Delinquency
Management
Date:
October 24, 2008
To:
Fannie Mae Multifamily Lenders
From:
Caroline Blakely, Vice President
Subject:
Lender Memo 08-19:
Mortgage Loan Delinquency Management Process and Procedures
Highlights

Fannie Mae modifies its Delinquent Mortgage
Requirements for Mortgage Loan Payment Defaults.
Loan
Servicing
This Lender Memo builds on Lender Memo 08-14, which clarified Servicers’ reporting
and certification requirements for all delinquent Mortgage Loans in a Servicers’ Fannie
Mae portfolio and updates Fannie Mae’s delinquency and monetary default resolution
protocols. Lender Memo 08-14 remains in effect and should be read in conjunction with
this Lender Memo. This Lender Memo amends certain requirements of Part V, Chapter
5, of the DUS Guide, Part VI, Chapter 5, of the NT Guide, and Part IX, Chapters 7 and
8, of the NT Guide to the extent that the subject matter discussed herein modifies the
subject matter in such Guide provisions.
Fannie Mae requires that at a minimum each Servicer offer the same standard of care
to its Fannie Mae portfolio as it would its own portfolio. Servicers must aggressively
pursue collection of all amounts due from Borrowers under the Mortgage Loan
documents to minimize losses. To that end, this Lender Memo sets forth the roles,
duties and responsibilities of the various groups within Fannie Mae, the Servicer, and, if
applicable, the Special Servicer charged with resolving delinquencies and defaults in
the most efficient and expeditious manner.
For purposes of this Lender Memo, the term “Servicer” means the primary servicer
responsible for servicing the Mortgage Loan, whether such party is the selling Lender or
a third party servicer for the selling Lender. To the extent Fannie Mae has approved a
third-party servicer or subservicer for any Lender, such servicers or subservicers will be
required to comply with the requirements contained in this Lender Memo and the
Lender Memo 08-19
1
Lender is required to assure such compliance. Other terms used in this Lender Memo
and its Attachments are defined in the Glossary attached to this Lender Memo as
Attachment C. If a capitalized term is used but not defined, it has the meaning
specified in the Glossaries of the DUS or NT Guides.
Delinquency and Default Management
Fannie Mae follows the Dual Track Approach, which we believe is the most effective
and efficient process to resolve Mortgage Loan delinquencies. Under this approach,
attempts are made to resolve the delinquency through dialog with the Borrower, while
concurrently pursuing the foreclosure process. To be effective, both tracks of the Dual
Track Approach must be pursued aggressively to ensure the delinquent Borrower
understands the gravity of the situation. Fannie Mae and the Servicer must work
together to craft the best resolution of the delinquency. While this Lender Memo
provides a general overview of the Dual Track Approach, the delinquency resolution
process remains a case-specific process and not every case will fit perfectly into this
approach. Please refer to Attachment A, Mortgage Loan Delinquency Resolution Dual
Track Timeline and the DUS and NT Guides for further guidance.
Secondary Risk and Primary Risk Mortgage Loans
For certain Multifamily Lenders, the Lender’s Contract with Fannie Mae will specify
whether a Mortgage Loan is Primary or Secondary Risk to Fannie Mae. The
contractual obligations will determine which party, Fannie Mae or the Servicer, is
responsible for performing special servicing of the delinquent Mortgage Loan.
Secondary Risk Mortgage Loans
A Mortgage Loan is a Secondary Risk Mortgage Loan when the Lender bears all losses
on Mortgage Loans until the Lender’s recourse obligations are exhausted. This is
known as the “Top Loss” obligation. Because Secondary Risk Mortgage Loans will
convert to Primary Risk upon exhaustion of the Lender’s Top Loss obligation, Fannie
Mae and the Servicer must work together to accurately track amounts for any losses
that may have occurred. For Secondary Risk Mortgage Loans, the Servicer’s Special
Asset Management team (SAM) performs approved loss mitigation actions to be taken
under the Dual Track Approach (including selecting a Course of Action for resolution).
