711.03
| 711.03A | |
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With any Non-Performing Mortgage LoanNon-Performing Mortgage LoanMortgage Loan that is subject to an uncured default. in Monetary or Payment DefaultPayment DefaultFailure of a Borrower to pay when due and in full any payment required for the Mortgage Loan, including, but not limited to, principal, interest, late charges, default interest, fees, prepayment premium, escrows, or other collateral accounts for taxes, insurance premiums, and assessments, other…, the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. may enter into an arrangement with the BorrowerBorrowerPerson who is the obligor per the Note. in which the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. agrees to make its own loan and advance its own funds to the BorrowerBorrowerPerson who is the obligor per the Note. to cure the defaults (a “Lender Workout”).
Examples of instances where a Lender Workout may be appropriate include:
- PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). cash flow shortfall is temporary in nature;
- the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. becomes delinquent within the first year following the sale of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. to Fannie Mae;
- the cost of the Lender Workout to the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. may be less than the cost to the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. of a Joint Workout or foreclosure; or
- Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. at Loss Level II or III.
A Lender Workout must be documented as a separate loan from the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. to the BorrowerBorrowerPerson who is the obligor per the Note. to meet the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). ’s operating needs and fully cure the Monetary or Payment DefaultPayment DefaultFailure of a Borrower to pay when due and in full any payment required for the Mortgage Loan, including, but not limited to, principal, interest, late charges, default interest, fees, prepayment premium, escrows, or other collateral accounts for taxes, insurance premiums, and assessments, other…. The LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. may place whatever restrictions it deems appropriate on the disbursement and use of the funds. The Lender Workout loan may be unsecured, secured by a subordinate lien against the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). (with Fannie Mae’s prior approval), or secured by other collateral. Any subordinate lien, by its express terms, must be fully subordinated to all Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. in favor of Fannie Mae, and must comply with the requirements for junior liens included in Parts I, II, and III. The Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. evidencing the Lender Workout loan must clearly indicate that the loan does not in any way affect the status of the Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. owned by Fannie Mae or any of Fannie Mae’s rights or remedies in connection therewith, and that the amount owed under the Lender Workout is owed only and directly to the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. and is not added to Fannie Mae’s Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. (s).
1. Primary Risk Mortgage Loans
Any sums lent by the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. or expenses incurred by the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. in a Lender Workout will not be included in the final settlement of loss for the Primary Risk Mortgage LoanPrimary Risk Mortgage LoanMortgage Loan where Fannie Mae bears all losses or where the Lender and Fannie Mae share losses. .
2. Secondary Risk Mortgage Loans
Any losses incurred on a Secondary Risk Mortgage LoanSecondary Risk Mortgage LoanMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted. as a result of the Lender Workout will be the obligation of the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. but will not be applied as a credit against the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. ’s recourse obligation.
| 711.03D | |
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Before committing to a Lender Workout with the BorrowerBorrowerPerson who is the obligor per the Note. , the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. must obtain the written approval of Fannie Mae Special Asset ManagementSpecial Asset ManagementTeam that performs the work of the Special Servicer for Fannie Mae that can be contacted at [email protected] . Fannie Mae Special Asset ManagementSpecial Asset ManagementTeam that performs the work of the Special Servicer for Fannie Mae that can be contacted at [email protected] will have 10 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, a day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. from receipt of written notice from the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. , containing the terms of the Lender Workout to approve or disapprove the Lender Workout Course of ActionCourse of ActionFor Non-Performing Mortgage Loans, loss mitigation activities per Part V: Servicing and Asset Management, Chapter 7. . With its notice of its intention to enter into a Lender Workout, the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. must deliver a copy of the proposed Lender Workout documents, including subordinate lien documentation, if applicable, to Fannie Mae Special Asset ManagementSpecial Asset ManagementTeam that performs the work of the Special Servicer for Fannie Mae that can be contacted at [email protected] for review and approval prior to execution. The purpose of this review is to determine that:
- the Lender Workout and related documents:
- do not modify or waive any of the terms of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. (s), including the NoteNoteInstrument evidencing a Mortgage Loan obligation, including Form 6010 (series), any other note approved by Fannie Mae, and all applicable addenda, schedules, and exhibits. rate, term, or amortization;
- do not modify or waive any of the terms of the Collateral AgreementsCollateral AgreementsAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. ;
- do not limit, waive, or lessen Fannie Mae’s rights, claims, or remedies under its Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the obligations under the Loan Documents. including, but not limited to, obtaining a priority claim in a bankruptcy proceeding as a result of lending money to the BorrowerBorrowerPerson who is the obligor per the Note. ;
- do not prevent, or otherwise limit, Fannie Mae from enforcing its rights under the Mortgage Loan DocumentsMortgage Loan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. in the event the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. defaults under its workout with the BorrowerBorrowerPerson who is the obligor per the Note. ; or
- do not violate any bond documentation or SecuritySecurityMBS, PFP MBS, or REMIC. rules, if applicable;
- the term of the Lender Workout loan does not exceed 24 months; and
- Fannie Mae is satisfied with the performance of any previous Lender Workouts and the total of all Lender Workouts does not materially impact the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. ’s financial condition.
