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Subsequent Workouts and Prior Principal Forbearance

This job aid covers what to do with loans that had a loan modification that included principal forbearance and is now being considered for a subsequent workout, and meets the following:

  • Has been reported to  Fannie Mae's servcing solutions system,
  • Is in closed or completed status, and
  • Has successfully bridged to LSDU.

Servicers must be mindful of two of the calculations associated with new cases in which a subsequent workout is generated:

  1. Any MTMLTV requirements for a modification campaign should be calculated based on the gross unpaid principal balance (UPB) (Actual UPB + any previous forbearance amounts) for the subsequent modification.

  2. Any delinquent interest that will be capitalized on a subsequent modification or assessed on a subsequent workout, such as a short sale or deed-in-lieu, should not include any previous forbearance amounts (i.e., delinquent interest is calculated based on the Gross UPB minus previous modified principal forbearance amount or Net UPB).

When a case is submitted to HSSN, it will pull in the gross UPB which will include any Principal Forbearance from LSDU. HSSN will subtract the Principal Forbearance from the gross UPB when calculating the delinquent interest, if applicable.  

Subsequent Loan Modification

To determine if the case is a subsequent modification with principal forbearance and to complete the appropriate delinquent interest calculations, take the following steps:

  1. From the case entry screen, find the section, Investor Reporting Data Source

    .
  2.  If the Principal Forbearance Amount (Previous Modification) field is populated, this is your indicator that the case is a subsequent modification with principal forbearance.
  3. Ensure the correct delinquency interest amount is calculated by subtracting the amount appearing in the Principal Forbearance Amount (Previous Modification) field from the amount appearing in the Last Reported UPB to Fannie Mae field.

Subsequent Standard Short Sale / Mortgage Release™, and Other Workouts

The same premise applies for all other workout types. You will need to ensure that delinquent interest calculations are self-calculated and manually updated if principal forbearance was previously applied. Do not report any previously forbeared amounts in any case entry fields not labeled as such.