Servicing Guide

Published October 14, 2020

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SMDU™ UI User Guide 7.39 October 2020 (Create Charge Off)

Create Charge Off 

This section provides instruction on how to create a case to report a loan being charged off. 

  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 create a charge off case, select the Create Charge Off link under the Other Actions section.

       D. The Create Charge Off page opens.  You are responsible for completing and/or updating all applicable data.

  • NoteYou can also hover your cursor over the name of the respective data field to read the definition

 

  1. Loan Details: Last Reported UPB to Fannie Mae” is the loan’s last unpaid principal balance reported to Fannie Mae via Investor Reporting (SURF)
  • NoteConfirm the “Last Reported UPB to Fannie Mae” matches what is on your system of record, if it does not match then you will need to stop and update through investor reporting (SURF) to proceed.  It will take 24 hours for any updates through investor reporting (SURF) to show up in SMDU.
  1. Loan Details: Reported Last Paid Installment Date” is the loan’s last paid installment date reported to Fannie Mae via Investor Reporting (SURF)
  • Note:  Confirm the “Reported Last Paid Installment Date” matches what is on your system of record, if it does not match then you will need to stop and update through investor reporting (SURF) to proceed.  It will take 24 hours for any updates through investor reporting (SURF) to show up in SMDU.
  1. Loan Details:  Enter or update the “Loan Unpaid Principal Balance”, the current principal balance from your servicing system at the time of case creation, this does NOT include any existing forbearance amount
  2. Loan Details:  Enter or update the “Last Paid Installment”, by entering the date (MM/DD/YYYY) or selecting the date by clicking on the calendar icon, this date comes from your servicing system at the time of case creation
  3. Loan Details:  Enter or update the loan’s “Last Paid Installment Date Before Capitalization” 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 it is the due date of the last paid contractual payment
  4. Loan Details:  Enter or update the current contractual "Interest Rate"
  • Note:    Enter the current interest rate on your servicing system, this should be the current contractual interest rate based on the date of submission, not based on the last paid installment date.
  1. Loan Details:  Enter or update the current scheduled “Monthly Principal & Interest” payment amount
  2. Loan Details:  Enter or update the scheduled “Remaining Term” in months from the date of submission regardless of any delinquency (calculate how many months are remaining from the evaluation month to the loan’s maturity date, do not calculate from the last paid installment date)
  3. Property:  Enter or update the complete physical “Property Address” (should match what was previously reported to Fannie Mae in SURF)
  4. Property:Property State” is provided, if not correct then investor reporting (SURF) needs to be updated before you submit the case
  5. Property:  Enter or update the five digit “Property Zip Code” (should match what was previously reported to Fannie Mae in SURF)
  6. Property:  Select or update answer by selecting “Yes” or “No” to indicate whether there are any known structural or environmental problems with subject property
  7. Property:  Select or update the current “Property Occupancy Status” from drop-down box
  8. Property:  Select or update the current “Intended Property Usage” from drop-down box
  9. Property Valuation:  Enter “Property Value at Origination
  10. Property Valuation: Enter the “Property “As Is” Value” determined by the valuation method used (e.g. BPO)
  11. Property Valuation:  Enter the “Property Valuation Type” from the drop-down box 
  12. Property Valuation:  Enter the “Property Valuation Date” by entering the date (MM/DD/YYYY) or selecting the date by clicking on the calendar icon
      • Note:   If the property valuation data is greater than 90 days then you will need to get an updated BPO
      • Note:  SMDU may pull in the Automated Valuation Model (AVM) “Property “As Is” Value”, “Property Valuation Type” and “Property Valuation Date”.  When this happens override this information with details from the BPO and/or Appraisal.
      • Note:  The property valuation data provided during a loan modification evaluation is usually from an AVM, remember short sales reviews might require a different type of evaluation. 
  13. Property Valuation:  Enter the “LMV As Repaired Value Amount”, this amount is usually included on the loan’s BPO
  14. Property Valuation:  Enter the “Market Value Analysis Company Name” that prepared the valuation
  15. Property Valuation:  Enter the “Market Value Analysis Preparer Name” that prepared the valuation
  16. Foreclosure:  If applicable, enter the “Foreclosure Attorney Contact Name
  17. Foreclosure:  If applicable, enter the “Projected Foreclosure Sale Date” by entering the date (MM/DD/YYYY) or selecting the date by clicking on the calendar icon, projected or actual date property went/goes to foreclosure sale at public auction
  18. Debt Charge Off:  Select either “Low Balance” or “Other” for the “Type of Debt Charge Off” from the drop-down box
  • NoteIf you select “Other” from the drop-down box then the “Reason for “Other” Debt Charge Off” field will open, and you will need to explain why you believe that charging off the loan is in Fannie Mae’s best interest.  For example, the property may not have land value due to an environmental hazard. 
  1. Debt Charge Off:  Enter the amount of the “Debt Charge Off Gain/Loss Adjustments
  • NoteEnter an amount in this field only if:
    • Funds were recently posted and not yet reported to Fannie Mae, or
    • Hazard Insurance funds have been received and need to be applied to reduce the loss.
    • Servicers should contact Fannie Mae Hazard Loss before applying any hazard insurance funds.
  1. Debt Charge Off:  Select “Yes” or “No” to indicate whether a lien will be released as part of the debt charge off
  2. Servicer Recommendation:  Select “Yes” or “No” to indicate whether servicer recommends approving the charge off
  3. Servicer Recommendation:   If applicable, enter “Servicer’s General Comments
  4. Delinquency/Fees and Costs:  Enter the “Delinquent Interest” amount, which is a calculation of the delinquent interest based on the loan’s current LPI date through the last day of the preceding month 
  • Note:  For example, if the reported last paid installment date was May 1, 2017 and the evaluation date is November 1, 2018, then the “Delinquent Interest Through Submission Date Amount” will be the interest amount from May 1, 2017 until October 31, 2018.  This should not confuse this with how actual “Delinquent Interest” is calculated for capitalization for a modification. 
  1. Delinquency/Fees and Costs:  If applicable, enter any incurred “Attorney Fees/Costs
  2. Escrow/Hazard Insurance:   Enter the current “Escrow Payment” collected as part of regular monthly mortgage payment to cover, on behalf of the mortgagee, periodic payments of property taxes and hazard insurance
  • Note:  Private mortgage insurance payments and escrow shortage amounts should be excluded from the total “Escrow Payment” amount.  Is this a correct statement, it is excluded on the modification side, should it be excluded or included on the PFS side
  1. Escrow/Hazard Insurance:  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
  2. Escrow/Hazard Insurance:  If applicable, enter the capitalized “Escrow Balance” amount, any amount based off projected escrow analysis already paid by servicer and any escrow advances servicer expects to pay on behalf of borrower
  3. Servicer Contact Information: If applicable, enter or update the "Servicer Contact Name", the person responsible for working with Fannie Mae on modification
  4. Servicer Contact Information: If applicable, enter or update the "Servicer Contact Email Address", the person responsible for working with Fannie Mae on modification
  5. Servicer Contact Information: If applicable, enter or update the "Servicer Contact Phone Number"
  6. Servicer Contact Information: If applicable, enter or update the "Servicer Contact Phone Number Extension"
  7. Hardship:  If applicable, select or update the hardship “Reason” from drop-down box
  • Note:  You are responsible for ensuring that the hardship reason(s) reported to Fannie Mae is consistent with the hardship reason(s) contributing to the borrower’s need for loss mitigation assistance. 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.
  1. Hardship:  If “Disaster” is the hardship reason, you must enter the FEMA “Disaster Name
  2. Borrowers:  Enter Borrower One’s “First Name”
  3. Borrowers:  Enter Borrower One’s “Last Name”
  4. Borrowers:  Select from the drop-down to indicate if the borrower has ever file bankruptcy.
  5. Bankruptcy:  If applicable, select the current bankruptcy “Type Filed” from the drop-down box
  6. Bankruptcy:  If applicable, select the current bankruptcy “Status” from the drop-down box
  7. Bankruptcy:  If you indicate a bankruptcy has previously been submitted for the applicable, select the current bankruptcy “Type Filed” from the drop-down box Type File” field you selected “Chapter 7” and the “Status” type is “Discharged” then for “If a discharged Chapter 7 bankruptcy, did the borrower subsequently reaffirm the mortgage loan?” you must select “Yes” or
    No” from the drop down-box

