bidding instructions from Radian, the insured must bid in accordance with the following
state guidelines.
a)In states which provide deficiency recovery rights, or if special circumstances
warrant, Radian may specify a bid outside of the state guidelines in order to
preserve deficiency rights.
b)Radian will not require a bid of less than the uninsured loan amount. If the
recommended bid per state guidelines is less than the uninsured loan amount,
the insured may bid the uninsured loan amount. The chart shown below provides
a sample of current state permitted bid instructions.
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Default and Claims Servicing Guide | Default Servicing
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Default and
Claims Servicing
Guide
State
AK
AL
AR
AZ
CA
CO
CT
DC
DE
FL
GA
Guam
HI
IA
ID
IL
IN
KS
KY
LA
MA
MD
ME
MI
MN
MO
MS
Bidding Amount
Total Debt
Total Debt
FMV - Full value*
Total Debt
FMV - Full value*
Total Debt
FMV - Full value*
FMV - Full value*
FMV - Full value*
Open @ $100 up to full FMV*
FMV - Full value*
Total Debt
FMV - Full value*
Total Debt
FMV - Full value*
Total Debt
FMV - Full value*
Total Debt
FMV - Full value*
FMV - Full value*
FMV - Full value*
FMV - Full value*
FMV - Full value*
Total Debt
Total Debt
FMV - Full value*
FMV - Full value*
State
Bidding Amount
MT
FMV - Full value*
NC
FMV - Full value*
ND
Total Debt
NE
FMV - Full value*
NH
FMV - Full value*
NJ
Open @ $100 up to full FMV*
NM
Total Debt
NV
FMV - Full value*
NY
Open @ $500 up to full FMV*
OH
FMV - Full value*
OK
FMV - Full value*
OR
FMV - Full value*
PA
Open @ Sheriff cost up to full FMV*
Puerto Rico
FMV - Full value*
RI
FMV - Full value*
SC
FMV - Full value*
SD
FMV - Full value*
TN
FMV - Full value*
TX
FMV - Full value*
UT
Total Debt
VA
FMV - Full value*
VT
FMV - Full value*
WA
Total Debt
WI
FMV - Full value*
WV
FMV - Full value*
WY
Total Debt
*The bid must not exceed total debt. If the bid calculated according to the table above exceeds total debt, then
bid total debt. Radian will not require a bid of less than the uninsured loan amount.
Uninsured loan amount = Total debt - (total debt x % coverage); Total debt = Total debt + attorney’s fees and costs.
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Default and Claims Servicing Guide | Default Servicing
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3 Reporting
A. Event Reporting
Default and
Claims Servicing
Guide
The following occurrences are to be reported to Radian as they may impact the collateral
securing the insured loan.
•Borrower death.
•Hazard Insurance Claim in excess of $10,000 filed on subject property.
•Substantial destruction of collateral.
•Property vacancy.
•Property condemnation.
•Title issue adversely affecting the insured’s first lien position.
In the event an occurrence coincides with loan default, this information is expected to be
included in the normal default reporting. For those occurrences which do not coincide with loan
default, the Servicer is to report the event to Radian via email at [email protected], upon
discovery, no longer than 30 (thirty) days after it is known.
B. Loan Delinquency
Radian requires that the servicer report specific delinquent loan information in order to
predict future claim filings.
1. Initial Notification
The Notice of Default (NOD) is to be used at the time of initial notification.
Link to Notice of Default
Default Status
Early-Payment Defaults
The borrower fails to make any of the initial
12 monthly loan payments.
Initial Notification
Report using a Notice of Default (NOD) no later than
day 45 in the delinquency.
Seasoned-Payment Defaults
The borrower fails to make three
consecutive payments after the first year
of timely loan payments.
Report using a Notice of Default (NOD) no later than
day 75 in the delinquency.
Current Loan in Jeopardy
Information made available to the
Servicer indicates the loan is in jeopardy
of imminent default.
Report using a Notice of Default (NOD) only after a careful
review of the facts and circumstances surrounding the case.
2. Recurring Reporting Requirements
The Monthly Delinquency Report Document (MDR) is to be used for all subsequent
and recurring reporting.
Effective:
September 17, 2012
14
Link to Monthly Delinquency Report
Default and Claims Servicing Guide | Reporting
For all defaulted loans reported to Radian, the Servicer is required to provide
the following information on a recurring monthly basis:
Radian
Default and
Claims Servicing
•The due date;
•Specific reason for default;
•All contact efforts;
•The specific results of any borrower contact;
•Any action taken specific to a retention workout.
Guide
Monthly Delinquency Reports (MDR) must continue until it has been reported that:
a) The borrower is no longer in default;
b) The loan has been paid in full;
c) The servicing has been transferred (servicing transfers should not be reported
as paid in full or cures);
d) The borrower has completed the modification trial period and the loan has
been brought current as a result of a completed modification;
e) Applicable bankruptcy/foreclosure proceedings have concluded; or the claim
has been paid.
3. Report Delivery
Initial notification (NOD) and recurring monthly reporting (MDR) may be delivered via
electronic file transmission, computer tape or by an individual report sent to Radian.
For NOD submissions other than EDI, an MDR from Radian will be produced and provided
to the lender each month until the loan cures, pays off, or a claim is filed. The completed form
should then be returned to [email protected].
If prior arrangements have been made with Radian to report loans in default by electronic
file transmission, Radian will not send MDRs to the lender. The lender can choose to transmit
an electronic file each month, email a text file to [email protected], or drop the file in an
inbound designated folder for FTP transmission. This file must be received by Radian no later
than the last day of each month. For specific instructions before choosing this option, please
contact Radian’s Default Reporting Department at [email protected].
C. Loan Workout/Modification Reporting
In October 2011, Radian joined the Mortgage Insurance Companies of America (MICA) in the
adoption of a new standardized template for servicers to report loan workouts. Servicers were
required to begin using this template in April, 2012 and, following a transition period, will be
notified by Radian to discontinue any legacy methods for workout submissions. Servicers can
contact their Radian Risk Manager to obtain additional guidance on the completion and
submission requirements of the new template.
Link to modification reporting
D. Effective:
September 17, 2012
15
Liquidation Reporting Requirements
Link to liquidation reporting
Default and Claims Servicing Guide | Reporting
Radian
4 Loss Mitigation
Default and
Claims Servicing
Guide
A timely evaluation of foreclosure prevention alternatives is to occur once the servicer determines a
default is imminent. Government mandates such as the AG Settlement must be followed when applicable;
otherwise, the Servicer is to follow the established GSE workout hierarchy, which details the preferred
order of consideration for the use of special relief measures and foreclosure prevention options. This
includes a procedure to obtain relevant borrower personal and financial information to determine the
appropriate workout solution, which includes both retention and liquidation alternatives. It is imperative
that the servicer exhaust all retention workout options before pursuing a liquidation workout. The
following structure represents the GSE and Radian’s preferred hierarchy:
Retention Workouts
1.
2.
3.
4.
Liquidation Workouts
5. Pre-foreclosure (Short) Sale
6. Deed-in-lieu of foreclosure
7. Foreclosure Sale
A. Reinstatement
Repayment Plan
Forbearance
Loan Modification
Radian Delegation
Radian values and encourages any and all efforts by the Servicer to mitigate loss. To assist
in these efforts, Radian extends to the servicer certain delegated authority.
The delegated authority identified within this Guide is extended for the sole purpose of facilitating
the servicer’s execution of workout options. This authority is expressly limited to those workout
options which:
•Meet the investor/insured’s guidelines; and
•Provide the assistance necessary to resolve a default situation.
This delegation permits the servicer to exercise independent and prudent judgment in providing
workout options to borrower(s) and is not limited to government sponsored workout options,
such as the Treasury’s Home Affordable Modification Program (HAMP).
B. Retention Workout
1. Delegated Non-Modification Options
Effective:
September 17, 2012
16
Radian extends to the servicer full delegated authority to execute the following non-modification
retention work out options. These include repayments plans, forbearance plans, partial
reinstatements and stipulation agreements. Radian is to be notified of the completion of such
efforts through standard default reporting requirements.
