By Jennifer Garofalo, CPA & President, American Mortgage Professionals
(March 5, 2008)—Fannie Mae is now offering a new program to help troubled borrowers bring delinquent mortgages current. HomeSaver Advance provides funds to cure arrearages of principal, interest, taxes, and insurance (PITI), as well as other miscellaneous fees.
HomeSaver Advance is an unsecured loan, payable over 15 years at a fixed rate of 5% with no payments or interest accrual for the first six months. It is designed for qualified borrowers who have fallen behind on their mortgage, but are able to resume payments once their loan is brought current by the advance.
HomeSaver Advance Highlights:
-- the maximum loan amount is the lesser of $15,000 or 15% of the original unpaid principal balance;
-- the loan is for delinquent PITI (principal, interest, taxes & insurance), escrow advances, and advances for attorney fees and costs and up to 6 months of unpaid homeowners association 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);
-- note rate at a fixed rate of 5% with 6-month no-interest/no-payment period; and
-- amortization period of 14.5 years after the conclusion of the 6-month no-interest/no-payment period.
A HomeSaver Advance can be made for any mortgage loan that is purchased or securitized by Fannie Mae (including a pooled from portfolio loan) if the mortgage loan meets the following criteria:
-- the mortgage is delinquent in an amount equal to or greater than two full payments of PITI (principal, interest, taxes, and insurance);
-- the borrower must have made a minimum of six monthly payments since the date of loan closing;
-- the mortgage may secure a principal residence, second home, or investment property; and
-- the mortgage may generally be any type of loan (i.e., fixed-rate, adjustable-rate, interest-only, bi-weekly or daily simple interest).
HomeSaver Advance does not have a loan-to-value restriction or property valuation requirement.
-- the borrower has successfully resolved the reason for delinquency;
-- the borrower demonstrates a long-term financial capacity to resume making the payments on the first mortgage loan and all other debts, including any subordinate mortgage loans;
-- the borrower has enough income to support an additional monthly payment of at least $200 but does not have the ability to cure the arrearage using a repayment plan within a period of not more than nine months; and
-- borrowers involved in an active bankruptcy proceeding or who have had the debt previously discharged in a bankruptcy action are not eligible.
HomeSaver Advance will be available to all Fannie Mae-approved servicers in April 2008. For more information, call the Fannie Mae Servicing Solutions Center at 1-888-FANNIE8 (1-888-326-6438), option #2.