126.96.36.199.4 How borrowers obtain a Fannie Mae Covid-19 Deferral
Fannie Mae does not require borrowers to submit documentation of hardship or a borrower response package (BRP) or other financial documentation to access this option. Fannie Mae guidelines state that Quality Right Party Contact (QRPC) is required in order to determine basic information about the borrower’s finances, including whether the borrower can afford the pre-forbearance monthly payment. However, if the servicer does not make QRPC with a borrower who is otherwise eligible for a deferral, the servicer must send the borrower a deferral offer within fifteen days after any forbearance ends.61
In determining eligibility for the “blind offer” of a COVID-19 Deferral when there is no QRPC, the servicer can ascertain from its own records whether the borrower was current or less than two months delinquent as of March 31, 2020. The servicer can also tell from its records whether, at the time of an offer, the borrower is at least one month, but not more than eighteen months, in arrears. Notably, the offer is not contingent on the servicer’s first determining that the borrower has a COVID-19 related hardship, that the borrower can now afford the scheduled payment, or that the borrower is unable to reinstate with a lump sum payment or a payment plan.
Fannie Mae proposes a sample form letter for blind offers of a COVID-19 Deferral.62 The letter includes a recommended standard form deferral agreement. The agreement sets out the amount due and terms of repayment. The form solicitation letter and deferral agreement are not mandatory, but reflect what Fannie Mae considers “the minimum level of information that the servicer must communicate.”63 The servicer can require that the borrower sign the deferral agreement. However, Fannie Mae authorizes servicers to allow borrowers to indicate acceptance in several ways. These include by signing and returning the agreement, as well as by any other method the servicer chooses. This would include verbal acceptance. As discussed below, Freddie Mac has authorized acceptance of a unilateral deferral offer simply by making the regularly scheduled payment as directed by the solicitation letter. Evidencing acceptance in this way appears to be consistent with Fannie Mae’s guidelines as well.
In determining the deferral amount, the servicer must include unpaid principal and interest payments (up to twelve months) and any out of pocket escrow and servicing advances. Because the terms are limited to out of pocket advances and not the amount of missed monthly escrow payments, a shortage in the escrow account may occur, which may cause a significant problem for borrowers who believe they should receive their pre-forbearance payment. Fannie Mae has partially addressed this issue by stating “the servicer must spread repayment of the escrow shortage amount in equal monthly payments over a term of up to 60 months, unless the borrower decides to pay the shortage up-front.”64
The borrower must receive a written copy of the deferral, but Fannie Mae is only requiring signature of the forbearance or recording if required to ensure full enforceability of the deferral and to maintain lien status.