Once the Servicer’s SAM team has selected a Course of Action, it must submit to
Fannie Mae a Special Servicing Action Plan. The Special Servicing Action Plan will be
reviewed by Fannie Mae and, if approved, the Servicer will be granted a limited power
of attorney to take all actions submitted under the Special Servicing Action Plan. In
addition, if the Servicer or legal counsel determines that, with respect to a specific
Mortgage Loan, a waiver of actions otherwise required hereunder or in the Guide is
required by local law or a waiver will result in a more effective delinquency resolution,
then the Servicer must document the appropriate action through the Special Servicing
Action Plan. This memo highlights and enhances the existing Guide requirements on
the Servicer’s treatment of delinquent Secondary Risk Mortgage Loan’s.
Lender Memo 08-19
2
Primary Risk Mortgage Loans
For all DUS Lenders, Aggregation Lenders and certain Multifamily Lenders, the
Mortgage Loans are Primary Risk Mortgage Loans. A Mortgage Loan is a Primary Risk
Mortgage Loan when Fannie Mae bears all losses on Mortgage Loans or when the
Lender and Fannie Mae share losses on Mortgage Loans. For all Primary Risk
Mortgage Loans, Fannie Mae is the Special Servicer and makes all decisions regarding
loss mitigation and actions to be taken under the Dual Track Approach, including any
Course of Action as described in the applicable Guide and/or Lender Contract.
Therefore, the Servicer must remain in very close contact with Fannie Mae regarding all
Primary Risk Mortgages. Fannie Mae’s Special Asset Management unit will be the
Servicer's primary point of contact during delinquency resolution. While Fannie Mae
makes all decisions on Primary Risk Mortgage Loans, the Servicer must comply with
Fannie Mae’s determinations as part of its servicing duties. If a Servicer implements
any decision on a Primary Risk Mortgage Loan without the prior approval of Fannie
Mae, such action will constitute a breach of the Servicer's obligations to Fannie Mae.
Track One – Dialog with the Borrower
The Dialog Track attempts to resolve the delinquency through dialog with the Borrower
during calendar days two (2) through 60 beginning immediately after the first missed
Payment Due Date. When a Mortgage Loan becomes delinquent, it is absolutely
essential that the Servicer contact the Borrower without delay.
The first 30 calendar days of the Dialog Track are focused on working with the Borrower
to collect all sums due and owing. While calendar days 31 through 60 continue to focus
on collections, the focus also includes preparing a delinquent Mortgage Loan for Loss
Mitigation.
The First 30 Calendar Days after a Delinquency.1 During this stage of the Dialog
Track, a Servicer must act quickly and aggressively to establish contact with a
delinquent Borrower to determine:
1.
2.
3.
4.
the cause of the missed payment;
whether the Borrower will make the missed payment before the end of the
month of default;
the likelihood of the Borrower making the next month's payment; and
if the missed payment will not be made, whether the Borrower will voluntarily
turn over the monthly net operating income of the Property.
Because Fannie Mae requires Servicers to report all delinquent Mortgage Loans on or
about the 17th day of a month, some Servicers begin calling and corresponding with
delinquent Borrowers as early as a few days after the Payment Due Date or the day
before the Late Fee becomes due. These practices facilitate accurate and timely
delinquency reporting to Fannie Mae. Waiting until the Late Fee becomes due to begin
1
Please note that for illustration purposes, a 30 day month is assumed.
Lender Memo 08-19
3
contacting delinquent Borrowers jeopardizes the Servicer’s ability to report and certify
delinquent Mortgage Loans on a timely and complete basis. 2
Calendar Days 31 through 60 after a Delinquency. During calendar days 31 through
60 after a delinquency, or until the Mortgage Loan is transferred to Special Servicing,
the Servicer should remain focused on aggressively pursuing collection of all amounts
due. The Servicer must continue to call and correspond with the Borrower and make
every attempt to resolve the delinquency.
Pre-Negotiation Letter. Prior to any discussions with the Borrower regarding any
workout of the Mortgage Loan or a possible modification of its terms, the Borrower,
Fannie Mae, and the Servicer must execute a written Pre-Negotiation Letter. The
purpose of the Pre-Negotiation Letter is for all parties (the Servicer, Fannie Mae and
the Borrower) to acknowledge in writing that any discussions regarding the problems
associated with the Mortgage Loan are not binding on either party until the discussions
are documented in a written agreement executed by all parties.
