Updated 8/27/20: LL-2020-11 has been revised to clarify the intent of certain requirements in response to servicer inquiries. Additionally, an update has been made to the authority to offer an initial forbearance plan of up to three months without achieving quality right party contact in certain circumstances in connection with a disaster event.
LL-2020-11 (Disaster Payment Deferral)
Additional Related Updates:
LL-2020-07 (COVID-19 Payment Deferral)
Investor Update
July 15, 2020
Source: Fannie Mae
With Lender Letter LL-2020-05, Payment Deferral, we announced payment deferral, a new retention workout option jointly developed with Freddie Mac at the direction of the Federal Housing Finance Agency (FHFA). That workout option was created to assist borrowers who became delinquent due to a short-term hardship that has since been resolved. Subsequently, with Lender Letter LL-2020-07, COVID-19 Payment Deferral, we announced COVID-19 payment deferral, a new retention workout option also jointly developed with Freddie Mac at the direction of FHFA and designed to help borrowers impacted by a hardship related to COVID-19 return their mortgage to a current status after up to 12 months of missed payments.
With this Lender Letter, Fannie Mae is introducing disaster payment deferral, a new retention workout option created to assist borrowers with a disaster-related hardship return their mortgage to a current status after up to 12 months of missed payments. Disaster payment deferral offers servicers:
▪ A solution that is simple to explain to borrowers, as the amount of their delinquency moves into a non-interest bearing balance, due and payable at maturity of the mortgage loan or earlier payoff; and all other terms of the mortgage remain unchanged.
▪ No trial period, resulting in fewer borrower touchpoints than required for modifications.
▪ An efficient automated process through Servicing Management Default Underwriter™ for evaluation and decisioning case submissions.
This Lender Letter contains the following:
▪ Determining eligibility for a disaster payment deferral
▪ Determining eligibility for a disaster payment deferral for a Texas Section 50(a)(6) loan
▪ Performing an escrow analysis
▪ Determining the disaster payment deferral terms
▪ Completing a disaster payment deferral
▪ Soliciting the borrower for a post-forbearance disaster payment deferral
▪ Soliciting the borrower for a Fannie Mae Flex Modification
▪ Processing a disaster payment deferral for an MBS mortgage loan
▪ Reporting a delinquency status code for a disaster payment deferral
▪ Reporting a disaster payment deferral to Fannie Mae
▪ Processing a disaster payment deferral for a mortgage loan with mortgage insurance
▪ Handling fees and late charges in connection with a disaster payment deferral
▪ Incentive fees
▪ Servicing fees
▪ Paying expenses and requesting reimbursement related to a disaster payment deferral
▪ Default after completing a disaster payment deferral
▪ Evaluation hierarchy for a borrower impacted by a disaster
▪ Update to Fannie Mae Flex Modification eligibility criteria
▪ Updates to the Investor Reporting Manual
Effective: As of Oct. 1, 2020, servicers must evaluate borrowers for a disaster payment deferral in accordance with this Lender Letter in lieu of Extend Modification for Disaster Relief and Cap and Extend Modification for Disaster Relief, which will be retired as of such date.
To access full Lender Letter, please click the source link above.
