Fannie Mae Extends Mortgage Relief for Unemployed Borrowers

Fannie Mae Extends Mortgage Relief for Unemployed Borrowers . Unemployment Forbearance

Fannie Mae issued new guidelines to its servicers 01/11/2012, introducing an unemployment forbearance program which provides servicers the flexibility to assist borrowers who have a financial hardship due to job loss, including those facing imminent default.

With unemployment forbearance, the servicer reduces or suspends monthly payments for a specified period for a borrower who is unemployed.

The new guidelines, gives servicer authority to approve an unemployment forbearance term of six months without obtaining Fannie Mae’s approval, provided that all borrower eligibility requirements are met. This mirrors Feddie Mac

If during the final month of the initial Unemployment Forbearance period, the borrower remains unemployed, the servicer must determine if the borrower is eligible for an extension of Unemployment Forbearance of no more than six additional months. The Unemployment Forbearance term, however, must not be extended beyond a term that would cause the delinquency to exceed 12 months of the borrower’s contractual mortgage loan payment, including taxes and insurance if the servicer is collecting escrows for such expenses. Unemployment Forbearance extensions may be recommended on a case-by-case basis and must be submitted to Fannie Mae for review and a final decision. Additional eligibility and documentation requirements for extending the Unemployment Forbearance are provided in this Announcement.

Additionally, should an unemployed borrower who was previously on a forbearance plan that has since expired request forbearance, then the servicer must evaluate the borrower for an Unemployment Forbearance due to continued unemployment. The servicer must base the evaluation on the extending Unemployment Forbearance requirements described in this Announcement. Servicers are encouraged to review such borrowers proactively if the borrower is not engaged in another foreclosure prevention alternative solution.

If an eligible borrower is offered and declines an Unemployment Forbearance plan, such borrower is ineligible for another Fannie Mae forbearance. The borrower, however, must be evaluated for other foreclosure prevention alternatives.

If the borrower regains employment or is ineligible for an Unemployment Forbearance extension, the borrower must cure the delinquency through a full reinstatement, payoff, or a repayment plan. If the borrower is unable to do so, he or she must be considered for another foreclosure prevention alternative in accordance with the Fannie Mae Workout Hierarchy.

The Fannie Mae Unemployment Forbearance program simplifies and streamlines the use of forbearance options by incorporating the following features:

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Provides a viable alternative for borrowers who are unemployed (including borrowers facing imminent default);

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Allows the borrower to receive a reduction or suspension of the monthly mortgage payment for a specific period of time;

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Prohibits the servicer from proceeding with foreclosure proceedings during the forbearance period;

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Includes borrower requirements outlining their responsibility for communicating with the servicer and providing the necessary documentation;

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Uses standard processes, documents, and time frames.

Servicing Guide Announcement SVC-2012-01

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2012/svc1201.pdf