Fannie Mae announced new guidelines for servicers regarding temporary interest rate buydowns. Borrowers must receive a notification detailing the upcoming interest rate increase 90 days before it occurs. Specific directives include applying buydown funds to manage arrearages and adhering to updated loan-modification agreements when applicable. Servicers are prohibited from reducing delinquency amounts using buydown funds unless allowed by the agreement. Additionally, servicers must ensure that borrowers waive any reimbursement for buydown funds upon mortgage release. Changes also extend the deadline for payment reminders to the 20th day of the month, effective immediately and formalized by December 1.
Fannie Mae expects servicers to notify borrowers about their temporary interest rate buydown ending and subsequent interest rate increases 90 days prior to the change.
Servicers should apply interest-rate buydown funds to reduce arrearages and use the updated loan-modification agreement form to document changes.
Servicers must not apply interest rate buydown funds for delinquency reduction unless explicitly permitted by the buydown agreement.
Mortgage release requires borrowers to waive reimbursement for any buydown funds associated with the release.
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