Fannie Mae Introduces HomeSaver Forbearance
HomeSaver Forbearance from Fannie Mae provides an additional foreclosure prevention option for borrowers who are ineligible for the Home Affordable Modification Program.
Summary
- HomeSaver Forbearance is available to borrowers that are either in default or for whom default is imminent and who do not qualify for the HMP. A servicer should offer a HomeSaver Forbearance if such borrowers have a willingness and ability to make reduced monthly payments of at least one-half of their contractual monthly payment.
- The plan should reduce the borrower’s payments to an amount the borrower can afford, but no less than 50 percent of the borrower’s contractual monthly payment, including taxes and insurance and any other escrow items at the time the forbearance is implemented.
- During the six month period of forbearance, the servicer should work with the borrower to identify the feasibility of, and implement, a more permanent foreclosure prevention alternative. The servicer should evaluate and identify a permanent solution during the first three months of the forbearance period and should implement the alternative by the end of the sixth month.
- Servicers will receive a $200 incentive fee upon successful reporting to Fannie Mae of the initiation of a HomeSaver Forbearance plan and the collection of one payment under the forbearance plan. A servicer will also be eligible to receive an incentive upon the successful completion of the resulting permanent foreclosure prevention alternative.
Mortgage Insurance and Insurer Approval
- Image by AFP/Getty Images via Daylife
Granting forbearance is contingent on the servicer’s ability to ensure the continuation of mortgage insurance coverage. In this regard, servicers must, for example, ensure that
- The MI company has provided a delegation of authority, either through Fannie Mae (see below) or directly to the servicer, or the servicer has obtained the MI’s approval for forbearance on a case-by-case basis.
- They comply with all reporting required by the MI company for loans modified under HomeSaver Forbearance.
- They continue to pay the full MI premium during the forbearance period, advancing such funds as may be necessary in accordance with our Servicing Guide.
- They consult their mortgage insurance providers for specific processes related to the reporting of forbearance terms, payment of premiums, payment of claims, and other operational matters in connection with forbearances granted under HomeSaver Forbearance.
Effective as of March 4, 2009, Fannie Mae has obtained blanket delegations of authority on behalf of all servicers from each of the mortgage insurers identified below. As a result, servicers can process HomeSaver Forbearances (and Home Affordable Modifications) in connection with Fannie Mae-owned or guaranteed loans as described in Announcement 09-05R, as such programs may be amended, without obtaining separate mortgage insurer approval at the company or loan level. If the status of any of these blanket delegations changes, servicers will be advised accordingly in writing and the list below will be revised as necessary. Even though these blanket delegations allow servicers to process HomeSaver Forbearances (and Home Affordable Modifications) without obtaining separate mortgage insurer approval, servicers must, as described above, still ensure that such modification or forbearance does not impair any existing mortgage insurance coverage and adheres to all other requirements of the applicable master policy.
Mortgage insurers from which blanket delegations of authority have been obtained:
- CMG Mortgage Insurance Company
- Genworth Mortgage Insurance Corporation
- Mortgage Guaranty Insurance Corporation
- PMI Mortgage Insurance Co. and PMI Insurance Co.
- Radian Guaranty Inc.
- Republic Mortgage Insurance Company
- Triad Guaranty Insurance Corporation
- United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company
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June 22nd, 2009 at 6:19 pm
I recieved a letter of approval through FedEx from my mortgage company (Bank of America). Also, I recieved a letter of default from Bank of America during the same week. Today I called to get verification on this letter. I have not been able to get any confirmation this letter was legitimate because no one seem to know. I was connected to one number then given another number to call then put on hold to speak with someone else and finally they disconnected me. I have been trying to get help since hurricane Ike in September 08. What’s up with this?
The only thing I am trying to get straight is, Am I approved or not?
Todd Temaat Reply:
June 22nd, 2009 at 6:51 pm
It’s confusing, but the modification process and the foreclosure process are completely separate from one another. More than likely, two different departments in the bank are responsible for each of the notices.
Unfortunately, about the only thing you can do is continue to call. I’d recommend calling the phone number on the modification package, though, rather than the Notice of Default. If they tell you the foreclosure has been stopped, ask them to fax or e-mail or mail you confirmation…don’t just take their word for it!
August 4th, 2009 at 9:52 pm
We received a FedEx pkg from Bank of America offering the HomeSaver option. I’ve read and re-read the materials, and I am not quite clear on how paying the reduced amount will impact our credit report. Will it be reported as being delinguent? After missing May’s payment because of forgetting to schedule it until the weekend and then a mixed message from the online payment scheduling for the June and May payments which resulted in no payment being made (and probably resulted in the generation of the HomeSaver option), at this point, we are now current – May, June and July (we do still need to make the August payment). We are down one income due to a layoff, so we might be in a place where we might eventually need to take advantage of HomeSaver; however, in recognition that employers are now doing credit checks as a part of the hiring process, we are still a little worried about the immediate impact on our credit report for participating in HomeSaver. Thanks for any information … hopefully this isn’t too convoluted to understand.
Todd Temaat Reply:
August 8th, 2009 at 9:41 am
Thanks for asking.
As you read this, remember that it’s just my opinion. The only way to know how they will report it is to ask them and then follow up to see if they actually did what they said they were going to.
That being said, a forbearance shouldn’t impact your credit by itself. Here’s why I say that. When you agree to a forbearance, the lender is basically saying they’ll reduce your payment for a few months to help you get back on your feet financially or give you time to work a permanent solution out.
If you agree to the forbearance, you still owe the bank the same amount every month, they just agree to take a reduced payment and still count you as current. At some point in the future, you will repay the amount they’ve agreed to forbear…probably at the end of the loan.
Let me give a simple example. Say I borrowed $1000 from you and I was supposed to pay it back in 10 $100 monthly payments. I lose my job and can’t pay you the first payment. So we talk and we agree that you’ll let me only pay $25/month for 3 months and then the payments will go back to $100/month because I’ll have a job again by then. You’ve just given me a forbearance on my payments….but I still owe the entire $1,000 and will eventually pay it all. It will just take me a few more months.
Now, what will hurt your credit for sure is being late on or missing payments all together.
I hope my answer helps and wasn’t too convoluted.
April 27th, 2010 at 9:08 am
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August 7th, 2010 at 10:59 am
We did this program from 7/19/09 – 1/1/10. Today 8/7/10 we recieved in the mail a default notice for the balance that was suppose to be the forbearance.
My husband called Bank of America who told him it was not really a forbearance. Now we are really screwed. This program appears to be a fraud. Who do we contact to file a complant?
Todd Temaat Reply:
August 22nd, 2010 at 4:16 pm
I’d recommend going to your state attorney general’s office. You can also go to a local HUD housing office to see if there are others in your area that have had the same problem or if they know of class action lawsuits alleging the same things.