Servicing Guide

Published June 13, 2018

D2-3.2-06: Fannie Mae HAMP Modification (09/13/2017)

In order for the servicer to have offered a Fannie Mae HAMP Trial Period Plan, the servicer's evaluation must have been based on the borrower's submission of a complete BRP on or before December 30, 2016 and the Modification Effective Date must be on or before December 1, 2017.

This topic contains the following:

Completing a Fannie Mae HAMP Modification

For the servicer to convert a Fannie Mae HAMP Trial Period Plan to a permanent Fannie Mae HAMP modification, the Modification Effective Date must be on or before December 1, 2017.

Identifying Loss of Good Standing

If, following a successful Trial Period Plan, a borrower defaults on a Fannie Mae HAMP modification (three monthly payments are due and unpaid on the last day of the third month), the mortgage loan is no longer considered to be in “good standing.” Once lost, good standing cannot be restored even if the borrower subsequently cures the default.

Communicating with a Borrower Regarding Eligibility for the Expanded Borrower “Pay for Performance” Incentive for a Fannie Mae HAMP Modification

The following table outlines the servicer requirements related to the expanded borrower “pay for performance” incentive.

The servicer must...

Provide written notice of the potential for receipt of the expanded borrower “pay for performance” incentive to a borrower in good standing prior to the fifth anniversary of the Fannie Mae HAMP modification effective date as described in the following table.

Take the following actions if by the 150 th day before the fifth anniversary of the Fannie Mae HAMP modification effective date the servicer has not received an executed Real Estate Fraud Certification (Form 720) or U.S. Treasury Department’s (Treasury) “Dodd Frank Certification”:
If at least one notification has... Then the servicer must provide at least...
been sent

one additional notice no later than 60 days prior to the fifth anniversary of the Fannie Mae HAMP modification effective date.

not been sent

two written notices that are:

  • at least 60 days, but no more than 150 days, prior to the fifth anniversary of the Fannie Mae HAMP modification effective date; and

  • at least 30 days apart.

Note: The servicer is authorized to

  • send a notice or notices for the expanded borrower “pay for performance” incentive at any time leading up to the 150 th day before the fifth anniversary of the Fannie Mae HAMP modification effective date;

  • include any notice for the expanded borrower “pay for performance” incentive in other notices sent to the borrower, provided the timing requirements are met;

  • provide other communications in addition to the required written notices to the borrower of the potential for receipt of the expanded borrower “pay for performance” incentive;

  • include information in the notice indicating that the mortgage loan could be re-amortized if eligible on or after the sixth anniversary of the Fannie Mae HAMP modification effective date, provided the borrower receives the expanded borrower “pay for performance” incentive; and

  • send no additional notices if the borrower returns an executed Form 720 or Treasury’s “Dodd Frank Certification” after a prior notification.

Include a copy of Form 720 or Treasury’s “Dodd Frank Certification” in the written notice to eligible borrowers, if not already collected.

Note: The servicer must notify the borrower that he or she must have submitted an executed Form 720 or Treasury’s “Dodd Frank Certification” on or before the sixth anniversary of the Fannie Mae HAMP Trial Period Plan effective date in order to be eligible for the expanded borrower “pay for performance” incentive. The servicer is authorized to collect an executed Form 720 or Treasury’s “Dodd Frank Certification” before the mortgage loan modification is complete. If the servicer elects to collect an executed Form 720 or Treasury’s “Dodd Frank Certification” before the mortgage loan modification is complete, it must be clearly communicated to the borrower that eligibility for and settlement of the mortgage loan modification is not contingent on the submission of an executed Form 720 or Treasury’s “Dodd Frank Certification.”

Determine which person must execute Form 720 or Treasury’s “Dodd Frank Certification,” and the required documentation to retain, when there has been a change in borrowers (for example, death and/or a qualifying assumption) under the original permanent Fannie Mae HAMP modification by referring to HMPadmin.com for Treasury’s policy clarifications and reporting requirements.

Communicating with a Borrower Regarding the Re-Amortization Option Related to the Expanded Borrower “Pay for Performance” Incentive for a Fannie Mae HAMP Modification

The following table outlines the servicer requirements related to the re-amortization option for a Fannie Mae mortgage loan with a Fannie Mae HAMP modification.

The servicer must ...

Provide written notice of an option to re-amortize the UPB, excluding deferred principal, over the remaining term of the mortgage loan if at the time of the notice the mortgage loan is in good standing. The written notice must

  • be provided at least 60 days, but no more than 120 days, prior to the sixth anniversary of the Fannie Mae HAMP modification effective date;

  • give the borrower at least 30 days, but no more than 180 days, from the date of the notice to respond to the re-amortization offer;

  • notify the borrower of any changes to P&I payments as required by applicable law;

  • specify changes to the payment schedule as a result of the re-amortization and total interest to be paid during the remaining term of the mortgage loan after the sixth anniversary of the Fannie Mae HAMP modification effective date, both with and without the effect of the re-amortization; and

  • include the contact information of the servicer and instruct the borrower to contact the servicer if the borrower has questions or concerns about the re-amortize offer.

Note: The servicer is authorized to include the notice of a re-amortization offer in other notices sent to the borrower, provided the timing requirements are met.

