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Fannie gives more servicer flexibility
WASHINGTON (12/10/08)—Credit Union National Association Senior Assistant General Counsel Jeffrey Bloch said Tuesday credit unions should be aware of new Fannie Mae servicer flexibility to help borrowers avoid foreclosure. Fannie Mae said in its announcement this week that it will allow servicers more flexibility and will provide additional loss mitigation options to address potential delinquencies earlier and to help avoid foreclosure for borrowers with loans in mortgage-backed securities (MBS) pools or in the Fannie portfolio. Fannie introduced a new 2009 Single-Family Master Trust Agreement, an amended and restated 2007 Single-Family Master Trust Agreement, a new base Single-Family MBS Prospectus, and issued certain servicing clarifications and changes. The government-sponsored housing enterprise said in its release that significant changes affecting all MBS pools include:
* Authorization for servicers to begin loss mitigation with a borrower facing imminent default—a default that is reasonably foreseeable but has not yet occurred; * Fannie Mae’s new Early Workout program allowing servicers, in one step, to pre-negotiate a loan modification that becomes effective and permanent only after an initial trial period: * Clarification that a loan can stay in a Trust even if it is 24 months past due, as measured by the last paid installment, if repayment arrangements, foreclosure, or certain other actions are proceeding; and * Elimination of the requirement to refer a loan to foreclosure after a specified number of consecutive days in delinquency status.
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