Servicing Guide

Published September 9, 2020

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What requirements must be met when offering the borrower a Trial Period Plan for a Fannie Mae Flex Modification?

For an MBS mortgage loan, the servicer must also see Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan in D2-3.1-02, Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan.

The servicer must communicate with the borrower that the mortgage loan modification will not be binding, enforceable, or effective unless all conditions of the mortgage loan modification have been satisfied, which is when all of the following have occurred:

  • the borrower has satisfied all of the requirements of the Trial Period Plan,

  • the borrower has executed and returned a copy of the Loan Modification Agreement (Form 3179), and

  • the servicer or Fannie Mae (depending upon the entity that is the mortgagee of record) executes and dates (Form 3179).

The servicer must use the applicable Evaluation Notice to document the borrower's Trial Period Plan. See Sending a Notice of Decision on a Workout Option in D2-2-05, Receiving a Borrower Response Package for requirements relating to the Evaluation Notice, and the additional requirements provided in the table below.

If the servicer sends the Evaluation Notice… Then the servicer must use...
on or before the 15th day of a calendar month the first day of the following month as the first Trial Period Plan payment due date.
after the 15th day of a calendar month the first day of the month after the next month as the first Trial Period Plan payment due date.

The following table provides the requirements for the length of the Trial Period Plan, which must not change even if the borrower makes scheduled payments earlier than required.

If the mortgage loan at the time of evaluation is... Then the Trial Period Plan must be…
current or less than 31 days delinquent four months long.
31 or more days delinquent three months long.

If the borrower fails to make a Trial Period Plan payment by the last day of the month in which it is due, the borrower is considered to have failed the Trial Period Plan and the servicer must not grant the borrower a permanent Fannie Mae Flex Modification.

For more information please see: D2-3.2-07: Fannie Mae Flex Modification. 
 

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