Fannie Mae to Purchase Delinquent Loans from Specified REMICs and Structured Transactions, and Provide Additional On-Going Loan-Level Data for Certain Fully-Guaranteed Whole Loan Structured Transactions

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Fannie Mae to Purchase Delinquent Loans from Specified REMICs and Structured Transactions, and Provide Additional On-Going Loan-Level Data for Certain Fully-Guaranteed Whole Loan Structured Transactions

Commencing immediately, Fannie Mae will exercise its option to purchase mortgage loans that are delinquent as to four or more consecutive monthly payments from the Fannie Mae whole loan REMIC trusts and other structured transactions reflected on the attached chart (these affected transactions are referred to as the "Affected Trusts"). The chart also provides information regarding the principal balances of the delinquent loans that will be purchased during the November 2010 monthly period. (REMIC trusts and other structured transactions that either are backed directly by loans insured by the Federal Housing Administration or guaranteed by the Veterans Administration, or have a credit enhancement structure with senior and subordinate classes, will not be subject to this initiative.)

Going forward, each month we intend to continue to conduct purchases of loans that are delinquent as to four or more consecutive monthly payments from the Affected Trusts. However, our execution of this initiative in the future could be affected by economic, market, operational, and regulatory factors. Certain loans will also be exempt from this initiative (including those loans that currently or in the future are in a forbearance or repayment plan).

The purchase of a loan from an Affected Trust has the same effect on the timing of certificate principal distributions as a borrower prepayment in full. Therefore, the exercise of our option to purchase delinquent loans may accelerate the timing of principal distributions on the certificates. Payments in respect of the delinquent loans initially purchased from the Affected Trusts will be distributed to the related certificateholders on the distribution date in December 2010. Payments in respect of subsequent purchases of delinquent loans will be distributed to certificateholders on the distribution date in the month following the month in which such purchases occur. Due to the volume of loans initially purchased by us under this initiative, we expect that the effect of this initiative on principal distributions for the certificates will be more pronounced for the December 2010 distribution date than for subsequent distribution dates. Please consult the prospectus for the Affected Trust for additional information regarding distributions of principal to certificateholders and servicing practices regarding troubled loans, including the optional purchases of delinquent loans from our REMIC trusts and other structured transactions.

In addition, on or about December 27, 2010, Fannie Mae will begin providing additional loan-level delinquency data in the on-going monthly disclosure for fully-guaranteed structured transactions issued in 2003 and thereafter that are backed directly by whole loans. The current on-going loan-level data fields will be expanded to include the number of days a loan is delinquent (if any), the last paid installment date, and the loan status code (which identifies the current delinquency or default status of the loan or the borrower — e.g., delinquent, in a forbearance or repayment plan, borrower is bankrupt, etc.). This information can be accessed on Fannie Mae's website in the Monthly Reporting Data section for fully-guaranteed whole loan structured transactions. During 2011, we plan to begin providing loan-level delinquency data for all fully-guaranteed structured transactions issued in 2000-2002 that are backed directly by whole loans.

Investors may contact our Fixed-Income Securities Helpline at 1-888-BOND HLP (1-888-266-3457) if they have additional questions.

Certain statements in this announcement may be considered forward-looking statements within the meaning of the federal securities laws, including statements about how we will implement our initiative to repurchase delinquent loans, and the amount and timing of our repurchases. Factors that may cause actual results to differ materially from the expectations in these forward-looking statements include our future funding needs, the rate at which loans in the Affected Trusts become delinquent, and those other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2009 and our reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investors page of our Web site at www.fanniemae.com and the SEC's Web site at www.sec.gov.

 

Originally published: 11/30/10