NEW STREAMLINED FANNIE MAE AND FREDDIE MAC MODIFICATION UPDATES - NO HARDSHIP DOCS, NO INCOME DOCS?
just came out today, i had hoped that freddie and fannie would get rid of hardship and income documentation requirements when i wrote this article back on april 11 2012 and it looks like they did just that:
From Freddie Mac today and this policy becomes effective July 1st 2013, so if you are missing April, May and June's payments, you will be eligible July 1st if you have made at least 12 consecutive on time payments since you first received your Freddie Mac loan:
The Streamlined Modification will target borrowers who are at least 90 days delinquent on mortgages that are at least 12 months old, and meet other eligibility criteria
Eligible borrowers are not required to submit documentation, but can accept a Streamlined Modification offer simply by making the trial period payments. The modification becomes permanent once the borrower demonstrates their ability to pay by completing the trial period
The Streamlined Modification offers the same mortgage terms as the Standard Modification Freddie Mac announced in September 2011, which enables servicers to reduce a borrower's monthly mortgage payment by adjusting interest rates, extending payment terms to 40 years, and providing principal forbearance for certain underwater borrowers.
Use of the Streamlined Modification Solicitation Letter and the Streamlined Modification Trial Period Plan Notice is optional and may be altered at the Servicer’s discretion as it deems necessary to meet the requirements of the Guide and to comply with disclosure and other requirements under applicable law.
If the Borrower qualifies for a HAMP modification and the post-modified monthly principal and interest payment under the HAMP modification is less than the principal and interest payment available under the Streamlined Modification, the Servicer must offer the Borrower the HAMP modification.
Servicers must send a HAMP Agreement Cover Letter (Form 1118) to the Borrower indicating that a restart of the Trial Period is not required and if the Borrower complies with the terms of the Streamlined Modification Trial Period Plan and executes the Home Affordable Modification Agreement (Form 3157), he or she will receive the HAMP modification terms.
The Servicer must require the Borrower to continue making the Streamlined Modification Trial Period Plan payments and send the Borrower a Home Affordable Modification Agreement reflecting HAMP modification terms upon successful completion of the Streamlined Modification Trial Period Plan.
The Servicer must convert the existing Streamlined Modification Trial Period Plan to a HAMP Trial Period Plan in Workout Prospector. The Workout Prospector® Users’ Guide will be updated to provide additional instruction for this purpose once Workout Prospector has been updated.If the Borrower does not qualify for a HAMP modification based on a review of a complete Borrower Response Package received during the Trial Period, the Servicer must communicate to the Borrower verbally or in writing the Borrower’s ineligibility for HAMP, and reconfirm that if the Borrower complies with the terms of the Streamlined Modification Trial Period Plan and returns an executed modification agreement, the Mortgage will be modified under the terms of the Streamlined Modification.from the servicing guide announcement at fannie mae MArch 27th, 2013:
Fannie Mae is introducing a new mortgage loan modification, Streamlined Modification, which targets borrowers whose mortgage loans are at least 90 days delinquent and who meet the eligibility requirements provided below.
Prior to and after offering a Streamlined Modification, a servicer must continue to comply with the delinquency management and default prevention requirements in the Servicing Guide, as updated through this Announcement.
The policies in this Announcement apply to all conventional mortgage loans held in Fannie Mae’s portfolio and to mortgage loans that are part of an MBS pool that have the special servicing option or a shared-risk MBS pool for which Fannie Mae markets the acquired property.
Servicers are encouraged to implement the Streamlined Modification policies immediately; however, servicers are required to implement these policies for borrowers who are eligible for a Streamlined Modification on or after July 1, 2013. The Streamlined Modification will expire on August 1, 2015; therefore, all Streamlined Modification Trial Period Plans must have an effective date on or before August 1, 2015.
Eligibility requirements - Mortgage loans must satisfy all of the eligibility requirements shown below to be eligible for a Streamlined Modification.
- must be at least 90 days delinquent, but no more than 720 days delinquent;
- must have a pre-modified mark-to-market loan-to-value ratio (the gross unpaid principal balance of the mortgage loan divided by the current value of the property), greater than or equal to 80%; and
- must be a first-lien mortgage loan.
Fannie Mae is eliminating the requirement that the standard mortgage loan modification results in a P&I payment reduction of at least 10%. Instead, Fannie Mae is now requiring that the standard mortgage loan modification result in a P&I payment that is less than or equal to the pre-modification P&I payment.
To be considered eligible for a Streamlined Modification, a complete Borrower Response Package is not required.
Borrowers will continue to be eligible for the Streamlined Modification even if a payment is received following the borrower evaluation or solicitation that results in the borrower subsequently becoming less than 90 days delinquent. However, the borrower must be at least 30 days or more delinquent prior to the commencement of the Streamlined Modification Trial Period Plan.
The mortgage loan was previously modified under the Fannie Mae standard modification payment structure described in the Servicing Guide, Part VII, Section 602: Mortgage Loan Modifications, and became 60 or more days delinquent within 12 months of the modification effective date.
The mortgage loan origination date was less than 12 months prior to the date of evaluating eligibility for a Streamlined Modification.
The mortgage loan was previously modified two or more times, regardless of the modification program or dates of prior modifications.
The borrower previously failed a Trial Period Plan under a Fannie Mae standard modification payment structure within 12 months of evaluating eligibility for a Streamlined Modification.
The calculated Streamlined Modification monthly principal and interest (P&I) payment is greater than the borrower’s current contractual P&I obligation.
The mortgage loan is insured or guaranteed by a federal government agency (e.g., FHA, VA, or Rural Housing).
