Servicing Guide

Published March 10, 2021

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  • Home
  • / THE SERVICING GUIDE
  • / Part D, Providing Solutions to a Borrower
  • / Subpart D2, Assisting a Borrower Who is Facing Default or
  • / Chapter D2-3, Fannie Mae’s Home Retention and Liquidation
  • / Section D2-3.2, Home Retention Workout Options
  • / D2-3.2-05, Payment Deferral

D2-3.2-05: Payment Deferral (12/09/2020)


D2-3.2-05, Payment Deferral (12/09/2020)

This topic contains the following information:


Determining Eligibility for a Payment Deferral

The servicer is authorized to evaluate the borrower for a payment deferral without receiving a complete Borrower Response Package (BRP). When the servicer offers a payment deferral without receiving a complete BRP, the servicer is not required to send an Evaluation Notice, or equivalent.

If the borrower submitted a complete BRP, then the servicer must evaluate the borrower in accordance with D2-2-05, Receiving a Borrower Response Package. The servicer is authorized to use an Evaluation Notice, but must make the appropriate changes as necessary, including to the applicable Frequently Asked Questions, to reflect the terms of the payment deferral.

In order to be eligible for a payment deferral, the following criteria must be met.

✓ Eligibility Criteria for a Payment Deferral
The mortgage loan must be a conventional first lien mortgage loan, and may be a fixed-rate, a step-rate, or an ARM.

Note: The property securing the mortgage loan may be vacant or condemned.

The mortgage loan must meet the following delinquency parameters:

  • As of the date of the evaluation, the mortgage loan must be 30 or 60 days delinquent (i.e., the borrower is not past due for more than two full monthly contractual payment); and

  • Such delinquency status must have remained unchanged for at least three consecutive months, including the month of the evaluation.

    Note: The servicer must receive the borrower’s full monthly contractual payment due for the month of evaluation. If the servicer has not received this full monthly contractual payment as of the date of evaluation, the borrower may still be eligible for a payment deferral if he or she makes the full monthly contractual payment by the end of the evaluation month. See F-2-12, Payment Deferral Delinquency Eligibility Examples for examples on determining delinquency status.

The servicer must achieve QRPC with the borrower (see D2-2-01, Achieving Quality Right Party Contact with a Borrower for additional information).

Additionally, the servicer must confirm that the borrower:

  • has resolved the hardship,

  • is able to continue making the full monthly contractual payment, and

  • is unable to reinstate the mortgage loan or afford a repayment plan to cure the delinquency.

    Note: If the borrower’s mortgage loan previously received a Fannie Mae HAMP Modification and the borrower remains in “good standing,” the servicer must inform the borrower that a payment deferral will result in the mortgage loan’s removal from HAMP, and the borrower will lose any future HAMP “pay for performance” incentive he or she might otherwise have received.

The mortgage loan must have been originated at least 12 months prior to the evaluation date for a payment deferral.
The mortgage loan must not have received a previous payment deferral.

Note: This does not include a previous disaster payment deferral.

The mortgage loan must not be subject to

  • a recourse or indemnification arrangement under which Fannie Mae purchased or securitized the mortgage loan or that was imposed by Fannie Mae after the mortgage loan was purchased or securitized,

  • an approved liquidation workout option,

  • an active and performing forbearance plan or repayment plan,

  • a current offer for another retention workout option, or

  • an active and performing mortgage loan modification Trial Period Plan.

The borrower must not have failed a non-disaster related mortgage loan modification Trial Period Plan within 12 months of being evaluated for eligibility for a payment deferral.

Note: Converting from a Trial Period Plan to a forbearance plan is not considered a failed Trial Period Plan.

The mortgage loan must not have been modified with a non-disaster related mortgage loan modification within the previous 12 months of being evaluated for eligibility for a payment deferral.


Determining Eligibility for a Payment Deferral for a Texas Section 50(a)(6) Loan

A Texas Section 50(a)(6) loan is eligible for a payment deferral if

  • the requirements described in Determining Eligibility for a Payment Deferral are satisfied, and

  • the application of a payment deferral to the mortgage loan complies with applicable law.

If the servicer receives notice from the borrower that a payment deferral fails to comply with Texas Section 50(a)(6) requirements, the servicer must immediately, but no later than seven business days after receipt, take the actions listed in the following table.

