Fannie Mae has released Announcement 09-07 titled, "Updates to the HomeSaver Advance™ Foreclosure Prevention Alternative".

Updates to the HomeSaver Advance™ Foreclosure Prevention Alternative

Introduction

In Announcement 08-14 (dated June 16, 2008), Fannie Mae introduced the HomeSaver Advance™ (HSA), a foreclosure prevention alternative that is designed to cure the delinquency on a first-lien mortgage loan when a repayment plan is not feasible.

This Announcement updates Fannie Mae’s policy related to HSA repurchase and cancellation requirements, and notifies servicers of revisions to the HomeSaver Advance™ Truth-in-Lending Disclosure Statement and Promissory Note (Forms 3721 and 3721.33, referred to as the HSA note) and delivery requirements.

Updates to HSA Note Repurchase and Cancellation Policies
Repurchase Policy

Fannie Mae will require repurchase of HSA notes by the originating servicer if any of the following occurs:

• There are unresolved HSA note errors identified during the certification process that are not remediated by the servicer within 90 calendar days from the notification of such errors.
• Fannie Mae’s HSA designated third-party servicer has not received an HSA note (or a copy of the note with a Lost Note Affidavit in a form satisfactory to Fannie Mae) within 90 days from the notification of the missing HSA note.
• HSA proceeds were improperly applied to the first-lien mortgage loan and the servicer failed to initiate correction of the application within 60 days after the HSA is funded.
• The first-lien mortgage loan is determined to be a regular servicing option loan after the HSA is funded.
• More than one HSA has been funded for the same property or more than two HSAs are funded for the same borrower (for separate properties) to the same lender.
• The HSA note was otherwise originated improperly (e.g., the HSA note was entered into by an estate or an administrator of an estate without Fannie Mae’s prior written approval, the wrong form of the HSA note was used).

Unless the servicer submits an appeal in writing, the servicer must remit repurchase funds as indicated on the repurchase letter within 30 days of the date of the repurchase letter or within a timeframe specified by Fannie Mae. Failure to comply with these repurchase requirements in a timely manner may result in Fannie Mae imposing sanctions or other remedies.

Servicers are reminded that the HSA foreclosure prevention alternative may only be utilized once during the term of a first-lien mortgage loan. Therefore, first-lien mortgage loans for which the servicer repurchased the HSA note are not eligible for another HSA.

After repurchasing the HSA note, the HSA note will be returned to the originating servicer and the originating servicer will be responsible for collections under the note. The originating servicer may continue to leverage Fannie Mae’s designated third-party servicer to perform collections activity; however, the originating servicer will be responsible for compensation of such services. Note: A repurchase transaction must not adversely affect the loan status of the first-lien mortgage, e.g., the servicer cannot reverse payments previously applied.

Cancellation Policy

HSA Case Cancellation

Effective with the date of this Announcement, Fannie Mae will automatically cancel an HSA case in the Home Saver Solutions® Network (HSSN) if a loan is submitted through HSSN’s Workout Profiler, the case remains in a status of “In Review” or “Awaiting Review” for more than 30 days, and the information requested from the servicer has not been submitted. The servicer can subsequently resubmit the case, if necessary.

Additionally, in cases where the servicer has submitted and closed an HSA case but has done so in error (e.g., a properly executed note was never received by the servicer), Fannie Mae will cancel the HSSN case.

HSA Note Cancellation

Fannie Mae may cancel an HSA note for loans submitted in error or where the borrower’s actions impact the viability of the HSA. Examples include, but are not limited to, the following:

• The borrower failed to comply with all terms and conditions of the HSA approval.
• The borrower pays off the first-lien mortgage loan or brings the first-lien mortgage loan current prior to the posting of the HSA proceeds.
• The borrower filed for bankruptcy prior to or on the date the HSA note was executed.
• The amount of the HSA is insufficient to bring the first-lien mortgage loan current.
• The borrower declines the HSA within one month of funding.

A servicer must notify the Fannie Mae HSA designated third-party servicer at hsa@DyckONeal.com as soon as they become aware that a case should be cancelled. In the event a servicer requests to cancel an HSA case more than 60 days after the funding date, Fannie Mae will review the HSA case and related circumstances and make a determination on whether cancellation should be granted or if repurchase of the HSA note is required.

When an HSA note is cancelled, the servicer must reverse the entire HSA loan proceeds applied to the first-lien mortgage loan, as well as payments made to the first-lien mortgage loan after the application of the HSA proceeds. The servicer then must reapply the payments made by the borrower after application of the HSA proceeds and make appropriate adjustments to the loan status.

Upon cancellation of the HSA note, Fannie Mae will draft the entire amount of the proceeds from the servicer’s designated “All Fees for Cash Contracts and MBS Pools” account. First-lien mortgage loans that have had an HSA note cancelled may be eligible for a subsequent HSA provided that all of the eligibility criteria for an HSA are met.

Revised HomeSaver Advance™ Truth-in-Lending Disclosure Statement and Promissory Note (Forms 3721 and 3721.33)

Fannie Mae has revised the HomeSaver Advance™ Truth-in-Lending Disclosure Statement and Promissory Note (Forms 3721 and 3721.33) as follows:

• Changed the APR from 4.64 percent to 4.61 percent.
• Revised the language in the APR section.
• Revised the language related to first payment date.
• Revised the language related to maturity date.
• Revised the language related to prepayment.
• Revised the language related to certification.
• Added a reference number field. The reference number is the Fannie Mae first-lien mortgage loan number.
• Added an offer date field. The servicer must document the date the HSA offer was mailed to the borrower.
• Added a termination date field. Servicers should enter a date that is less than or equal to 30 days from the offer date. As explained in the HSA note, if the servicer does not receive the HSA note by the termination date, the HSA note will not be considered valid. If the servicer determines that the borrower is still eligible for the HSA, a new HSA note will have to be offered and executed.
  

Fannie Mae will enhance HSSN to include the “Offer Date” and “Offer Termination Date” as required entry fields. Once these fields are available, the “1st Paid Installment Date” field will be determined by the “Offer Termination Date” field rather than the “Borrower Note Execution Date” field. In addition, HSSN will reject any HSA cases where the “Borrower Note Execution Date” is after the “Offer Termination Date.” As soon as the effective date for this HSSN enhancement is determined, Fannie Mae will notify servicers.

The servicer of the first-lien mortgage loan must ensure that the HSA note is complete and accurate. This Announcement does not change the submission or endorsement requirements for the HSA note or the required HSA note provisions and repayment terms (refer to Announcement 08-14 for further details).

The updated Form 3721 and Form 3721.33 are available on eFannieMae.com. Servicers are required to begin using the revised HSA notes not later than May 1, 2009. Prior versions of the HSA notes will no longer be accepted on loans closed after that date.

HomeSaver Advance Delivery Inventory Notification

Servicers must provide a completed HomeSaver Advance Delivery Inventory for every delivery package of HSA note(s) submitted for certification review to the Fannie Mae HSA designated third-party servicer at hsa@DyckONeal.com. The HSA Delivery Inventory template is available on eFannieMae.com and is required for deliveries beginning on May 1, 2009, though servicers are encouraged to start this process as soon as possible. Servicers should note that the Inventory contains non-public and confidential information (NPI) and should be handled in a secure manner.

Servicers should contact their Servicing Consultant, Portfolio Manager, or the National Servicing Organization's Servicer Support Center at 1-888-FANNIE5 (1-888-326-6435) if they have any questions about this Announcement. 

To view the Announcement in its entirety, please click here

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 700 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.