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Metropolitan Washington Council of Government Predatory Lending Conference

Metropolitan Washington Council of Government Predatory Lending Conference. April 27, 2006 Anne Tyree Option One Mortgage Corporation. Option One Mortgage Corporation. Founded 1992, Subsidiary H&R Block, Inc. Lending Channels: Indirect and Direct

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Metropolitan Washington Council of Government Predatory Lending Conference

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  1. Metropolitan Washington Council of GovernmentPredatory Lending Conference April 27, 2006 Anne Tyree Option One Mortgage Corporation

  2. Option One Mortgage Corporation • Founded 1992, Subsidiary H&R Block, Inc. • Lending Channels: Indirect and Direct • Indirect, wholesale through brokers and through banks and financial institutions. Non-prime products , full service origination and servicing. • Direct, retail through H&R Block Mortgage, prime and non-prime products (retail will now report directly to HRB in 2006-7) • Origination through December 2005, 44.6 Billion • Servicing through December 2005, 79.4 billion

  3. Best Practices and transparency • Best Practices— • Option One was one of the first lenders to publish and discuss best practices. Freddie Mac included Option One in its original Don’t BorrowTrouble symposiums in year 2000. • Our Best Practices for origination and servicing were reviewed by consumer advocates such as NFHA and NCRC. There is continuous review of best practices that responds to external feedback, technology gains, and market dynamics. • Our Best Practices will be updated in May with new and improved features. • Having Best Practices is a strong company model for customers, investors and employees and external partners….it sends a clear message, offers transparency, and builds trust.

  4. Highlights of Best Practices • Prepay-duration matches ARM and borrower benefit is required • Updated change, moving to 3-2-1 versus California pre-pay (May,2006) • ARM start rate floats up and down • Re-disclose upon receipt of application, with changes and at closing. • Updated change, many plain language disclosures around stated income, prepayment penalty, YSP, and interest only products. (May,2006) • Do not offer mandatory arbitration, Neg Am and Option arms. Interest only holds for 5 years. • Servicing: We contact all borrowers from the start. We offer extended phone hours in English or Spanish, day or night. We do not charge fees for many services. We promptly provide payoff statements, typically within 48 hours. • Visit www.OOMC.com for best practices

  5. Katrena Disaster Assistance Initiatives • Dedicated team of Disaster Specialists to work with borrowers in impacted areas • 15,143 loans are in the affected zip codes • 3,851 damaged properties • 2,870 loans were not successfully contacted (estimate the contacts do take time to calculate since they happen in many forms) • Outbound solicitation efforts to contact as many borrowers   • No credit reporting or late charges on loans in affected zip codes • All pre-payment penalties waived for victims of federally declared disasters, with borrowers’ written or verbal request • All foreclosures in affected areas on hold through May 31, 2006.

  6. Financial education for borrowers • Financial Education • Option OneUniversity-Train brokers on industry business practices, including fair lending. New emerging markets and anti-fraud courses added in 2006. • Diversity Scholarship-OOMC offers a diversity scholarship to our brokers and also to our employees to attend the School of mortgage banking through the MBA. • MBA-OOMC-Option One Co-branded a three year offering to provide mortgage brokers with new skills in creating new customers by educating first- time homebuyers (50 sessions per year). • Borrow Smart— is a nonprofit “train the trainer” team that offers non-profits credit counseling for borrower readiness. • JumpStart is a nonprofit foundation that focuses on ways to increase the financial knowledge of young people. • Option One distributes a financial education brochures to borrowers and offers key websites for borrowers who may have mortgage questions..

  7. Partnership with industry • OOMC partners with recognized realtor trade groups to work with a diverse segment of the market: the affordable housing and emerging markets. • National Association of Hispanic Real Estate professionals (NAHREP) is a partner to create new opportunities for homeownership and homeownership preservation. • Partnership with PRADO. (Gary Acosta, former NAHREP chairman.) • National Association of Real Estate Brokers (NAREB) • Recruit/train members to become REO broker with OOMC • Asian Real Estate Association of America (AREAA) is a new partner. • OOMC leadership is on the board of directors. • Trade Associations: Mortgage Bankers Association, American Financial Services Association, Financial Services Roundtable, and National Home Equity Association.

  8. Partnership with Community • Option One works with community and advocacy groups on multiple issues, such as the Katrina working group in Washington, DC. • Highlights • National Fair Housing Alliance (NFHA), Shanna Smith: They assist us in our review of many functions, including fair lending practices. They provide feedback on best practices and we engage on numerous housing issues. • National Community Reinvestment Coalition (NCRC), John Taylor: They assist us on a number of housing issues, training, borrower resolutions. We participate on the Mortgage Finance Council for NCRC. • Neighborworks and NHS offices, CCRC and The HOPE foundation • OOMC is represented on the Federal Reserve Consumer Advisory Council. (2006-2008)

  9. Preserving Homeownership Home Ownership Preservation Option One has a long standing commitment of customer advocacy for borrowers who in need assistance to stay in their homes. We have partnered with a national organization, Neighborworks, to reach out to borrowers in the most vulnerable markets where they are at risk of foreclosure. New focus areas are Detroit, Dallas, Ohio, Atlanta, and Houston Neighborworks is an umbrella organization for Neighborhood Housing Services (NHS). NHS Chicago example: • On the ground. OOMC is actively engaged with Neighborhood Housing Services (NHS) in Chicago, Home Ownership Preservation, CCRC and other local counselors, to educated borrowers and reduce the risk of foreclosure. • Public private partnering is a success • City/County, NHS (counseling, loss mitigation, and REO) • Federal Reserve • Homeownership Preservation Foundation (spearheaded creation and support of CCRC) • Lender/Servicer partners

  10. Support of our communities • Option One is very active in giving back to the communitythrough its Lending Hands giving and volunteering program. Our focus areas are Housing, Education and Health and Human Services. • Partners include Habitat for Humanity and Junior Achievement through national partnerships to engage our efforts across the country. • Junior Achievement-We have reached more than 40,000 students through Junior Achievement programs. • Habitat forHumanity-We have built homes for 34 families, mobilized more than 3,000 volunteers, and given more than 7,200 hours of time • Corporate Awards • Option One received the Ethics in America Award from the Passkeys Foundation in the national public company category, 2005 • Option One was named 2003 Business of the Year by the Irvine Chamber of Commerce, 2004 • Best company to work for by OC Metro magazine, 2004

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