Posted on Wed, Nov. 21, 2007

Statement from GMAC Financial Services

Question: What has GMAC ResCap actually agreed to do as part of Governor Schwarzenegger's foreclosure prevention initiative?

Response: We believe Gov. Schwarzenegger's initiative sets a standard in creating a partnership between mortgage servicers and government agencies in addressing the California's foreclosure problem. We believe it's a model that other states may want to consider. As a major mortgage servicer, we encourage the assistance of state and federal agencies in helping us encourage homeowners to seek help and to avoid foreclosure.

Our company is dedicated to assisting our customers who are struggling with their mortgages. We have already implemented the some of the principles outlined by Gov. Schwarzenegger. For example:

- We already offer foreclosure prevention counseling. Our HOPE-Keychain Alliance program, established in 2003, features specially trained loss mitigation specialists who meet face to face with homeowners to help our customers avoid foreclosure through loan modifications and loss mitigation efforts. Our HOPE-Keychain team members are located in major cities across the country, including San Diego (we are looking at adding another California market within the near future, based on need). In addition, our company helped to launch the Homeownership Preservation Foundation in 2004. The foundation provides free telephone counseling to homeowners throughout the U.S., including California, through a nationwide hotline, 1-888-995-HOPE. We also offer free employment counseling and job placement assistance to our customers who a struggling with their mortgage payments because of job loss.

- For a number of years, GMAC ResCap has invested in developing loss mitigation capabilities to increase our ability to reach and connect with our customers in a more efficient and timely manner. These investments include technology upgrades, system enhancements and employee training programs that when combined, allow us to better assist our customers in preserving their homeownership. We have a wide variety of modification programs designed to assist homeowners who are struggling with their mortgage payments. We have dedicated staff who are focused on working with each of our customers. We are continually striving to improve and perfect our programs.

- We already notify ARM borrowers five months in advance of their reset date, and again at 100 and 45 days.

- ResCap is one of the founding members of the HOPE NOW Alliance -- an alliance of major servicers, the Homeownership Preservation Foundation, NeighborWorks, and the U.S. Departments of Treasury and Housing and Urban Development, which is dedicated to providing coordinated, third-party outreach to borrowers at risk of foreclosure, including metrics by which to measure progress of the effort.

We will continue to work with the State of California and other states to continue to develop partnerships that will allow us to better assist our customers who are struggling with their mortgage payments.

Q. How important is it for GMAC ResCap’s primary servicing operations to help homeowners who are struggling with paying their mortgages?

A. It is very important to us. We have developed a number of proactive loss mitigation tools to help customers struggling with their mortgages.

For example, five years ago, we formed the HOPE-Keychain Alliance, a special team of loss mitigation specialists whom we have embedded in over 12 cities (and expanding in 2008) throughout the United States. The HOPE-Keychain Alliance teams works directly with customers to help maintain their homeownership through face-to-face meetings, workshops conducted by HOPE-Keychain Alliance associates, and other customer education initiatives. These specialists are part of a broader, outreach strategy that we use to help homeowners who are facing financial challenges.

Q. What is your general approach to loss mitigation (or, helping homeowners get current on their mortgages and avoid foreclosure)?

A. GMAC ResCap actively engages its customers on a number of levels to help homeowners avoid foreclosure.

For current ARM customers who are not delinquent on their mortgage payments, the company distributes information and proactively contacts them to ensure they understand the terms of their mortgage. We also suggest various options for customers whose interest rates are going to reset.

Options vary on a case-by-case basis and can include refinancing, modifying the terms of the loan either permanently or temporarily, extending the term of the loan, or setting up a repayment plan.

Even if a customer hasn’t missed a payment but thinks they may because of other financial difficulties, we encourage those customers to call us directly to seek help. The sooner customers call, the more options they have in getting through a very challenging situation. When customers seek our help, the two most important factors we consider are their willingness to maintain their homeownership, and their ability to pay. We then carefully look at their situation and attempt to tailor a plan that makes sense for them.

For customers who have become delinquent on their mortgage payments, GMAC ResCap relies on its loss mitigation specialists to maintain a dialogue with its customers to help them avoid foreclosure.

Q. What should one of your customers do if they fall behind in their mortgage payment? A. Please don’t wait another minute to call us. The sooner a customer calls us, the more options we have. Here are the customer service phone numbers for our major servicing brands:

Homecomings Financial customers should call 1-800-799-9250.

GMAC Mortgage customers should call 1-800-766-4622.

Ditech mortgage customers should call 800-711-4091 (first mortgages) or 800-852-0656 (home equity loans and lines of credit).

If customers prefer to seek help elsewhere, we urge them to call 1-888-995-HOPE to seek free foreclosure prevention counseling from the Homeownership Preservation Foundation. Counselors are available 24-hours-a-day, seven-days-a-week. Q. Does your company help its customers who fall behind in their mortgage payments? A. Yes. Based on a customer’s financial situation, we can consider a number of options, including:

Refinance the customer’s loan;

Modify the customer’s loan, which may include temporary or permanent interest-rate adjustment, or extend the term of the loan;

Set up a repayment plan;

Offer a short refinance or short sale; or

Offer a deed-in-lieu.

