Use Fannie Mae's HomeSaver Advance to Stop Foreclosure

News Release from Fannie Mae. On Feb 27, 2008, Fannie Mae (FNM/NYSE) announced  that, as part of its HomeStayTM initiative to support its mortgage servicers as they provide at-risk borrowers with refinancing and loan workout assistance, it is offering a new option — HomeSaver AdvanceTM. 

HomeSaver Advance is designed to help qualified borrowers bring delinquent mortgages current and keep their homes. With HomeSaver Advance, servicers can now offer an unsecured, personal loan that will enable a qualified borrower to cure the payment default on a mortgage loan that Fannie Mae owns or has securitized, with fewer up-front costs and generally in less time.

"HomeSaver Advance will help Fannie Mae streamline its loss mitigation efforts and offer loan servicers a new way to cope with a delinquent loan," said Mike Quinn, Fannie Mae Senior Vice President for Single-Family Credit Risk Management. "Our research shows that most borrowers become delinquent because of a temporary life event or hardship. This loan can offer these borrowers another alternative, and help prevent a temporary setback from becoming a foreclosure."

HomeSaver Advance will provide Fannie Mae with an enhanced ability to manage credit risk and conserve capital during the housing downturn. Fannie Mae anticipates that HomeSaver Advance will reduce the number of delinquent mortgage loans it purchases from its mortgage-backed securities trusts and the fair value losses it would record in connection with those purchases.

HomeSaver Advance is just one of a variety of workout options that Fannie Mae's servicers can offer to borrowers. HomeSaver Advance is being rolled out and should be available to all Fannie Mae Servicers by April 15, 2008. 

HomeSaver Advance Highlights

• Loan amount up to the lesser of $15,000 or 15% of the original UPB for delinquent PITI, escrow advances, and advances for attorney fees and costs and up to 6 months of unpaid HOA 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)

• Truth in Lending Statement and unsecured promissory note are executed at time of agreement with borrower

• Note rate at a fixed rate of 5% with 6-month no-interest/no-payment period

• Amortization period of 14.5 years after the conclusion of the 6-month no-interest/no-payment period

• Workout fee paid to servicer is $600

• Fannie Mae will contract with a third party to service HomeSaver Advance promissory notes

Loan Eligibility

A HomeSaver Advance can be made in connection with 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 principal, interest, taxes, and insurance;

• The mortgage must be seasoned with a minimum of six monthly payments made since the date of loan closing;

• The mortgage may secure a principal residence, second home, or investment property—owner occupancy is not required; 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.

Borrower Eligibility

Servicers must also ensure their borrower meets the following qualifications:

• 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 (verbal confirmation of financial capacity is acceptable);

• The borrower has surplus 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;

• The borrower is willing to participate in HomeSaver Advance; and

• The borrower does not currently have an outstanding HomeSaver Advance note; the HomeSaver Advance option may only be used once during the life of the particular first mortgage loan.

Borrowers involved in an active bankruptcy proceeding or who have had the debt previously discharged in a bankruptcy action are not eligible for this loss mitigation option.

To download a copy of teh Fact Sheet of the Fannie Mae's HomeSaver Advance, click HERE

To get more help on stop home foreclosure, go to http://foreclosure-help-centers.com

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