Part two of a multi-part post. Click the Fannie Mae tag to see the rest.
The Payment Reduction Plan (PRP) replaced the HomeSaver Forbearance (HSF) program in Fannie Mae’s Workout Hierarchy as of 31 Oct 09. The goal of the PRP is to allow additional time to identify a permanent foreclosure prevention solution.
**Note: this only affects homeowners with loans backed by Fannie Mae.
If you don’t know whether your loan is backed by Fannie Mae or not, you can check here.
PRP Process
The PRP is available to borrowers who do not qualify or are not eligible for HAMP and who are either in default or are at risk of imminent default. If a borrower has the willingness and the ability to make reduced monthly payments of at least 70 percent of their contractual monthly P&I payment and a more permanent foreclosure prevention option cannot be readily determined, then a servicer should consider the borrower for the PRP. This program is not available for borrowers who are unable to make reduced monthly payments of at least 70 percent of their contractual monthly P&I payment. Those borrowers can be considered for a regular forbearance while the servicer evaluates a permanent foreclosure prevention solution; however, the servicer will not receive the PRP incentive under these circumstances.
While the borrower is eligible for the PRP for a maximum of six months, the servicer must actively work towards finding a permanent foreclosure prevention solution during this timeframe. The servicer is encouraged to find a solution as early as possible during the six-month forbearance period, with the expectation that a solution will generally be identified in the first three months and then implemented during the latter part of the forbearance period, as borrowers will not be permitted to remain in a delinquent status with no action taken by the servicer upon completion of the PRP term.
When a servicer offers a borrower a PRP, the terms of the PRP offer must indicate that the forbearance will end and foreclosure action will be resumed or commenced as soon as one of the following occurs:
- The borrower fails to make any payment more than 15 days after it is due during the forbearance period
- The servicer determines that a foreclosure prevention solution is not feasible – even if the borrower is making timely forbearance payments, or
- A foreclosure prevention solution has not been identified by the end of the six-month forbearance period.
Servicers can enroll the borrower in a PRP while they are exploring other foreclosure prevention strategies provided the PRP does not exceed six months. However, a servicer must immediately resume or commence foreclosure proceedings, in accordance with applicable laws, when a borrower fails to make any payment more than 15 days after it is due during the forbearance period or as soon as the servicer determines that a foreclosure prevention solution is not feasible
Leave a Reply
You must be logged in to post a comment.