Fannie Mae issued a notice to its mortgage servicers to postpone scheduled foreclosure proceedings for around 45 days for those unemployed borrowers who were approved for receiving financial assistance through Hardest Hit Fund programs.
For those who may not know, Fannie Mae is one of the government sponsored enterprises, or GSE in short, chartered by Congress. The mission of Fannie Mae is to provide affordability, stability, and liquidity to the U.S. housing and mortgage market. As per recently released directive by GSE, if a servicer is notified by a HFA that one or more borrowers have been approved for assistance, then the servicer is not supposed to refer the mortgage to foreclosure or carry out a foreclosure, which may have been scheduled, for 45 days. The current notice is an update to the Fannie Mae’s other directive from October.
The previous directive did not give clear-cut instructions on adjourning foreclosure for the recipients of Hardest-Hit Fund, with the exception of where a foreclosure sale had been already scheduled. In such a case, the GSE instructed that the foreclosure proceedings should not be suspended unless the servicers were in actual receipt of funds from the HFA, in order to cover the mortgage payment from borrower.
The 19 states receiving HFA funds are: Arizona, Alabama, Florida, California, Ohio, Georgia, Indiana, Illinois, Michigan, Kentucky, Nevada, Mississippi, North Carolina, New Jersey, Rhode Island, Washington, D.C, Oregon, Tennessee, and South Carolina.
The directive also went on to say that if a mortgage was permanently modified under the HAMP or Home Affordable Modification Program, a borrower who later becomes unemployed can use a Hardest-Hit Fund to pay their monthly mortgage payments.
If the borrower is still unemployed and the unemployment program completes, the servicer would be required to evaluate the borrower for one of the foreclosure prevention alternatives as given by the Fannie Mae, including forbearance.
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