Ever wondered how your lender determines what workout to offer you? It seems like black magic sometimes, but there really is rhyme and reason to it.
They have standard guidelines they have to follow as they consider your hardship package and decide what workout option to offer you. By knowing what they’re looking for and shaping your hardship package in a truthful, yet most beneficial, way, you can stack the odds in your favor.
Below are the Fannie Mae guidance to lenders about their standard workout hierarchy. While Fannie Mae is just one servicer, they are one of the largest and are quasi-government. That means that what they say usually trickles down to most lenders across the country.
Even if your loan isn’t Fannie Mae, there’s a pretty good chance their guidelines are pretty similar to this. They may call the programs different things, but your lender is trying to reach the same goal Fannie Mae is, so they probably have similar programs.
These Fannie Mae guideline lay out exactly what they’re looking for as they review your package. If you know what they’re looking for, you can use it to your advantage in your negotiations.
Fannie Mae is establishing a new workout hierarchy, which supersedes the previously announced “RAMPD” hierarchy introduced in Announcement 08-14: Introduction of the HomeSaver Advance™ (HSA). This new hierarchy establishes the preferred order of consideration of foreclosure prevention alternatives to resolve a borrower delinquency.
Summary of the New Workout Hierarchy
TEMPORARY HARDSHIP
(For a borrower expected to overcome a temporary financial hardship AND be able to make future scheduled payments in addition to an amount to cure any outstanding arrearage)
- Forbearance
- Repayment Plan
- HomeSaver Advance
LONG-TERM OR PERMANENT HARDSHIP
(For a borrower experiencing a long-term or permanent financial hardship)
- Home Affordable Modification
- HomeSaver Forbearance
- Other Forbearance
- Modification
- Pre-foreclosure sale
- Deed-in-lieu
So the first thing you have to determine and prove to your lender is whether your hardship is temporary or permanent. How do you do that?
Through your hardship package and your financial information.
To find out more about how negotiating with your lender, sign up for site updates below–we plan several articles on this topic over the next few weeks that you won’t want to miss.
Tags: fannie mae, lender negotiation, loan modification, loss mitigation, workout plan
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