Servicing Guide

Published November 10, 2020

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D1-3-01: Evaluating the Impact of a Disaster Event and Assisting a Borrower (09/09/2020)

This topic contains the following:

 

Evaluating the Extent and Nature of the Property Damage

Disasters are earthquakes, floods, hurricanes, or other catastrophes caused by either nature or a person or event beyond the borrower's control resulting in devastation in terms of property damage and destruction.

When the servicer becomes aware that a disaster event has occurred, it must determine the extent and nature of the damage to any property securing a mortgage loan in the disaster area (regardless of whether the property is in a FEMA-Declared Disaster Area eligible for Individual Assistance) through reasonable means, including but not limited to:

  • obtaining information from the borrower, or

  • performing a property inspection when necessary.

 

Note: The servicer is authorized, but not required, to attempt to contact the borrower or perform a property inspection if the mortgage loan is current at the time of the disaster event and remains current following the disaster event.

 

When a disaster event occurs, the servicer is permitted to use predictive modeling data or alternative technology, such as aerial photography, to estimate the likelihood of damage in an area or to a property impacted by a disaster event.

See D2-2-10, Requirements for Performing Property Inspections for additional information on property inspections.

When inspecting impacted properties, the servicer must utilize the Property Inspection Report (Form 30) or equivalent. The servicer must exercise discretion in determining whether an interior or exterior property inspection is appropriate depending on the individual circumstances. The servicer is authorized to request reimbursement for disaster inspection costs incurred on current and delinquent mortgage loans when a property inspection is necessary. To request reimbursement, the servicer must follow the procedures in Reimbursement for Property Inspections and Property Preservation Expenses in F-1-05, Expense Reimbursement.

The following table describes the servicer’s requirements when it becomes aware that a property securing a mortgage loan has incurred damage as a result of a disaster event.

The servicer must...
 

Determine whether the property is adequately insured against any damage in accordance with B-2, Property Insurance Requirements and B-3, Flood Insurance Requirements.

 

Ensure that any applicable property insurance claims are filed and settled promptly, and that the property is repaired fully in accordance with B-5-01, Insured Loss Events.

  Follow the requirements in B-5-02, Uninsured Loss Events if there are uninsured losses.

See the Property Preservation Matrix and Reference Guide for additional information on property inspections and property preservation.

 

Servicer’s Responsibilities When a Borrower Is Affected by a Disaster Event

The following table describes the servicer's requirements when a borrower is affected by a disaster event.

The servicer must...
 

Counsel the borrower on the availability of appropriate workout options and federal disaster relief that might be available through FEMA. See Chapter D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options for additional information on available workout options.

Note: The servicer is also authorized to inform the borrower of Fannie Mae’s Disaster Response Network™ as a resource to assist borrowers impacted by disasters. The Disaster Response Network™ can be reached by calling 1-877-833-1746 or at Fannie Mae’s Know Your Options™ website.

 

Evaluate each mortgage loan that is or becomes delinquent as a result of the borrower incurring damages or expenses related to the disaster event on a case-by-case basis.

 

Ensure that the specific action that it takes does not jeopardize Fannie Mae’s ability to recover damages under any applicable property insurance policy.

 

Contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts) if it needs assistance in determining how a policy should be applied or if it has determined that a departure from Fannie Mae’s policies is warranted.

 

Refer to FHA, VA, or RD guidelines to determine appropriate procedures for extending relief to a borrower who has a government-insured or government-guaranteed mortgage loan.

 

Workout Hierarchy for When a Borrower Is Affected by a Disaster Event

If the servicer determines that the borrower is unable to resolve a delinquency resulting from a disaster-related hardship through a reinstatement and cannot afford a repayment plan, the servicer must evaluate the borrower for a retention workout option in accordance with the following table.

