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Fannie Mae Issues Numerous Selling and Servicing Updates
On August 21, Fannie Mae issued Selling Guide Announcement SEL-2012-07, which updates numerous Selling Guide topics, including changes to loan eligibility requirements. As of October 20, 2012, for adjustable rate mortgages, the maximum LTV ratios will be reduced and the minimum score requirement for manually underwritten loans will increase. Fannie Mae is also changing LTV ratios and minimum credit score requirements in certain areas to simplify the requirements and align product and property types. Also effective on October 20, 2012, Fannie Mae will (i) retire the Comprehensive Risk Assessment Worksheet for Manual Underwriting, (ii) update the eligibility criteria matrix for manually underwritten loans, (iii) implement several changes to the DU Version 9.0, and (iv) retire the FannieNeighbors product.
On August 22, Fannie Mae issued Servicing Guide Announcement SVC-2012-18, which announces several policy changes related to delinquency management and default prevention. To further short sale directives, and to support other policy changes, the Announcement updates Fannie Mae’s Uniform Borrower Assistance Form. The announcement also implements the extended stay of foreclosure protections enacted recently as part of the Honoring America’s Veterans and Care for Camp Lejeune Families Act and the extension of the federal Making Home Affordable Programs. Concurrently, Fannie Mae issued Announcement SVC-2012-17, which requires servicers to cancel hazard insurance coverage within fourteen days after a property has been inspected and is confirmed vacant by a broker, agent, or property management company designated by Fannie Mae. This change takes effect on October 1, 2012.
Fannie Mae Updates Custodial Bank Accounts Guidance
On August 15, Fannie Mae issued Servicing Guide Announcement SVC-2012-06, which amends requirements regarding custodial accounts. Under the amended guidance, servicers may maintain multiple tax and insurance custodial accounts for hazard insurance loss drafts, partial payments, or unapplied funds, but must execute a Form 1014 for each such account. Servicers also are no longer required to (i) notify Fannie Mae of a depository’s ineligible status, (ii) request approval to hold custodial funds in a formerly ineligible, but now compliant, depository, or (iii) request the implementation of a different remedy for an ineligible depository. Servicers still must monitor depositories to ensure they maintain eligibility.
Fannie Mae Announces Numerous Servicing Policy Changes; ULDD Mandate Takes Effect
On July 25, Fannie Mae issued Servicing Guide Announcement SVC-2012-12, which provides notice of miscellaneous changes to the Fannie Mae Servicing Guide related to (i) the MERS Rule 14 Notice, (ii) approved title company requirements for certain states, and (iii) allowable attorney fees. With respect to the MERS Rule 14 notice, servicers will now be required to notify Fannie Mae whenever they are required to send MERS notice of certain MERS-related legal challenges. Fannie Mae announced that it is eliminating the requirement that servicers select a Fannie Mae-approved title company for work performed inArizona,California andWashington. Instead, servicers may select the title company of their choice. Fannie Mae also announced changes to the allowable amount of attorney’s and trustee’s fees in several jurisdictions.
On July 23, the Uniform Loan Delivery Dataset (ULDD) mandate took effect for loans delivered to Fannie Mae and Freddie Mac. Fannie Mae recently provided a notification, and Freddie Mac recently published a Bulletin, outlining updates to their ULDD resources.
Fannie Mae Alters Policies for Preforeclosure Sale Process, Delinquency Management, Default Prevention
On April 25, Fannie Mae issued Servicing Guide Announcement SVC-2012-06, which sets new policies and clarifies several delinquency management and default prevention requirements related to (i) electronic submission of borrower response package documents, (ii) income documentation for employed borrowers, (iii) determining monthly gross income, (iv) modifications of loans secured by leasehold estates, (v) property valuation, and (vi) executing and recording modification agreements. The majority of the changes are effective immediately. The new requirements for determining income are effective for loans evaluated on or after July 1, 2012.
On the same date, Fannie Mae also published Announcement SVC-2012-07 to establish new policies to expedite the preforeclosure sale process. For all conventional mortgage loans held in Fannie Mae's portfolio, those purchased for Fannie Mae's portfolio but subsequently securitized into Fannie Mae MBS pools, and those originally delivered as part of an MBS pool, the policies (i) establish maximum required response times for preforeclosure sale offers submitted for consideration, (ii) require servicers to provide borrowers with status updates during the evaluation process, and (iii) allow servicers to respond to unsolicited preforeclosure sale offers without first requiring an evaluation for a HAMP modification. Servicers are encouraged to adopt these policies immediately, but must do so no later than June 25, 2012. The Announcement reminds servicers that Fannie Mae may pursue any of its available remedies for failure to comply with these new policies.
Fannie Mae Provides Guidance Regarding Hardest-Hit Fund
On March 6, Fannie Mae issued Servicing Guide Lender Letter LL-2012-02 to all single-family servicers to provide guidance in connection with transition assistance programs under the Hardest-Hit Fund (HHF). Effective immediately, servicers must facilitate the borrowers’ receipt of HHF funds in connection with transition assistance programs on Fannie Mae loans, including those held in a Fannie Mae portfolio or those in an MBS pool with the special servicing option or a shared-risk MBS pool for which Fannie Mae markets the acquired property. The Lender Letter also clarifies policies related to implementation of the HHF unemployment, reinstatement, and loan modification assistance programs, including clarifications regarding (i) collection and solicitation activity, (ii) foreclosure actions, and (iii) servicer obligations when dealing with housing finance agencies.