1. Call center activity requirements by performing call analysis to assess:
• Servicer call activity volume to delinquent borrowers
• Success in receiving payment from delinquent borrowers
• SPOC assignment activity
• Adequacy of servicer call activity
• Re-performance rates

2. Loss mitigation and foreclosure (including short sale and deed-in-lieu) activity and timelines:

• Perform delinquency roll rate analysis to understand loss mitigation effectiveness as well as migration from foreclosure back to performing
• Monitor modification activity to assess principal forgiveness, trial and permanent modification performance and recidivism rates

Trust performance improved significantly due to BPA’s monitoring activities on items 1 and 2 above.

More recent improvements are described below:

• 60+ day delinquencies decreased by 1.53%
• 90+ day delinquencies decreased by 1.37%
• The 24-month perfect payment record increased by 1.71%
• The 60-month perfect payment record increased by 1.45%

3. REO activity, timelines and recoveries:

• Perform roll rate analysis to understand migration from REO back to foreclosure due to faulty foreclosure processes
• Perform REO analysis to determine days in REO, appropriate marketing (valuation, pricing) and determine loss severity
• Overall, both faulty foreclosure processes and loss severities have decreased. REO marketing time has similarly decreased

4. MI claims processing and deductible tracking resulted in increased claims approval and expedited decrease in the pool deductible.

Origination review of NPL’s and RPL’s

BPA implemented a broad put-back effort that included developing a comprehensive database to track put-back activity. A combination of discretionary and random loan samples was selected for review using statistical sampling methodologies. The loans were reviewed by the securitization Loan Performance Monitor. Thereafter, loans found to be guideline-violatory were reviewed by BPA and included in a schedule of repurchase demands as well as added to the database and tracked throughout the life of the transaction.

During this process BPA analyzed the loan files and data to prepare rebuttals and surrebuttals to arguments made by the Seller against putting back certain loans. Over the course of 2 years, BPA issued ~1,250 repurchase demands. A small group was rescinded due to liquidation with no loss to the trust and those that went into RPL status were placed on watch. The Seller repurchased ~$33.9 mm outright after which BPA worked with the client’s attorneys to strategically negotiate and settle the remaining claims resulting in an additional $40 mm settlement.

As part of the above process, a group of repurchase demands were issued under an Automatic Put Back Theory as the mortgage insurer rescinded coverage of certain loans under its pool policy thereby violating the transaction representations and warranties. The MI pool policy included a deductible that was also closely tracked by BPA.

BPA provided monitoring services to review and track the servicer’s handling of MI rescission activity that the servicer handed off to a third-party vendor. BPA examined the servicer’s claims tracking and accounting process as well as its vendor’s progress in arguing rescissions. BPA uncovered faulty accounting processes that were later corrected as well as MI denials and curtailments resulting from servicing timing and document production failures.

After a servicing transfer occurred, BPA continued to monitor MI activity and pursue remedy for wrongful servicer activity. It took the new servicer more than a year to sort out the MI claims issues after which BPA identified continued failures on the part of the new servicer for the reasons cited above. Once again, BPA prepared a schedule and demanded indemnification. The servicer immediately agreed to indemnify the trust for a specific amount and the remainder is being pursued by the servicer with the MI provider.