Fannie Mae, Freddie Mac Update Guidance on Participation in State Hardest Hit Fund Programs

Posted on September 17th, 2012 in Federal Issues, Mortgages By BuckleySandler

On September 12, Fannie Mae issued Servicing Guide Lender Letter LL-2012-06, which requires servicers to accept funds provided on behalf of a borrower under a state housing finance agency Hardest Hit Fund (HHF) modification assistance program. This includes funds provided in connection with a loan “recast,” or re-amortization. Servicers now are permitted to approve a loan recast for a current or delinquent portfolio loan or loan in an MBS pool. Such loan recasts will not be deemed modifications for purposes of determining eligibility for a subsequent modification. With respect to loan modifications involving a change of terms, such as an interest rate reduction or an extension of the term of the loan, servicers may only apply the modification funds in accordance with existing standard or HAMP modification requirements. These changes are effective immediately.

On September 10, Freddie Mac issued Bulletin 2012-17, which, effective immediately, allows servicers to participate in state housing finance agency HHF modification assistance programs that permit a mortgage to be recast (after applying the state funds to pay arrearages and curtail principal). The bulletin also revises participation requirements for modification assistance programs. In addition, for foreclosure sales conducted on or after November 1, 2012, servicers will now have 450 days for allowable delays due to military indulgence under the Sevicemembers’ Civil Relief Act or parallel state laws. Finally, the bulletin announces a technical Servicing Guide change to reflect an increase in the attorney fee limit for foreclosures in Oregon that was implemented earlier this year.

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