Servicing Guide

Published September 9, 2020

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How should the servicer determine whether a borrower response package is complete?

Unless a borrower or co-borrower is deceased or divorced, all parties whose income was used to qualify for the original mortgage loan and who signed the mortgage loan note must submit the items required for a complete BRP. The following table lists the documentation that the servicer must obtain for a BRP to be complete, as required in Mortgage Assistance Application (Form 710).

Items required for a complete BRP
 

Form 710, or equivalent, that is completed in its entirety.

 

Income documentation as outlined in Form 710 based on income type. Income documentation must be no more than 90 days old as of the date the servicer first determines that the borrower submitted a complete BRP or at the time of a subsequent evaluation for another workout option.

Non-borrower income: The servicer may include income of a non-borrower who contributes to the mortgage loan payment in monthly gross income if the income is voluntarily provided by the borrower, is documented and verified by the servicer using the same standards used for verifying a borrower’s income, and if

  • the servicer verifies that the non-borrower occupies the subject property as a principal residence based on a review of the credit report or any other available document; and

  • there is documentary evidence to support that the income has been, and reasonably can continue to be, relied upon to support the mortgage loan payment.

The servicer must not consider the expenses of a non-borrower household member and may only consider the amount of the non-borrower’s income that he or she routinely contributes to the household.

Non-taxable income: When the borrower’s income is non-taxable, and the income and its tax-exempt status are likely to continue, the servicer must develop an “adjusted gross income” by adding an amount equivalent to 25% of the non-taxable income to the borrower’s income. If the servicer can determine that the actual amount of federal and state taxes is more than 25% of the borrower’s non-taxable income, the servicer is authorized to use that amount to develop the adjusted gross income.

Income documented by bank statements: When the borrower’s income is documented by bank statements, the servicer must develop an adjusted gross income by adding an amount equivalent to 25% of the amount documented by the bank statements. If the servicer can determine that the actual amount of federal and state taxes is more than 25% of the borrower’s income documented by bank statements, the servicer is authorized to use that amount to verify the borrower’s income.

Note: If a borrower has been impacted by a disaster (see D1-3, Providing Assistance to a Borrower Impacted by a Disaster Event ), income documentation must be equal to or less than 180 days old at the time of the post-disaster evaluation for a workout option, and the evaluation must occur prior to the expiration of any forbearance period granted to the borrower affected by a disaster.

 

Hardship documentation as outlined in Form 710 based on hardship type.

 

The IRS Short Form Request for Individual Tax Return Transcript (IRS Form 4506T-EZ) or IRS Request for Transcript of Tax Return IRS Form 4506-T), signed by the borrower under the following circumstances:

  • to reconcile inconsistencies between other information the borrower provided (e.g., information the borrower provided in the Form 710) and the income documentation; or

  • if Fannie Mae requests it.

Note: The servicer is authorized to obtain the 4506-T/4506T-EZ signed by the borrower in the instance the borrower is self-employed, and he or she does not provide the documentation that is outlined in the Form 710. If the IRS Short Form Request for Individual Tax Return Transcript (IRS Form 4506T-EZ) or IRS Request for Transcript of Tax Return Transcript (IRS Form 4506-T) is required, the servicer must follow the procedures in Processing the IRS Form 4506T-EZ or IRS Form 4506-T in F-1-12, Preparing to Implement a Workout Optionfor processing the IRS Form 4506T-EZ or IRS Form 4506-T.

The servicer is authorized to

  • permit the borrower to complete, sign, and fax or email the documents required for a complete BRP to the servicer in accordance with applicable law; or

  • provide a secure means of access through which a borrower may prepare and electronically deliver the documents required for a complete BRP to the servicer.  

See Selling Guide A2-5.1-03, Electronic Records, Signatures, and Transactions for additional information.

If the servicer determines that any special documentation is required to support information provided by the borrower, it must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts).

See below for related Q&A:

What actions must the servicer take if it is determined that a borrower response package is incomplete?  

For more information please see: D2-2-05, Receiving a Borrower Response Package.

 

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