Servicing Guide

Published June 10, 2020

The Servicing Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Servicing Guide in PDF format.

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D2-3.1-05: Interacting with Housing Finance Agencies and Hardest Hit Fund Programs (09/13/2017)

This topic contains the following:

 

Programs to Assist an Unemployed Borrower

The servicer must accept funds on behalf of a borrower from an unemployment assistance program either from an HFA or its third-party vendor, regardless of whether the mortgage loan is current or delinquent.

If the borrower is currently participating in a forbearance plan and the borrower is accepted into an unemployment assistance program, the servicer must cancel the forbearance plan. If the borrower becomes eligible for additional assistance after the period of assistance provided by the HFA, the servicer must evaluate the borrower for a retention workout option in accordance with Chapter D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options.

The servicer must follow the procedures in F-1-23, Reporting a Workout Option via Fannie Mae’s Servicing Solutions System to report the action to Fannie Mae.

 

Programs to Assist with Reinstatement

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 when his or her mortgage loan is fully reinstated as a result of HFA-HHF reinstatement funds, the servicer must cancel the workout option. 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 a Borrower 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.

 

Programs to Assist with a Mortgage Loan Modification

The servicer must accept funds on behalf of a borrower from an HFA-HHF mortgage loan modification assistance program, regardless of whether the mortgage loan is current or delinquent.

Mortgage Loan Recast or Reamortization-only: When a mortgage loan recast is approved, the servicer must take the actions listed in the following table.

The servicer must...
 

Apply the funds and process the mortgage loan re-amortization in accordance with Processing Additional Principal Payments for Current Mortgage Loans and document the mortgage loan re-amortization in accordance with Processing a Re-Amortization After Application of Additional Principal Payments in C-1.2-01, Processing Additional Principal Payments.

 

Accept the funds submitted by the HFA.

The servicer must not consider a mortgage loan recast to be a mortgage loan modification for the purpose of determining eligibility for a subsequent mortgage loan modification in accordance with this Guide.

Mortgage Loan Modification When the Terms of the Mortgage Loan Change: When a mortgage loan is modified using modification assistance program funds while also changing the terms of the mortgage loan, the funds must be applied once the borrower has successfully completed a Trial Period Plan and after any MBS mortgage loan reclassification, but before the modification effective date. The servicer must apply these funds in accordance with C-1.2-01, Processing Additional Principal Payments.

If the servicer does not receive the funds from the HFA prior to the first payment due date of the permanently modified mortgage loan, the servicer must re-evaluate the borrower to determine eligibility for a mortgage loan modification in accordance with this Guide. If the servicer determines that the borrower qualifies for a mortgage loan modification, it must not require the borrower to complete a new Trial Period Plan, even if the modified monthly payment will be higher than the current Trial Period Plan payment. If the borrower no longer qualifies for a mortgage loan modification, the servicer must submit the case to Fannie Mae for decision.

If a borrower who has received modification assistance program funds subsequently requests reapplication of principal prepayments as described in Reapplying Principal Prepayments to Cure a Delinquency in C-1.2-01, Processing Additional Principal Payments, the servicer must not approve the borrower’s request.

 

Programs to Assist with Transition

The servicer must work closely with the HFA and the eligible borrower to provide the necessary information for participation in the transition assistance program.

 

Requirements for Collection and Solicitation Actions

If an HFA notifies the servicer that a borrower is conditionally approved for HHF unemployment, modification, or reinstatement assistance, the servicer is authorized to cease collection and solicitation activities. If the servicer receives notice that a borrower’s approval status has changed, it must resume collection and solicitation activities as described in D2-2, Requirements for Contacting a Borrower.

 

Reporting Mortgage Loans That Have Received HFA Assistance to Fannie Mae

The servicer must be able to

  • readily identify on its servicing system any borrower who is participating in an HHF program, and

  • provide this information to Fannie Mae upon request.

The servicer must follow the procedures in F-1-23, Reporting a Workout Option via Fannie Mae’s Servicing Solutions System to report the action to Fannie Mae.

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