TopMortgage Compliance Update (1)
  June 4, 2010
                                       Fannie: Alternative Modification™ Extended  

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Overview

On June 3, 2010, Fannie Mae issued Lender Letter LL-2010-07, the purpose of which is to extend the eligibility timeline provided in LL-2010-04 and clarify certain requirements for participation in the Alt Mod™ program.  

The Alternative Modification program (Alt Mod™), introduced on March 18, 2010 in LL-2010-04, is an alternative to the Home Affordable Modification Program (HAMP) for those borrowers who were eligible for and accepted into a HAMP trial period plan and completed all trial period payments, but who were subsequently not offered a HAMP permanent modification because of eligibility restrictions.

Highlights

Revised Eligibility Timeline
 
Eligible borrowers who failed to qualify for a permanent HAMP modification but successfully completed ALL of the trial period plan payments before LL-2010-04 was issued on March 18, 2010, must be sent an Alt Mod™ offer no later than June 18, 2010. Borrowers  who are unable to submit ALL non-capitalized post-trial period payments will not be eligible for the Alt Mod™.

Timing of Borrower Solicitation and Follow Up

Borrowers who complete their trial period plan payments and who are determined to be ineligible for a permanent HAMP modification, but eligible for Alt Mod™, must be sent offers within 10 days of their completion of the HAMP trial period plan or within 10 days of the expiration of the 30-day HAMP Borrower Notice (Notice of Non-Approval).

Once the HAMP trial period has been completed, the service may send an Alt Mod™ Offer to an eligibility borrower subject to receipt of specified documentation, such as: first payment for the Alternative Modification; Hardship Affidavit (or similar document); any remaining documentation required to verify borrowers income; and, executed Loan Modification Agreement.

Servicer follow-ups, by mail and phone, are required for borrowers who do not respond to the Alt Mod™ offer in accordance with specified follow-up timelines.

Mortgage Insurer Approval

Until Fannie Mae obtains a delegated authority agreement from a mortgage insurer on behalf of all servicers, the servicer must obtain approval through either their delegations from each mortgage insurer or, if not available, on a case-by-case basis.

Borrowers Ineligible for Alt Mod™

Borrowers who are not eligible for Alt Mod™ may not be considered for any other permanent modification without the prior written consent of Fannie Mae. Instead, the servicer must attempt to structure a repayment plan to bring the mortgage loan current within 12 months or proceed with foreclosure prevention alternatives or, if necessary, foreclosure.


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Extension to Fannie Mae's Alternative Modification™ to the Home Affordable Modification Program

LL-2010-07, June 3, 2010

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