Q. How do you determine if you can help a homeowner who is falling behind in their payments?

A. Even if a customer hasn’t missed a payment but think they may because of other financial difficulties, we encourage them to call us directly. The sooner customers call, the more options they have in getting through a very challenging situation. When customers seek our help, the two most important factors we consider are their willingness to maintain their homeownership, and their ability to pay. We then carefully look at their situation and attempt to tailor a plan that makes sense for them.

Q. What strategies do you employ to help customers who have fallen behind in their mortgages?

A. Probably the most important aspect of working with customers who have fallen behind on their mortgage payments is reaching out to them and entering a dialogue to help them understand their options.

As well as the HOPE-Keychain Alliance, we use mail, outbound calling, their inbound calling, and educational campaigns, as well as incentives, such as gift cards, to encourage customers to speak with our loss mitigation professionals. This can be difficult for many customers because in many cases, they are embarrassed and upset about their situation and don’t know that we may be able to help them. According to the Homeownership Preservation Foundation, about 50 percent of homeowners avoid contacting their mortgage servicer when they become delinquent in their mortgage payments.

Q. Are you modifying loans to help struggling homeowners?

A. Yes. We have created a special team of loan modification specialists who are prepared to work with our customers who qualify for a loan modification.

Q. As a loan servicer, how broad is your ability to modify loans limited due to investor constraints? A. We have a fairly broad range of authority to work with customers who are struggling to make their payments. We offer several loan modification options that help customers and also keep the interests of our investors and bondholders in mind.

Q. What is the HOPE-Keychain Alliance?

In addition to our ongoing loss mitigation effort, the company relies on its HOPE-Keychain Alliance to work directly with struggling customers through face-to-face meetings, workshops conducted by HOPE-Keychain Alliance associates, and other customer education initiatives. The HOPE-Keychain Alliance team consists of roughly 20 loss mitigation associates located in 12 large metro areas (expanding in 2008) including Chicago, Dallas, Denver, Detroit, St. Louis, Philadelphia, Cleveland, Indianapolis, Atlanta, Houston, San Diego and Memphis. This team also serves about a dozen smaller markets within an easy distance of the major markets.

The HOPE-Keychain Alliance team members proactively seek face-to-face meetings with customers facing financial difficulties. The team reaches out to homeowners where the company has not been able to maintain contact with a homeowner in more than 60 days or with borrowers who are more than 60 days delinquent on their loan. The HOPE-Keychain Alliance also has formed partnerships with nonprofits such as NHS (Neighborhood Housing Services), city and state governments, faith-based organizations, other mortgage companies, and interested parties to educate customers facing financial difficulties. The HOPE-Keychain Alliance has been instrumental in initiating partnerships within Chicago, Dallas, Houston, Indianapolis, Memphis, St. Louis, and Detroit as well as launching citywide awareness campaigns.

Q. What are HOPE-Keychain Alliance Partnerships?

A. GMAC ResCap, through the HOPE-Keychain Alliance program, has formed partnerships with nonprofits such as NHS (Neighborhood Housing Services), city and state governments, faith-based organizations, other mortgage companies, and interested parties to educate homeowners facing financial difficulties about how to maintain the ownership in their homes, and avoid foreclosure. We have been instrumental in initiating partnerships within the cities of Chicago, Dallas, Houston, Indianapolis, Memphis, St. Louis, and Detroit as well as launching citywide awareness campaigns for any homeowner facing financial difficulties.

Q. Does your company do anything else to help struggling homeowners? A. Yes. Here are other services we provide to help our customers: Homeownership Preservation Foundation: We can refer customers for additional budget counseling, based on our relationship with the Homeownership Preservation Foundation (“The Foundation”), which provides telephone counseling to homeowners through its 888-995-HOPE national, toll-free hotline. GMAC ResCap has provided $20 million in seed funding to the Homeownership Preservation Foundation, a 501(c)(3) nonprofit corporation dedicated to providing information, education, and free counseling to all borrowers (serviced by any lender). The Foundation provides free counseling to homeowners who are having difficulty paying their mortgages through its 888-995-HOPE hotline that is available to any homeowner nationwide. In addition, the Foundation has launched a nationwide TV, radio and print public service awareness campaign to encourage homeowners to call its hotline for help. Launched in February 2006, the campaign’s TV PSAs have aired more than 5,000 times on 100+ TV stations nationwide and have generated more than 28,000 phone calls and web site visits to www.995HOPE.org. CARE Employment Service Referrals: Through our partnership with CARE, we provide employment service referrals to those homeowners experiencing unemployment. Mortgage education: Our web sites, literature and brochures provide ongoing information to educate customers about their mortgages.

Q. Can you do anything to help a homeowner who has declared bankruptcy? A. Possibly. Depending upon the customer’s individual circumstances, it may be possible for the customer to maintain home ownership. If a customer has filed for bankruptcy, that customer’s bankruptcy lawyer should contact us immediately.