If your mortgage is held or serviced by Fannie Mae, whether or not you’re considered in danger of imminent default may be up for reconsideration..which may be good or bad.
According to HousingWire.com,
Mortgage servicers of loans held in a Fannie Mae portfolio and part of a mortgage-backed securities (MBS) pool will begin to use Freddie Mac’s Imminent Default Indicator (IDI) in March.
Fannie servicers must use the indicator for borrowers either current or less than 60 days delinquent when determining eligibility for the Home Affordable Modification Program (HAMP).
So what’s this mean for you and your efforts to get a modified loan under HAMP?
Well, IDI uses statistical model to predict how likely you are to default or become seriously delinquent (60 days or more). It uses all of your financial information including your credit score, your monthly debt payment to income ratio, in addition to other statistical information Freddie Mac has gathered over the last 9 months or so since HAMP started.
You can be considered in danger of imminent default if you have less than three times your monthly mortgage payment as a cash reserve. But if you have cash reserves of more than $25,000, you cannot be considered in danger of imminent default. Having more than $25,000 doesn’t make you ineligible for HAMP, it just means you’re not able to qualify as being in danger of imminent default.
The HousingWire.com article continues:
Servicers must continue to process borrowers who were 31-59 days past due and cleared for a HAMP trial before the IDI implementation. The servicer must also provide the property value used for the initial Net Present Value (NPV) test. Servicers modifying a loan must get a borrowers debt-to-income ratio down to 31% through the various waterfalls including an initial interest rate reduction.
Overall, this should mean less inconsistency between servicers on how they treat and evaluate imminent default. Of course, each case is different, but this decision at least gives you something to hang your hat on if you have one of the millions of Fannie Mae or Freddie Mac mortgages out there. After almost 60% of the mortgages in America are backed by one of these two!
Finally, you should also know that simply because you’re in default doesn’t mean you’re in danger of imminent default. I know it doesn’t make sense on the surface, but if you
- You have the money to pay your payments but have chosen not to.
- You have cash reserves but have chosen not to deplete them.
You do not meet the criteria for imminent default under HAMP.




31. May 2009
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