Certain Single-Family MBS Pools Experienced Earlier-than-Expected Trial Modification-Related Loan Buyouts

January 25, 2022

It is Fannie Mae's current practice to require a borrower in most cases to successfully make three modified loan payments1 while in a modification Trial Period Plan before we remove the associated loan from an MBS Trust to finalize a permanent modification. Fannie Mae recently discovered instances of modification-related delinquent loan removals prior to the completion of the necessary trial payments. Once a loan is removed from a pool, such removal cannot be reversed.

Starting with the January reporting period, we have enhanced controls to ensure delinquent loans in an active Trial Period Plan remain in the MBS pool until the completion of the trial period of modified loan payments.

As a result of these buyouts, investors may have experienced earlier principal repayments and reduced interest payments from the associated MBS pools. We are in the process of evaluating the impacted population and will publish an estimated financial impact for the associated securities in a future announcement to support investor analysis. While most of these buyouts occurred in recent months, the analysis will cover activity beginning in January 2021 when Fannie Mae updated its Single-Family MBS Prospectus to extend the timeframe for repurchases of delinquent mortgage loans from four consecutively missed monthly loan payments to twenty-four months delinquency. As a reminder, Fannie Mae has a claims process for investors who believe they may have been financially harmed due to a unique incident or potential disclosure issue on a Fannie Mae issued security. The claims form may be found here.

For questions, please contact the Fannie Mae Investor Help Line at 1-800-232-6643, Option 3 or by e-mail.

1 Four successful modified loan payments are typically required for a loan that is current, but in which default is imminent.