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Fannie Mae and Freddie Mac to Align Guidelines for Servicing Delinquent Mortgages

May 7th, 2011 6:44 AM by Lehel S.

Fannie Mae and Freddie Mac to Align Guidelines for Servicing Delinquent Mortgages
Updated Framework to Include Servicer Incentives and Penalties
Washington, DC – Federal Housing Finance Agency Acting Director Edward J. DeMarco has
directed Fannie Mae and Freddie Mac (the Enterprises) to align their guidelines for servicing
delinquent mortgages they own or guarantee. The updated framework will establish uniform
servicing requirements as well as monetary incentives for servicers that perform well and
penalties for those that do not.
“FHFA’s directive to align Enterprise policies for servicing delinquent mortgages should result
in earlier servicer engagement to identify the best solution available for homeowners, given
their individual circumstances,” DeMarco said.
The updated guidelines also address the so-called “dual track” by requiring servicers to contact
borrowers as soon as they become delinquent and focus solely on remediating that delinquency. 
The foreclosure process may not commence if the borrower and servicer are engaged in a goodfaith effort to resolve the delinquency. The servicer must conduct a formal review of each case
to ensure a borrower has been considered for foreclosure alternatives before the loan is referred
for foreclosure. Even after foreclosure processing begins, financial incentives are provided to
encourage servicers to continue to help borrowers pursue a foreclosure alternative.
Consistent with statements recently issued by federal and state regulators, this initiative is
intended to deal with identified problems in mortgage servicing. The updated framework will
streamline and expedite borrower outreach, align mortgage modification terms and
requirements, and establish a consistent schedule of performance-based incentive payments
and penalties. Fannie Mae and Freddie Mac will each issue detailed guidelines to their servicers
in the second and third quarters of 2011.
“Once fully implemented by the servicing industry, the Enterprises’ aligned policies should give
homeowners a greater understanding of the process and faster resolution by requiring earlier
contact, more frequent communication, and prompt decisions,” said DeMarco.  “Equally
important, the newly aligned policies will minimize taxpayer losses by ensuring that Enterprise
loans are serviced efficiently and fairly.”
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Link to Frequently Asked QuestionsLink to Fannie Mae Notice to Servicers
Link to Freddie Mac Notice to Servicers
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. 
These government-sponsored enterprises provide more than $5.9 trillion in funding for the U.S. mortgage markets
and financial institutions
Posted in:General
Posted by Lehel S. on May 7th, 2011 6:44 AM

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