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Servicers Informed About New Treasury HAMP Waiver

December 16, 2009, Single-Family Advisory E-mail

Today, Fannie Mae, in its capacity as program administrator, posted, on behalf of the U.S. Department of Treasury, a new permanent waiver called "Permanent HAMP Waiver for Elimination of the 25 Percent Trial Period Restart Rule #20091203" for the Home Affordable Modification program (HAMP) on Freddie Mac Servicers may utilize this waiver when servicing mortgages for Freddie Mac, but in doing so, they must comply with the terms of this waiver.

With this permanent HAMP waiver, a borrower is no longer required to restart the Trial Period if the borrower's verified income exceeds the initial income information used by the Servicer to place the borrower in a stated Trial Period Plan by more than 25 percent. The borrower will still be required to be re-evaluated based on the program eligibility and underwriting requirements. If the borrower remains eligible based on the verified income, the Servicer is not required to adjust the Trial Period payment amount or term. However, the permanent modification terms must be based on the borrower's higher verified income.

With the publishing of this new permanent waiver, Workout Prospector® will need to be updated so it does not include the 25 percent tolerance requirement in the long term. In the interim, and until Workout Prospector is updated, Freddie Mac Servicers should follow these steps for borrowers currently being evaluated using verified income for a Trial Period that was initiated using stated income when the 25 percent tolerance is exceeded:

  1. Cancel the existing HAMP modification in Workout Prospector, using HAMP Reject Reason Code 026 Payment Adjustment.
  2. Re-enter the loan data using the verified income in the HAMP screens, and save the model in the Trial Period-Verified Income Approved status. The Evaluation Date should be the original evaluation date.
  3. The Servicer will need to determine the Trial Period Start Date and Trial Period End Date based on the number of payments made by the borrower up to the modification effective date. The Servicer will then need to select the appropriate Trial Period Start Date and Trial Period End Date from the drop down menus. Please note that the Trial Period Start Date in Workout Prospector may not reflect the actual month in which the first Trial Period payment was made.
  4. Per the existing program requirements, the Servicer will then need to rerun the Treasury Net Present Value (TNPV) based on the verified income. However, if you intend to rely on the waiver retroactively for Trial Period Plans that were already restarted, you are not required to run the TNPV Model again. In this case, the Servicer may rely on the TNPV result obtained using the verified income at the time the Trial Period was restarted.

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