The GSEs have made helping families avoid foreclosure one of their top priorities since the start of the housing crisis, and Fannie Mae just announced an update to support a policy change to assist in that initiative.
Fannie Mae announced it has updated its Servicing Management Default Underwriter tool, which will aid servicers in providing foreclosure alternatives to struggling borrowers by saving the servicers time, expense, and complexity of implementing the Default Underwriter tool on their own, according to the announcement from Fannie Mae.
“We are continuously looking for ways to help struggling Fannie Mae borrowers,” said Joy Cianci, SVP, Credit Portfolio Management, Fannie Mae. “With this technology update, our servicers will be able to help more struggling borrowers sooner since we are implementing the policy change directly in the tool.”
Servicers are required under the new policy change to calculate the borrower’s full mortgage obligation, which includes outstanding principal balance, past due interest, and other arrearages, in order to determine the borrower’s eligibility for either a Streamlined Modification or a Fannie Mae Standard Modification. This is a change from the previous policy, when only a borrower’s outstanding principal balance was calculated.
As a result of the policy change, more struggling borrowers will qualify for assistance with avoiding foreclosure and more borrowers will receive additional relief under their loan modification, according to Fannie Mae. The Servicing Default Underwriter tool provides real-time evaluation for servicers to provide timely, responsive, and effective foreclosure avoidance help to struggling borrowers.
Click here to view the new policy, which can be found in Fannie Mae’s September 9, 2015 Servicing Guide Announcement. Servicers must implement the new policy on or before March 1, 2016; however, the Servicing Management Default Underwriter has been updated as of December 5, 2015, to allow borrowers to more quickly benefit from the change.