Servicing Guide

Published October 14, 2020

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SMDU™ UI User Guide 7.39 October 2020 (Imminent Default Evaluation for Modifications and Liquidations)

Mandatory IDE Request Data Elements (“IDE Request”)  25

Evaluate for Imminent Default Using Fannie Mae’s Stand-Alone Tool 26

An imminent default evaluation (IDE) determines if a borrower’s mortgage payment is in imminent default for purposes of determining eligibility for a conventional mortgage loan modification and liquidation options.  SMDU will run an IDE when a loan is being evaluated by SMDU for a workout (auto-decisioning), creation of case for a loan that was not decisioned by SMDU.   Although SMDU will run an IDE it will not impede the creation of a case in SMDU UI.

You can use the Stand-Alone tool to conduct an independent IDE prior to the loan being evaluated for a modification or liquidation option or creating a case for a loan that was not decisioned by SMDU.

Mandatory IDE Request Data Elements (“IDE Request”)

Below is a list of mandatory and applicable data elements that must be provided by the servicer for SMDU to run an imminent default evaluation as part of an auto-decisioning request, case creation request, and/or IDE Stand-Alone request.

IDE Data Element

SMDU UI Page

Mandatory for SMDU to Perform  IDE

Notes

Representative Credit Score

Borrowers

Yes

 

Asset

Borrowers

Yes

The following asset types will be used to determine the total cash reserve amount.

Checking Account, Savings Account, Money Market/Mutual Fund, Severance Package, Other Liquid Asset, Stock, Trust/Annuity Funds, Bond, Cash on Hand, and Certificate of Deposit, Gift

IDE will not consider the following: Automobile, Boats RV, Life Insurance, Other no-liquid asset, Real Estate not for sale, and Retirements Funds IRA 401K 

Asset Amount

Borrowers

Yes

 If there are no assets select Asset Type Checking and enter Zero in Asset Amount.  

Income

Borrowers

Yes

 

Income Amount

Borrowers

Yes

Enter monthly gross income, unless drop down name references net

Expenses

Borrowers

No

 

Does borrower currently occupy or intend to occupy property as primary residence?

Borrowers

Yes

 

Current Property Usage

Property

Yes

 

Property Number of Units

Property

Yes

 

Monthly Principal & Interest (pre-workout)

Loan & Origination

Yes

 

Last Paid Installment Date

Loan & Origination

Yes

 

Monthly Real Estate Taxes

Loan & Origination

Yes

 

Monthly Association Dues/Fees

Loan & Origination

If applicable

 

Monthly Hazard Insurance

Loan & Origination

If applicable

 

Monthly Flood Insurance

Loan & Origination

If applicable

 

Number of times the borrower has been exactly
30 days delinquent within the last six months

Delinquency & Foreclosure

Yes 

Refer to below this table for examples on how to complete this data element. 

Current Escrow Shortage Monthly Payment

Insurance & Escrow

If applicable

 

Hardship Reason

Hardship & Imminent Default

Yes

 

 

Evaluate for Imminent Default Using Fannie Mae’s Stand-Alone Tool

This section provides instructions on how to enter the borrower and loan data into SMDU for an Imminent Default Evaluation.

  1. Search for the loan by using the Fannie Mae 10-digit loan number.
  2. If the loan search is successful you will be brought to the Loan Landing page, which features the main actions banner and is comprised of a variety of sections, including the “Recent SMDU Evaluation History.

C. To use SMDU to evaluate a loan for immediate or inevitable default select the Evaluate for Imminent Default link under the Other Actions section.

D. The Evaluate for Imminent Default page opens .

  • Note:  The individual data elements on this page also reside within the Evaluate for Workout section and Create Manual Submission section.  As a result, data entered on this page will also be saved in those respective fields, and vice-versa. Please keep this is mind as you review and submit the data.

1. Enter the “Number of times the borrower has been exactly 30 days delinquent within the last six months

  • Note: This data element indicates the number of times the loan was 30 days delinquent within the previous six months. 

  • Note:  When a loan is less than sixty days delinquent and a servicer does not provide the “Number of times the borrower has been exactly 30 days delinquent within the last six months” (a required data field for IDE) in the SMDU Request, SMDU will derive that number. If a servicer does provide the number in the SMDU Request, SMDU will use the servicer-provided number in the IDE evaluation. The number used by SMDU for the IDE will be returned in the SMDU Response.

