Fannie Mae Simplifies Payment Forbearance Policies to Assist Borrowers
In alignment with Freddie Mac and at the direction of the Federal Housing Finance Agency (FHFA), we are simplifying our forbearance policies by introducing a new, singular, consolidated forbearance plan. The new plan is intended to provide payment forbearance to assist borrowers who are experiencing a short-term hardship and improve operational efficiency for servicers.
Servicers are encouraged to implement these policy changes immediately, but must implement no later than December 1, 2018. Once implemented, servicers must evaluate borrowers for forbearance plans in accordance with this policy. Forbearance plans that were entered into prior to the servicer's implementation of these changes would adhere to existing policy until the expiration of such forbearance plan.
In summary, the new forbearance plan:
• Covers all eligible hardships (including, but not limited to, unemployment, disability, divorce, death of borrower, and natural or other disaster) as noted on the Mortgage Assistance Application / Form 710.
• Requires that the servicer achieve Quality Right Party Contact (QRPC), which is a standard of communicating with the borrower about resolution of the mortgage loan delinquency, in order to enter into a forbearance plan, unless the borrower's hardship is due to a disaster event.
- When the hardship is due to a disaster event and the mortgage loan is 31 or more days delinquent, the servicer is authorized to grant an initial forbearance plan term of up to 3 months without achieving QRPC if its review of the facts and circumstances indicates that the property, the borrower’s employment, or the borrower's income is seriously affected by a disaster event. The servicer must continue attempts to achieve QRPC during this initial 3-month forbearance plan term.
• Delegates the decision to provide forbearance up to a cumulative term of 12 total months to the servicer; additional forbearance may be offered if approved by Fannie Mae.
• Must not result in the mortgage loan becoming greater than 12 months delinquent, without approval from Fannie Mae.
• Does not require a complete borrower response package, in order to assist more homeowners more quickly in the event of a hardship.
The simplified forbearance policy provides clear parameters to servicers to assist borrowers who are experiencing a short-term hardship and in need of a recovery period. It enables the servicer to offer forbearance to a borrower more quickly and enables servicers to more swiftly work with borrowers to place them in a permanent solution.
With the release of this simplified forbearance policy, Fannie Mae is also simplifying its policy on disaster assistance. The preliminary three-month period where a servicer was instructed to offer disaster relief is now incorporated into the simplified forbearance plan as described above, in which servicers are delegated authority to provide forbearance for a time period not to exceed a cumulative term of 12 total months, or a total of no greater than 12 months of cumulative delinquency on a loan. Fannie Mae may approve forbearance periods in excess of these limits on a case-by-case basis.
See Fannie Mae's Servicing Announcement and Servicing Guide for comprehensive details regarding these updates.
For questions, please contact Fannie Mae's Investor Help Line at 1-800-232-6643 or by email.