Fannie Mae Announces Servicing Rules for Delinquency Status Reporting
by: Anna DeSimone
On April 10, 2013 Fannie Mae issued Servicing Announcement SVC-2013-08, Delinquency Status Reporting and Hierarchy. This Announcement provides new and updated policy requirements for the following:
Introduction of a Delinquency Status Code Hierarchy, and
Updates to Delinquency Status Code Definitions
Effective Date: Servicers are encouraged to implement the new policies in this Announcement as soon as possible; however, servicers are required to implement these policies for the February 2014 delinquency status code reporting cycle for the January 2014 activity.
Introduction of a Delinquency Status Code Hierarchy
Fannie Mae is introducing a delinquency status code hierarchy that servicers must use for reporting to Fannie Mae. Servicers must report the most appropriate delinquency status code based on the delinquency status code hierarchy priority level. The delinquency status code hierarchy is comprised of six priority levels in descending order:
Delinquency Status Code Priority Levels
Priority Level Priority Level Description
1 Approved Foreclosure Prevention Alternative or Special
Relief Measures Delinquency
2 Complete Borrower Response Package
3 Bankruptcy
4 Foreclosure
5 Collection
6 Other
When multiple delinquency status codes are applicable to an individual loan, the servicer must use the appropriate delinquency status code in the highest priority. Priority Level 1, Priority Level 2, and Priority Level 3 delinquency status codes are mutually exclusive, meaning only one delinquency status code within each priority level can apply during a reporting cycle. If the most appropriate delinquency status code is in a priority level in which the codes are not mutually exclusive, the servicer must determine the delinquency status code that best describes the latest action it has taken to cure the delinquency or to liquidate the mortgage loan.
Servicers must continue to report the appropriate delinquency status code based on the hierarchy until the delinquency has been resolved or the delinquency action is complete. The Servicing Guide exhibit, Delinquency Status Codes, has been replaced with a new exhibit, Delinquency Status Code Hierarchy and Definitions. This new exhibit is available on Fannie Mae’s website.
Updates to Delinquency Status Code Definitions
Fannie Mae has updated the definitions for the following delinquency status codes on the Delinquency Status Codes Hierarchy and Definitions exhibit:
Trial Modification, Code BF (Priority Level 1)
Modification, Code 28 (Priority Level 1)
Military Indulgence, Code 32 (Priority Level 1)
Complete Borrower Response Package, Code H5 (Priority Level 2)
Probate, Code 31 (Priority Level 4)
Foreclosure Sale Continued, Code 95 (Priority Level 4)
Title Issue in Progress, Code BE (Priority Level 4)
Quality Right Party Contact, Code AW (Priority Level 5)
Please refer to the Servicing Guide, Part VII, Chapter 7: Delinquency Status Reporting, Section 701: Delinquency Status, and “Reason for Delinquency” Codes and Delinquency Status Codes Exhibit
About the Author:
Anna DeSimone is President and Founder of Bankers Advisory, Inc. She can be reached at anna@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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