Servicing Guide

Published June 13, 2018

  • Servicing Guide: Main Page
    • Part D: Providing Solutions to a Borrower
      • D2: Assisting a Borrower Who is Facing Default or in Default
        • D2-3: Fannie Mae’s Home Retention and Liquidation Workout Options
          • D2-3.1: Preparing to Implement a Home Retention or Liquidation Workout Option
            • D2-3.1-02: Working with an MBS Mortgage Loan for Certain Workout Options (06/08/2016)

Determining the Allowable Forbearance Plan Term for an MBS Mortgage Loan

The servicer must not allow a forbearance plan to extend beyond the last scheduled payment date of the mortgage loan.

Unless the criteria in the following sentence is satisfied, the servicer must remove a mortgage loan from an MBS pool after six consecutive months of forbearance. For a mortgage loan to remain in an MBS pool after six consecutive months of forbearance, the servicer must report

  • that the mortgage loan became current, or

  • a delinquency status code to indicate that the mortgage loan status changed during or at the end of the six-month forbearance plan period.

The servicer must follow the procedures in Reclassifying an MBS Mortgage Loan for Forbearance in F-1-28, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan for reporting mortgage loans in a forbearance plan.

Determining the Allowable Repayment Plan Term for an MBS Mortgage Loan

The following table provides the requirements based on the MBS pool issue date to which the servicer must adhere when determining the repayment plan term.

MBS Pool Issue Date Maximum term of repayment plan based on aggregated number of months in a repayment plan without a full cure of the delinquency

June 1, 2007 through December 1, 2008

18 months from the first day of the month in which the plan commences (its inception).

Up to and including May 1, 2007

The servicer is authorized to offer a repayment plan for a period longer than 18 months from inception. See D2-3.2-04, Repayment Plan for additional information on this workout option.

January 1, 2009 through May 1, 2016

June 1, 2016 and beyond

The servicer must follow the procedures in Reclassifying an MBS Mortgage Loan for a Repayment Plan in F-1-28, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan for reporting mortgage loans in a repayment plan.

Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan

The servicer must not modify a mortgage loan while it is in an MBS pool (including PFP mortgage loans). Performing MBS mortgage loans are ineligible for purchase from the related MBS pool for the purpose of modifying the mortgage loan term, interest rate, UPB, or other major characteristic(s) of the mortgage loan. However, if the mortgage loan has been in a continuous state of delinquency for four consecutive monthly payment due dates (or at least eight consecutive payment due dates in the case of a biweekly mortgage loan) without a full cure of the delinquency during that period, then the mortgage loan may be modified after it is removed from the MBS pool.

The servicer must ensure that the mortgage loan modification is not implemented if the required Trial Period Plan payments are not made in accordance with the applicable mortgage loan modification workout option, since the preconditions to make the mortgage loan modification effective have not been satisfied. The servicer must ensure that a mortgage loan modification does not become effective while it remains in an MBS pool.

The mortgage loan modification agreement must be executed after the mortgage loan has been removed from any MBS pool and reclassified as a Fannie Mae portfolio mortgage loan, and must reflect the actual date of the servicer’s execution. The servicer must follow the procedures in Reclassifying or Voluntary Repurchasing an MBS Mortgage Loanfor a Mortgage Loan Modification in F-1-28, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan to reclassify or voluntary repurchase, as applicable, the mortgage loan.

The following table describes the requirements for removal of a mortgage loan from an MBS pool for the purpose of modifying the mortgage loan once the preconditions to make the mortgage loan modification effective have been satisfied.

If the mortgage loan is... Then the mortgage loan must be...

a regular servicing option mortgage loan or a shared-risk special servicing option mortgage loan for which the servicer’s shared risk liability has not expired

purchased by the servicer from the MBS pool.

a special servicing option mortgage loan or a shared-risk special servicing option mortgage loan for which Fannie Mae markets the acquired property

reclassified through Fannie Mae’s standard reclassification process.

Note: For an MBS mortgage loan that is not subject to Fannie Mae’s automatic reclassification process, the servicer must request reclassification or a voluntary repurchase through Fannie Mae’s servicing solutions system.

Regular servicing option MBS mortgage loans, and shared-risk special servicing option MBS mortgage loans for which the servicer's shared risk liability has not expired, that have been removed from an MBS pool, and have been modified are not eligible for redelivery to Fannie Mae unless Fannie Mae agrees otherwise.

If the servicer determines that a mortgage loan modification is the appropriate workout option for an MBS mortgage loan with a pool issue date on or after January 1, 2009, and that the extraordinary circumstances relating to the mortgage loan justify the earlier removal of the mortgage loan from the MBS pool, it must request Fannie Mae’s prior written approval to remove a mortgage loan that has only one monthly payment delinquent if the delinquency has not been fully cured on or before the next payment date.

See A1-3-06, Automatic Reclassification of MBS Mortgage Loans for additional information on the reclassification and removal of MBS mortgage loans.

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