TopMortgage Compliance Update (1)
September 23, 2010
Fannie: Introduces Second Lien Modifications

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Overview
On August 13, 2009, the US Department of Treasury (Treasury) published Supplemental Directive 09-05, introducing the Second Lien Modification Program designed to work in tandem with the Home Affordable Modification Program (HAMP). The Supplemental Directive 09-05 was revised on March 26, 2010.

HAMP and the Second Lien Modification Program (which is named "2MP") are meant to create a "comprehensive solution to help borrowers achieve greater affordability by lowering payments on both first-lien and second-lien mortgage loans."

On September 21, 2010, Fannie issued Announcement SVC-2010-14, which introduces its Second Lien Modification Program and provides guidelines to Fannie servicers.

All Fannie Mae-approved servicers must participate in the program for all eligible Fannie Mae second-lien mortgage loans and must implement the 2MP program no later than January 1, 2011.

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Highlights
Modification Eligibility
  • Borrowers in Bankruptcy
  • Coordination with Other Making Home Affordable Programs
Modification Process
  • Matching Second Liens to HAMP First Liens
  • Reliance on First-Lien Data
  • Standard Modification Steps
  • Compliance with Applicable Laws
  • Borrower Communication
  • Trial Period Requirements
  • Borrower Response
  • Effective Date of 2MP Modification
  • Reclassification or Removal of MBS Mortgage Loans Prior to Effective Date of Modification
  • Borrower Notice
  • 2MP Modification Documents
  • Assignment to MERS
Use of Suspense Accounts and Application of Payments
  • Monthly Statements
Reporting Requirements
  • Reporting to Fannie Mae Through HSSN
  • Reporting to Treasury
  • Reporting to Credit Bureaus
Mortgage Insurers
  • Mortgage Insurer Approval
  • Reporting to Mortgage Insurers
Fees and Costs
  • Servicing Fees
  • Late Fees
  • Administrative Costs
Incentive Compensation
  • Servicer Incentive Compensation
  • Borrower Incentive Compensation
  • Re-default and Loss of Good Standing
Compliance

Record Retention

Transfers of Servicing
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Fannie: Home Affordable Modification Program: Introduction of Second Lien Modification Program, SVC-2010-14
September 21, 2010


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