Borrowers who are working with their mortgage servicer to avoid foreclosure can expect greater efficiency than in prior years as they pursue their options. This should mean a faster resolution and less frustration during a challenging time.
Fannie Mae implemented new delinquency management and default prevention standards in October 2011. These standards require servicers to use a uniform approach, consistent guidelines, and clear timelines when working with delinquent borrowers. The Federal Housing Finance Agency mandated this approach as part of its Servicing Alignment Initiative, which seeks to establish consistency in the servicing of delinquent loans owned or guaranteed by Fannie Mae and Freddie Mac.
Our goal is to keep people in their homes whenever possible and to minimize financial losses to Fannie Mae and to taxpayers. Since 2009, we have helped more than 900,000 homeowners stay in their homes or otherwise avoid foreclosure. This has helped support neighborhoods, home prices, and the housing market.
Early intervention offers delinquent borrowers the best chance to avoid foreclosure, so the new guidelines require servicers to contact borrowers early and often and to make certain those communications clearly spell out all options available to borrowers. Also, borrowers will now have a single point of contact at their servicer with whom they can discuss all their options, which helps alleviate confusion and delays in the process.
These new standards require servicers to evaluate borrowers simultaneously for a full range of foreclosure prevention alternatives, including modifying terms of the mortgage loan, in order to identify the best alternative for the borrower to avoid foreclosure. Delinquent borrowers receive a Borrower Solicitation Package that explains what documents the borrowers will need to submit to be considered for a modification or other foreclosure alternatives.
To keep the process on track, borrowers have an equally important responsibility to submit the required documentation promptly and stay in contact with the servicer.
Servicers must let the borrower know within five days of receiving the borrower’s information whether all of the necessary documents are complete and accounted for. Once all the required documents are in hand, servicers are to use consistent standards within a specified timeframe to evaluate borrowers for a foreclosure prevention alternative. Borrowers should expect a decision within 30 days once they have provided a complete Borrower Response Package – that is, the completed Solicitation Package with necessary supporting documentation. Throughout the process, servicers are to provide borrowers with regular updates.
A borrower with questions or concerns about the decision must raise them with the servicer. The servicer must acknowledge receiving the borrower’s inquiry within three business days. Within 15 business days, the servicer must propose a resolution and next steps. If the servicer fails to resolve the inquiry within that time, the servicer may extend the resolution period for an additional 15 business days. Under no circumstances may the total time to resolve an escalated case exceed 30 days.
Servicers can turn to Fannie Mae for training and guidance on every aspect of the process, including the content and timing of all communications with borrowers. To help ensure servicers meet the program’s expectations, Fannie Mae offers monetary incentives to servicers that exceed workout benchmarks and imposes fines on those who fail to meet those benchmarks or timelines.
If you are a homeowner and are unhappy with the level of attention from your servicer, please contact Fannie Mae at 1-800-7FANNIE (1-800-732-6643) or send an email using our online submission form. Also, visit www.KnowYourOptions.com anytime for more information on alternatives to foreclosure.
Senior Vice President – National Servicing Organization
April 20, 2012
The views expressed in these articles reflect the personal views of the authors, and do not necessarily reflect the views or policies of any other person, including Fannie Mae or its Conservator. Any figures or estimates included in an article are solely the responsibility of the author.