Link to default reporting requirements
Default and Claims Servicing Guide | Loss Mitigation
Radian
Fully Delegated Retention Workout Options
Default and
Repayment Plan: A plan based on a borrower’s financial situation to spread out repayment of a
Claims Servicing
past-due balance over an extended period of time. A repayment plan does not change the original
terms of the Loan.
Guide
Forbearance Plan: Provides a temporary reduction or suspension of payments on a mortgage
loan; and it is typically incorporated in a payment arrangement to cure any delinquent payment
after the underlying hardship has gone away.
Partial Reinstatement: A payment transaction wherein the Borrower(s) pays a portion of the Loan
Coverage Type
Primary and Pool
arrears and agrees to a repayment plan for the balance owed.
Stipulation Agreement: A post foreclosure initiated agreement under which the borrower agrees
to waive all defenses to a foreclosure action and make a certain number of payments, in order to be
considered for a loan modification or to reinstate the mortgage.
2. Delegated Modification Options
Radian supports modification efforts whenever the servicer has obtained information sufficient
to ascertain that the repayment terms of the modified loan are affordable for the borrower.
Radian extends to the Servicer delegated authority to complete a modification based on the
following conditions.
Treasury’s Home Affordable Modification Program (HAMP) – GSE Loans
Radian agrees to provide servicers with Radian Delegated authority in order to support the
execution of loan modifications within the Treasury’s Home Affordable Modification Program
(HAMP). These modifications must meet all guidelines/requirements under the applicable
GSE HAMP policy.
Delegated Retention Workout Options
Workout/Coverage Type
Delegated Program Requirements
Modification terms:
•Must result in a payment that is affordable for the borrower
•Does not release any portion of the collateral
Modification
Coverage terms:
•Coverage extended to the modified unpaid principal balance (UPB) on all HAMP modifications.
•Radian will limit coverage to the modified UPB up to the original loan amount on all nonHAMP modifications.
For coverage on GSE non-HAMP modifications, please check coverage limits for each GSE.
Loan Status:
Loans must be at least 60 days delinquent.
Premium Payment (monthly/annual) :
Calculated from the modified Unpaid Balance (UPB).
Modification with
Principal Forgiveness*
Coverage terms:
Includes any part of principal that was forgiven pursuant to a workout, but excludes any
interest accumulated on the forgiven principal after the date of the modification
Claim Payment:
In the event a loan modification involving principal forgiveness re-defaults and a claim is submitted,
the claim payment amount shall be reduced by the amount of premium that Radian would have
received on the forgiven principal from the date of modification through the date of default.
*Principal Forgiveness: Radian will not terminate coverage upon removal of the underlying loan from the securitization
due to the modification. Radian reserves any rights or defenses it may have under its applicable Master Policy. Under no
circumstances will Radian cover principal forgiveness when the principal forgiveness is court ordered in settlement of any
litigation or other administrative action involving the insured and/or servicer.
Delegated Loan Modification Program Reporting Requirements
Effective:
September 17, 2012
17
The status of a loan modification, including a trial plan, completion or cancellation must be
reported to Radian using the Delegated Loan Modification Notice.
Link to Delegated Loan Modification Notice
Default and Claims Servicing Guide | Loss Mitigation
Radian
Default and
This reporting requirement applies to both HAMP and non-HAMP modifications. In addition:
Claims Servicing
HAMP
For any loan deemed to be in imminent default under the provisions of the Treasury’s
“Making Home Affordable” program, a NOD must be forwarded to Radian.
Guide
Link to Loan Delinquency; Initial Notification
HARP
A Notification of Mortgage Insurance Modification is to be completed and emailed
to Radian at the time the new HARP loan is originated. See Radian’s website for
complete details.
Link to HARP guideliness
Principal Forgiveness
Radian must be notified of all principal forgiveness workout plans within 30 days of borrower
execution of the modification agreement using the Delegated Loan Modification Notice.
3. Non-Delegated Modification Option
a. MI Second Look Program
The companies of the Mortgage Insurance Companies of America (MICA) established
the MI Second Look Program in May 2009 to help avoid potential disparate treatment
of borrowers with insured mortgage loans by facilitating modifications, for HAMP-eligible
loans in their portfolios that fail the Treasury NPV test. The MICA companies acted in
February 2010 to enhance support of HAMP and minimize exception processing for
servicers by implementing MI Second Look.
All requests under the MI Second Look program must be submitted to Radian identified
as an MI Second Look request. Servicers are required to consider MI Second Look as
an option of last resort for aiding modifications on any Radian-insured loan that meets
the requirements below and must document their systems to reflect such.
•The loan must be 90 days or more past due.
•The loan has a current LTV greater than 90% established by an appraisal or broker price
opinion (BPO), interior inspection, performed and reported within the most recent 120 days.
•The loan was originated prior to 01/01/2009.
•Non-GSE loans only.
•Primary coverage only.
•Property must be the current primary residence of the borrower.
•The borrower is not in bankruptcy.
•The Servicer has exhausted all other available modification options.
•The requested advance amount does not exceed the maximum coverage of the loan,
less any prior advances made.
•The Servicer agrees that an advance greater than 65% of the maximum claim amount
is deemed to be a commutation of the mortgage insurance coverage.
Effective:
September 17, 2012
18
Default and Claims Servicing Guide | Loss Mitigation
b. MI Second Look Submission Process
Radian
•Servicers must submit all requests electronically to [email protected]
using the MI Second Look Request Template.
Link to MI Second Look Request Template
Default and
Claims Servicing
Guide
•After receipt of a complete MI Second Look Request, Radian will respond to the request
within 10 business days.
•Servicer will maintain all of the supporting documentation used to support the request.
Radian may request the servicer provide this documentation and additional
documentation in order to make its decision.
•If an advance request is approved, it will be funded after the Servicer notifies Radian
the modification has been executed, reported and the loan has cured.
C. Liquidation Workout
For certain liquidating workout types (short sales, assumptions, short refinances and deeds-in-lieu)
Radian will not consider a claim unless the loan is in default (60 days or more past due).
Link to liquidation options
It is Radian policy to waive its right of subrogation to pursue the deficiency upon completion
of an approved or delegated short sale or deed-in-lieu of foreclosure.
1. Delegated Liquidation Options
Link to Radian delegation
Radian may, at its sole discretion, grant delegated authority to provide liquidation options
to the borrower that help to resolve a default situation as follows:
•Full delegated authority for Short Sale and Deed-in-lieu transactions under agreements
reached between Radian and the GSEs on GSE owned loans. The Servicer is expected
to follow the liquidated workout guidelines and procedures established by the agreements
for all Loans insured by Radian.
•Delegated authority, according to the following terms and conditions, is available
on all non-Fannie Mae owned loans, HAFA* loans and/or assumptions.
HAFA is a federal program that authorizes a participating mortgage lender/servicer to
consent to a sale of the property by the borrower (short sale) with pre-approved terms and
conditions in order to avoid foreclosure. A deed-in-lieu of foreclosure may also be an option
under the HAFA program if selling the property is not feasible.
*Home Affordable Foreclosure Alternatives (HAFA)
Effective:
September 17, 2012
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Radian
Delegated Program Requirements
Default and
Claims Servicing
Guide
Short Sale; Primary Coverage only
Loan:
Loan is 60 days or more past due as of the servicer’s short sale written approval date.
Borrower Participation:
Servicer used its best efforts to obtain reasonable borrower financial participation (if appropriate).
Claim:
•Estimated Radian claim payment does not exceed $30,000.
•Restoration adjustment waived if repair cost less than $7,500.
•If the estimated loss from the sale transaction does not exceed Radian’s primary coverage claim payment,
the following criteria must be met:
– Net Proceeds to Property Value ratio must be 82% or more.
Documentation:
•Credit Report obtained subsequent to the Short Sale request must indicate the Primary Borrower’s FICO
is 580 or less.
•Interior BPO/Appraisal to be dated 180 days or less prior to the servicer’s short sale written approval date.
•Copy of final HUD1 settlement statement.
•Assessment regarding borrower participation.
Deed-in-lieu of Foreclosure; Primary Coverage only
Loan:
•Loan is 60 days or more past due at the time the Deed-in-lieu of Foreclosure document is executed by the borrower.