If the Non-Performing Mortgage LoanNon-Performing Mortgage LoanMortgage Loan that is subject to an uncured default. has been accelerated prior to notice of the Lender Workout, it is in Fannie Mae’s sole discretion to agree to accept less than the full payoff and reinstate the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. .
If Fannie Mae approves the Lender Workout, the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. must deliver a copy of the executed Lender Workout documents, including a Subordination Agreement, if applicable, to Fannie Mae Special Asset ManagementSpecial Asset ManagementTeam that performs the work of the Special Servicer for Fannie Mae that can be contacted at [email protected] and to Fannie Mae Asset Acquisition and Custody. If the BorrowerBorrowerPerson who is the obligor per the Note. subsequently defaults under the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. after the Lender Workout, then the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). must follow the procedure outlined in this Chapter for a Non-Performing Mortgage LoanNon-Performing Mortgage LoanMortgage Loan that is subject to an uncured default. as if no Lender Workout occurred.
If a ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g., the originator, the selling Lender, or a third-party servicer). advances P&IP&IPrincipal and interest payments on a Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. with a Monetary or Payment DefaultPayment DefaultFailure of a Borrower to pay when due and in full any payment required for the Mortgage Loan, including, but not limited to, principal, interest, late charges, default interest, fees, prepayment premium, escrows, or other collateral accounts for taxes, insurance premiums, and assessments, other…, but the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement. has not been reported as delinquent on the Multifamily Delinquency System as required in this Chapter, such advances will be considered an unauthorized Lender Workout and will not be considered a Delinquency AdvanceDelinquency AdvanceFor Primary Risk Mortgage Loans and Secondary Risk Mortgage Loans, an amount advanced by a primary servicer in respect of regularly scheduled monthly interest or principal due on 1 or more Mortgage Loans, to the extent required under its Lender Contract. For Secondary Risk Mortgage Loans only, in….
If a Lender Workout is approved, the foreclosure process will continue until the earlier of the curing of the defaults by the Lender Workout or the foreclosure sale. If Fannie Mae approves the Lender Workout, the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. must fully implement the Lender Workout on the approved terms, and thereby cure all defaults, prior to any scheduled foreclosure sale or the conclusion of any other Course of ActionCourse of ActionFor Non-Performing Mortgage Loans, loss mitigation activities per Part V: Servicing and Asset Management, Chapter 7. by Fannie Mae. If the Lender Workout is proceeding and is likely to be consummated, Fannie Mae may agree to reschedule (but not cancel) the foreclosure sale. Any agreement to delay a foreclosure sale or any other Course of ActionCourse of ActionFor Non-Performing Mortgage Loans, loss mitigation activities per Part V: Servicing and Asset Management, Chapter 7. to allow the implementation of the Lender Workout will be solely in Fannie Mae’s discretion.