Operations

HOPC will perform all operational functions that are required to purchase, administrate and exit from all loan portfolio purchases.HOPC system platforms provide collateral valuation, risk management and data analytic services.

HOPC’s management delivers a superior homeowner and investor experience that is transparent, accurate and cost-efficient.Platform development will include systems for the HOPC website, the call/contact center and processing.

• Mortgage Note Acquisition

HOPC will purchase the large pools of non-performing loans sold by lenders and investors such as FHFA and HUD in the open market. These are larger pools that typically sold at a lower price than smaller pools from private sales and these notes can be from all states or be area specific.

Area specific sales price will vary with current market trends and conditions. In addition purchases will be made from smaller pools from private investors, but typically they will be made at a higher price. These can also be area specific or spread out nationally.

Due diligence will begin with obtaining a list [or tape] of the property addresses of the notes for sale. The list will then be broken into groupings by area, and each area will be analyzed for population growth, stability of the local economy and the current real estate value trend.

• Registration

Each note will be assigned a loan number based on region, the year purchased, state and a five-digit number. The notes will be separated into their specific regions, and underwriters will be assigned regions and will be given that region’s files to process.

The homeowner will be sent a letter introducing HOPC as the new holder and servicer of the loan. The letter will be completed and signed by the compliance officer. It will provide  HOPC’s contact information and request the homeowner to contact the underwriter assigned to the file as person of contact.

A second letter will go out to the client as an introduction to the underwriter and a marketing brochure with our products.

• Underwriting / Homeowner Solutions

Following compliance regulations, the underwriting team will be the main contact for the homeowner. Homeowner assessment begins with by reviewing income documentation to see what program the homeowner qualifies for.

Following HOPC underwriting guidelines [see Appendix B] the underwriting team determines if the homeowner qualifies for modification. This decision will be reviewed with the homeowner to make sure the income analysis is correct, and that the homeowner understands the offer.

Working relationships will be established with the affiliated real estate agent if personal meeting or assistance is required.

• Note Servicing and Sale

The modified notes will be serviced with a sub-servicer until they are sold on the secondary market. If the property securing the note is sold, the investor will receive their money back plus their share of the profits from the sale.

• REO Property Management and Maintenance

HOPC has relationships with local and national property management companies to maintain vacant and blighted properties in its portfolio. As part of their BPO, HOPC’s affiliated Realtors will notify it of any visible defects in both occupied and vacant properties in our loan portfolio.

HOPC’s property management partners will comply with any municipality’s ordinance covering vacant properties. They will cure blighted issues and secure each property against any further vandalism.

• Loan Portfolio and SAC

In an effort to increase the number of homeowners that qualify for loan modification, HOPC will offer to reduce the interest bearing balance of the loan in exchange for a share in any future home appreciation. There will be a shared appreciation contract that will specify agreed share of the appreciation to the investor exchanged for the reduction in principal balance.

• Compliance

HOPC has to comply with many Federal, State and Municipal regulations. Given the current environment it is likely that additional regulations and regulatory agencies will be announced in order to address the many issues involving real estate financing and homeowner protection.

HOPC has assigned a senior partner to oversee compliance obligations. In order to provide full compliance, it will partner with reputable independent industry consultants that will bring needed specialized knowledge and expertise.

• Investor Reporting

HOPC will utilize a reputable custodian provider to administer receipt of all investor funds. The custodian will maintain funds until needed to purchase a loan portfolio. HOPC will utilize FCI Inc. or any other reputable sub servicer to service our loan portfolio and receive mortgage payments.

HOPC will reconcile investor’s accounts, report loan portfolio information and remit quarterly payments to investors. A reputable accounting firm will provide annual audited financial statements.

• Acquisition Criteria

Location: HOPC anticipates acquiring non-performing notes with properties as collateral located in a specific geographical area. HOPC will conduct a market evaluation to determine the appropriateness of the areas in which it will invest. This evaluation will give special attention to population movement and growth potential of the area.

Property Size/Type: As a general policy, HOPC will acquire any non-performing notes secured by any size one-to-four unit residential property including condominiums and townhouses. The residential properties can be owner occupied, non-owner occupied or vacant.

Deferred Maintenance: Residential properties that require considerable updating to meet building code requirements will be acceptable provided the acquisition price reflects the cost of needed maintenance.

Insurance: Prior to the acquisition of any non-performing note secured by an acceptable residential unit, HOPC will verify the homeowner insurance policy for each residential property and if the property does not have a current homeowner’s insurance policy, HOPC will purchase a new policy and make the acquisition provided that the acquisition price reflects the costs of the new homeowner’s policy.

Investment Amount: In principle, the acquisition price (not taking into account transaction costs) for any non-performing note secured by an acceptable residential unit at approximately seventy (70%) percent of the current value determined by HOPC. HOPC will determine the acquisition price based on internal market analysis. The HOPC market analysis will determine current market value and the acquisition price will be at approximately a thirty (30%) discount from that value.

Operating Costs: HOPC will receive 5% of the estimated Real Estate value to be paid at the time of the acquisition of the notes.