Fannie Mae has sent to servicers guidance on the company's Second Lien Modification Program (2MP). Originally announced in August 2009, 2MP encourages servicers to modify second mortgages for borrowers whose corresponding first mortgages have already been modified under the Home Affordable Modification Program (HAMP).
In a separate servicer announcement, the company said it is eliminating unemployment insurance benefits (as well as any other temporary sources of income related to unemployment) as an allowable source of income for borrowers who are being evaluated for a HAMP mod or any other modification. Starting Nov. 1, unemployed borrowers will have to be considered for forbearance plans prior to being evaluated for permanent HAMP modifications.
The 2MP guidelines provide information on which second liens are ineligible for 2MP modification, as well as reporting and documentation requirements. Mortgage liens that would be in the second position were it not for tax liens, mechanic's liens or other non-mortgage-related lien are eligible under 2MP.
Fannie Mae has tapped Lender Processing Services (LPS) to handle the process of matching first and second mortgages. Servicers will have to pay a one-time fee when entering into a direct contract with LPS and a nominal fee each time a second lien is matched to a first, regardless of whether the matching process leads to a completed 2MP modification.
The Fannie Mae guidance also instructs servicers on borrower communication. Servicers are required to inform borrowers that a 2MP modification will not become effective until modification of the first lien becomes effective under HAMP and the borrower has made all trial payments under 2MP.
All Fannie Mae-approved servicers must participate in 2MP for all eligible Fannie Mae second-lien mortgages. Servicers are required to implement 2MP no later than Jan. 1, 2011.
The company's decision to no longer accept unemployment benefits as borrower income under HAMP was announced alongside new terms of the company's forbearance plan. Effective Nov. 1, servicers will have to obtain written approval from Fannie Mae before granting a forbearance period longer than six months.
SOURCE: Fannie Mae