Fannie Mae to Purchase Delinquent Loans from Single-Family MBS Trusts - Additional Information

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MBS News and Announcements

Fannie Mae to Purchase Delinquent Loans from Single-Family MBS Trusts - Additional Information

On February 10, 2010, Fannie Mae announced that it intends to increase significantly its purchases of loans from single-family MBS trusts that are delinquent as to four or more consecutive monthly payments. We provided additional information about our selection criteria for purchasing these delinquent loans on March 1, 2010. In response to market inquiries and in the interest of further transparency, we are now providing additional information about our single-family delinquent loan purchases.

In March 2010, we intend to purchase all loans that we are required to purchase pursuant to our trust documents, as well as nearly all of the loans that are delinquent as to four or more consecutive monthly payments and back MBS with pass-through rates of 6.5% or greater. The loans that we are required to purchase pursuant to our trust documents include loans such as those that are 24 months delinquent and those that are ready for permanent modification under our loss mitigation strategies, including loans ready for modification under the Home Affordable Modification Program ("HAMP"). The March purchases will be reflected in the MBS pool factors to be released on the fourth business day of April 2010. We expect the aggregate number of delinquent loans purchased (on both a mandatory and optional basis) from MBS pools in March 2010 to be approximately 220,000.

In April 2010, we intend to purchase all loans that we are required to purchase pursuant to our trust documents, as well as nearly all of the loans that are delinquent as to four or more consecutive monthly payments and back MBS with pass-through rates of 6.0% or greater. All April 2010 purchases will be reflected in the MBS pool factors to be released on the fourth business day of May 2010.

In May 2010, we intend to purchase all loans that we are required to purchase pursuant to our trust documents, as well as nearly all of the loans that are delinquent as to four or more consecutive monthly payments and back MBS with pass-through rates of 5.0% or greater. All May 2010 purchases will be reflected in the MBS pool factors to be released on the fourth business day of June 2010.

As a result of the above method, in each specified month through May 2010 we will purchase those loans in the designated pass-through rate category that are delinquent with respect to four or more consecutive monthly payments as well as those loans in a pass-through rate category designated for a previous month that become delinquent with respect to four consecutive monthly payments.

In June 2010, we intend to purchase loans in a pass-through rate category designated for a previous month (5.0% or greater) that become delinquent with respect to four consecutive monthly payments and to purchase nearly all loans that are delinquent with respect to four or more consecutive monthly payments for all other pass-through rate categories (below 5.0%). These purchases will be reflected in the MBS pool factors to be released on the fourth business day of July 2010.

Subsequent to June 2010, we intend to purchase nearly all loans that become delinquent with respect to four consecutive monthly payments in all pass-through rate categories.

Generally, we intend to conduct the voluntary delinquent loan purchases described in this announcement when it is in our economic interest to do so; however, our ability to implement the purchases will be subject to economic, market, operational, and regulatory constraints. The purchases described in this announcement will occur for nearly all single-family MBS prefixes.

On March 3, 2010, we released a Servicing Guide Announcement which revised the reclassification and removal requirements to complete HAMP modifications as described in our November 24, 2009 Servicing Guide Announcement. In response to market inquiries, we are providing additional information about loans in MBS pools that are in active HAMP trial plans.

We disclosed in our 2009 10-K that as of December 31, 2009, there were approximately 291,000 HAMP trial plans in active status, including loans in MBS and cash loans that we held in our portfolio. As of that date, we estimate that 67% of active HAMP trial plans were in MBS pools. After giving effect to our March purchases of delinquent loans, and other activity including new trial plans that were initiated after December 31, 2009, we now estimate that there will be approximately 150,000 loans in active HAMP trial plans remaining in MBS pools.

Fannie Mae is introducing the Alternative Modification™ ("Alt Mod™") initiative, which is designed to help borrowers who are current on their HAMP trial payments but who do not qualify for a permanent HAMP modification for reasons other than payment. To be eligible for an Alt Mod, borrowers must have been in HAMP trial plans prior to March 1, 2010. The Alt Mod initiative does not increase the number of trial plans, but is expected to increase the number of HAMP trial plans that become permanent modifications. The HAMP trial plans remaining in MBS pools will convert to permanent modifications to the extent that our efforts on conversion are successful, over the next few months, pursuant to the guidelines set forth in HAMP and as released in our Alt Mod announcement. Trial modifications that become permanent modifications require mandatory purchase from MBS trusts.

Beginning in April 2010 (as reflected in the MBS pool factors to be released on the fourth business day of May 2010), permanent modifications resulting from Alt Mod will be included in our mandatory purchases from MBS pools.

Market participants should consult our June 1, 2009 MBS Prospectus for additional information regarding our trust agreement provisions and servicing practices regarding troubled loans, including purchases of delinquent loans from MBS trusts.

 

Last revised: 03/18/10