The mortgage loan is subject to:
a recourse or indemnification arrangement under which Fannie Mae purchased or securitized the mortgage loan or that was imposed by Fannie Mae after the loan had been purchased or securitized;active nonroutine litigation described in the Servicing Guide, Part VIII, Section 101: Routine vs. Nonroutine Litigation;a current offer for another modification or other foreclosure prevention alternative, such as a forbearance or repayment plan;an active and performing Trial Period Plan; an approved liquidation workout; or an active and performing forbearance or repayment plan, unless otherwise directed by Fannie Mae.
The borrower previously defaulted on either a Streamlined Modification Trial Period Plan or a Streamlined Modification.
The mortgage loan is on the most recent Fannie Mae Non-Eligible List, located on Fannie Mae’s website, at the time the servicer is evaluating eligibility for solicitation. If a mortgage loan is on Fannie Mae’s Non-Eligible List, the servicer must pursue receipt of the Borrower Response Package to evaluate the borrower for another foreclosure prevention alternative in accordance with the requirements in the Servicing Guide.
Servicers are required to check all mortgage loans that become 90 days delinquent against Fannie Mae’s Non-Eligible List prior to sending the borrower an initial or any subsequent Streamlined Modification Solicitation Letter as set forth in this Announcement. Mortgage loans not meeting the eligibility requirements for a Streamlined Modification must be evaluated for another type of modification or other foreclosure prevention alternative, provided the borrower submits a complete Borrower Response Package.
Once the Streamlined Modification Solicitation offer is accepted, follow-up solicitations for incomplete Borrower Response Packages are not required. If the borrower does not accept the offer, then the servicer must resume follow-up solicitation for the incomplete documentation in accordance with the Servicing Guide.
If the borrower qualifies for a Fannie Mae HAMP modification with a post-modification monthly P&I payment lower than the P&I monthly payment offered under the Streamlined Modification, the servicer must send a new offer to the borrower indicating that the borrower qualified for a Fannie Mae HAMP modification with a lower P&I payment.
The offer letter must indicate that if the borrower chooses to accept the Fannie Mae HAMP modification, the borrower will not be required to complete a new HAMP Trial Period Plan at the conclusion of the Streamlined Modification Trial Period Plan, but will execute a Modification Agreement under the terms of the Fannie Mae HAMP modification program upon successful completion of the Streamlined Modification Trial Period Plan.
If the borrower does not qualify for a Fannie Mae HAMP modification with a post-modification P&I payment lower than the P&I monthly payment offered under the Streamlined Modification, or if the borrower fails to return a complete Borrower Response Package within the prescribed timeline provided in the Streamlined Modification Solicitation Letter (and as a result is not eligible for a Fannie Mae HAMP modification), the servicer must also communicate to the borrower that he or she is not eligible for a HAMP modification.
The servicer, however, must communicate to the borrower that he or she continues to be eligible for the Streamlined Modification, and that if the borrower makes the trial payments in accordance with the requirements of the Streamlined Modification Trial Period Plan previously provided to the borrower, the mortgage loan will be permanently modified pursuant to the terms of the Streamlined Modification Trial Period Plan. As provided in the Servicing Guide, the servicer must comply with all applicable laws in connection with processing the Streamlined Modification.
Streamlined Modification Terms:The servicer must comply with the requirements described in the Servicing Guide, Part VII, Section 602.02.05:
Conventional Mortgage Loan Modification Terms, to determine the mortgage loan modification terms for a Streamlined Modification Trial Period Plan.
Completing the Modification:
Upon successful completion of the Streamlined Modification Trial Period Plan, the servicer will document and process the permanent modification in accordance with the applicable requirements in the Servicing Guide, based on the borrower’s qualification for a Streamlined Modification or Fannie Mae HAMP Modification, as described above. (For the Streamlined Modification, the servicer should refer to Part VII, Section 602.02.07: Executing and Processing the Loan Modification Agreement. For a Fannie Mae HAMP modification, the servicer should refer to Part VII, Section 609.03.06: Executing the HAMP Documents.)
Postponing Referral to Foreclosure or Foreclosure Proceedings:
Servicers must comply with the requirements in the Servicing Guide, Part VIII, Section 106: Referral to Foreclosure Attorney/Trustee and Section 107.01: Servicer-Initiated Temporary Suspension of Proceedings, in connection with offering Streamlined Modifications.
Streamlined Modification Incentives:
Fannie Mae will pay the servicer an incentive fee consistent with the tiered incentive structure for the Fannie Mae standard modifications as described in the Servicing Guide, Part VII, Section 602.04.05 titled Incentives.Any Streamlined Modification Trial Period Plan entered into by the borrower shall count towards the servicer achieving the minimum incentive benchmark (as described in the Servicing Guide, Part VII, Section 205.05:
Servicer Incentives and Compensatory Fees for Borrower Response Packages) upon the servicer’s entry of the associated case into the Home Saver Solutions Network (HSSN).Servicers will be paid a $500 incentive fee only for collection of a complete Borrower Response Package, provided the collection is reported to Fannie Mae in accordance with the Servicing Guide.
Mortgage Insurer Approval:
As a reminder, Fannie Mae has obtained delegations of authority with mortgage insurance companies so that servicers can more efficiently process modification requests without the need to obtain mortgage insurer approval on individual mortgage loans. A list of these mortgage insurers is posted on Fannie Mae’s website. For mortgage insurers not on this list, servicers must continue to obtain their approval on a case-by-case basis.Freddie and Fannie we will be using all the tools available to us to screen for potential strategic defaulters known as the "HAMPster Wheel" participants on this forum.