Review the four different scenarios to help aid you in completing this data element

Example 1:

In this example, at the beginning of January the loan has a due date of 01/01/2018. This makes the loan current, zero month’s delinquent, and is not considered 30 days delinquent in January. At the beginning of February, the borrower had not made their January payment. As a result, this makes the loan one-month delinquent, which is considered 30 days delinquent. At the beginning of March, the borrower had not made their January payment. As a result, the loan due date remains 01/01/2018. This makes the loan two months delinquent, which is considered 60 days delinquent. No payments were made in April, May or June, therefore the loan due date remains 01/1/2018. The loan in April is three months delinquent (90 days delinquent); in May is four months delinquent (120 days), and in June is five months delinquent (150 days). None of those months qualify as a 30-day delinquency. Therefore, for the six-month period from 01/01/2019 to 06/01/2018, the borrower is considered to have experienced one 30-day delinquency and the “Number of times the borrower has been exactly 30 days delinquent within the last six months” should be populated with a value of one. 

Example 2:

In this example, at the beginning of January the loan has a due date of 01/01/2018. This makes the loan current, zero month’s delinquent, and is not considered 30 days delinquent in January. At the beginning of February, the borrower had not made their January payment. As a result, this makes the loan one-month delinquent, which is considered 30 days delinquent. At the beginning of March, the borrower had not made their January payment. As a result, the loan due date remains 01/01/2018. This makes the loan two months delinquent, which is considered 60 days delinquent. A payment was made in March, which advanced the due date to 02/01/2018 at the beginning of April. However, since the loan is still two months delinquent, this is still considered to be 60 days delinquent. In May the loan is current and remains current in June. Therefore, for the six-month period from 01/01/2018 to 06/01/2018, the borrower is considered to have experienced one 30-day delinquency and the “Number of times the borrower has been exactly 30 days delinquent within the last six months” should be populated with a value of one.

Example 3:

In this example, at the beginning of January the loan has a due date of 01/01/2018. This makes the loan current, zero month’s delinquent, and is not considered 30 days delinquent in January. At the beginning of February, the borrower had not made their January payment. As a result, this makes the loan one-month delinquent, which is considered 30 days delinquent. At the beginning of March, the loan still has a due date of 01/01/2018. This makes the loan two months delinquent, which is considered 60 days delinquent.  A payment was made in March, which advances the due date to 02/01/2018 at the beginning of April. However, since the loan is still two months delinquent, this is still considered to be 60 days delinquent. In April the loan is brought current and is now due for the May payment. No payments are received in May and at the beginning of June the loan has a due date of 05/01/2018, making the loan one-month delinquent, which is considered to be 30 days delinquent. Therefore, for the six-month period from 01/01/2018 to 06/01/2018, the borrower is considered to have experienced two 30-day delinquencies and the “Number of times the borrower has been exactly 30 days delinquent within the last six months” should be populated with a value of two.

Example 4:

In this example, at the beginning of January the loan has a due date of 11/01/2017. This makes the loan two months delinquent, which is considered 60 days delinquent. In January, one payment has been received, which advanced the due date to 12/01/2017. However, since the loan is still two months delinquent, this is still considered to be 60 days delinquent. In February the payments are brought current and remain current through June. Therefore, for the six-month period from 01/01/2018 to 06/01/2018, the borrower is considered to have experienced no 30-day delinquencies and the “Number of times the borrower has been exactly 30 days delinquent within the last six months” should be populated with a value of zero.

2. Enter today’s date in the “Date of Imminent Default Evaluation” by entering the date (MM/DD/YYYY) or selecting the date by clicking on the calendar icon.

3. Select hardship “Reason” from drop down box

  • Note: You are responsible for ensuring that the hardship reason(s) reported to SMDU via the SMDU UI is consistent with the hardship reason(s) contributing to the borrower’s need for loss mitigation evaluation. You should report all hardships documented in the borrower’s Mortgage Assistance Application Form 710. Additionally, you may report any other contributory hardships based on documented conversations or other documentation provided by the borrower.

  • Note:   Permanent Change of Station (PCS) Orders:  To inform SMDU when a servicemember has PCS orders a servicer must select “Distant Employment Transfer” from the drop-down box:

4. To add an additional hardship select the “+Add Additional Hardship” link and then select another hardship reason

5. Enter the current scheduled “Monthly Principal & Interest” payment amount

6. Enter post-workout “Monthly Real Estate Taxes” amount, based on the projected or final escrow analysis

7. Enter post-workout “Monthly Association Dues/Fees” amount, based on the projected or final escrow analysis

8. Enter post-workout “Monthly Hazard Insurance” amount, based on the projected or final escrow analysis

9. Enter post-workout “Monthly Flood Insurance” amount, based on the projected or final escrow analysis

10. Enter the loan’s “Last Paid Installment Date” by entering the date (MM/DD/YYYY) or selecting the date by clicking on the calendar icon from, this date comes from your servicing system at the time of evaluation and is the due date of the last paid payment

11. Enter the “Current Escrow Shortage Monthly Payment” amount, monthly payment amount associated with current repayment of escrow account shortages (before escrow analysis is completed for the loan modification)

12. Select “Current Property Usage” from drop down

  • Note:   Permanent Change of Station (PCS) Orders:  To inform SMDU when a servicemember has PCS orders a servicer must select “Principal Residence” from the drop-down box:

13. Select “Property Number of Units” from drop-down 

14. Enter borrower’s “Representative Credit Score

15. Select “Yes” or “No” to indicate if the borrower currently occupies the subject property as their primary residence

16. Under “Assets” enter any which have value in the market, you do this by selecting the “+Add” button. You should select all that apply for this borrower.  DO NOT enter any information about the subject property in this section.

