D2-3.2-01: Forbearance Plan (09/09/2020)

Determining Eligibility for a Forbearance Plan

The servicer is authorized to evaluate the borrower for a forbearance plan without receiving a complete BRP. The following table provides the eligibility criteria for a forbearance plan at the time of evaluation.

If the servicer determines the borrower is not eligible for a forbearance plan but there are acceptable mitigating circumstances, it must request Fannie Mae’s prior written approval by submitting a completed Forbearance Exception Request Template. Generally, the servicer’s determination of acceptable mitigating circumstances is based on a review of the borrower’s complete BRP.

Forbearance Plan Terms

The following requirements apply to forbearance plans:

• For an MBS mortgage loan, the servicer must not allow a forbearance plan to extend beyond the last scheduled payment date of the mortgage loan. Additionally, the servicer must identify and distinguish the pool issue date and be familiar with the reclassification requirements (see A1-3-06, Automatic Reclassification of MBS Mortgage Loans for additional information).

• If the eligibility criteria in Determining Eligibility for a Forbearance Plan above is met, the servicer is authorized to

  • offer an initial forbearance plan term of up to 6 months, and

  • grant an extension of the initial forbearance plan term of up to 6 additional months.

• The servicer must receive Fannie Mae’s prior written approval for a forbearance plan to

  • exceed a cumulative term of 12 months as measured from the start date of the initial forbearance plan, or

  • result in the mortgage loan becoming greater than 12 months delinquent.

• When the servicer initially offers an arrangement that includes a combination of both forbearance and a repayment plan, the combined period must not exceed 36 months.

• The borrower’s monthly payment must be reduced or suspended during the forbearance plan term. When the servicer requires the borrower to make reduced payments, the payment must be received on or before the last day of the month in which it is due, unless the servicer determines that acceptable mitigating circumstances caused the payment to be late.

The forbearance plan terms must be provided to the borrower with an Evaluation Notice . See Sending a Notice of Decision on a Workout Option in  

D2-2-05, Receiving a Borrower Response Package D2-2-05, Receiving a Borrower Response Package

for additional information.

• Once the forbearance plan is complete, one of the following must occur:

  •   the mortgage loan must be brought current through a reinstatement,
  • the borrower is approved for another workout option,
  • the mortgage loan is paid in full, or
  • the servicer refers the mortgage loan to foreclosure in accordance with applicable law.  

• The servicer must terminate the forbearance plan if it determines

  •  the borrower failed to meet the terms specified in the Evaluation Notice,
  •  any of the eligibility criteria for the forbearance plan are no longer satisfied,
  • the borrower’s hardship is resolved, or
  • the borrower requests that the forbearance plan be terminated. 

Contacting a Borrower During a Forbearance Plan Term

The servicer must begin attempts to contact the borrower no later than 30 days prior to the expiration of any forbearance plan term and must continue outreach attempts until either QRPC is achieved or the forbearance plan term has expired. The following table provides the requirements the servicer must follow depending upon whether QRPC is achieved when the borrower’s hardship is not related to a disaster event.

See  D2-3.2-06, Disaster Payment Deferral for additional information on contacting a borrower during a forbearance plan term when the borrower’s hardship is related to a disaster event.

See  A4-2.1-04, Establishing Contact with the Borrower and D2-2-04, Sending a Borrower a Solicitation Package for a Workout Option for additional information on contacting the borrower and sending a Borrower Solicitation Package.

Handling Late Charges in Connection with a Forbearance Plan

The servicer must not accrue or collect late charges from the borrower during the forbearance plan. If the borrower defaults on the terms of the forbearance plan, the servicer is authorized to accrue late charges from the date the borrower defaulted on the plan.