Transfer to Special Servicing. At any time during the first 60 days after delinquency, a
delinquent Mortgage Loan may be transferred to Special Servicing if the Servicer or
Fannie Mae determines that the Borrower is either not cooperating with attempts to
resolve the delinquency or it becomes apparent the Borrower will not be able to cure
the delinquency. In any event, the delinquent Mortgage Loan will be transferred to
Special Servicing no later than the 60th day after the initial delinquency occurs. For
Mortgage Loans having a large unpaid principal balance (e.g., generally equal or
greater than $5 million), the transfer may occur closer to day 31. For Mortgage Loans
having a small unpaid principal balance (e.g., under $5 million), the transfer may occur
closer to day 60.
Servicing Transfer Memo (Primary Risk Mortgage Loan). Because the Dual Track
Approach requires a more formal relationship with the Borrower based on loss
mitigation activities, the Servicer and the Fannie Mae SAM unit must work together to
collect the data and documentation needed to engage counsel and commence
foreclosure proceedings. Attachment B to this Lender Memo contains the Servicing
Transfer Memo template (and replaces the Asset Audit form discussed in the Guides).
The Servicing Transfer Memo is used to gather and prepare the necessary data and
documentation. The Servicing Transfer Memo must be timely completed by the
Servicer to allow for review and approval by Fannie Mae’s SAM unit before Fannie Mae
engages legal counsel to commence the foreclosure proceedings.
Special Servicing Action Plan (Secondary Risk Loans). The Servicer, as the Special
Servicer, must collect the data and documentation needed to prepare its loss mitigation
plan for the Mortgage Loan. Once the data is collected, the Servicer must complete a
Special Servicing Action Plan. Attachment D hereto contains the form of Special
Servicing Action Plan template (and replaces the Pre-Asset Audit and Asset Audit form
2
See Lender Memo 08-14 for guidance on Servicers’ reporting and certification requirements for all
Delinquent Mortgage Loans in a Servicer’s Fannie Mae portfolio.
Lender Memo 08-19
4
discussed in the Guides). The Special Servicing Action Plan must be completed timely
to allow for review and approval by Fannie Mae’s SAM unit prior to being implemented
by the Servicer. The Special Servicing Action Plan will be reviewed by Fannie Mae’s
SAM unit and, if approved, the Servicer’s SAM representative will be granted a limited
power of attorney to take all actions described in the approved Special Servicing Action
Plan. All Special Servicing Action Plans must be updated and resubmitted to Fannie
Mae (i) as new information is available and/or the Servicer elects to change its loss
mitigation plan, and (ii) at least every six (6) months. The Special Servicing Action Plan
must also identify which counsel will commence all legal proceedings under Track Two
– the Foreclosure Track. Please see below requirements for Engagement of Legal
Counsel.
Track Two – Foreclosure on Primary and Secondary Risk Mortgage Loans
Experience has shown that if the foreclosure process is delayed until the parties know
whether a workout is achievable, valuable time is lost. Starting the foreclosure process
requires:
1.
2.
a more formal relationship with the Borrower; and
use of outside counsel to document the relationship as well as commence all
legal proceedings.
The foreclosure action may commence at any time in the delinquency resolution
process once the Mortgage Loan has been transferred to Special Servicing. Timing of
when to transfer a Mortgage Loan to Special Servicing is important. If the foreclosure
process is commenced too soon, no further collection dialog with the Borrower may
take place, unless it flows through legal counsel. If the foreclosure process is delayed,
valuable time is lost to enforce the assignment of rents and to initiate the foreclosure
action. Thus, the Servicer and Fannie Mae must work closely together to coordinate
the transfer of the Mortgage Loan to Special Servicing at the most appropriate time.
