Fannie Mae issued Lender Letter LL-2020-11: Disaster Payment Deferral (Letter). The Letter introduced Disaster Payment Deferral, a new home retention workout option to assist borrowers with a disaster-related hardship. Disaster Payment Deferral allows a borrower to return their mortgage to a current status after up to 12 months of missed payments. Disaster Payment Deferral offers servicers:
- A solution that is easy to explain to borrowers (as the amount of the delinquency moves into a non-interest bearing balance, due and payable at maturity or earlier payoff, with all other terms of the mortgage remaining unchanged);
- No trial period (resulting in fewer borrower touchpoints than required for modifications); and
- An efficient automated process through Servicing Management Default Underwriter for evaluation and decisioning case submissions.
Servicers must begin evaluating borrowers for disaster payment deferral as of October 1, 2020.
Click here to view the Fannie Mae Lender Letter LL-2020-11: Disaster Payment Deferral
