On July 20th, Fannie Mae released Announcement 06-08 titled, "Servicer Repayment Plan Incentive Fee"

Fannie Mae will be compensating servicers for the successful completion of repayment plans. A $200 incentive fee will be paid to servicers for each repayment plan that meets specific criteria listed below, and successfully brings a mortgage current.

The  goal of this initiative is to further encourage early loss mitigation efforts by compensating servicers for the work involved in handling repayment plans.

In order for a mortgage to be eligible for the repayment plan fee, the following criteria must be satisfied:

• The mortgage must be a conventional first or second mortgage for which Fannie Mae bears the risk of loss. 
• The mortgage must be 60 or more days delinquent when first reported with a Delinquency Status Code 12, Repayment Plan, by the servicer. 
• The mortgage must be brought current upon the successful completion of the repayment plan. 
• Once a repayment plan fee has been paid on a mortgage, a 12-month period must elapse from the date the mortgage became current before another repayment plan fee will be paid on that mortgage.

The following mortgages are not eligible for the repayment plan;

• Mortgages that are first reported with a Delinquency Status Code 12 and brought current in the same month

• Mortgages that are paid-in-full or repurchased after the Delinquency Status Code 12 is reported and before the mortgage becomes current.

The repayment plan may include any accrued late charges due when the plan is established. However, servicers are expected to waive late fees accrued during the repayment plan period as long as the borrower continues to meet the terms of the repayment plan.

After a repayment plan is established, the following criteria must be satisfied:

• A servicer must report the repayment plan using the Home Saver Solutions® Network ("HSSN") by the second business day of the month following the month the repayment plan was established. 
• A servicer must continue to report each month that the borrower is on a repayment plan until the mortgage becomes current, the borrower defaults on the terms of the repayment plan, or the mortgage is liquidated.

Fannie Mae will review eligibility for the repayment plan fee and make the final determination based on information provided by the servicer; therefore, servicers need not submit requests for payment of repayment plan fees. Payments on eligible mortgages will be sent to servicers on a monthly basis.

Mortgages reported after August 1, 2006 with a Delinquency Status Code 12, Repayment Plan that meet the aforementioned  criteria will be eligible for the repayment plan fee.

Servicers are advised to contact their Servicing Consultant with any questions regarding this announcement.

To view the Announcement, including the revised section of the Servicing Guide (Attachment to the Announcement) please click on the following link.

Fannie Mae Announcement 06-08 Servicer Repayment Plan Incentive Fee