D2-3.2-01, Forbearance Plan (10/11/2023)

The servicer is authorized to evaluate the borrower for a forbearance plan without receiving a complete BRP. The following table provides the eligibility criteria for a forbearance plan at the time of evaluation.

If the servicer determines the borrower is not eligible for a forbearance plan but there are acceptable mitigating circumstances, it must request Fannie Mae’s prior written approval by submitting a completed Forbearance Exception Request Template. Generally, the servicer’s determination of acceptable mitigating circumstances is based on a review of the borrower’s complete BRP.

The following requirements apply to forbearance plans:

• 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. Additionally, the servicer must identify and distinguish the pool issue date and be familiar with the reclassification requirements (see A1-3-06, Automatic Reclassification of MBS Mortgage LoansA1-3-06, Automatic Reclassification of MBS Mortgage Loans for additional information).

• If the eligibility criteria in Determining Eligibility for a Forbearance Plan above is met, the servicer is authorized to

  • offer an initial forbearance plan term of up to 6 months, and

  • grant an extension of the initial forbearance plan term of up to 6 additional months.

Note: The servicer is authorized to offer the 6-month terms in separate, shorter increments.

If the borrower’s hardship is due to a disaster event (see Chapter D1-3, Providing Assistance to a Borrower Impacted by a Disaster Event for additional information) the servicer is authorized to offer an initial forbearance plan term of up to 3 months without achieving QRPC if

• the property securing the mortgage loan is located in a FEMA-Declared Disaster Area eligible for Individual Assistance,

• the mortgage loan was current or less than two months delinquent at the time the disaster event occurred, and

• the mortgage loan is equal to or greater than one month delinquent.

The servicer must continue attempts to achieve QRPC during this initial 3-month forbearance plan term.

• The servicer must receive Fannie Mae’s prior written approval for a forbearance plan to

  • exceed a cumulative term of 12 months as measured from the start date of the initial forbearance plan, or

  • result in the mortgage loan becoming greater than 12 months delinquent.

• When the servicer initially offers an arrangement that includes a combination of both forbearance and a repayment plan, the combined period must not exceed 36 months.

• The borrower’s monthly payment must be reduced or suspended during the forbearance plan term. When the servicer requires the borrower to make reduced payments, the payment must be received on or before the last day of the month in which it is due, unless the servicer determines that acceptable mitigating circumstances caused the payment to be late.

The forbearance plan terms must be provided to the borrower with an Evaluation Notice. See Sending a Notice of Decision on a Workout Option in D2-2-05, Receiving a Borrower Response PackageD2-2-05, Receiving a Borrower Response Package for additional information.

Note: If the mortgage loan is a second lien mortgage loan, the servicer must include a provision for automatic termination of the forbearance plan when the first lien mortgage loan goes into foreclosure.

• Once the forbearance plan is complete, one of the following must occur:

  •   the mortgage loan must be brought current through a reinstatement,
  • the borrower is approved for another workout option,
  • the mortgage loan is paid in full, or
  • the servicer refers the mortgage loan to foreclosure in accordance with applicable law.  

• The servicer must terminate the forbearance plan if it determines

  •  the borrower failed to meet the terms specified in the Evaluation Notice,
  •  any of the eligibility criteria for the forbearance plan are no longer satisfied,
  • the borrower’s hardship is resolved, or
  • the borrower requests that the forbearance plan be terminated. 

The servicer must begin attempts to contact the borrower no later than 30 days prior to the expiration of any forbearance plan term and must continue outreach attempts until either QRPC is achieved or the forbearance plan term has expired. The following table provides the requirements the servicer must follow depending upon whether QRPC is achieved when the borrower’s hardship is not related to a disaster event.

If the borrower has a disaster-related hardship, see Workout Hierarchy for When a Borrower is Affected by a Disaster Event in  D1-3-01, Evaluating the Impact of a Disaster Event and Assisting a BorrowerD1-3-01, Evaluating the Impact of a Disaster Event and Assisting a Borrower for evaluating and soliciting the borrower for a workout option.

See  A4-2.1-04, Establishing Contact with the BorrowerA4-2.1-04, Establishing Contact with the Borrower and D2-2-04, Sending a Borrower a Solicitation Package for a Workout OptionD2-2-04, Sending a Borrower a Solicitation Package for a Workout Option for additional information on contacting the borrower and sending a Borrower Solicitation Package.

The servicer must not accrue or collect late charges from the borrower during the forbearance plan. If the borrower defaults on the terms of the forbearance plan, the servicer is authorized to accrue late charges from the date the borrower defaulted on the plan.