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© Fannie Mae Single Family Servicing Guide

Introduction

This topic contains the following:

• Determining Eligibility for a

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• Forbearance Plan
• Forbearance Plan Terms
• Contacting a Borrower During a Forbearance Plan Term
• Handling Late Charges in Connection with a Forbearance Plan

Determining Eligibility for a Forbearance Plan

The servicer is authorized to evaluate the borrower for a forbearance plan with a term of up to six months without receiving a complete BRP. However, if the borrower submitted a complete BRP, the servicer must evaluate the borrower in accordance with Fannie Mae’s evaluation requirements as indicated in D2-2-05, Receiving a Borrower Response Package.

A forbearance plan must be offered when the borrower has demonstrated one of the following hardships and needs additional time to resolve the temporary hardship:

• a natural disaster (see Chapter D1-3, Providing Assistance to a Borrower Impacted by a Disaster for additional information),

• the death of a borrower or co-borrower,

• the death of a family member who contributed to the monthly payment,

• a divorce or separation that will result in the borrower being legally awarded the property,

• the inability to pay due to the pending settlement of a disability or major medical claim,

• a unique hardship (see D2-3.2-03, Forbearance Plan for a Unique Hardship for information on forbearance plans for unique hardships),

• a borrower becomes unemployed (see D2-3.2-02, Forbearance Plan for an Unemployed Borrower for information on forbearance plans for an unemployed borrower),

• a substantial reduction in income that could not be prevented,

• an involuntary distant employment transfer that will result in a hardship attributed to the borrower being transferred or relocated to a distant job location, or

• some other unusual circumstance that warrants the use of a forbearance.

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

• the mortgage loan must be brought current via 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.

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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.

Forbearance Plan Terms

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 servicing requirements. See Determining the Allowable Forbearance Plan Term for an MBS Mortgage Loan in D2-3.1-02, Working with an MBS Mortgage Loan for Certain Workout Optionsfor additional information.

• The servicer must obtain and evaluate a complete BRP in order to

  • offer a forbearance plan with a term greater than six months, or

  • extend a forbearance plan beyond six months (as measured from the start of the initial forbearance plan to the projected end of the forbearance plan).

• Any forbearance plan that extends greater than six months must receive prior written approval from Fannie Mae.

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

• When a borrower’s monthly payment is in imminent default and reclassification requirements (see A1-3-06, Automatic Reclassification of MBS Mortgage Loans (09/18/2018) for additional information).
• If the eligibility criteria in Determining Eligibility for a Forbearance Planabove 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.

Note: 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) and the mortgage loan is 31 or more days delinquent, the servicer is authorized to offer an initial forbearance plan term of up to 3 months without achieving QRPC if it’s review of the facts and circumstances (which may result from establishing contact with the borrower and/or other means, such as a property inspection) indicates that the property, the borrower’s employment, or the borrower’s income is seriously affected by a disaster event. 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.
• When 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 Optionin D2-2-05, Receiving a Borrower Response Package (09/13/2017) for additional information.

Note: If the borrower is performing on a permanent HAMP modification, the servicer must include a provision that the borrower will be ineligible for the “pay for performance” incentives if he or she loses a good standing.

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 that
  • the borrower failed to
  make timely payments
  • 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, orthe borrower requests that the forbearance plan be terminated.
• The servicer must

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• see C-4.1-02, Suspending Credit Bureau Reporting (06/13/2018) for the requirements for suspending reporting to the credit bureaus.

Contacting a Borrower During a Forbearance Plan Term

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.

See A4-2.1-04, Establishing Contact with the Borrower (12/16/2015) and D2-2-04, Sending a Borrower a Solicitation Package for a Workout Option (09/13/2017) for additional information on contacting the borrower and sending a Borrower Solicitation Package.

Handling Late Charges in Connection with a

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Forbearance Plan

While The servicer must not accrue or collect late charges may accrue when the servicer is determining borrower eligibility for a forbearance plan and during from the borrower during the forbearance plan. If the borrower defaults on the terms of the forbearance plan, the servicer must not assess is authorized to accrue late charges to from the date the borrower during defaulted on the forbearance plan and must waive all accrued and unpaid late charges if the borrower receives a workout option.

Related Announcements

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

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Announcement SVC-2017–04

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May 10, 2017

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