If a borrower contacts a servicer indicating they are impacted by COVID-19, the servicer must determine if the borrower has experienced an eligible hardship (for example, unemployment, reduction in regular work hours, or illness of a borrower/co-borrower or dependent family member).
For example, if a borrower is ill or quarantined and unable to work and, as a result, experiences a reduction in income that impacts the borrower’s ability to make their monthly mortgage payment, the borrower may be eligible for one of our existing workout options (in accordance with our workout hierarchy). For this situation, a forbearance plan may be an ideal workout option to consider.
Additionally, with Lender Letter LL-2020-07, COVID-19 Payment Deferral we introduced a new home retention workout option to assist borrowers who have resolved their COVID-19 related hardship. Once the servicer implements COVID-19 payment deferral, it must evaluate borrowers impacted by COVID-19 for a COVID-19 payment deferral in accordance with the eligibility requirements and evaluation hierarchy described in the Lender Letter rather than for the post-disaster forbearance mortgage loan modifications as made available in Lender Letter LL-2020-02, Impact of COVID-19 on Servicing. Until the servicer implements COVID-19 payment deferral, it must continue to evaluate the borrower for a post-forbearance mortgage loan modification in accordance with Lender Letter LL-2020-02, Impact of COVID-19 on Servicing.
For more information, see Lender Letter LL-2020-02, Impact of COVID-19 on Servicing, LL-2020-07, COVID-19 Payment Deferral, and Lender Letter 2017-09R, Fannie Mae Extend Modification for Disaster Relief and Other Clarifications for Mortgage Loans Impacted by Disaster Events.
See below for more information on COVID-19: