Fannie Mae 2009 Annual Report Download - page 47

•Trial Period Required before Modification. Borrowers must satisfy the terms of a trial modification plan
for a trial payment period, typically for at least three months. The modification will become effective
upon final execution of a modification agreement following satisfactory completion of the trial period.
•Preforeclosure Eligibility Evaluation. Servicers have been directed not to proceed with a foreclosure sale
until the borrower has been evaluated for a modification under the program and, if eligible, has been
extended an offer to participate in the program.
Incentive Payments to Servicers. For each Fannie Mae loan for which a modification is completed under
HAMP, we pay the servicer (1) $1,000; (2) an additional $500 if the modified loan was current when it
entered the trial period (that is, if the loan was current but a payment default was imminent); and (3) an
annual “pay for success” fee of up to $1,000 if the modification reduces the borrower’s monthly payment by
6% or more, payable for each of the first three years after the modification as long as the borrower is
continuing to make the payments due under the modified loan.
Incentives to Borrowers. For a permanent modification under HAMP that reduces the borrower’s monthly
payment by 6% or more, we will provide the borrower an annual reduction in the outstanding principal
balance of the modified loan of up to $1,000 for each of the first five years after the modification as long as
the borrower is continuing to make the payments due under the modified loan.
Costs of Modifications. We bear all of the costs of modifying our loans under the program, including any
additional amounts we are required to provide under our guarantees for loans owned by one of our MBS trusts
during a trial payment period or any other mortgage-backed securities for which we have provided a guaranty.
HAMP expires on December 31, 2012.
Our Role as Program Administrator of HAMP
Treasury has engaged us to serve as program administrator for loans modified under HAMP that are not
owned or guaranteed by us. In April 2009, Treasury released guidance to servicers for adoption and
implementation of HAMP for mortgage loans that are not owned or guaranteed by us or Freddie Mac. Freddie
Mac maintains guidelines for modification under the program of loans it owns or guarantees.
Our principal activities as program administrator include the following:
• Implementing the guidelines and policies of the program;
• Preparing the requisite forms, tools and training to facilitate efficient loan modifications by servicers;
• Creating, making available and managing the process for servicers to report modification activity and
program performance;
• Acting as paying agent to calculate and remit subsidies and compensation consistent with program guidelines;
• Acting as record-keeper for executed loan modifications and program administration;
• Coordinating with Treasury and other parties toward achievement of the program’s goals, including assisting with
development and implementation of updates to the program and initiatives expanding the program’s reach; and
• Performing other tasks as directed by Treasury from time to time.
In our capacity as program administrator for the program, we support over 100 servicers that have signed up
to offer modifications on non-agency loans under the program. To help servicers ramp up their operations to
modify loans under HAMP, we have provided information and resources through a Web site dedicated to
servicers under the program. We have also communicated information about the program to servicers and
helped servicers implement and integrate the program with new systems and processes. Our servicer support
as program administrator includes dedicating Fannie Mae personnel to participating servicers to work closely
with the servicers to help them implement the program. We also have established a servicer support call
center, conducted weekly conference calls with the leadership of participating servicers, and provided training
through live Web seminars, recorded tutorials, checklists and job aids on the program Web site.
42