Fannie Mae will eliminate its HomeSaver Advance (HSA) Program effective Sept. 30 as modifications have increased, according to an announcement this week. Fannie launched the program in February 2008 to help qualified borrowers bring delinquent mortgages current. With it, servicers could offer an unsecured personal loan that the borrower used to cure defaulted payments on a mortgage Fannie had securitized. The idea was to reduce up-front costs on that personal loan and reduce the time spent modifying a securitized mortgage. Fannie capped the personal loan amount at $15,000 or 15% of the original unpaid principal balance. The HSA loan was also used to pay up to six months of homeowner association dues. According to Fannie, HomeSaver was the preferred option to a “capitalization-only” modification, but as the number of workouts increased, the number of HAS loans purchased by Fannie “has been substantially reduced.” Government-sponsored enterprise (GSE) servicers have conducted more than 28,000 permanent modifications through the Home Affordable Modification Program (HAMP) as of June. There are more than 169,000 HAMP-eligible mortgages in their portfolios. Fannie also changed its deed-in-lieu of foreclosure policy. Before, a servicer was not allowed to recommend a voluntary deed-in-lieu until the property has been listed for sale at market value for less than three months without a reasonable offer. Fannie announced this week that servicers no longer have to wait to make the recommendation. Write to Jon Prior.

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