E. Submit the charge off case to Fannie Mae:  Once you have entered and reviewed all the data and are ready to submit the case click the Submit for Charge Off button

F. Case Submission will result in one of the following: 

  1. Successful:  If the charge off submission is successfully submitted to Fannie Mae then you will receive a “Case Sent to Fannie Mae” message, and the case status will reflect “CHARGEOFF - Awaiting Review”.  “Awaiting Review” means the case has been placed in Fannie Mae’s queue for review.

  • Note:  The case status will change as it moves through the subsequent steps of the Fannie Mae review process:
  • An “In Review” status means the case is being reviewed by a Fannie Mae.

  • An “Approved” or “Declined” status means the case has been decisioned by a Fannie Mae.  An email will be sent to the servicer contact who created the case detailing Fannie Mae’s recommendation and applicable details.

  • Note:  A Fannie Mae representative will email their recommendation and applicable details to the person who submitted the Create Charge Off.
  1. Unsuccessful Case Creation:  If the charge off submission is not successfully submitted to Fannie Mae then you will receive a validation error message highlighted in red at the top of the page, and you will need to review the message and take appropriate measures to clear the error.

  • Note:  In the screenshot above the message is letting you know that you need to update the “Projected Foreclosure Sale Date” field.  Once updated you will need to reselect the “Submit for Charge Off” button to resubmit your case request to Fannie Mae.
  • Note:  If you receive a message indicating that gross monthly income needs to be provided, you will need to update previously entered data by completing the following steps:
    • From the functionality bar select the Create Manual Submission icon and once opened select the Borrowers link from the left-hand navigation bar
    • On the Borrowers page remove the “Total Monthly Income” and return “Total Monthly Income Type” to “Select…
    • Then select the Create Charge Off link under Other Actions and resubmit your charge off request to Fannie Mae

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