Fannie Mae Announces Hardest-Hit Fund® Modification Assistance Programs and Updates Disaster Assistance
by: Michelle Peters
On July 1, 2013 Fannie Mae issued Announcement SVC-2013-14: Hardest-Hit Fund® Modification Assistance Programs. This announcement references Lender Letter LL-2012-08 which provides guidance regarding loan modification assistance programs for loans that fall within the Hardest-Hit Fund® guidelines. Within the announcement, servicers are notified that regardless of whether or not principal forbearance is required, acceptance of modification assistance provided from any Housing Finance Agency (HFA) in connection with Fannie Mae modification loans is required. Servicers must comply with the stipulations detailed in Announcement SVC-2011-18, Updates to Delinquency Management and Default Prevention Requirements.
Also referenced in this announcement is information regarding the Trial Period Plans for borrowers in the process of receiving loan modification. In the instances when a borrower has successfully completed their Trial Period Plan, however the servicer has not received HFA funds upon the first payment due day for the modified mortgage, the servicer must re-evaluate to determine if the borrower still meets eligibility requirements according to the Selling Guide. The Servicer must send the case to Fannie Mae for review and decision if the borrower no longer qualifies for modification. If the servicer determines that the borrower does qualify for the modification, a new Trial Period Plan is not required, regardless of whether or not the modified mortgage payment will be higher than the Trial Period Plan payment.
The changes noted in in this announcement are effective as of October 1, 2013; however servicers may begin implementation immediately if they choose to do so.
On August 7, 2013 Fannie Mae issued Announcement SVC-2013-16: Updates to Assistance in Disasters
This Announcement updates policies on assistance for borrowers impacted by disasters (defined in the Servicing Guide as earthquakes, floods, hurricanes, or other catastrophes caused by a person or event beyond the borrower’s control). The policies relate to the following:
Forbearance for Assistance in Disasters
Insurance Claim Settlements
Borrower Income Documentation, and
Credit Bureau Reporting
In addition, Fannie Mae is updating and introducing additional guidance relating to modification options for borrowers whose properties are located in Federal Emergency Management Agency (FEMA) Declared Disaster Areas eligible for Individual Assistance:
Applying Streamlined Modifications Post Disaster Forbearance
Cap and Extend Modification for Disaster Relief, and
Escrow Accounts.
Effective Date: Servicers are required to implement the updated policies in this Announcement immediately, unless otherwise indicated.
About the Author
Michelle Peters is Vice President and Chief Information Officer at Bankers Advisory, Inc. She oversees the company’s pre-funding services division and all post-funding re-verification services. She can be reached at michelle@bankersadvisory.com
Michelle oversees the mortgage information security, vendor management, and pre-funding services, and manages the QC processing department. She received her associate's degree at the New England College of Finance and is a BA candidate at Bentley University.
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