Fannie Mae Announces New Options for the Struggling Housing Sector

Fannie Mae recently unveiled three new exit options for borrowers involved in the deed-in-lieu of foreclosure process. The guidelines are part of the servicing alignment initiative and mirror policies previously outlined by the Federal Housing Finance Agency for Fannie Mae and Freddie Mac. Fannie also announced it has renamed the deed-in-lieu of foreclosure process as a 'mortgage release' and is using that term throughout the servicing guidebook. The three new exit options for borrowers include (1) immediate move; (2) three-month transition with no rent payment, and (3) 12-month lease with market rent payment.  Servicers will be required to implement the new policies for all loans under consideration on or after March 1, 2013, though Fannie Mae encourages servicers to implement the policy changes earlier. The new requirements are a response to simplify and streamline the Mortgage Release processes. Further, Fannie Mae announced that they are no longer required to obtain written approval when they want to postpone a foreclosure sale on a loan that is more than 12 months delinquent as of the last paid installment date. Every borrower being considered for a Mortgage Release must submit a complete Borrower Response Package unless the borrower qualifies for Streamlined Documentation. The servicer may consider accepting a Mortgage Release from a borrower who is experiencing a financial hardship if other special relief measures or foreclosure prevention alternatives are not feasible. To determine a borrower’s eligibility, the servicer must use the borrower’s delinquency status at the time of the evaluation.
 
In October, Fannie Mae reached delegation agreements with all of its mortgage insurer counterparties. These agreements allow servicers the opportunity to approve and complete short sales and deed-in-lieu of foreclosures without seeking approval from the individual mortgage insurer. Short sales and deed-in-lieus are alternatives in preventing foreclosures and assisting struggling homeowners. These agreements are an important achievement and an effort to stabilize neighborhoods. Borrowers may visit http://www.knowyouroptions.com for foreclosure prevention information and resources. Bella Realty is always available for a confidential consultation to discuss your options.