Servicing Guide

Published December 12, 2018

A4-2.1-01: Preventing Defaults and Managing Delinquencies (06/08/2016)

This topic contains the following:

General Responsibilities for Preventing Defaults and Managing Delinquencies

The servicer must take the actions described in the following table in the servicing of Fannie Mae mortgage loans.

The servicer must…

Identify and distinguish the pool issue date of a MBS mortgage loan and be familiar with the varying servicing requirements applicable to those pool issue dates.

Adapt its systems to be able to identify the MBS issue dates for PFP mortgage loans in MBS pools.

Comply with all specific written direction Fannie Mae issues to an individual servicer regarding actions to be taken in connection with preventing a foreclosure, including, but not limited to, actions to be taken in connection with mortgage loan modifications, short sales, and Mortgage Releases, with respect to either

  • all mortgage loans purchased or securitized by Fannie Mae, or

  • a designated population.

Cooperate with third parties engaged by Fannie Mae to support the servicer in the fulfillment of the servicer’s obligations that may impose additional requirements.

Establish a practice for servicing delinquent mortgage loans that follows the accepted standards used by prudent servicers.

Apply the requirements of a borrower Delinquency Management Model that allows a borrower to contact one individual or a dedicated team of individuals in the servicer’s organization to obtain accurate information on the various foreclosure prevention alternatives available to the borrower. If the servicer develops a model for itself or any other investor, it must apply the requirements of the model to mortgage loans serviced for Fannie Mae.

Employ collection and foreclosure prevention strategies that are designed to meet the goal of bringing delinquent mortgage loans current in as short a time as possible.

Ensure that all notices and information provided to the borrower are clear and understandable.

Be aware of any programs that may assist a borrower in resolving their delinquencies, or of any housing counseling agencies that may help them in their debt management and provide information on and refer the borrower to those programs or agencies when it is appropriate.

Some of the servicer’s operational requirements for servicing delinquent mortgage loans are listed in the following table.

The servicer must have…

An accounting system that immediately alerts the appropriate department that a mortgage loan is delinquent.

A collection department staff that is familiar with all FHA, HUD, VA, RD, mortgage insurer, and Fannie Mae procedural and reporting requirements, if applicable.

Procedures to

  • advise the borrower on how to avoid or cure delinquencies,

  • instruct the borrower on how to obtain information about housing counseling, and

  • refer the borrower to housing counseling upon receipt of the borrower’s request.

Guidelines for the individual analysis of each delinquency.

Instructions and adequate controls for the following:

  • sending delinquency notices,

  • assessing late charges,

  • applying or returning partial payments,

  • maintaining collection histories, and

  • reporting delinquencies to credit bureaus.

Management review procedures to evaluate the borrower’s actions and the servicer’s collection efforts before the execution of a workout option or the decision to start liquidation proceedings.

Related Announcements

The following table provides references to Announcements that are related to this topic.

Announcements Issue Date
Announcement SVC–2016–05 June 8, 2016