  • If there is no asset select “Checking Account” and enter zero ($0.00) for the Asset Amount. Currently an asset type is required for an IDE.

  • These asset types will be used in the IDE to determine total cash reserve amount:  Checking Account, Savings Account, Money Market/Mutual Fund, Severance Package, Other Liquid Asset, Stock, Trust/Annuity Funds, Bond, Cash on Hand, and Certificate of Deposit, Gift

  • IDE will not consider the following asset types: Automobile, Boats RV, Life Insurance, Other no-liquid asset, Real Estate not for sale, and Retirements Funds IRA 401K

Select the asset type from the drop-down menu and then enter applicable value.

The example below shows assets of a $750.00 checking account and $250.00 savings account.

17. Under “Income” enter monthly gross income, unless description in drop-down says otherwise, you do this by selecting the “+Add” button. You should select all that apply for this borrower. If for example you are entering Social Security Income you will need to remember to be sure to gross it up.

Select income type from the drop-down menu and then enter applicable value.

  • Note:  Permanent Change of Station (PCS) Orders:  To inform SMDU when a servicemember has PCS orders a servicer must select “Military Pay” from the drop down box and the include amount must be greater than zero:

18. Under “Expenses” enter any category or class of debts monthly amounts which must be paid monthly by borrower to pay down liability and keep accounts current, you do this by selecting the “+Add” button. You should select all that apply for this borrower. Information from the credit report should be entered in expenses. You DO NOT enter any information about the subject property, other than, as applicable, the Subject Property Subordinate Financing P&I, all other details for the subject property will be captured through other left hand navigation links (e.g., Property, Loan & Origination).

Select expense type from the drop-down menu and then enter applicable value

  • Note: The Primary Residence Housing Expenseshould only be used if the property is NOT a borrower(s)’ primary residence.  You will need to report the monthly housing expenses associated with the location that is a borrower(s)' primary residence.  This amount may be associated to rent, mortgage payments, or borrower(s) may be living rent-free.  An amount will be expected, and should only be provided, in the following circumstances:

    • The subject property is a second home or an investment property.

    • The subject property is NOT the primary residence of ALL the borrowers who signed the mortgage note. 

    • Use caution to ensure that “Primary Residence Housing Expenses” is only provided when the subject property is a second home or an investment property; or when the loan contains Non-Occupant BorrowersDo not report any amount for the “Primary Residence Housing Expenses” associated to owner-occupant borrower(s).

    • SMDU will include this amount in the numerator of the Debt to Income Ratio calculation (DTI also known as Back Ratio). SMDU will include this amount, as appropriate, in the numerator of the Housing Expense to Income Ratio calculation (HTI also known as Front Ratio).

 

  • Example when to use “Primary Residence Housing Expenses

 

  • Example when NOT to use “Primary Residence Housing Expenses

19. To add an additional borrower click the “+Add Borrower” link and then enter all details for each additional borrower by following steps 14-18 above

  • Note:  Each borrower is designated with a different color for servicer identification purposes

  • Note:  You can delete a borrower.  If you delete Borrower One, Borrower Two becomes Borrower One

  • Note: You can enter up to six borrowers

E. After you have reviewed, updated and entered all the applicable data, you are ready to submit for the imminent default evaluation. When ready, click the “Submit for IDE” button.

F.  SMDU submits the case for the imminent default evaluation and returns in real-time an eligible or ineligible imminent default evaluation result and applicable messages for both modification and liquidation options.

1. Imminent Default Evaluation:  Eligible (Loan meets imminent default criteria)

  • Note: You can print the IDE evaluation by selecting the printer icon on the right-hand side of the page below the Submit for IDE submission button.

2. Imminent Default Evaluation:  Ineligible (Loan does not meet imminent default criteria)

G. Saving an IDE:  The Stand-Alone IDE Tool does not keep a history of prior imminent default evaluations.  Therefore, if you want a copy of an IDE response for your records please print out the IDE response page by clicking on the printer icon.

  • Note:  You can print the IDE evaluation by selecting the printer icon on the right-hand side of the page below the Submit for IDE submission button.

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