Fannie Mae Forbearance Changes
Forbearance plan eligibility:
To assist borrowers who have experienced a hardship resulting from COVID-19 (for example, unemployment, reduction in regular work hours, or illness of a borrower/co-borrower or dependent family member) which has impacted their ability to make their monthly mortgage loan payment, the servicer should evaluate the borrower for a forbearance plan in accordance with Servicing Guide D2-3.2-01, Forbearance Plan. The servicer must achieve quality right party contact (QRPC) with the borrower prior to offering a forbearance plan. With this Lender Letter, when determining eligibility for a forbearance plan for a borrower impacted by COVID-19, the property securing the mortgage loan may be a principal residence, a second home, or an investment property. The servicer must otherwise follow the requirements in D2-3.2-01, Forbearance Plan.
NOTE: The servicer is not required to obtain documentation of the borrower’s hardship
Evaluating the borrower for a mortgage loan modification after a forbearance plan:
For borrowers who have received a forbearance plan in response to COVID-19, the servicer must begin attempts to contact the borrower no later than 30 days prior to the expiration of the forbearance plan term, must continue outreach attempts until either QRPC is achieved or the forbearance plan term has expired, and analyze each case carefully in accordance with the requirements in the table below before determining which mortgage loan modification is most appropriate for the borrower. We are actively monitoring reports about the spread of COVID-19 (coronavirus) in the United States and understand that there may be concerns about its potential impact on borrowers. At the direction of the Federal Housing Finance Agency (FHFA) and in alignment with Freddie Mac, we are communicating temporary policies in this Lender Letter to enable servicers to better assist borrowers impacted by COVID-19. The policies in this Lender Letter are effective immediately and are effective until Fannie Mae provides further notice. We are releasing information to our servicers as quickly as possible and will update and republish this Lender Letter as new guidance becomes available.
This Lender Letter provides information about the following:
▪ Forbearance plan eligibility: We expanded eligibility for a forbearance plan for borrowers impacted by COVID-19.
▪ Evaluating the borrower for a mortgage loan modification after a forbearance plan: We clarified the mortgage loan modifications that must be considered near the conclusion of a forbearance plan term.
▪ Credit bureau reporting: We clarified that servicers must suspend credit reporting when the hardship is related to COVID-19.
▪ Suspension of foreclosure sales: We are instructing servicers to not allow any foreclosure sales within the next 60 days.
Additionally, we are providing information about our Disaster Response Network as a reference for Fannie Mae borrowers. © 2020 Fannie Mae LL-2020-02 Page 2 of 3 With LL-2017-09R Fannie Mae introduced the Fannie Mae Extend Modification for Disaster Relief (Extend Mod), a temporary post-disaster forbearance mortgage loan modification, as well as the order of evaluation for Extend Mod and other post forbearance mortgage loan modifications when the property securing the mortgage loan or the borrower’s place of employment is located in a FEMA-Declared Disaster Area eligible for Individual Assistance. With this Lender Letter, we are extending the availability of these post-forbearance mortgage loan modifications to borrowers impacted by COVID-19. The following table provides guidance and the order of evaluation for the mortgage loan modification
All information from Fannie Mae, for more details, see the full lender letter here.