Servicing Guide

Published October 14, 2020

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Does Lender Letter LL-2020-02 address servicer requirements for disbursing insurance loss proceeds for borrowers impacted by COVID-19?

NOTE: The response to this Q&A is directly from Fannie Mae Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing.

In response to servicer inquiries and in an effort to repair properties that experience an insured loss event as expeditiously as possible, we are updating our requirements for determining the mortgage loan status for disbursing insurance loss proceeds for a borrower impacted by COVID-19. The servicer must consider the loan to be current or less than 31 days delinquent for purposes of disbursing insurance loss proceeds if

  • the borrower experienced a COVID-19 related hardship;
  • the mortgage loan was current or less than two months delinquent as of Mar. 1, 2020, the effective date of the National Emergency declaration related to COVID-19; and 
  • at the time of the loss event, the borrower is performing on a COVID-19 related forbearance plan, repayment plan, or Trial Period Plan.

The servicer must otherwise disburse the proceeds in accordance with Servicing Guide B-5-01, Insured Loss Events.  

The servicer must document in the mortgage loan servicing file the date that the COVID-related hardship began and the date of the insured loss event.  

For more information see Fannie Mae Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing.

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