If the servicer... Then the servicer must evaluate the borrower affected by the disaster event...
achieves QRPC with the borrower, regardless of whether the borrower was on a disaster-related forbearance plan in accordance with the steps in the following table
Step Servicer Action
1 Evaluate the borrower for a disaster payment deferral in accordance with Determining Eligibility for a Disaster Payment Deferral in D2-3.2-06, Disaster Payment Deferral
If... Then the servicer must...
the mortgage loan is eligible offer a disaster payment deferral.
the servicer determines that the borrower is not capable of maintaining the current contractual monthly PITI payment, or the mortgage loan is greater than 12 months delinquent proceed to step 2
2 Evaluate the borrower for a Fannie Mae Flex Modification in accordance with the reduced eligibility criteria within Evaluating or Soliciting a Borrower with a Disaster-Related Hardship for a Fannie Mae Flex Modification in D2-3.2-07, Fannie Mae Flex Modification
If the mortgage loan is... Then the servicer must...
eligible offer a Fannie Mae Flex Modification
two or more months delinquent at the time the disaster occurred, or less than 90 days delinquent proceed to step 3
3 Evaluate the borrower for a Fannie Mae Flex Modification in accordance with D2-3.2-07, Fannie Mae Flex Modification
If the mortgage loan is... Then the servicer must...
eligible offer a Fannie Mae Flex Modification.
not eligible evaluate the borrower for a Fannie Mae Short Sale (see D2-3.3-01, Fannie Mae Short Sale or a Fannie Mae Mortgage Release (see D2-3.3-02, Fannie Mae Mortgage Release (Deed-in-Lieu of Foreclosure).
does not achieve QRPC with a borrower who is on a disaster-related forbearance plan prior to the expiration of the plan in accordance with the steps in the following table
Step Servicer Action
1 Evaluate the borrower for a disaster payment deferral in accordance with Determining Eligibility for a Disaster Payment Deferral in D2-3.2-06, Disaster Payment Deferral
If the mortgage loan is... Then the servicer must...
eligible solicit the borrower for a disaster payment deferral in accordance with Soliciting the Borrower for a Post-Forbearance Disaster Payment Deferral in D2-3.2-06, Disaster Payment Deferral .
greater than 12 months proceed to step 2.
2 Evaluate the borrower for a Fannie Mae Flex Modification in accordance with the reduced eligibility criteria within Evaluating or Soliciting a Borrower with a Disaster-Related Hardship for a Fannie Mae Flex Modification in D2-3.2-07, Fannie Mae Flex Modification
If the mortgage loan is... Then the servicer must...
eligible offer a Fannie Mae Flex Modification.
two or more months delinquent at the time the disaster occurred proceed to step 3
3 Evaluate the borrower for a Fannie Mae Flex Modification in accordance with D2-3.2-07, Fannie Mae Flex Modification.
If the mortgage loan is... Then the servicer must...
90 days or more delinquent and the borrower is otherwise eligible solicit the borrower a Fannie Mae Flex Modification in accordance with Soliciting the Borrower for a Fannie Mae Flex Modification in D2-3.2-07, Fannie Mae Flex Modification
not eligible continue attempts to achieve QRPC in accordance with D2-2-02, Outbound Contact Attempt Requirements

Note: If the borrower doesn't respond to the disaster payment deferral offer as described in Soliciting the Borrower for a Post-Forbearance Disaster Payment Deferral in D2-3.2-06, Disaster Payment Deferral by the acceptance date provided in the disaster payment deferral agreement, then the servicer must evaluate the borrower in accordance with Evaluating or Soliciting a Borrower with a Disaster-Related Hardship for a Fannie Mae Flex Modification in D2-3.2-07, Fannie Mae Flex Modification

does not achieve QRPC with a borrower who was not on a disaster-related forbearance plan prior to the expiration of the plan for a Fannie Mae Flex Modification in accordance with D2-3.2-07, Fannie Mae Flex Modification and take action in accordance with the following table.
If the mortgage loan is... Then the servicer must...
90 or more days delinquent and the borrower is otherwise eligible solicit the borrower a Fannie Mae Flex Modification in accordance with Soliciting the Borrower for a Fannie Mae Flex Modification in D2-3.2-07, Fannie Mae Flex Modification
not eligible continue attempts to achieve QRPC in accordance with D2-2-02, Outbound Contact Attempt Requirements

 

Initiating or Suspending Legal Proceedings

If the servicer has any doubt about the effect of the disaster event on the condition of a property or the borrower's employment or income status, it must suspend any legal proceedings, including foreclosure proceedings, already in process until it can determine the accurate status, and make its final decision on the appropriate course of action based upon its findings. The servicer must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts) to obtain written approval before granting a suspension that exceeds 90 days.

The servicer must not initiate or complete foreclosure proceedings related to a property that has been destroyed until it eval- uates the economic feasibility of pursuing the foreclosure.

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