Fannie Mae has updated its imminent default guidance for loans evaluated for the Home Affordable Modification Program (HAMP), according to Announcement SVC-2010-02, dated Feb. 1.

The announcement introduces the use of Freddie Mac's Imminent Default Indicator (IDI) through Fannie Mae's HomeSaver Solutions Network (HSSN), requires the use of verified income documentation before entering the borrower into a trial period plan and changes the amount of maximum cash reserves that are allowed in the imminent default screen as outlined in Announcement 09-05R.

The IDI is a statistical model that predicts the likelihood of default or serious delinquency for mortgage loans that are less than 60 days past due.

In addition, Announcement 09-05R instructed servicers to use the imminent default screen to evaluate borrowers who are current or less than 30 days delinquent. Fannie Mae is changing the requirement for the imminent default screen to require an imminent default evaluation for all borrowers who are either current or in default but less than 60 days delinquent. This policy change achieves consistency in the treatment of Fannie Mae loans with the treatment of non-government-sponsored enterprise loans under the Treasury Department’s Supplemental Directive 09-01, Fannie Mae says.

Servicers of conventional mortgage loans held in Fannie Mae's portfolio that are part of a mortgage-backed security (MBS) pool with the special servicing option or a shared-risk MBS pool for which Fannie Mae markets the acquired property, must utilize IDI when making an imminent default evaluation for borrowers who are current, as well as borrowers whose mortgage loans are in default but less than 60 days delinquent.

Fannie Mae servicers who are required to use IDI by March 1, 2010, by other investors must implement the use of IDI for mortgage loans owned or securitized by Fannie Mae on the same date. All other servicers must implement the use of IDI as soon as possible but no later than June 1, 2010.

The full announcement is available on efanniemae.com.

SOURCE: Fannie Mae