Servicing Guide

Published July 15, 2020

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D2-3.2-02: Repayment Plan (05/10/2017)

This topic contains the following:  

 

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:

  • The servicer must consider a repayment plan when the delinquency resulted from a temporary hardship that no longer appears to be a problem.

  • 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).

  • 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.

  • 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
  • The borrower is not required to submit a complete BRP.

  • The total monthly repayment plan payment must not exceed 150% of the full monthly contractual payment.

  • The borrower must have the financial capacity to bring the mortgage loan current during the repayment plan; which may be verified through QRPC if the offer is not based on a complete BRP.

Greater than 90 days delinquent or the term of the repayment plan exceeds six months.
  • The borrower is required to submit a complete BRP.

  • The total monthly repayment plan payment must not exceed 150% of the full monthly contract payment.

  • A repayment plan that exceeds 12 months must be submitted to Fannie Mae for written approval.

  • The servicer may offer the borrower a mortgage loan modification as an alternative to a repayment plan.

 

Note: The borrower may make a payment that is sufficient to bring the arrearage within eligible parameters.

 

 

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.

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