Fannie Mae Updates Delinquency Management, Default Prevention Policies


On May 16, Fannie Mae announced through Servicing Guide Announcement SVC-2014-07, that for a borrower who submits a complete Borrower Response Package (BRP) or incomplete documentation 37 days or less prior to a foreclosure sale, the servicer (i) must explain its plans for evaluating the borrower for a workout option and suspending the foreclosure sale in the BRP acknowledgement notice, if applicable; and (ii) is encouraged to work with borrowers who submit incomplete documentation to obtain a complete BRP but is not required to send an Incomplete Information Notice. Fannie Mae is eliminating all Servicing Guide requirements related to a substantially complete BRP, and thus servicers need no longer postpone foreclosure due to the receipt of a substantially complete BRP. But when a borrower has been offered a workout based on a complete BRP, the servicer must not refer the loan to foreclosure or proceed with the motion for judgment or order of sale until the borrower’s time period for submitting the initial payment to accept the offer has expired without payment. The announcement also states that, where additional amounts have accrued and/or the due dates of the initial workout offer have changed because the borrower was awaiting the outcome of the appeal decision, the servicer must adjust the payment amount of the initial offer, use the same adjustment approach on all Fannie Mae loans, and reissue the initial offer to reflect adjusted dates or amounts. Finally, servicers are no longer required to refer a mortgage loan secured by a principal residence to foreclosure within 5 business days after the 121st day of delinquency.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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