CRT-Eligible Profile Summary
MI Factor
Streamline calculation of MI claims, accelerate payment, and reduce uncertainty
.
Investors in CAS and CIRT transactions can now expect timelier, more predictable settlement of MI claims with no expected material impact on aggregate proceeds
received
MI Factor is used to determine only the foreclosure/property preservation cost component of an MI claim, which typically represents approximately 5% of the claim
but requires the most work for all parties involved
Current practice of using actual foreclosure/property preservation costs to determine a claim amount is replaced by a calculation that applies a numerical factor
to the property value or default UPB (shown below) (1)
Factor applied to a given loan determined by using a grid that allows consideration of relevant loan characteristics that impact foreclosure/property preservation
costs
Factor was developed by back-testing against 13 years of claim data covering a number of economic environments. We found costs can be predicted with great
accuracy using four loan attributes: disposition types, geography clusters, statistically-derived home value buckets, and property type buckets
To capture changing market dynamics, Fannie Mae will evaluate the selection of loan attributes and determination of factors annually
MI Factor Calculation of Foreclosure/Property Preservation Costs
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© 2024 Fannie Mae
Fixed Foreclosure Costs
Variable Foreclosure Costs
Property Value
or Defaulted
X
Fixed Cost
Factor
+
UPB
Property Value
or Defaulted
UPB
X
Min(Days between LPI
Date and Foreclosure
Date, Allowable Days)
Variable
X
Cost
Factor
1Property value is used for Short Sales whereas default UPB is used for REO and Third-Party Sales claims.View entire presentation