HAMP: Non-GSE-Insured Loans
This may include private label securitized loans or portfolio loans. MGIC delegates to Servicers authorization to approve or consent to modifications made in accordance with the terms of HAMP under MGIC Limited Delegation of Modification Authority (Exhibit B).
Non-GSE loans that do not pass the NPV test must be submitted to MGIC for its “Second Look” process.
Participating Servicers must evaluate all delinquent loans for HAMP eligibility through the following HAMP process flow.
- Eligible loans must be reviewed through a sequence of steps to reach the goal of a 31% housing debt-to-income (HDTI) ratio. This is called the "Waterfall" process.
- A Net Present Value (NPV) test that compares the net present value of cash flows with modification and without modification is performed. When performing the NPV test, the “Second Look” process details how a loan with private mortgage insurance must be handled to make every possible effort to modify the loan.
- Note: Refer to Exhibit A: Memorandum of Understanding (MOU), an agreement between the Mortgage Insurance Companies of America (MICA) and the U.S. Treasury, which initiated the “Second Look” process.
- If the NPV of the modified value is greater than the non-modified value (NPV test is “positive”), the Servicer must proceed to Step 4. MGIC delegates authority for Loans that have passed the NPV test.
- If the NPV of the modified value is less than the non-modified value (NPV test is "negative"), the Servicer may choose to proceed with the modification (Step 4) or proceed to Step 3, MGIC’s “Second Look” process.
- MGIC’s “Second Look” – MGIC will determine why the NPV test is negative, how much financial assistance is required to cause a positive NPV result and whether MGIC will make an Advance Claim Payment. If so, the loan will proceed to Step 4 in the HAMP process flow.
- The Servicer sets up a Trial Period. The Trial Period will last 90 days (three payments at modified terms) or longer if necessary to comply with investor contractual obligations.
- If the borrower is current at the end of the Trial Period, the modification is completed and MGIC will remit the Advance Claim Payment.