•Loan must have been originated as owner occupied, primary residence.
•Completed Deed-in-lieu of Foreclosure must be reported to the major credit repositories.
Borrower Participation:
Servicer used its best efforts to obtain reasonable borrower financial participation (if appropriate).
Property:
•Property must be listed at fair market value for at least 90 days unless primary borrower is deceased or the borrower
has obtained a Chapter 7 bankruptcy discharge of mortgage liability.
•Prior to conveyance, title to the property must be free and clear of all liens and encumbrances.
Claim:
•Estimated Radian claim payment is not to exceed $30,000.
•Completed Deed-in-lieu of Foreclosure must be reported to the major credit repositories.
•Fund(s) disbursed to a junior lien holder to facilitate clear title are not claimable unless approved in writing
by Radian Loss Mitigation.
Documentation:
•Credit Report obtained subsequent to the Deed-in-lieu of Foreclosure request must indicate the Primary Borrower’s
FICO is 580 or less.
•Interior BPO/Appraisal Date must be 180 days or less prior to the Servicer’s Deed-in-lieu approval date.
a. Liquidation Reporting Requirements
Short sale and Deed-in-lieu status is reported to Radian using the Delegated Pre-foreclosure
Sale Notice.
Delegated Pre-foreclosure Sale Notice.
Short sale
At time of claim filing, notify Radian of sale results and submit all documents from
the transaction.
Deed-in-lieu
At the time of claim filing, notify Radian that title has been acquired via Deed-in-lieu
and submit all documents from the transaction.
Effective:
September 17, 2012
20
Assumption
Notify Radian’s Customer Care department of assumption terms and new borrower
information by emailing [email protected].
Default and Claims Servicing Guide | Loss Mitigation
Radian
Default and
Claims Servicing
Guide
2. Non-delegated Liquidation Options
All loans not meeting Radian’s Liquidation delegated authority, must be submitted by
the Servicer prior to the liquidation event occurring. These events include:
Pre-Foreclosure;
Short Sales;
Short Refinances; and
Deeds-in-lieu of Foreclosure.
Please contact Radian Customer Care at [email protected], 877.RADIAN1 (723.4261)
and ask for the Liquidation team if you wish to discuss or submit a liquidation workout request.
Link to Delegated Liquidation Options
For HAFA loans not meeting delegated authority guidelines:
•The Servicer must obtain Radian‘s written approval to determine if HAFA program
requirements can be met before communicating HAFA eligibility to the borrower or
any third party associated with the Liquidating Workout.
•Radian reserves its rights and defenses under the Master Policy for claims submitted
subsequent to a HAFA Liquidating Workout. Certain HAFA-related expenses are not
claimable (relocation assistance, for example).
•Information requirements for HAFA Liquidating Workout requests are streamlined.
The Servicer should submit all Liquidating Workout requests to the assigned Radian
Loss Mitigation Specialist via email noting the request is specific to HAFA.
Link to Documentation; Streamlined Information Requirements
3. Terms/Conditions
a. Delinquency Status
In order for a liquidating workout request to be considered, a loan must be 60 days
or more past due unless one of the following exceptions apply:
•The Borrower has been discharged from mortgage liability through Chapter 7
Bankruptcy (confirmed by recent credit report or a copy of the bankruptcy document).
•The Borrower is deceased (copy of the Death Certificate required).
•Involuntary Employment Relocation (required supporting documentation may include
a signed and dated letter from the prior and/or current employer confirming an
employment change or layoff that required relocation).
In the event none of the above exceptions applies and the Servicer believes it
appropriate to move forward with the transaction, Radian may consider a negotiate
settlement and accept a claim. Please contact a Radian Loan Workout Specialist at
[email protected] to discuss a workout of this nature.
b. Waiver of Policy Rights/Requirements
In considering a Liquidating Workout, Radian is being asked to waive the following rights
under its Master Policy:
•The requirement that the insured obtain title to the property (Primary Coverage);
Effective:
September 17, 2012
21
•The requirement that the insured obtain title to the property and sell the REO (Pool Coverage);
Default and Claims Servicing Guide | Loss Mitigation
Radian
•The right of subrogation with respect to deficiencies;
Default and
•The right to acquire title to the property.
Claims Servicing
Guide
Radian reserves all rights and defenses under the applicable Policy of Insurance not
tacitly waived by its approval of a Liquidating Workout, including the right to rescind
coverage or deny claims.
4. Components of Review
Radian’s review of a liquidating workout requires the Servicer obtain and submit specific
documents and information.
Link to Documentation/Financial Forms
This information will be used by Radian to evaluate the following factors:
•Whether the borrower has the ability to pay all or a portion of the amount owed;
•The borrower’s original occupancy intent and current occupancy;
•The estimated proceeds from the liquidating workout relative to the property’s fair market
value and seller costs;
•Whether the Servicer offered appropriate Loss Mitigation services to the borrower;
•Whether the proposed Liquidating Workout is an arm’s-length transaction;
•Any other factor bearing on the propriety of the proposed Liquidating Workout.
Radian will conduct all of its communications relating to liquidating workouts exclusively with
the Servicer. Any communications from an interested third party to Radian will be referred
to the Servicer. The Servicer will be solely responsible for any and all communications with
the borrower and/or any interested third parties.
5. Evaluation Guidelines
For primary and/or modified pool coverage where the estimated loss exceeds
Radian’s maximum coverage amount:
Rather than refuse a Liquidating Workout request, Radian will review the request and, if
appropriate, communicate a proposed claim payment adjustment (reduction) along with any
other terms and conditions. Any proposed adjustment is specific to the Liquidating Workout request.
The proposed claim payment adjustment will vary relative to the facts surrounding the request.
In the event Radian provides both primary and modified pool coverage the adjustment will be
based on the total estimated loss to Radian under both coverages.
The Servicer may, in its sole discretion:
•Accept Radian’s conditional approval and proceed with the transaction;
•Offer to reduce the proposed claim payment by adjusting the net proceeds requirement;
•Provide Radian with additional documentation that supports an elimination or
reduction to the proposed claim payment adjustment;
•Decline our conditional approval and continue to service the loan in accordance with
the requirements of Radian’s Default and Claims Servicing Guide.
Effective:
September 17, 2012
22
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Radian
D. Default and
Loan Charge Off
A charge off is a resolution available to the insured where the outstanding debt of a delinquent
mortgage loan is written off as a loss without the Servicer taking title to the subject property.
Claims Servicing
Guide
Radian has no liability to accept or pay a claim on a charged off account under any policy of
coverage when the Insured has not acquired clear title to the property. Radian reserves all of
its rights and defenses under the applicable Policy of Insurance, including the right to rescind
coverage or deny claims. Without waiving any of its rights, Radian may, under appropriate
circumstances, consider reduced payments in exchange for cancellation of coverage on
charged off loan accounts.
Please contact Customer Care at [email protected], 877.RADIAN1 (723.4261)
and ask for the Loss Mitigation team if you wish to discuss a charge-off situation.
E. Foreclosure
Loss Mitigation Methods and Strategies
It is the responsibility of the Servicer to:
•Perform a thorough review of the circumstances surrounding the default and the results
of prior servicing activities prior to commencing foreclosure proceeding.
•Offer or encourage delinquent borrowers to seek free or low-cost consumer credit
counseling services.
•Establish a business process to ensure that all cases are reviewed before referral to foreclosure
and that all reasonable steps have been diligently pursued to avoid the need for referral.
•Comply with, all federal, state, and local laws (including statutes, regulations, ordinances,
administrative rules and orders and judicial rulings and opinions that have the effect of law)
that apply to any of its origination, selling, servicing or other business practices (including the
use of technology) that may have a material effect on the results of servicing activities. Among
other things, this means that the servicer must comply with any applicable law that addresses
fair housing and equal credit laws.
•Comply with conflict of interest/confidentiality responsibilities.
F. Deficiency Judgments
Radian subrogates to the lender’s rights to pursue a deficiency. On Radian insured loans, we
reserve the right to pursue borrowers directly where permitted by state law. These rights must
be preserved and protected by the Insured/Servicer.
