The servicer must consider available workout options when the servicer is notified or otherwise becomes aware of events or factors that are expected to cause the borrower’s monthly payment to be in default within the next 90 days (“imminent default”). In determining whether a borrower’s monthly payment is in imminent default, the servicer must take the actions described in the following table.
|✓||The servicer must...|
Evaluate the borrower’s financial and hardship condition. See D2-2-05, Receiving a Borrower Response Package for information on evaluating the borrower for workout options when the borrower submits a complete BRP.
Evaluate the condition of and the circumstances affecting the property securing the mortgage loan by consulting with the borrower.
The servicer must not solicit borrowers who are current or less than 30 days delinquent for a workout option.
If the servicer determines that a borrower whose mortgage loan was less than 60 days delinquent did not qualify for any workout options, and the borrower’s mortgage loan subsequently becomes 60 or more days delinquent, the servicer must continue its solicitation and collection efforts with the borrower in accordance with D2-2, Requirements for Contacting a Borrower.
For a borrower’s monthly payment to be considered in imminent default for the purpose of determining eligibility for a conventional mortgage loan modification, the borrower must satisfy
the initial eligibility criteria, and
either the credit or hardship eligibility criteria.
The servicer must take the steps in the following table to perform the imminent default evaluation.
|1||Determine if all initial eligibility criteria are satisfied.|
|✓||Initial Eligibility Criteria|
|The mortgage loan is current or less than 60 days delinquent as of the evaluation date.|
|The property securing the mortgage loan is occupied as a principal residence by at least one borrower.|
|The borrower submits a complete BRP (see D2-2-05, Receiving a Borrower Response Package for additional information).|
|The borrower’s non-retirement cash reserves are less than $25,000 based on information provided in the Mortgage Assistance Application (Form 710), or equivalent.|
|The borrower has a hardship as documented in
accordance with Form
710, or equivalent.
Note: An increased monthly P&I payment that has occurred as a result of an interest rate adjustment within the last 12 months for a previously modified mortgage loan with a step-rate feature is an acceptable hardship.
|2||Determine if either the credit or hardship eligibility criteria is satisfied.|
|Credit||A FICO credit score less than or equal to 620,
Note: The FICO credit score must be no more than 90 days old as of the date of evaluation. If the servicer obtains multiple credit scores for a single borrower, it must select a representative credit score using the lower of two or the middle of three credit scores. If there are multiple borrowers, the servicer must determine the representative score for each borrower and use the lowest representative score as the credit score for the evaluation.
|Hardship||The borrower has one of the following hardships
as documented in accordance with Form
710, or equivalent:
If the servicer requests Fannie Mae’s approval of a conventional mortgage loan modification through Fannie Mae’s servicing solutions system and the mortgage loan is current (i.e., not delinquent or in default) and Fannie Mae declines the borrower’s request, the servicer must send an Adverse Action Notice (Form 182) to the borrower within 30 days of receipt of Fannie Mae’s decision, unless the servicer offers the borrower another retention workout option and the borrower accepts the counteroffer within the 30-day period.
While use of Form 182 is optional, it reflects the minimum level of information the servicer must communicate and illustrates a level of specificity that complies with the requirements of this Guide. The following table provides requirements for the adverse action notice.
|✓||The adverse action notice must include...|
|A statement that Fannie Mae, as the owner of the mortgage loan, reviewed the mortgage loan modification request.|
|Fannie Mae’s contact address shown
3900 Wisconsin Ave, NW,
Washington, DC, 20016-2892
|The reason Fannie Mae did not approve the request.|
|The name and contact information of the credit reporting agency used to make the denial decision, if applicable.|
When requesting Fannie Mae’s approval for a mortgage loan modification for a borrower facing imminent default, the servicer must either
include the draft adverse action notice in its submission to Fannie Mae’s servicing solutions system, or
certify it has a process to send the text pre-approved by Fannie Mae for every adverse action notice that is sent in accordance with the requirements of this Guide. See A4-2.1-06, Adverse Action Notification Certification for information on obtaining approval and certification.
The following table provides references to Announcements that are related to this topic.
|Announcement SVC-2018-04||June 13, 2018|