Apply the same re-amortization conditions to all mortgage loans serviced for Fannie Mae, however, the servicer is authorized to

  • require that the mortgage loan is current at the time of the re-amortization;

  • require that the borrower receives the expanded borrower “pay for performance” incentive prior to completing the re-amortization;

  • not send a notification to a borrower of the option to re-amortize the UPB if at the time the servicer sends its notifications the borrower is not eligible to receive the expanded borrower “pay for performance” incentive; and

  • not to send a notification to an eligible borrower of the option to re-amortize the UPB if the mortgage loan was re-amortized within the previous twelve months.

Provide the re-amortization at no expense to the borrower once the borrower accepts the re-amortization offer.

Perform a follow-up communication to the initial written notice using any acceptable communication methods as described in D2-2-01, Achieving Quality Right Party Contact with a Borrower if the borrower has not responded to the initial written notice.

Provide estimated amortization schedules upon the borrower’s request.

Process and document the mortgage loan re-amortization in accordance with Processing a Re-Amortization After Application of Additional Principal Payments in C-1.2-01, Processing Additional Principal Payments.

Ensure that the mortgage loan maintains its first lien position and is fully enforceable.

Servicer Duties and Responsibilities

The following table outlines the servicer’s duties in servicing mortgage loans modified under Fannie Mae HAMP.

In performing the duties incident to the servicing of mortgage loans modified under Fannie Mae HAMP, the servicer must...

Collect and record the details of all executed mortgage loan modifications including, but not limited to, the following:

  • the original terms of the modified mortgage loan,

  • the modified terms of the modified mortgage loan

  • data supporting the mortgage loan modification decision,

  • updates to payoff information and the last payment date, and

  • additional information and data as may periodically be requested by Fannie Mae.

All such data must be compiled and reported to Fannie Mae in the form and manner set forth in this Guide.

Interpret the terms of this Guide and any related instructions from the Treasury or Fannie Mae in a reasonable manner to serve the purposes and interests of the United States.

Use any non-public information or assets of the United States or Fannie Mae received or developed in connection with Fannie Mae HAMP solely for the purposes of fulfilling its obligations hereunder.

Comply with all lawful instructions or directions received from the Treasury and Fannie Mae.

Develop, enforce, and review for effectiveness at least annually, an internal control program designed to ensure effectiveness of duties in connection with Fannie Mae HAMP and compliance with this Guide, to monitor and detect mortgage loan modification fraud, and to monitor compliance with applicable consumer protection and fair lending laws.

The internal control program must include documentation of the control objectives for Fannie Mae HAMP activities, the associated control techniques, and mechanisms for testing and validating the controls.

Provide Fannie Mae with access to all internal control reviews and reports that relate to duties performed under Fannie Mae HAMP by the servicer and/or its independent auditing firm.

Supervise and manage any contractor that assists in the performance of services in connection with Fannie Mae HAMP. The servicer must remove and replace any contractor that fails to perform and ensure that all of its contractors comply with the terms and provisions of this Guide. The servicer shall be responsible for the acts or omissions of its contractors as if the acts or omissions were those of the servicer.

Ensure compliance with the terms of any program waivers.

Authorization to Sign Amendment to Servicer Participation Agreement

If a servicer that signed a Commitment to Purchase Financial Instrument and Servicer Participation Agreement (SPA) with Treasury and signed an amendment to the SPA (Amendment) described in Supplemental Directive 2015-01 issued by Treasury, it is authorized to perform the following services for Fannie Mae mortgage loans:

1. Determine which borrowers are in good standing under Fannie Mae HAMP as of the sixth anniversary of their Fannie Mae HAMP Trial Period Plan effective date;

2. Receive Form 720 or Treasury’s “Dodd-Frank Certification” from potentially eligible borrowers in accordance with documentation requirements established by Treasury in order to determine which of those borrowers are eligible to receive the expanded borrower “pay for performance” incentive funded through Treasury’s Troubled Asset Relief Program (TARP);

3. Apply the expanded borrower “pay for performance” incentive funded through TARP to the borrower’s mortgage account and, to the extent such incentive exceeds the outstanding mortgage loan debt, remit any excess to the borrower in accordance with Incentive Compensation for a Fannie Mae HAMP Modification in F-1-21, Processing a Workout Incentive Fee;

4. Comply with reporting requirements and other requests for information issued by Treasury or its program administrator that are related to the services described in 1-3, in accordance with applicable law; and

5. Comply with any compliance or audit review related requests from Treasury, or any third party that Treasury has designated to perform such reviews, that relate to the services described in 1-3, in accordance with applicable law.

The servicer is not authorized to perform any other services under the SPA with respect to Fannie Mae mortgage loans.

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-2017-05 June 21, 2017
Announcement SVC-2016–10 November 9, 2016
Announcement SVC-2016–09 October 19, 2016
Announcement SVC–2016–05 June 8, 2016
Announcement SVC-2016–03 April 13, 2016
Announcement SVC-2016–02 March 9, 2016
Announcement SVC–2015–14 November 25, 2015
Announcement SVC–2015–13 October 14, 2015
Announcement SVC-2015–12 September 9, 2015
Announcement SVC-2015–10 July 8, 2015
Announcement SVC-2015–09 June 10, 2015
Announcement SVC-2015–05 April 8, 2015