Fannie Brings New Servicer to HSA Program

The addition of a new loan servicer to Fannie Mae’s (FNM: 1.02 -0.97%) HomeSaver Advance (HSA) loss mitigation program is unrelated to a cease and desist order issued to the program’s original servicer.

Ewing, NJ-based Central Loan Administration and Reporting (CENLAR) has joined North Texas-based Dyck O’Neal, which has serviced the HSA loans since the program was announced in June 2008.

The loans are designed to bring borrowers current on their first lien mortgages secured or owned by Fannie Mae. CENLAR will service new loans issued Friday.

The Georgia Department of Banking and Finance issued a cease and desist order to Dyck O’Neal on June 22. The order alleges the firm originated loans in the state without a license.

A Fannie Mae spokesperson said the addition of CENLAR is unrelated to the cease and desist order, and was planned before the order was issued. HSA loans originated before Friday will continue to be serviced by Dyck O’Neal, however the Fannie Mae spokesperson declined to comment as to how the Georgia order would affect Dyck O’Neal’s standing with the mortgage company in the future.

The HSA loan is a loss mitigation tool for home owners who are able to resume their monthly loan payments once their account is brought current. The 15-year note has a fixed 5% interest rate, and funds can be applied to delinquent principal interest, taxes and insurance (PITI), escrow advances, and advances, and foreclosure and bankruptcy fees and costs, as well as unpaid homeowners association fees.

The change, originally announced in June 2009, comes after Fannie Mae’s conservator, the Federal Housing Finance Agency (FHFA), noted in May that nearly 70% of borrowers that received a HSA loan redefaulted on their mortgage.

Write to Austin Kilgore.

Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.