Fannie Mae Amends Servicing Policies

• April 15, 2015
• Anna DeSimone

April 15, 2015, Fannie Mae issued Ann. SVC-2015-06: Miscellaneous Servicing Policy Changes.   Fannie Mae is amending its policies and requirements related to the following: 
•    Processing Additional Principal Payments for Delinquent Mortgage Loans
•    Accepting Funds from Hardest-Hit Fund (HHF) Programs and Housing Finance Agencies (HFA)
•    Processing a Partial Reinstatement During Foreclosure 
Policy Change Effective Date
The servicer is encouraged to implement the policy changes in this Announcement immediately, but must implement the changes by June 1, 2015. 
Date of Servicing Guide Update
These policy changes will be reflected in C-1.2-01, Processing Additional Principal Payments; D2-3.1-05, Interacting with Housing Finance Agencies and Hardest-Hit Fund Programs; and E-3.2-08, Processing Reinstatements During Foreclosure in the May 2015 monthly update of the Servicing Guide. 
Processing Additional Principal Payments for Delinquent Mortgage Loans
Fannie Mae is adding clarification related to processing additional principal payments for delinquent mortgage loans. In the case of a delinquent mortgage loan, any additional principal payments identified as such must first be applied toward curing the delinquency. If there are any remaining funds, the servicer must then apply them as an additional principal payment. 
Accepting Funds from Hardest-Hit Fund Programs or Housing Finance Agencies
Fannie Mae is updating its policies and requirements for accepting funds from hardest-hit fund programs or Housing Finance Agencies. 
Programs to Assist an Unemployed Borrower
The servicer must accept funds on behalf of a borrower from an unemployment assistance program either from an HFA or its third-party vendor, regardless of whether the mortgage loan is current or delinquent.

If the borrower is in a forbearance plan when he or she is accepted into the unemployment assistance program, the servicer must cancel the forbearance plan. If the borrower becomes eligible for additional assistance after the period of assistance provided by the HFA, the servicer must evaluate the borrower for a retention workout option in accordance with Chapter D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options. 

Programs to Assist with Reinstatement
The servicer must accept funds from an HFA-HHF reinstatement program that fully reinstates the borrower’s mortgage loan. 

If a borrower is in a mortgage loan modification Trial Period Plan, a repayment plan, or a forbearance plan when his or her mortgage loan is fully reinstated as a result of HFA-HHF reinstatement funds, the servicer must cancel the workout option. See C-1.2-01, Processing Additional Principal Payments for information related to processing additional principal payments for a delinquent mortgage loan.

If the borrower requests additional assistance after the mortgage loan has been fully reinstated, the servicer must evaluate the borrower for a retention workout option in accordance with Chapter D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options. If the borrower fails to qualify due to the IDI test (see D2-1-02, Using Freddie Mac’s Imminent Default Indicator for more information on evaluating a borrower using IDI), the servicer must submit the case to HSSN for Fannie Mae to decision. 

If the funds from the HFA-HHF reinstatement program do not fully reinstate the borrower’s mortgage loan, then the servicer must attempt to contact the borrower and achieve QRPC in accordance with Chapter D2-2, Requirements for Contacting a Borrower and take the actions outlined in the following table, taking into account the partial reinstatement funds, to resolve the remaining delinquency.

Programs to Assist with a Mortgage Loan Modification
The servicer must accept funds on behalf of a borrower from an HFA-HHF mortgage loan modification assistance program, regardless of whether the mortgage loan is current or delinquent. 
Accepting a Partial Reinstatement During Foreclosure
Fannie Mae is updating its policies and requirements for accepting a partial reinstatement during foreclosure. The servicer is authorized to accept a borrower’s request for a partial reinstatement if the borrower would qualify for a workout option after application of the partial reinstatement funds. See Chapter D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options for additional information on available workout options.

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