Servicing Guide

Published November 10, 2020

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What are the requirements for evaluating or soliciting a borrower with a disaster-related hardship for a Fannie Mae Flex Modification?

The following table provides the reduced eligibility criteria for evaluating a borrower with a disaster-related hardship for a Fannie Mae Flex Modification.

Reduced Eligibility Criteria When Evaluating a Borrower with a Disaster-Related Hardship for a Fannie Mae Flex Modification
 

The disaster event must result in

  • a financial hardship (e.g., a loss/reduction of income or increase in expenses) that impacts the borrower’s ability to pay his or her current contractual monthly payment, and

  • either

    • the property securing the mortgage loan experienced an insured loss,

    • the property securing the mortgage loan is located in a FEMA-Declared Disaster Area eligible for Individual Assistance, or

    • the borrower’s place o employment is located in a FEMA-Declared Disaster Area eligible for Individual Assistance.

Note: See Evaluating the Extent and Nature of the Property Damage in D1-3-01, Evaluating the Impact of a Disaster Event and Assisting a Borrower for additional information on what constitutes a disaster.

  The mortgage loan must be a first-lien conventional mortgage loan.
  The mortgage loan must
  • have been current or less than two months delinquent when the disaster occurred, and

  • be at least three months delinquent.

  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;

  • a current offer for another mortgage loan modification or other workout option;

  • an approved liquidation workout option; or

  • an active and performing repayment plan, other non-disaster-related forbearance plan, or Trial Period Plan.

If the servicer is unable to establish QRPC as described in Determining Eligibility for a Disaster Payment Deferral in D2-3.2-06, Disaster Payment Deferral , with a borrower on a disaster-related forbearance plan and the borrower is ineligible for a disaster payment deferral, then the servicer must evaluate the borrower for a Fannie Mae Flex Modification in accordance with the reduced eligibility criteria in the table above and, if eligible, the servicer must send an offer for a Fannie Mae Flex Modification within 15 days after expiration of the forbearance plan.

In addition, if a borrower is eligible for a disaster payment deferral but does not respond to the disaster payment deferral offer as described in Soliciting the Borrower for a Post-Forbearance Disaster Payment Deferral in D2-3.2-06, Disaster Payment Deferral , by the acceptance date provided in the disaster payment deferral agreement, then the servicer must evaluate the borrower for a Fannie Mae Flex Modification in accordance with the reduced eligibility criteria in the table above and, if eligible, solicit the borrower for a Fannie Mae Flex Modification within 15 days after the expiration of the disaster payment deferral offer.

Note: In either case, the servicer is authorized to continue proactive solicitation for a Fannie Mae Flex Modification based on the reduced eligibility criteria in the table above at its discretion. The servicer must not solicit a borrower for a Fannie Mae Flex Modification based on the reduced eligibility criteria if the property has a scheduled foreclosure sale date within 60 days of the evaluation date if the property is in a judicial state, or within 30 days of the evaluation date if the property is in a non-judicial state.

The servicer must send the borrower the applicable Flex Modification Solicitation Cover Letter with the Flex Modification Trial Period Plan Solicitation Offer - Not Based on an Evaluation of a BRP Evaluation Notice, or the equivalent, and make appropriate changes to these documents, including the applicable Frequently Asked Questions and as needed to comply with applicable law.

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

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