Servicing Guide

Published June 13, 2018

Determining Whether a Borrower Response Package is Complete

Unless a borrower or co-borrower is deceased or divorced, all parties whose income was used to qualify for the original mortgage loan and who signed the mortgage loan note must submit the items required for a complete BRP. The following table lists the documentation that the servicer must obtain for a BRP to be complete, as required in Mortgage Assistance Application (Form 710).

Items required for a complete BRP

Form 710, or equivalent, that is completed in its entirety.

Income documentation as outlined in Form 710 based on income type. Income documentation must be no more than 90 days old as of the date the servicer first determines that the borrower submitted a complete BRP or at the time of a subsequent evaluation for another workout option.

Non-borrower income: The servicer may include income of a non-borrower who contributes to the mortgage loan payment in monthly gross income if the income is voluntarily provided by the borrower, is documented and verified by the servicer using the same standards used for verifying a borrower’s income, and if

  • the servicer verifies that the non-borrower occupies the subject property as a principal residence based on a review of the credit report or any other available document; and

  • there is documentary evidence to support that the income has been, and reasonably can continue to be, relied upon to support the mortgage loan payment.

The servicer must not consider the expenses of a non-borrower household member and may only consider the amount of the non-borrower’s income that he or she routinely contributes to the household.

Non-taxable income: When the borrower’s income is non-taxable, and the income and its tax-exempt status are likely to continue, the servicer must develop an “adjusted gross income” by adding an amount equivalent to 25% of the non-taxable income to the borrower’s income. If the servicer can determine that the actual amount of federal and state taxes is more than 25% of the borrower’s non-taxable income, the servicer is authorized to use that amount to develop the adjusted gross income.

Income documented by bank statements: When the borrower’s income is documented by bank statements, the servicer must develop an adjusted gross income by adding an amount equivalent to 25% of the amount documented by the bank statements. If the servicer can determine that the actual amount of federal and state taxes is more than 25% of the borrower’s income documented by bank statements, the servicer is authorized to use that amount to verify the borrower’s income.

Note: If a borrower has been impacted by a disaster (see D1-3, Providing Assistance to a Borrower Impacted by a Disaster Event ), income documentation must be equal to or less than 180 days old at the time of the post-disaster evaluation for a workout option, and the evaluation must occur prior to the expiration of any forbearance period granted to the borrower affected by a disaster.

Hardship documentation as outlined in Form 710 based on hardship type.

The IRS Short Form Request for Individual Tax Return Transcript (IRS Form 4506T-EZ) or IRS Request for Transcript of Tax Return IRS Form 4506-T), signed by the borrower under the following circumstances:

  • to reconcile inconsistencies between other information the borrower provided (e.g., information the borrower provided in the Form 710) and the income documentation; or

  • if Fannie Mae requests it.

Note: The servicer is authorized to obtain the 4506-T/4506T-EZ signed by the borrower in the instance the borrower is self-employed, and he or she does not provide the documentation that is outlined in the Form 710. If the IRS Short Form Request for Individual Tax Return Transcript (IRS Form 4506T-EZ) or IRS Request for Transcript of Tax Return Transcript (IRS Form 4506-T) is required, the servicer must follow the procedures in Processing the IRS Form 4506T-EZ or IRS Form 4506-T in F-1-12, Preparing to Implement a Workout Optionfor processing the IRS Form 4506T-EZ or IRS Form 4506-T.

The servicer is authorized to

  • permit the borrower to complete, sign, and fax or email the documents required for a complete BRP to the servicer in accordance with applicable law; or

  • provide a secure means of access through which a borrower may prepare and electronically deliver the documents required for a complete BRP to the servicer.  

See Selling Guide A2-5.1-03, Electronic Records, Signatures, and Transactions for additional information.

If the servicer determines that any special documentation is required to support information provided by the borrower, it must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts).

A BRP is not considered complete if the borrower submits Form 710, or equivalent, that is

  • only partially completed,

  • not accompanied by all required income and hardship documentation, or

  • not accompanied by an executed IRS Form 4506T-EZ or IRS Form 4506-T under the circumstances described in this section above.

When a borrower is in an active Chapter 7 or Chapter 13 bankruptcy, the servicer is authorized to

  • accept a copy of the bankruptcy schedule(s) in lieu of Form 710, provided that the schedule(s) is not more than 90 days old on the date the servicer receives the schedule(s);

  • accept tax returns, if returns are required to be filed; and

  • use this information, along with any required income and hardship documentation as specified in Form 710, to determine borrower eligibility for workout options.

