Determining Eligibility for a Standard 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.
Standard Forbearance Plan Terms
The following requirements apply to forbearance plans:
For an MBS mortgage loan, 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 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 forbearance plan 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 servicer must terminate the forbearance plan if it determines that the borrower failed to make timely payments.
The servicer must follow the procedures in Requesting an Extension of a Standard Forbearance Plan for requesting Fannie Mae’s prior written approval and in Preparing a Written Agreement or Evaluation Notice for a Standard Forbearance Plan for preparing the written agreement or Evaluation Notice in F-1-23, Processing a Forbearance Plan.
Handling Late Charges in Connection with a Standard Forbearance Plan
While late charges may accrue when the servicer is determining borrower eligibility for a forbearance plan and during the forbearance plan, the servicer must not assess late charges to the borrower during 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.
| Announcements | Issue Date |
|---|---|
May 10, 2017 |
Additional Information: https://www.fanniemae.com/content/guide/servicing/d2/3.2/01.html