G. Documentation/Financial Forms
1. Streamlined Information Requirements
Radian understands that time is of the essence when pursuing and evaluating loss mitigation
opportunities. This is particularly true for time-sensitive liquidating workout.
Effective:
September 17, 2012
23
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Radian
Default and
Please be aware that the following information must be submitted to Radian to confirm
Servicer efforts regarding liquidating workouts:
Claims Servicing
Guide
1st Lien – Loss Mitigation Streamlined Short Sale Information Requirements
Submit, via secure email, to a Radian Loss Mitigation Specialist the following information:
•Your Loan Number
•Radian Certificate Number
•Borrower(s) Last Name(s)
•Next Payment Due Date
•Unpaid Principal Balance (UPB)
•Total Mortgage Debt (UPB, past due interest, costs, advances, etc.)
•Foreclosure Sale Date (if applicable)
•Property Value, Value Date and Value Type (BPO, Appraisal, AVM, etc.)
•Recommended List Price/Purchase Amount
•Estimated Net Proceeds
•Anticipated Closing Date (if known)
•Reason for Default (if known)
•Any material information that you believe should be disclosed to facilitate a decision.
(HAFA program for example)
•Name and phone number of submitter
1st Lien Product – Loss Mitigation Streamlined Deed-in-lieu of Foreclosure
Information Requirements
Submit to a Radian Loss Mitigation Specialist via secure email the following information:
•Your Loan Number
•Radian Certificate Number
•Borrower(s) Last Name(s)
•Next Payment Due Date
•Unpaid Principal Balance (UPB)
•Estimated Total Mortgage Debt (UPB, past due interest, costs, advances, etc.)
•Property Value, Date and Type (BPO, Appraisal, AVM, etc.)
•Is the Property listed for Sale? If yes, what is the current asking price?
•Reason for default (brief description)
•Name and phone number of submitter
•Any material information that should be disclosed to facilitate a decision
(HAFA program for example)
Effective:
September 17, 2012
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5 Claim Eligibility
Default and
Claims Servicing
Guide
The eligibility of a Claim is determined by:
1.) The Terms and Limiting Conditions of Radian’s Master Policy
2.) Compliance with Underwriting Guidelines and Eligibility Criteria
3.) Servicing Performance
A. The Terms and Limiting Conditions of Radian’s Master Policy
1. Limitations of Coverage
Prior to any of the following actions being taken, it is necessary to contact a Radian Loss
Mitigation Specialist to obtain Radian’s prior consent in order to ensure continued coverage
of the loan. Failure to obtain Radian’s prior consent may result in termination of coverage
pursuant to the terms of Radian’s Master Policy.
•Any material change or modification of the terms of the Loan including, but not limited to,
the UPB interest rate, term or amortization schedule, excepting only such modifications
specifically provided for in the Loan documents, and permitted without further approval
or consent of the Insured.
Link to Delegated Modification Options
•Any release of a borrower from liability for the loan, including any loan principal forgiveness.
Certain specific principal forgiveness modifications may be completed using delegated authority.
Link to Principal Forgiveness delegation
•Any assumption of liability for the loan with release of the original borrower from liability.
•Any release of the collateral or any partial release of the collateral.
•Any change in the character or use of the property (for example, the conversion of a
single-family home into a commercial property).
•Any transfer or sale of the servicing of the loan to a company not approved* by Radian.
*Approval requires the Servicer to have an active Master Policy with Radian.
2. Exclusions from Coverage
Radian’s coverage is limited to the normal risk of a default caused by a change in the
borrower’s economic circumstances. Insurance coverage under the Master Policy does not
extend to certain risks. The occurrence of any of the following may result in denial of coverage
or curtailment of claim payment.
Link to Radian’s Master Policy
Effective:
September 17, 2012
25
•Any loss resulting from the lender exercising its right to accelerate the loan based on a
balloon payment clause in the loan document. However, if the borrower refuses to accept
an extension or renewal of the mortgage terms at market rates from the lender, this
condition will not apply.
Default and Claims Servicing Guide | Claim Eligibility
Default and
•Any loss on a loan which was delinquent prior to Radian issuing insurance coverage
on that loan.
Claims Servicing
•Any loss as the result of incomplete construction of the insured property.
Guide
•Any loss resulting from fraud or misrepresentation of a material fact upon which Radian
based its decision, in whole or in part, to insure the loan.
Radian
•Any loss or material increase in risk of loss resulting from negligence in the origination
of the loan or servicing of the loan prior to or after default.
•Any cost or expense to repair any physical damage to the Property, including but not
limited to physical damage arising from:
– Contamination by toxic waste or hazardous water;
– Earthquake, flood, or other act of God;
– Civil war or riot;
– Any defects in construction not identified in the Application for Insurance.
3. Inability to Evaluate a Claim
In order for a Claim to be eligible, Radian must be in receipt of all requested documentation
which it considers, in its sole discretion, to be reasonably necessary to evaluate liability with
respect to the Claim.
Failure to submit a Perfected Claim within the time period specified by the pertinent policy
shall relieve Radian of any obligation or liability with respect to the underlying Certificate
of Insurance.
Link to Perfected Claim
B. Loan Compliance to Underwriting Guidelines and Eligibility
1. Delegated and Non-delegated Underwriting
For both delegated and non-delegated mortgage insurance, Radian relies on the lender’s
representation and warranty that the loan closed in compliance with the terms and conditions
under which the loan was underwritten and approved. Adherence to this requirement is
reviewed by Radian when a mortgage insurance claim is submitted.
2. Delegated Mortgage Insurance
For delegated mortgage insurance, Radian further relies on the lender’s representation
and warranty that the loan file and application for mortgage insurance have been presented
accurately and underwritten in accordance with the agreed upon insurance underwriting
standards. Adherence to the underwriting standards behind the lender’s representations and
warranties is reviewed by Radian when a mortgage insurance claim is submitted.
C. Servicing Performance
Failure to adhere to the Highest Level of Servicing Performance may result in the denial or
curtailment of claims.
Effective:
September 17, 2012
26
Link to Claim Curtailment
Default and Claims Servicing Guide | Claim Eligibility
Radian
6 Initiation of a Claim
Default and
Claims Servicing
Guide
When it becomes necessary to file a claim, it is important to comply with the following procedures.
Timely, accurate claim filing will expedite the claim settlement process. Radian strives to settle claims
promptly and fairly in compliance with the terms of the agreements between it and its Insureds and
insurance laws.
A. Claims Filing
Radian’s Master Policy provides timelines for both Radian and the Servicer to request and submit
documents. Radian expects Claims to be filed within 60 (sixty) days of the Insured’s acquisition of
Borrower’s Title. Once the Claim filing has been received, Radian will request, within 20 (twenty)
days, the documents necessary to perfect the Claim directly from the Servicer.
1. When to File
a. Primary Insurance
Radian requests that all Claims be filed no later than 60 days after title is obtained
through a foreclosure sale. If the title was acquired through a voluntary conveyance,
the 60-day period begins when the borrower signs the deed.
A claim may be filed prior to the expiration of the redemption period; however:
•The claim filing period will not begin until the expiration of the redemption period.
•Radian will not cover any expenses incurred after claims have been filed.
Supplemental Claim
As a courtesy, Radian will process supplemental claims for allowable Advances and
expenses not available at the time of claim filing, provided the supplemental claim is
received within 60 days of the original claim payment. Please email supplemental claim
requests to [email protected].
b. Pool Insurance
As a guideline, a claim is to be filed with Radian no later than 60 days after closing
on the sale of the REO Property. A copy of the settlement statement from the sale of
the REO property must be included with the claim. Please refer to Special Risk policy
covering the certificate for the specific claim filing deadline.
c. Extensions
An extension of the 60-day claim filing period may be requested. Submit the request
in writing to Radian’s Claims Department before the 60-day period expires at
[email protected].
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2. Claims Filing Format
a. Radian’s MI Online
Claims can be filed electronically through MI Online, Radian’s secure self-service
Web-based portal. If you have not established an account with Radian’s MI Online,
visit our web site at www.radian.biz for registration instructions.