Acknowledging Receipt of a Borrower Response Package

Within five business days, the servicer must acknowledge its receipt of a BRP to the borrower in writing, and must indicate whether the BRP is complete or incomplete. The acknowledgment must include the items listed in the following table.

The acknowledgment must include...

A statement indicating whether the BRP is complete or incomplete; and if complete, providing any other information required by applicable law.

The servicer’s evaluation process and response time frame.

An explanation of the foreclosure process, including that

  • the foreclosure process may continue, and

  • foreclosure referral will not occur if the servicer is reviewing a complete BRP or if the servicer extends an offer for a home retention workout option and the borrower’s response time for acceptance has not expired.

In addition, for borrowers who submit a complete BRP 37 days or less prior to a scheduled foreclosure sale, the servicer must submit an explanation of the servicer’s plans for evaluating the borrower for a workout option and suspending the foreclosure sale, if appropriate.

Sending a Notice of Incomplete Information

The servicer must send an Incomplete Information Notice including the items listed in the following table to the borrower no later than 5 business days from receipt of documentation from the borrower if the servicer determines that documentation is missing.

The Incomplete Information Notice must include...

A list of missing documents or information needed to begin an evaluation of the borrower for a workout option.

A toll-free number for the borrower to contact the servicer if the borrower has any questions.

A reference to the HUD website for HUD-approved counselors as a resource available to help the borrower complete the package.

A reminder that failure to submit all the required documentation or information may result in ineligibility for a workout option and the foreclosure proceedings will continue, including referral to foreclosure if the mortgage loan was not previously referred.

A statement that depending on the timing of when the necessary information or documentation is received, there is no guarantee of an evaluation for a workout option and suspension of foreclosure proceedings.

If the BRP is incomplete, the servicer is authorized to combine the Incomplete Information Notice with the acknowledgment of its receipt of the BRP.

The servicer is authorized, but not required, to send an Incomplete Information Notice to a borrower who submits incomplete documentation 37 days or less prior to a scheduled foreclosure sale. The servicer is strongly encouraged to work with borrowers who submit incomplete documentation 37 days or less prior to a scheduled foreclosure sale to obtain a complete BRP and expedite a decision.

The servicer must continue to attempt to obtain missing documentation using outbound contact methods as described in D2-2-02, Outbound Contact Attempt Requirements.

Sending a Notice of Decision on a Workout Option

The servicer must review and evaluate a complete BRP and communicate a decision to the borrower by sending an Evaluation Notice, or equivalent, within five days after making the decision, but no later than 30 days following the receipt of a complete BRP. See E-3.4-01, Suspending Foreclosure Proceedings for Workout Negotiations for evaluation requirements during foreclosure proceedings.

While use of an Evaluation Notice is optional, it reflects a minimum level of information that the servicer must communicate and illustrate a level of specificity that complies with the requirements of this Guide. The following table provides the requirements for the Evaluation Notice.

The Evaluation Notice must...

Be written in clear, concise language.

Identify whether the borrower is receiving an offer of a workout option and, if so, the decision for the workout option that is being offered to the borrower.

Provide the steps the borrower must take to participate in or accept any offer.

Provide a 14-day time frame for the borrower to accept or decline the workout option or inform the servicer of the borrower’s intent to accept the workout option, if applicable.

Include all other disclosures required by applicable law.

An acceptance by the borrower of a workout option may be in the form of verbal or written communication, or receipt of a payment, if applicable. The type of acceptance may vary based on the status of the foreclosure action of the mortgage loan.

Receipt of a Borrower Response Package after Referral to Foreclosure

If a mortgage loan has been referred to foreclosure prior to receipt of a complete BRP and a complete BRP is subsequently received, see E-3.4-01, Suspending Foreclosure Proceedings for Workout Negotiations for the requirements for reviewing and evaluating a BRP.

Related Announcements

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

Announcements Issue Date
Announcement SVC-2017-08 September 13, 2017
Announcement SVC-2017-04 May 10, 2017
Announcement SVC–2017–02 February 15, 2017
Announcement SVC–2016–05 June 8, 2016
Announcement SVC–2015–15 December 16, 2015