Servicing Guide

Published September 9, 2020

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What are the servicer responsibilities when accepting funds from a hardest hit funds reinstatement program?

The servicer must accept funds from an HFA-HHF reinstatement program that fully reinstates the borrower’s mortgage loan.

If a borrower is in a mortgage loan modification Trial Period Plan, a repayment plan, or a forbearance plan, or is being/has been  evaluated for a payment deferral that has not yet been completed when his or her mortgage loan is fully reinstated as a result of HFA-HHF reinstatement funds, the servicer must cancel the workout option.

When the servicer receives funds from a third party, such as an HFA or similar entity that is assisting the borrower in qualifying for a payment deferral or mortgage loan modification, the servicer must accept such funds contingent upon the following:

  • neither the servicer nor Fannie Mae will be required to match any assistance provided by the third party or HFA;
  • the third party or HFA will pay the servicer the full amount of the agreed upon assistance in one lump-sum payment; and
  • if after the delinquency is cured, the servicer applies the funds as an additional principal payment, the funds must be applied to the interest-bearing UPB.

See C-1.2-01, Processing Additional Principal Payments for information related to processing additional principal payments for a delinquent mortgage loan.

If the borrower requests additional assistance after the mortgage loan has been fully reinstated, the servicer must evaluate the borrower for a retention workout option in accordance with D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options. If the borrower fails to qualify for a conventional mortgage loan modification due to the imminent default evaluation (see Evaluating aBorrower for Imminent Default for Conventional Mortgage Loan Modification Eligibility in D2-1-01, Determining if the Borrower’s Mortgage Payment is in Imminent Default for more information), the servicer must submit the case to Fannie Mae’s servicing solutions system for Fannie Mae to decision.

If the funds from the HFA-HHF reinstatement program do not fully reinstate the borrower’s mortgage loan, then the servicer must attempt to contact the borrower and achieve QRPC in accordance with D2-2, Requirements for Contacting a Borrower and take the actions outlined in the following table, taking into account the partial reinstatement funds, to resolve the remaining delinquency.

If the servicer... Then the servicer...
achieves QRPC must evaluate the borrower for a workout option in accordance with D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options
If the borrower... Then the servicer...
would qualify for a workout option after the application of the partial reinstatement funds

must accept the funds and offer the borrower the workout option.

Note: The servicer is authorized to decline acceptance of the funds if the borrower does not respond to the offer.

would not qualify for a workout option after application of the partial reinstatement funds is authorized to decline acceptance of the funds.
does not achieve QRPC is authorized to decline acceptance of the funds.

If a borrower receives both reinstatement and unemployment mortgage assistance, reinstatement may occur either before or after the period of HFA-HHF unemployment assistance.

For more information please see: D2-3.1-05: Interacting with Housing Finance Agencies and Hardest Hit Fund Programs.

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