As part of an effort to allow more struggling borrowers to receive a mortgage modification, Fannie Mae announced updates to its procedures, which it says will increase both the number of mortgage modifications it supports and the speed in which those modifications are completed.
Fannie Mae said Tuesday that it is updating its Servicing Management Default Underwriter tool, which is used by many Fannie Mae servicers to determine what foreclosure prevention options are available to help a borrower facing financial difficulty, to support policy changes it announced in September.
The policy changes announced in September require that servicers calculate the borrower’s full mortgage obligation, including the outstanding principal balance, past due interest and other arrearages, to determine the borrower’s eligibility for a Fannie Mae standard modification or streamlined modification.
Previously, the outstanding principal balance was the only factor that was used.
As a result of the change, a greater number of borrowers facing financial hardship will qualify for assistance and a greater number will receive additional payment relief under their mortgage loan modification, Fannie Mae said.
Fannie Mae said that Tuesday’s announced update to the Servicing Management Default Underwriter tool will save its servicers the time, expense and complexity of implementing the policy changes on their own – all of which should help more borrowers get a loan modification, faster.
According to Fannie Mae, the Servicing Management Default Underwriter tool provides real-time evaluation capabilities so that servicers can provide “timely, responsive and effective help” to borrowers.
“We are continuously looking for ways to help struggling Fannie Mae borrowers,” said Joy Cianci, senior vice president, 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.”
Fannie Mae said that servicers must implement the new policy by March 1, 2016.
But Fannie Mae made the updated Servicing Management Default Underwriter available as of the weekend of Dec 5, 2015 so that borrowers can benefit from the change more quickly.