Filing a claim through MI Online allows Servicers to:
•Receive confirmation of a claim filing.
•Review Claim Status for one or multiple claims.
•View and download an Explanation of Benefits (EOB).
•Review and Print Revised Claim and Original Claim.
•Review status of documents submitted.
•Save partially submitted claims for completion at a later time.
b. Additional Options
•Industry standard 260 transaction.
•Email notification of a claim filing via secure email to [email protected].
3. Automated Document Notification
Radian’s automated notification system initiates email contact after a claim has been filed.
Requests for missing documentation and the status of documentation review are system generated
and sent via a secure server using the Radian email address [email protected].
The email should include Radian’s Certificate Number and the Servicer’s Loan Number.
4. Timeline Summary
Servicer Claim Filing
60 days after acquiring Borrower’s Title.
Claim Filing Extension
Radian will consider upon request prior to 60 days
expiration period.
Radian Request for Documents
from the Servicer
Within 20 days of the receipt of Claim filing.
Servicer Response to Radian
Document Request
90 days after receipt of Radian’s document request.
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7 Perfected Claim
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A Claim must be perfected, meaning the filing must include all of the information and proof Radian, in
its sole discretion, considers to be reasonably required to evaluate Radian’s liability. Once a claim has
been filed, Radian will request all required documentation necessary to perfect the claim directly from
the Servicer.
A. Components of a Perfected Claim
1. Required Documentation
The following fully executed documentation is required prior to claim review:
In certain cases, Radian may have an agreement with the servicer/insured to request the
loan origination and closing documents upon notification that a foreclosure sale has been
scheduled. In this case, required Servicing documents will be requested upon claim filing.
a. Loan Origination Documents include, but are not limited to:
•Loan Application: Fully executed 1003 — original and/or final.
•Assets — Any and all documentation necessary to evidence sufficient funds to meet down
payment and reserve requirements, according to the terms of the loan program.
•Income — Any and all documentation necessary to evidence income from an acceptable
source in an amount sufficient to meet program ratio requirements.
•Credit — credit report, trade line histories, credit references and/or documentation
necessary to evidence indebtedness and satisfy loan program credit history requirements.
•Property Appraisal/Valuation — acceptable evidence of collateral valuation.
•Purchase Agreement, as applicable — complete and fully executed contract of sale
including all addenda.
•DU, LP or Proprietary AUS Findings Report, if applicable.
•Underwriting Approval Document — to identify loan program and all applicable
underwriting and closing conditions.
b. Closing Documents include, but are not limited to:
•Final HUD-1
•Copy of the mortgage note
–Explanation of the repayment feature for any mortgage instrument other than the
standard level payment amortizing type, including those with adjustable rates.
c. Servicing documents include, but are not limited to (where applicable):
•Payment History; ever to date
•Bankruptcy Documentation, identify date filed; date discharged
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•Modification Agreement; note the Unpaid Principal Balance (UPB), prior to
the modification
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•Short Sale or Post Sale HUD, property value at time of sale; Approval Letter
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•Deed-in-lieu
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•Foreclosure Information/Timeline, in the event of foreclosure delay
Link to Foreclosure Documentation
Guide
•BPO/Appraisal, as is; repaired
•Sheriffs Deed/Trustee Deed
•Certificate of Title or Sale
•Coverage: Tax information/Homeowners insurance; submit coverage dates
for taxes and insurance being claimed
•Primary Explanation of Benefits (EOB), HUD-1, pool loans
d. Servicing, Collection and Loss Mitigation Notes
•Call record
•Action taken log
•Default Notes
•Communications with Borrower
•Financial packages collected subject to Treasury Programs
2. Document Submission/Receipt
a. Submission
Once a Claim is filed, the Servicer can submit the required documentation through one
of the avenues identified below. The preferred method is FTP (File Transmittal Protocol).
•FTP (SFTP, FTPS, or FTP w/ PGP Encryption)
•Email to [email protected]
•CD’s
•Paper
Link to Radian’s MI Online
b. Document Receipt
Users of MI Online can access the “Document Status” tab to view the status of
document requests. All claim-related documents received by Radian are housed in
Radian’s Loss Management document imaging system. Benefits include:
•Receipt, index and storage of all documents;
•Ability to identify the status of claim filings and workout efforts;
•Document location tracking.
At the point Claim documentation is received, Radian will review for completeness.
This review makes certain all documentation requested has been received but does
not review document content.
A Claim is not reviewed and evaluated until all requested information has been
received in its entirety.
c. Documentation Submission Timeline
Servicers have 90 (ninety) days to respond to any documentation requests.
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Default and Claims Servicing Guide | Perfected Claim
Once such a request has been made, no further action will be taken on the claim until
the requested documents, or acceptable alternative documents, have been received.
Subsequent requests and updates will be sent if the complete file has not been received
by the 20th, 40th and 60th day after the claim has been submitted.
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d. Missing Documents Claim Denial
In the event the claim submission reaches ninety days, without the required documentation
being received by Radian, the system will refer the denial to a Radian Claims Analyst.
Servicers have the right to cure a denial and reinstate the claim within the time limits
imposed by the terms of Radian’s Master Policy.
Link to Claim Filing
B. Inability to Evaluate a Claim
If apparent defects in the foreclosure process create sufficient uncertainty that Radian cannot
reasonably evaluate a claim, Radian reserves its right under the applicable Policy to classify the
claim as unperfected and to withhold a decision on the claim until the apparent defects have
been finally resolved. If foreclosures are overturned after Claim payments have been made,
Radian again reserves its rights and will address issues on a case-by-case basis.
C. Action During the Claim Filing Period
1. Eviction of Tenants
In some cases, holdover tenants or mortgagors may still be occupying the property after
foreclosure sale. In these cases, the lender must start legal proceedings to evict them in
accordance with the requirements of state law.
2. Filing of Claim before Eviction
A Claim for Loss may be filed prior to obtaining physical possession of the property.
D. Sale of REO Property/Duty to Cooperate
During the 60-day claim-filing period, every effort should be made to sell the property.
Servicers have an obligation to promptly list the REO and shall include diligent efforts to
market any property once they have obtained REO title.
See Claim Curtailment
1. Listing the Property For Sale
After obtaining title, the Insured must submit for approval any offer that might be acceptable to
Radian. Failure to submit an offer for approval may result in an adjustment of the Claim for Loss.
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In order to protect its interests, the Insured’s listing agreement should contain a clause
precluding payment of a real estate sales commission if Radian exercises its options to
purchase the property as more fully described in Condition Twelve-A, paragraph 1 of
Radian’s Master Policy.
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2. REO Purchase Offers
Primary Insurance
Any offer for sale of the insured property must be submitted to the Radian’s REO Administration
Department. These submissions can be emailed to [email protected].
Link to REOApproval Template
Pool Insurance
Radian must approve the REO marketing plan, including listing price, adjustments, etc. Any
modification to the marketing plan must be approved by Radian. Submissions for pool insured
loans can be emailed to [email protected]. The final sale must be approved along
with verification of consistency with the prior Radian approved REO marketing plan.
Link to REO Marketing Request Template
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8 Claim Review/Evaluation
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The purpose of the Claim review process is to confirm Claim eligibility and determine the amount
of Loss incurred as a result of the default.
Link to Claim Eligibility
A. Review Requirements
•The Servicer has filed a timely and accurate Claim.
•The Claim is perfected.
Link to Perfected Claim
B. Claim Review Timeline
Radian’s review of the Claim may take up to sixty (60) days. This timeline may be expanded
if a Claims investigation occurs.
1. Access to the Property
If requested, Radian representatives must be allowed access to the property to determine
the property condition and value. If Radian seeks access to the property, the 60-day period
will be suspended until access is made available.
C. Claims Investigation
As part of the Claim review process, Radian may perform a forensic audit of the Loan file
in order to ascertain:
•Adherence to applicable eligibility and underwriting guidelines in place at the time
the Loan was originally insured.
•Adherence to Loan Servicing Requirements and Performance Expectations.
1. Investigative Timeline
Radian may take up to a 120 (one hundred twenty) days to conduct a Claims investigation.
