Fannie Mae and Freddie Mac Update COVID-19 and Payment Deferral Servicing Guidance
On October 14, 2020, Fannie Mae issued updates to Lender Letter 2020-02, Lender Letter 2020-05, and Lender Letter 2020-07, and Freddie Mac issued Bulletin 2020-39, regarding COVID-19 and payment deferral servicing guidance.
In Lender Letter 2020-02, Fannie Mae clarifies servicer requirements related to disbursing insurance loss proceeds for borrowers impacted by COVID-19. Fannie Mae also clarifies that if a mortgage loan was previously modified pursuant to a Fannie Mae Home Affordable Modification Program (HAMP) modification, the borrower will not lose any future HAMP “pay for performance” incentives if the borrower immediately reinstates the mortgage loan upon expiration of the COVID-19 related forbearance plan, or transitions directly from a COVID-19 related forbearance plan to a repayment plan
In Lender Letter 2020-07, Fannie Mae addresses its COVID-19 payment deferral program and advises that if the mortgage loan was previously modified pursuant to a HAMP modification under which the borrower remains in “good standing,” and the borrower was on a COVID-19 related forbearance plan immediately preceding the COVID-19 payment deferral or had a COVID-19 related hardship immediately preceding the COVID-19 payment deferral, then the borrower will remain eligible to receive any future HAMP “pay for performance” incentives upon acceptance of the COVID-19 payment deferral. Freddie Mac provides similar guidance in Bulletin 2020-39.
Fannie Mae also advises, as does Freddie Mac in Bulletin 2020-39, that if a mortgage loan was originated after March 1, 2020, the effective date of the National Emergency Declaration related to COVID-19, and otherwise meets all criteria to receive a COVID-19 payment deferral, then the servicer must evaluate the borrower for a COVID-19 payment deferral and, if eligible, offer the COVID-19 payment deferral.
In contrast to the guidance provided in connection with a COVID-19 payment deferral, in Lender Letter 2020-05 Fannie Mae addresses its standard payment deferral program and advises that if the borrower’s mortgage loan previously received a HAMP modification and the borrower remains in “good standing,” then the servicer must inform the borrower that a payment deferral will result in the mortgage loan’s withdrawal from HAMP, and the borrower will lose any future HAMP “pay for performance” incentives he or she might otherwise have received. Freddie Mac provides similar guidance in Bulletin 2020-39.
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