Introduction
This topic contains the following:
- Repayment Plan Terms
- Soliciting the Borrower for a Workout Option After a Failed Repayment Plan
- Handling Late Charges with a Repayment Plan
Repayment Plan Terms
The servicer is authorized to evaluate the borrower for a repayment plan without receiving a complete BRP. However, if the borrower submitted a complete BRP, the servicer must evaluate the borrower in accordance with Fannie Mae’s evaluation requirements as indicated in D2-2-05, Receiving a Borrower Response Package.
The following requirements apply to repayment plans:
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The servicer must consider a repayment plan when the delinquency resulted from a temporary hardship that no longer appears to be a problem.
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For an MBS mortgage loan, 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).
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The repayment plan terms must be provided to the borrower with an Evaluation Notice. For additional information on the requirements for an Evaluation Notice, see Sending a Notice of Decision on a Workout Option in D2-2-05, Receiving a Borrower Response Package.
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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 following table provides the requirements for a repayment plan based on the mortgage loan's delinquency status at the time of evaluation and the duration of the repayment plan.
| If, at the time of evaluation, the mortgage loan is … | Then… |
|---|---|
| Less than or equal to 90 days delinquent and the term of the repayment plan does not exceed six months |
|
| Greater than 90 days delinquent or the term of the repayment plan exceeds six months. |
|
Soliciting the Borrower for a Workout Option After a Failed Repayment Plan
If the borrower does not make their total monthly repayment plan payment by the end of the month in which it is due and the servicer is unable to achieve QRPC, then the servicer must evaluate the borrower for a payment deferral and, if eligible, solicit the borrower for a payment deferral in accordance with D2-3.2-04, Payment Deferral.
If the borrower is ineligible for a payment deferral, then the servicer must evaluate the borrower for a Fannie Mae Flex Modification and, if eligible, solicit the borrower for a Fannie Mae Flex Modification in accordance with D2-3.2-06, Fannie Mae Flex Modification.
If a borrower with a disaster-related hardship does not make their total monthly repayment plan payment by the end of the month in which it is due and the servicer is unable to achieve QRPC, then the servicer must evaluate the borrower for a disaster payment deferral and, if eligible, solicit the borrower for a disaster payment deferral in accordance with D2-3.2-05, Disaster Payment Deferral.
If the borrower is ineligible for a disaster payment deferral, then the servicer must evaluate the borrower for a Fannie Mae Flex Modification and, if eligible, solicit the borrower for a Fannie Mae Flex Modification in accordance with Evaluating or Soliciting a Borrower with a Disaster-Related Hardship for a Fannie Mae Flex Modification in D2-3.2-06, Fannie Mae Flex Modification.
Handling Late Charges with a Repayment Plan
The repayment plan may include accrued late charges due when the plan is established between the servicer and the borrower. The servicer must waive late charges accrued during the repayment plan period as long as the terms of the repayment plan are maintained by the borrower.
Recent Related Announcements
The table below provides references to recently issued Announcements that are related to this topic.
| Announcements | Issue Date |
|---|---|
| Announcement SVC-2023-05 | October 11, 2023 |