711.04C

Joint Workout Process

The following is a general description of how a Joint Workout process might work.

1.  Fact-Finding Meeting

The first contact between the BorrowerBorrowerPerson who is the obligor per the Note. , Fannie Mae and the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. will be a fact-finding meeting and will focus on:

  • explaining the Dual Track Approach and, if the Pre-Negotiation Letter has not been signed, executing the letter;
  • reviewing the documents necessary for the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). or Fannie Mae to complete its due diligence and the Asset Review (for a Primary Risk Mortgage LoanPrimary Risk Mortgage LoanMortgage Loan where Fannie Mae bears all losses or where the Lender and Fannie Mae share losses. ) or Asset Audit (for a Secondary Risk Mortgage LoanSecondary Risk Mortgage LoanMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted. ); and
  • the BorrowerBorrowerPerson who is the obligor per the Note. ’s explanation of its requested relief.

2.  Fannie Mae and Lender Meeting

A separate meeting between Fannie Mae and the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. will focus on:

  • reviewing the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. ’s and Fannie Mae’s due diligence;
  • reviewing the BorrowerBorrowerPerson who is the obligor per the Note. ’s request;
  • formulating a response to the BorrowerBorrowerPerson who is the obligor per the Note. ’s request with emphasis on the source and use of funds necessary to implement the Joint Workout; and
  • the impact of the Joint Workout on the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. ’s servicing and loss sharing obligations to Fannie Mae and any modifications to each that need to be made.

It is important that any differences between Fannie Mae and the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. be resolved at this meeting.  If the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. ’s contribution to the Joint Workout or a modification to its servicing or loss sharing obligations must be documented, this must be included in a separate document between Fannie Mae and the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. .

3.  Workout Meeting with Borrower

If a Joint Workout appears feasible, Fannie Mae and the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. will schedule a workout meeting with the BorrowerBorrowerPerson who is the obligor per the Note. .  All parties, including Fannie Mae, the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. , the BorrowerBorrowerPerson who is the obligor per the Note. , and their respective legal counsel, must attend and must allow enough time to facilitate a workout.  Those in attendance must have authority to execute documents pursuant to a signed Pre-Negotiation Letter.  Experience indicates that to be most productive, the workout meeting should start early in the morning and continue until a deal is reached or the parties agree to disagree.

4.  Letter of Intent

If agreement is reached on all of the terms of the Joint Workout, counsel will draft a non-binding letter of intent, to be executed during the workout meeting.  This letter of intent will set forth each party’s agreements and obligations until the formal, written modification documents are completed.  The letter of intent must be specific enough to fully reflect the intent of the parties (other than any modifications to the LenderLenderPerson approved by Fannie Mae to sell or service Mortgage Loans. ’s servicing or loss sharing obligations).  Until the formal modification documents are completed and executed by all parties, there has been no modification of the terms of the Non-Performing Mortgage LoanNon-Performing Mortgage LoanMortgage Loan that is subject to an uncured default. or the BorrowerBorrowerPerson who is the obligor per the Note. ’s obligations.