Wednesday, March 24, 2010

FYI: Fannie Announces "Alt Mod" Requirement

Fannie Mae issued the attached Lender Letter (FNMA Lender Letter LL-2010-04) announcing an alternative to the HAMP modification for borrowers who were eligible for and accepted into a HAMP trial period plan, but were subsequently not offered a HAMP permanent modification because of eligibility restrictions.

For mortgage loans in active HAMP trial period plans initiated prior to March 1, 2010, all Fannie Mae-approved servicers must consider the Alternative Modification ("Alt Mod") prior to the initiation of foreclosure for all eligible borrowers who were not offered a permanent HAMP modification after making payments under a HAMP trial period plan.

All borrowers must meet the eligibility criteria outlined in the attached Lender Letter, including that the mortgage loan is secure by 1-4 family owner occupied property, and that the monthly mortgage payment ratio based on verified income was less than 31%, the target mortgage payment ratio of 31% could not be reached using the standard HAMP modification waterfall, or the borrower failed to provide all HAMP documentation but qualifies for new streamilined documentation under the Alt Mod program.

The policies in the Lender Letter apply to all conventional mortgage loans held in Fannie Mae's portfolio and to mortgage loans that are part of an MBS pool that have the special servicing option or a shared-risk MBS pool for which Fannie Mae markets the acquired property. A borrower that entered into a trial period plan prior to March 1, 2010 will be considered eligible for the Alt Mod as long as the case is submitted to FNMA prior to the final date of the program offering, which is August 31, 2010.

Let me know if you have any questions.  Thanks.


Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874


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