During this review, Radian may request additional documentation and is reliant upon the
Lender’s timely submission of these documents. A Claim can be denied if the additional
documentation requested by Radian is not received within 90 days of request.
2. Investigation Process
Radian’s review and investigation of the Loan file includes the following elements:
•Reconfirmation of the borrower’s information including phone number and address
provided on the 1003.
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•Verification of the borrower’s income, assets, employment, occupancy and history
of housing payments.
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•For Stated income Loans; determination of the stated income’s reasonableness with
respect to the Borrower’s employment and job title.
•Review of the collateral including a review of the original appraisal, a retroactive AVM,
BPO, field review and/or drive-by appraisal.
•Review of any associated credit reports to determine the borrower’s debts and obligations
at the time of Loan origination/closing.
•Questioning of any discrepancies and/or “red flags” noted within the file documentation
which should have been addressed by the Lender during the original underwriting process.
Radian may conduct an interview of the borrower, contact the borrower’s employer to confirm
employment or income, review bankruptcy filings or other court documents available to the
public, and review any additional public information such as on websites, which may provide
information that is material to Radian’s investigation.
During the investigative review Radian will not:
•Incent or otherwise encourage, investigators to determine that a Loan was ineligible
for coverage.
•Incent or otherwise encourage, investigators to pressure the borrower to discuss
the Loan if they are unwilling to do so.
•Utilize an expired IRS Form 4506T to confirm income.
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9 Claim Disposition
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As a result of the Claim review and/or investigation one of three actions are taken:
1.) Claim Fulfillment
The Claim proceeds for normal processing.
2.) An Intent to Deny is Issued.
Radian intends to deny the Claim because it is not eligible and/or crucial documents requested
as part of the review/investigation have not been submitted in a timely manner (90 days).
a.Appeal of an Intent to Deny
Servicers have the remainder of the Claim filing period, or 30 days, whichever is greater,
to resubmit their Claim with the proper documentation and/or supporting information
after an Intent to Deny is issued. Radian will continue to accept documents during this
time, and will retract a previous Intent to Deny and perform a re-evaluation if the
requested documents are received within this timeline. All appeals are to be remitted
through [email protected].
Link to Claim Filing Period
3.) An Intent to Rescind Coverage is Issued.
If the Claim investigation reveals inaccuracies in the application for insurance, underwriter
negligence, or other deficiencies in the underwriting process, Radian may conclude that
rescission of coverage is warranted. In the event Radian determines a rescission is warranted,
a letter of Intent-to-Rescind is sent to the lender providing a description of the facts supporting
the decision.
The Intent-to-Rescind letter provides a period of time (usually 60 days) for a rebuttal response
prior to the rescission being finalized.
Link to Appeal of Rescission
A. Factors in Rescissions
Radian will establish a good faith belief that the Insured or the Insured agent(s) participated in,
were aware of, or, in the exercise of reasonable diligence, should have been aware of, the
deficiencies upon which rescission of the mortgage insurance coverage is based. Radian does
not shift the burden to the Lender to prove absence of fraud. Missing documentation, on its own,
generally will not warrant rescission if the information is not deemed material, and does not
prevent Radian from assessing the overall risk that was insured.
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Below are general evaluation guidelines. This list is not comprehensive and is for illustrative
purposes. Many of these factors will not, on their own, warrant rescission action. However, if
multiple factors warranting rescission also are present, Radian will take this “layering” of
additional factors into account. If a Lender rebuts Radian’s decision with information within the
variance threshold but outside the underwriting or eligibility guidelines for the Loan, the rescission
decision will not be overturned.
Default and Claims Servicing Guide | Claim Disposition
Value
•An inflated discrepancy in the appraised value by ≥20% of the amount stated in
the application for insurance.
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Debt-to-Income Ratio
•A recalculated debt-to-income ratio which is ≥5% above allowable guidelines.
•Undisclosed debt ≥ 5% above allowable guidelines.
Assets
•The amount of assets verified is short ≥ $500 for funds to close and/or ≥ $1,000 for
reserve funds.
•Material misrepresentation of Verification of Deposit(s) when discovered will warrant
rescission. Visibly altered asset documentation such as a bank statement will be
considered negligence by the underwriter.
Occupancy
•For Owner Occupied originated Loans the burden falls to Radian to prove that
the borrower never occupied.
B. Appeal of Rescission
The Servicer has the option to appeal a rescission decision by submitting a rebuttal to Radian’s
Dispute Resolution group at [email protected]. The appeal review may incorporate many of
the same techniques utilized during the Claim investigation, such as borrower/employer interviews
and review of public records. If Radian’s Dispute Resolution group agrees with the lender’s
position, or if the lender provides additional information sufficient to alter the original decision,
coverage will continue or be reinstated and the claim will resume on a normal course towards
payment. If the appeal does not support the lender’s position, the lender will receive a
comprehensive letter of determination explaining the basis for the denial of the appeal. In the
event Radian reinstates a rescinded Certificate and honors the claim, the final claim payment
will be adjusted to reflect any premium refund check that may have been disbursed.
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10 Claim
Settlement
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Radian strives to pay Claims in a fair and prompt manner. Under Radian’s Master Policy of Insurance,
and various structured Pool Policies, Radian has several options in calculating its liability.
A. Timing of Claim Settlement
Radian will pay a claim within 60 days after all required documentation is submitted, subject
to the following conditions and requirements:
1. Additional Documentation
Radian may request additional documentation within 20 days of the filing date of the initial
claim. Until Radian receives the additional documentation, the 60-day time period for claim
payment will be suspended.
2. Access
If Radian seeks access to the property, the 60-day period will be suspended until access
is made available.
3. Acquisition
If Radian elects to acquire the property, the 60-day period shall be extended insofar as
necessary for there to be 10 days remaining after the insured tenders Merchantable Title
to Radian.
4. SIU and Default Servicing Investigations
If the claim is chosen for a quality assurance compliance audit relating to loan origination
and/or default servicing, the timeline for payment of the claim shall be extended by an
additional 120 days from the date of perfection.
5. Late Payment
If Radian does not pay the claim within 60 days, subject to the above conditions, simple
interest will be paid at the note rate accruing from the settlement due date. Simple Interest
is limited to those claims covered under the Master Policy, and those select Pool Policies
that refer to the payment of Simple Interest.
B. Timing of Claim Settlement Under Structured Pool Policies
The Insured should refer to its applicable policy for terms on claim settlement under structured
Pool Policies. Questions on status and terms may be directed to [email protected].
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C. Calculation of Claim Liability
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1. Explanation of Benefits (EOB)
An Explanation of Benefits (EOB) is provided by Radian to the Servicer/Insured for each
Claim paid, and is available via MI Online.
The EOB provides a categorized itemization of a claim payment. If the claim was filed via
EDI 260 or via Radian’s MI Online application, the EOB will be in a side-by-side (Submitted
vs. Authorized) format detailing the losses requested in the Insured’s claim, compared to the
amount for each loss authorized by Radian.
If the policy includes a deferred premium, or if any premium is owed to Radian, including
premium on principal forgiveness or premium sent to servicers on over turned rescissions,
the final claim payment will be net of the outstanding deferred premium amount.
2. Claims Adjustments
a. The following advances are allowed to be included in a Claim calculation:
•Hazard insurance premiums paid after default, pro-rated to 60 days after foreclosure.
•Real estate taxes accrued or payable after default and prior to foreclosure, pro-rated
to 60 days after foreclosure.
•Reasonable and normal disbursements incurred in foreclosure (attorney fees are
limited to 3% of UPB and interest).
•Reasonable and normal property preservation expenses incurred after default and
60 days from foreclosure.
•Reasonable and normal eviction expenses (cash for keys is limited to $1,500 without
prior approval).
•Condominium fees accrued will be pro-rated from the last paid installment to 60 days
after foreclosure sale.
•If a property is subject to a redemption/confirmation period, advances will be pro-rated
to the date of the claim or 60 days after redemption/confirmation, whichever comes first.
b. The following advances are not allowed to be included in a Claim calculation:
•Insurance premiums and real estate taxes accrued and payable prior to default and
after 60 days from the foreclosure sale.
•Property preservation expenses prior to default and after 60 days of foreclosure.