✓ The servicer must
Inform our Legal department by submitting a Non-Routine Litigation Form (Form 20) and include the borrower notice in its submission.
Collaborate with us on the appropriate response, including any cure that may be necessary, within the 60-day time frame provided by the requirements of Texas Section 50(a)(6).


Determining the Payment Deferral Terms

The servicer must defer the past-due P&I payments as a non-interest bearing balance, due and payable at maturity of the mortgage loan, or earlier upon the sale or transfer of the property, refinance of the mortgage loan, or payoff of the interest-bearing UPB. All other terms of the mortgage loan must remain unchanged.

Any existing non-interest bearing balance on the mortgage loan remains due and payable at maturity of the mortgage loan, or earlier upon the sale or transfer of the property, refinance of the mortgage loan, or payoff of the interest-bearing UPB.

Note: If the servicer chooses to perform an escrow analysis, any escrow account shortage that is identified at the time of the payment deferral must not be included in the non-interest bearing balance and the servicer is not required to fund any existing escrow account shortage. In addition, the servicer is not required to revoke any escrow deposit account waiver.


Completing a Payment Deferral

The servicer must complete (i.e., submit the case via Fannie Mae’s servicing solutions system) a payment deferral in the same month in which it determines the borrower is eligible.

The servicer is authorized to use an additional month to allow for sufficient processing time (“processing month”) to complete a payment deferral. In this circumstance

  • the borrower must make his or her full monthly contractual payment during the processing month, and

  • the servicer must complete the payment deferral within the processing month after receipt of the borrower’s full monthly contractual payment due during that month.

Note: The servicer must treat all borrowers equally in applying the processing month, as evidenced by a written policy.

The servicer must send the payment deferral agreement, or equivalent to the borrower no later than five days after the completion of the payment deferral.

While use of the payment deferral agreement is optional, it reflects the minimum level of information that the servicer must communicate and illustrates a level of specificity that complies with the requirements of the Servicing Guide. Also, the servicer must ensure the payment deferral agreement complies with applicable law.

Note: If the servicer determines the borrower’s signature is required on the payment deferral agreement, it must receive the executed agreement prior to completing the payment deferral.

The servicer’s application of a payment deferral to the mortgage loan must not impair our first lien position or enforceability against the borrower(s) in accordance with its terms.

The servicer must record the payment deferral agreement if the servicer determines that recordation is required to comply with law and ensure that the mortgage loan retains its first lien position. The servicer must obtain a title endorsement or similar title insurance product issues by a title insurance company if the payment deferral agreement will be recorded.

The servicer must also provide documents to the document custodian in accordance with the following table.

If the payment deferral agreement is... Then the servicer must send...
not required to be signed by the borrower a copy of the payment deferral agreement signed by the servicer to the document custodian within 25 days of the effective date of the payment deferral.
required to be signed by the borrower but not recorded the fully executed original payment deferral agreement to the document custodian within 25 days of the effective date of the payment deferral.
required to be recorded

  • a certified copy of the fully executed payment deferral agreement to the document custodian within 25 days of the effective date of the payment deferral, and

  • the original payment deferral agreement that is returned from the recorder’s office to the document custodian within 5 business days of receipt.


Processing a Payment Deferral for an MBS Mortgage Loan

The servicer must not make a manual reclassification request for mortgage loans subject to a payment deferral. Also, see A1-3-06, Automatic Reclassification of MBS Mortgage Loans for additional information on automatic reclassification.


Processing a Payment Deferral for a Mortgage Loan with Mortgage Insurance

The servicer must see F-2-06, Mortgage Insurer Delegations for Workout Options for the list of conventional mortgage insurers from which Fannie Mae has obtained delegation of authority on behalf of all servicers, which allows the servicer to process a payment deferral without obtaining separate mortgage insurer approval at the company or loan level.


Handling Fees and Late Charges in Connection with a Payment Deferral

The servicer must not charge the borrower administrative fees.

The servicer must waive all late charges, penalties, stop payment fees, or similar charges upon completing a payment deferral.

The servicer must follow the procedures in Reimbursement for Expenses Associated with Workout Options in F-1-05, Expense Reimbursement for advancing funds and requesting reimbursement.

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