Fannie Mae Introduces HomeSaver Advance
Fannie Mae Introduces HomeSaver AdvanceTM;
Mortgage Workout Option Designed to Help Delinquent Borrowers
https://www.efanniemae.com/sf/servicing/pdf/homesaveradvance.pdf
WASHINGTON DC — Fannie Mae (FNM/NYSE) announced today that, as part of its HomeStayTM initiative to support its mortgage servicers as they provide at-risk borrowers with refinancing and loan workout assistance, it is offering a new option — HomeSaver AdvanceTM.
HomeSaver Advance is designed to help qualified borrowers bring delinquent mortgages current and keep their homes. With HomeSaver Advance, servicers can now offer an unsecured, personal loan that will enable a qualified borrower to cure the payment default on a mortgage loan that Fannie Mae owns or has securitized, with fewer up-front costs and generally in less time.
“HomeSaver Advance will help Fannie Mae streamline its loss mitigation efforts and offer loan servicers a new way to cope with a delinquent loan,” said Mike Quinn, Fannie Mae Senior Vice President for Single-Family Credit Risk Management. “Our research shows that most borrowers become delinquent because of a temporary life event or hardship. This loan can offer these borrowers another alternative, and help prevent a temporary setback from becoming a foreclosure.”
HomeSaver Advance will provide Fannie Mae with an enhanced ability to manage credit risk and conserve capital during the housing downturn. Fannie Mae anticipates that HomeSaver Advance will reduce the number of delinquent mortgage loans it purchases from its mortgage-backed securities trusts and the fair value losses it would record in connection with those purchases.
HomeSaver Advance is just one of a variety of workout options that Fannie Mae’s servicers can offer to borrowers. HomeSaver Advance is being rolled out and should be available to all Fannie Mae Servicers by April 15, 2008. Please click here for HomeSaver Advance fact sheet.
A New Loss Mitigation Option for Delinquent Mortgages
HomeSaver Advance™ is an extension of Fannie Mae’s HomeStay™ initiative — a multi-faceted initiative that helps lenders and servicers meet the needs of today’s challenging market. HomeSaver Advance is the latest example of our ongoing commitment to flexible servicing policies and homeownership preservation.
HomeSaver Advance, an unsecured personal loan, is a new loss mitigation alternative available to approved Fannie Mae servicers for eligible borrowers designed to bring a delinquent loan current. It provides funds to cure arrearages of principal, interest, taxes, and insurance (PITI), as well as other advances and fees as listed in the Highlights section below. HomeSaver Advance is documented by a borrower-signed promissory note, payable over 15 years at a fixed rate of 5% with no payments or interest accrual for the first six months.
HomeSaver Advance is designed for qualified borrowers who have fallen behind on their mortgage, but are able to resume timely payments once their loan is brought current by the advance. It helps simplify and streamline the workout process for applicable loans, as it provides an option for earlier resolution of delinquent loans.
HomeSaver Advance Highlights
Loan amount up to the lesser of $15,000 or 15% of the original UPB for delinquent PITI, escrow advances, and advances for attorney fees and costs and up to 6 months of unpaid HOA fees (12 months, where the HOA fee is paid once per year)
Advances may not include late charges or other ancillary fees and costs
The full loan amount is applied directly to arrearage (borrower never receives funds in hand)
Truth in Lending Statement and unsecured promissory note are executed at time of agreement with borrower
Note rate at a fixed rate of 5% with 6-month no-interest/no-payment period
Amortization period of 14.5 years after the conclusion of the 6-month no-interest/no-payment period
Workout fee paid to servicer is $600
Fannie Mae will contract with a third party to service HomeSaver Advance promissory notes
For More Information
HomeSaver Advance will be available to all Fannie Mae-approved servicers in April 2008
