Servicing Guide

Published October 14, 2020

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Are there any changes to the reclassification process for MBS mortgage loans for a borrower 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.

The following content was published May 14, 2020.

The Amended and Restated 2007 Single-Family Master Trust Agreement (the “2007 Trust Agreement”) applies to MBS mortgage loans with pool issue dates on or after June 1, 2007 through December 1, 2008.  As described in F-1-26, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan and in accordance with the 2007 Trust Agreement, we remove such mortgage loans from the MBS pool after the sixth consecutive month of continuing forbearance.  Selection for reclassification is based on the servicer’s monthly delinquency status reporting to Fannie Mae.  

In response to the CARES Act, we are updating our reclassification process for mortgage loans in these MBS pools when a borrower impacted by COVID-19 is provided a forbearance plan.  Such mortgage loans will not be removed from the MBS pool for the duration of the forbearance plan under the CARES Act, in accordance with the 2007 Trust Agreement, which permits mortgage loans to remain in trust longer than six consecutive months when the forbearance plan is required by applicable law.  

These changes will be effective beginning with the June 2020 monthly delinquency status reporting cycle and will apply when the servicer reports delinquency status code 09 (Forbearance) and reason for delinquency code 022 (Energy-Environment Costs), as reassigned pursuant to this Lender Letter for reporting a hardship associated with COVID-19.

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

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