Foreclosure Prevention Alternatives Introducing Deed-for-Lease Program
HAMP MBS Loan Guidelines Updated
On November 24, 2009, Fannie Mae issued a Servicing Guide update affecting MBS loan reclassification and removal requirements for HAMP loans in MBS pools.
View Announcement 09-35
Introducing Deed-for-Lease Program
Fannie Mae's Deed-for-Lease™ Program, a new loss mitigation option, was introduced November 5, 2009.
View Announcement 09-33
Foreclosure Prevention Alternatives
Workout Hierarchy
Fannie Mae's loan workout hierarchy requires that you first evaluate a borrower to determine if the Home Affordable Modification Program is appropriate. If the Home Affordable Modification Program is not appropriate, then consider other foreclosure prevention alternatives to resolve borrower delinquencies.
View the Loan Workout Hierarchy fact sheet, which includes descriptions of each loss mitigation option.
Loan Workout Hierarchy Fact Sheet (.pdf)
First Order of Consideration: Home Affordable Modification Program
A servicer should first evaluate a borrower to determine if the Home Affordable Modification is appropriate, and if not, the servicer should then determine whether the borrower is eligible for an alternative foreclosure prevention option based on whether the borrower is experiencing a temporary or permanent hardship.
Home Affordable Modification
Temporary Hardship
For borrowers expecting to overcome their financial hardship in a relatively short period of time and will be able to resume making timely, future payments in addition to an amount to repay any arrearages over time, the preferred workout hierarchy is:
· Forbearance – A temporary reduction or suspension of payments which must be immediately followed by an arrangement to cure the delinquency.
· Repayment Plan – An arrangement in which a borrower agrees to pay down past due amounts while still making regularly scheduled payments.
· HomeSaver Advance™ – A monetary advance to cure a delinquent loan resulting in a separate unsecured loan for the arrearage amount.
HomeSaver Advance
Permanent Hardship
For borrowers who have experienced a permanent or long-term/enduring financial hardship, foreclosure prevention alternatives should be considered in the following preferred order:
· Payment Reduction Plan™ (PRP) – For a borrower who is not eligible for, or who does not meet the terms of the Home Affordable Modification but has the willingness and ability to make reduced monthly payments of at least 70 percent of the borrower's contractual monthly payment.
Payment Reduction Plan
· Other Forbearance – A temporary reduction or suspension of payments (subject to the limits of the governing MBS trust document under which that mortgage loan was pooled), which will culminate in a more permanent foreclosure prevention alternative listed below.
Once borrowers are on a Payment Reduction Plan or other forbearance, the following options, along with any new programs that may become available, should be considered in the following preferred order:
· Modification – For mortgage loans that are ineligible for the Home Affordable Modification Program, such as non-owner occupied property, any permanent change to the terms of a mortgage loan, including changes to the interest rate, loan balance, or loan term.
· Pre-Foreclosure Sale – For delinquent mortgage loans, the acceptance of a sales contract prior to a foreclosure sale resulting in a payoff of less than the total amount owed on the mortgage loan and release of the mortgage lien.
· Deed-in-Lieu – For delinquent mortgage loans, the voluntary transfer of title from a borrower to the servicer to satisfy the mortgage loan and avoid foreclosure (also called a "voluntary conveyance").
· Deed-for-Lease (D4L) – For qualified borrowers with properties transferred through deed-in-lieu of foreclosure (DIL), D4L allows the execution of a lease agreement in conjunction with a DIL allowing for borrowers/tenants to remain in the home.
Deed-for-Lease
View and access all servicing-related Web seminars
Housing Finance Institute® (HFI)
Take advantage of one- or two-day servicing courses taught by industry experts, including Preventing and Managing Loans in Default and Foreclosure.
Learn more about HFI
