Helping the Homeowner Resolve Mortgage Delinquency

In a recent insights article, the Federal Housing Finance Agency (FHFA) highlighted a new mortgage assistance application that will allow servicers to help borrowers resolve delinquencies more quickly, and keep more people in their homes.

A lesson learned from the crisis, according to the article, is ensuring that the application process is straightforward and as easy to navigate as possible.

In light of this, the FHFA has worked with Fannie Mae and Freddie Mac to revise a form with one main objective—simplifying the loan modification process for borrowers.  

This review process led to the GSEs' announcement of a new Mortgage Assistance Application (MAAp) that will replace the Uniform Borrower Assistance Form (UBAF).  

The MAAp, is designed to balance five principles of loss mitigation learned from the housing crisis—accessibility, affordability, accountability, sustainability, and transparency.

The article noted that extensive borrower testing revealed a number of opportunities to make the form more user-friendly, including; reformatting the form with a cleaner, brighter look, and consolidating related questions on the same page, adding questions that enable borrowers to express their preferred method for being contacted by their servicer, and clarifying terms that borrowers identified as being unclear.

How does the new application work? By utilizing MAAp, a borrower struggling with their mortgage can fill out the application, prior to being 90 days delinquent, and submit it to their servicer.

“Once the servicer receives the application and supporting documentation, the servicer evaluates the borrower for foreclosure alternatives and works with the borrower to explore their options,” the article reports.

Solutions can include a repayment plan, forbearance plan, loan modification, short sale, or deed-in-lieu of foreclosure.  

In addition to changes on the application form, the MAAp reduces the supporting documentation required to demonstrate a struggling borrower’s hardship and income, “a change that will simplify the assistance process for both borrowers and servicers.”

According to the FHFA, servicers are encouraged to implement the MAAp immediately, but must implement it by June 1, 2018.