18.104.22.168 Forbearance Plan Requirements
For borrowers who were current or fewer than thirty-one days’ delinquent at the time of the eligible disaster, and who can resume making the contractual monthly payments on the mortgage, the servicer must first consider the borrower for an Extend Modification137 and then next consider the borrower for a Disaster Relief Modification.138
The Extend Modification extends the term of the mortgage by the number of months of the forbearance, but may increase the monthly payment due to repayment of escrow amounts through repayment of up to five years.139
The Disaster Relief Modification capitalizes arrearages and incrementally extends the mortgage term until the modified principal and interest (P&I) equals the pre-modified contractual principal and interest (P&I) payment amount (the actual post-modified P&I may be slightly less than the pre-modified P&I if the servicer is unable to attain an exact match based on the term extension).140
For a borrower who is fewer than ninety days’ delinquent, a complete Borrower Response Package (BRP) must be submitted to evaluate for a flex modification.141
The servicer must evaluate for a streamlined offer for a flex modification using Freddie Mac’s disaster related requirements if a borrower meets the following conditions: the borrower is ninety days’ delinquent or greater, but was current or fewer than thirty-one days’ delinquent at the time of the eligible disaster, and has rejected all previous options, including a disaster relief modification, or has not been in established contact with the servicer.
Disaster requirements for the flex modification permit the servicer to waive most eligibility criteria. However, there are exclusions from eligibility.142
When offering forbearance relief, a servicer must utilize the requirements set forth in chapter 9203 of the Freddie Mac Single-Family Seller/Servicer Guide, which—importantly—includes the opportunity to resolve delinquencies through a simple reinstatement process.143 Additionally, when the borrower is unable to send or receive documentation, the servicer may waive the requirement that the forbearance plan be in writing.144
137 Freddie Mac, Bulletin, Servicing Requirements to Assist Borrowers Impacted by Eligible Disasters (Nov. 2, 2017), available at www.freddiemac.com.
138 Freddie Mac Single-Family Seller/Servicer Guide § 9206.4, Disaster Relief Modification.
139 Freddie Mac, Bulletin, Servicing Requirements to Assist Borrowers Impacted by Eligible Disasters (Nov. 2, 2017), available at www.freddiemac.com.
140 Freddie Mac Single-Family Seller/Servicer Guide §§ 8404.6(a) and 9206.4, Flex Modification.
141 Freddie Mac, Freddie Mac Disaster Relief—Hurricanes Harvey & Irma, available at www.freddiemac.com.
142 Details on the Flex Modification waterfall are in Freddie Mac Single-Family Seller/Servicer Guide § 9206.10; complete requirements for the Flex Modification can be found in chapter 9206.
143 Freddie Mac Single-Family Seller/Servicer Guide § 9203.1, Reinstatements and Relief Options.
144 Freddie Mac Single-Family Seller/Servicer Guide § 8404.4(c).