•Trip charges.
•MI premiums.
•Penalties and interest owed on past due taxes, condominium fees, and municipal charges.
•Non-approved changes to the terms on an approved sale resulting in an unreasonable
reduction in net proceeds.
c. Other Claim Calculation Rules/Adjustments:
•Interest is calculated to a maximum of 60 days after the lender has acquired title to
the property, not to exceed two years from the default date as per the Master Policy.
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•On short sales, interest is capped to date of short sale.
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•On pool policies and influence sales, interest is capped to date of sale of the property.
Default and
•On third party sales, interest is calculated to date of settlement on third party sale; if
settlement date is not available, interest will be calculated on foreclosure sale.
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d. Rents Received
Rents received before and after foreclosure mitigate loss for all parties, and therefore
shall be deducted from any Claim for Loss filed.
3. Return of Paid Claim Funds
If for any reason a property is reverted back to the homeowner after a claim has been paid
(invalid foreclosure, post-foreclosure loss mitigation), it is expected that the servicer/insured
will return the claim funds to Radian in order for the coverage reinstatement process to begin.
4. Claim Curtailment
Radian’s Master Policy establishes servicing performance standards of Radian insured loans.
Link to Highest Standard of Servicing Performance
When a servicer fails to service a loan insured by Radian in a reasonable and prudent
manner and consistent with the highest standards of servicing in use in the residential
mortgage industry as required by the terms of Radian’s Master Policy, Radian may adjust
the loss to reflect the harm it has suffered in the form of increased Loss or risk of loss.
Identified deviations from servicing best practices are examined in order to determine
whether they resulted in harm to Radian in the form of an increased risk of loss or missed
opportunity to mitigate loss. If it is determined that an identified deficiency did not result in
harm, it does not result in a curtailment.
Only in those instances where Radian can reasonably calculate the amount by which the
deficiency in servicing increased the Loss as calculated under the policy is it required to adjust
losses. In all other cases Radian has the contractual right to deny coverage for the entire loss.
Rather than deny claims for which deficient servicing has been identified, but for which the
resultant loss can’t be calculated with arithmetic certainty, Radian makes every effort to
accurately estimate the harm it has suffered in the form of increased liability exposure or loss
of opportunity to mitigate or abrogate loss. In some instances, however, deficiencies may be
so egregious as to require denial of the entire claim.
a. Appeal of Curtailment
Servicers can appeal a curtailment decision by submitting a rebuttal to Radian’s
Dispute Resolution Group at [email protected].
Curtailment decisions are based upon Radian’s review of servicing notes and related
documents provided to Radian by the Insured at the outset of the claim process.
Generally, if a required servicing activity is not documented it is deemed not to have
occurred. If it is determined that there are missing notes or additional information not
previously provided to Radian which document activity, such additional information will
be considered on appeal subject to the Limitations of Actions clause and other time
constraints within the Master Policy.
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Default and Claims Servicing Guide | Radian Default and Claims Contact Information
Radian
Radian Default and Claims Contact Information
Default and
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Default Reporting
[email protected]
Claims
General inquiries/status: [email protected]
Claims documents: [email protected]
Appeals/Rebuttal
[email protected]
Loss Mitigation
To discuss non-delegated loan retention workouts and liquidation options,
please contact your dedicated Loan Specialist.
REO Acquisitions
Primary Insured Loans: [email protected]
Pool Insure Loans: [email protected]
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Default and Claims Servicing Guide | Radian Default and Claims Contact Information
Glossary
Radian
Deed-in-lieu of Foreclosure
A transaction where the borrower voluntarily conveys title to the mortgagee
lender as an alternative to foreclosure. Any Deed-in-Lieu transactions involving a
release of the Borrower(s) from liability under the Loan require Radian approval.
Default
The failure of the Borrower to pay when due an amount equal to or greater
than one (1) monthly regular periodic payment in accordance with the terms
of a Loan.
Deficiency
All amounts due and owing under a Loan on which a Default has occurred,
and remaining after the conclusion of Appropriate Proceedings, pursuant to
applicable state law.
Denial of Coverage
The cancellation of coverage as of a date after issuance of the Certificate of
Insurance resulting from exclusions in the applicable Policy of insurance, servicer
error or non-compliance of the terms of servicing. (Premiums are not refunded, or
refunded only of those collected after the date of non-compliance).
Early Default
The failure of the Borrower to make any of the initial twelve (12) monthly
payments in accordance with the terms of a Loan so that sums equal to the
aggregate of two (2) such monthly payments have not been paid when due.
Early Payment Default
Occurs when the borrower fails to make any of the initial 12 monthly payments,
the loan. When an early default occurs, a Notice of Default (NOD) must be
reported to Radian within 15 days after the second payment is due.
Early Stage Default
Defaults in some stage between Referral to Attorney date and the Foreclosure
Scheduled Date — a time-lapse that varies on a state by state basis (i.e., in
Alabama 3 months time lapse is allowed between the two dates whereas
in Maine, 10 months time lapse is allowed between the two).
Effective Date
With respect to an insured Loan, the effective date of mortgage insurance
coverage — generally the closing date of such Loan, or, such later date as
may be requested by the Insured and approved in writing by Radian.
EOB (Explanation of Benefits)
A categorized breakout of a Claim payment contained in a side-by-side format
detailing the losses requested in the Insured’s Claim, compared to the amount
for each loss authorized by Radian. An EOB is provided by Radian to the
Servicer/Insured for each Claim paid.
Fair Market Value
With regard to the amount bid for any Property at a foreclosure sale, the
Property’s value at the approximate time of the foreclosure sale as determined
by appraisal, if available, or in accordance with customary servicing practices
(which may include reliance on information provided by a local real estate
broker), subject to applicable law governing foreclosure.
Forbearance Plan
A forbearance provides a temporary reduction or suspension of payments on
a mortgage loan; and it is typically incorporated in a payment arrangement to
cure any delinquent payment after the underlying hardship has gone away.
Foreclosure Bid Price
Foreclosure bid price typically reflects the minimum bid acceptable to the lender
and normally includes the loan balance, all accrued interest, plus attorney’s fees
and any costs association with the foreclosure process. The final determinate for
foreclosure bid price is dependent on regulatory requirements and/or investor
bidding instructions/guidelines.
HAFA
Home Affordable Foreclosure Alternatives is a federal program where a
participating mortgage lender/servicer authorize the borrower to sell the
property (short sale) for a pre-approved amount to avoid foreclosure. A
Deed‑in‑lieu of foreclosure may also be an option if selling the property is not
viable. The federal government provides monetary incentives to the mortgage
servicer and the borrower to participate in the program.
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Default and Claims Servicing Guide | Glossary
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HAMP
The Home Affordable Modification Program is designed to help financially
struggling homeowners avoid foreclosure by modifying loans to a level that
is affordable for borrowers now and sustainable over the long term. The
program provides clear and consistent loan modification guidelines that the
entire mortgage industry can use. Borrower eligibility is based on meeting
specific criteria including: (1) borrower is delinquent on their mortgage or faces
imminent risk of default; (2) property is occupied as borrower’s primary residence;
(3) mortgage was originated on or before January 1, 2009 and unpaid principal
balance must be no greater than $729,750 for one-unit properties. After
determining a borrower’s eligibility, a servicer will take a series of steps to adjust
the monthly mortgage payment to 31% of a borrower’s total pretax monthly
income: First, reduce the interest rate to as low as 2%, Next, if necessary, extend
the loan term to 40 years, Finally, if necessary, forbear (defer) a portion of the
principal until the loan is paid off and waive interest on the deferred amount.
(Note: Servicers may elect to forgive principal under HAMP on a stand-alone
basis or before any modification step in order to achieve the target monthly
mortgage payment)
HNC
(Handle Normal Course)
Handle Normal Course. Term used to describe a Claim that is being processed
in accordance with Radian’s guidelines and processes, subject to denial or
adjustment based upon Radian’s rights and privileges under the applicable
Policy of insurance
Imminent Default
Judgment made by the Servicer when a borrower that is not yet in default is
faced with circumstances that make default a likely occurrence.
