Fannie Adds Investment, Second Homes to Forbearance Plan
Mortgage giant Fannie Mae (FNM) announced that its new Payment Reduction Plan (PRP) provides forbearance for struggling borrowers who are ineligible for the Home Affordable Modification Program (HAMP). Through HAMP, the US Treasury Department provides capped incentives to servicers for the modification of eligible loans on the verge of foreclosure. The PRP will grant transitional support for borrowers who do not qualify for HAMP while more permanent mortgage solutions are determined, according to Brian Faith, a vice president at Fannie Mae. The mortgage principal and interest payments will be reduced by up to 30% for borrowers qualified for PRP, which replaces Fannie’s HomeSaver Forbearance program. PRP reduces the payments by 30% rather than the previous 50% under HomeSaver Forbearance, because permanent solutions are closer to 30%, Faith said. Faith added that non-owner-occupied properties became eligible under PRP, and owners will receive new options and support for their investment properties and second homes – even though they do not fit under the HAMP umbrella. Incentive payments under the PRP were restructured to support the implementation of a more permanent foreclosure prevention solution earlier in the life cycle of the loan, Faith said. Write to Jon Prior.