Legal Alert

Fannie Mae Updates COVID-19 Payment Deferral Guidance

by the Mortgage Banking Group
May 28, 2020

As previously reported on May 13, 2020, Fannie Mae and Freddie Mac announced a COVID-19 payment deferral that was developed at the direction of the Federal Housing Finance Agency. Servicers may begin to evaluate borrowers for a COVID-19 payment deferral starting July 1, 2020. On May 27, 2020, Fannie Mae issued a revised version of Lender Letter 2020-07 to update the guidance regarding the COVID-19 payment deferral.

In connection with a COVID-19 payment deferral, the new guidance addresses Fannie Mae requirements with regard to (1) the reporting of a delinquency status code for the loan, (2) the reporting of an eligible COVID-19 payment deferral case, and (3) the reporting on the loan after a deferral. Fannie Mae cautions that if the servicer does not remit and report via a Loan Activity Record the full monthly contractual payment at least one business day prior to the last day of the month, the servicer will not be able to complete the COVID-19 payment deferral case. Fannie Mae also advises that if the unpaid principal balance (UPB) or loan paid installment (LPI) reported in Fannie Mae’s servicing solutions system prior to application of a COVID-19 payment deferral does not agree with the last reported UPB or LPI in Fannie Mae’s investor reporting system, the COVID-19 payment deferral will not be processed in Fannie Mae’s investor reporting system until the discrepancy is resolved.

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