Insured
The named Insured or any party: (1) to whom coverage has been granted by
Radian; or (2) that is a subsequent assignee or transferee owner of a Loan
that has requested to become the insured. If however, Radian has not been
notified in writing of such assignment or transfer, or the applicable Policy does
not allow transfer of the Loan, Radian’s sole obligation hereunder shall be to
the named Insured.
Late Stage Default
Defaults where a foreclosure sale has been held or scheduled or the property
associated with the loan has been sold or listed.
Liquidating Workout
A transaction that results in an elimination of the Loan. Workout types include short
sales, deeds-in-lieu of foreclosure and short refinances. A Liquidating Workout
will generally require Radian approval in order to be the basis for filing a Claim
under the applicable Policy of mortgage insurance.
Loan
The indebtedness of the Borrower to the Insured in the amount and for the term
specified on the face of the Certificate of Insurance, which is evidenced by a
written obligation and secured by a mortgage, deed of trust or other instrument,
which is a first lien or charge on the Property, and which is insured under the
Master Policy or other applicable Policy or intended to be insured in accordance
with the terms of a Commitment of Insurance.
Loan Modification
Represents a change in the terms of a mortgage contract to incorporate past-due
amounts and reduce monthly payment, extend term, reduce interest rate or any
combination thereof. A recorded loan modification is a legal change to the terms
of the loan and involves obtaining approval from the lender or investor and
mortgage insurer.
Loss
The amount of loss suffered or incurred by the Insured determined pursuant to
the provisions of Condition Eleven of the Master Policy. In general, the Loss for
primary mortgage insurance coverage will not include the proceeds of the sale
of the REO, whereas, the Loss for Pool mortgage insurance coverage will include
a credit for the net proceeds of the sale of the REO.
MDR
(Monthly Delinquency Report)
Monthly report produced and provided to the lender each month until the loan
cures, pays off, or a claim is filed.
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Merchantable Title
Title to the Property which is readily salable and freely transferable, and which
is free and clear of all liens, defects and encumbrances including, without
limitation, rights of parties in possession and rights of redemption (unless, in either
or both cases, Radian waives in writing its right to take the Property free of such
rights), excepting only: (1) The lien of current general real estate taxes and other
public charges and assessments not yet due and payable; (2) Easements for
public utilities, building restrictions and the effect of building laws or regulations
with which the improvements on the Property comply, which do not impair the
use of the Property and the improvements thereon for their intended purposes;
(3) Tenants under leases approved in writing by Radian; and (4) Such minor
imperfections of title as would not impair the use and enjoyment of the Property
as a residence. Merchantable Title does not exist if there is a lien on the Property
pursuant to federal or state law providing for liens in connection with the cleanup
of environmental conditions, or if notice has been given of commencement of
proceedings which could result in such a lien.
Modified Pool Insurance
A customized version of Pool insurance, Modified Pool coverage provides
coverage to reimburse a lender from its bottom-line loss after the sale of the REO
with a per Loan level loss limit based upon a designated percentage of coverage
set forth in the Modified Pool policy.
Negative Equity (Underwater)
A situation where the value of the property used as security on the mortgage
Loan is less than the outstanding balance on the loan. Negative Equity loans
are also known as being “underwater” or “upside down.”
NOD (Notice of Default)
Notification provided by a Servicer to the mortgage insurer advising that the
borrower(s) has not made their payments as scheduled and are currently in
default status (60 days past due). The Servicer is required to update the insurer
of the Loan status monthly until the loan has either cured or gone to a Claim.
Partial Reinstatement
A Partial Reinstatement is a payment transaction wherein the Borrower(s)
pays a portion of the Loan arrears and agrees to a repayment plan for the
balance owed.
Perfected Claim
A Claim containing all of the information and proof reasonably required by
Radian to evaluate its liability with respect thereto.
Physical Damage
Any tangible injury to the Property, whether caused by accident, natural
occurrence or otherwise, excluding normal wear and tear.
Pool Insurance
Mortgage insurance that insures multiple mortgages (often in a securitization) in
a single transaction. Radian insures the individual Loans in a mortgage portfolio
up to a specific level of coverage. Pool insurance many times is designed to
insure specific layers of risk through the use of Policy deductibles and Aggregate
Loss Limits (stop losses) — which require the Insured to bear the risk of loss up to a
certain dollar amount and also capping Radian’s liability at a specific dollar limit.
Unlike Primary coverage, Pool coverage insures against the Insured’s ultimate
bottom line loss after the sale of the REO property.
Pre-Foreclosure (Short) Sale
A sale transaction where the proceeds are not sufficient to satisfy the outstanding
mortgage balance. Since all Policies require the acquisition of Borrower’s Title
(and/or sale of the REO) in order to trigger a Claim, Radian approval of any
Pre‑Foreclosure Sale is a condition precedent to filing any Claim where a
Short Sale has occurred.
Primary Mortgage Insurance
Mortgage insurance that is written on an individual loan basis. Also known as
“flow business,” this option is priced and applied on a per-Loan basis. Radian
provides coverage by agreeing to pay the Insured a certain percentage of its
Loss when a Borrower defaults.
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Property
The residential real property, designed for occupancy by not more than
four (4) families, identified on the face of a Certificate of Insurance, and shall
include all appurtenances, rights of access and improvements thereon which
secure the Loan.
REO (Real Estate Owned)
Property that a lender has taken title to through Appropriate Proceedings of a
Deed-in-Lieu. Title to the REO is passed Radian if it exercises its right to pay the
full claim and take title.
Repayment Plan
Represents a payment arrangement plan based on a borrower’s financial
situation to spread out repayment of a past-due balance over an extended
period of time. A repayment plan does not change the original terms of the Loan.
Rescission of Coverage
The cancellation of the Certificate of Insurance evidencing coverage, effective as
of its inception, due to an uninsurable risk existing from the date of the issuance
of such Certificate, identified during the course of audit (premiums collected on
the certificate are fully refunded).
Reserves
Those liabilities an insurance company is legally required to maintain on its
balance sheet with respect to the expected future claim payments of the company.
Retention Workout
A transaction that results in the cure of a default with the borrower maintaining
ownership of their home. A retention workout may be either a repayment plan
(with or without forbearance) or a loan modification and results in the borrower
retaining their property. Barring a subsequent default on the Loan, a Retention
Workout will not result in a Claim under any Policy.
Seasoned-Payment Default
Occurs when a loan enters default after the first year of timely loan payments.
A Notice of Default (NOD) must be reported to Radian for any loan that is due
for three months or more. This must be done no later than 15 days after the third
payment is due.
Serial Fraud
A group of investigations with similar characteristics, reviewed as a large scale
investigation based on associated data.
Servicer
The entity servicing a Loan on behalf of the Insured. The Servicer is deemed to
be the representative of the Insured for purposes of the Master Policy and any
applicable Policy under a Special Risk agreement.
Settlement Due Date
The date sixty (60) days after receipt of a Claim by Radian, subject to the
extensions of time set forth in Condition Thirteen of the Master Policy.
Stipulation Agreement
A Stipulation Agreement is a post foreclosure initiated agreement which terms
require the borrower to waive all defenses to a foreclosure action and for the
borrower to make a certain number of payments, in order to be considered for
a loan modification or to reinstate the mortgage.
Supplemental Claim
A Claim filed by the Insured which includes losses not available at the time of
filing of the initial Claim. A Supplemental Claim will be honored by Radian if it
contains losses in excess of $25.00 and if it is filed within 60 days of payment
of the original Claim, a Supplemental Claim is not mandated under Radian’s
policies of insurance.
Third-Party Misrepresentation
or Fraud
A misrepresentation or fraud by anyone other than the Insured, its employees
or agents. For purposes of this definition, the Insured’s agents shall include any
mortgage broker and/or intermediary originating the Loan, or anyone under
contract with such persons in connection with the origination of the Loan, such as
an appraiser or escrow agent.
UPB (Unpaid Balance)
The total unpaid principal balance of a mortgage or note. This term may or
may not include capitalized interest depending on applicable regulatory
requirements.
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Radian Guaranty Inc.
1601 Market Street
Philadelphia, Pennsylvania
19103-2337
800.523.1988
215.231.1000
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