Engagement of Legal Counsel. All legal counsel must be retained by Fannie Mae. For
Primary Risk Mortgage Loans, Fannie Mae will refer the matter to legal counsel in the
Property jurisdiction. For Secondary Risk Mortgage Loans, the Servicer shall refer the
matter to Fannie Mae's legal counsel in the Property jurisdiction pursuant to the
approved Special Servicing Action Plan. Fannie Mae will provide a listing of legal
counsel on retainer with Fannie Mae in the Property jurisdiction for the Special
Servicer's choice or the Special Servicer may recommend another legal counsel to
Fannie Mae; which recommendation will require the consent of Fannie Mae's Legal
Department and the engagement of that legal counsel under Fannie Mae's retainer
agreement prior to the matter being referred to that legal counsel. Prompt completion
and approval of the Special Servicing Action Plan will give legal counsel sufficient time
to complete its conflicts check and to begin the Foreclosure Track by commencing legal
action to enforce the assignment of rents and initiating a foreclosure action.
Fannie Mae will pay all legal counsel fees, which counsel fees will be included in the
calculation of final settlement of loss. If the Servicer chooses to retain separate legal
Lender Memo 08-19
5
counsel on Primary Risk Loans, the fees and costs of the Servicer's legal counsel will
not be included in the final settlement of loss. For both Primary Risk and Secondary
Risk Mortgage Loans, the legal counsel will provide copies of all correspondence,
pleadings and documents to both the Servicer and Fannie Mae, unless Fannie Mae's
attorney-client privilege requires otherwise.
The Foreclosure Track on Secondary Risk Loans. The Servicer’s SAM representative
must submit the Special Servicing Action Plan and receive Fannie Mae's approval prior
to foreclosure, obtaining title to a Property in lieu of foreclosure or otherwise, consent to
a loan modification, or taking any other action with respect to the Property. The
Servicer must conduct environmental due diligence and may not foreclosure if, as a
result of any such action, Fannie Mae would be considered to be an "owner" or
"operator" of such Property (or would otherwise not be able to claim the secured lender
exemption under applicable environmental laws) within the meaning of CERCLA or any
comparable state or federal law or regulation.
Delinquency Resolutions for Mortgage Loans Acquired under Various Product Types.
The timeline for initiating a foreclosure action may vary from one Fannie Mae execution
to another. For example, because DUS Mortgage Loans are non-recourse (with limited
exceptions) and the dollar value of each Mortgage Loan tends to be larger, timely
commencement of a foreclosure action is needed to ensure the Property collateralizing
the Mortgage Loan is not allowed to deteriorate and the net operating income is being
accounted for and paid each month. On the other hand, delinquent Small Mortgage
Loans tend to be more dependent on the financial condition and sophistication of the
key principals. Experience shows that Borrowers often cure the delinquency on Small
Mortgage Loans prior to commencement of a foreclosure action. Thus providing
additional time to Small Mortgage Loan Borrowers to cure a delinquency may reduce
resolution costs for such Mortgage Loans.
Seller’s Option to Repurchase Delinquent Mortgage Loans from Fannie Mae. After 61
calendar days from the Payment Due Date, a Servicer may repurchase from Fannie
Mae a delinquent Primary Risk Mortgage Loan sold to Fannie Mae for cash. A Servicer
may repurchase such a Mortgage Loan where it desires to control the workout process.
NOTE: this option only applies to Mortgage Loans purchased by Fannie Mae for cash
and does not apply to Mortgage Loans that back a Fannie Mae Mortgage-Backed
Security.
Fannie Mae’s Special Servicer
Fannie Mae reserves the right to retain a third party Special Servicer to supplement
Fannie Mae staff from time to time.
Lender Memo 08-19
6
Summary
The requirements set forth in this Lender Memo represent only the minimum
requirements that Fannie Mae expects from the Servicer with respect to delinquent
Mortgage Loan servicing. Unusual circumstances may require the Servicer to perform
additional servicing duties, which should be discussed in advance with Fannie Mae.
Please direct your questions regarding Servicers’ delinquency management
responsibilities and the Dialog Track activities, to Servicer Relationship Management at:
Jeff Terra
Franchesca Fotenos
Telephone
301-204-8307
301-204-8063
Email
jeffrey_m_terra@fanniemae.com
franchesca_fotenos@fanniemae.com
Questions on Foreclosure Track activities and Special Servicing Action Plans should be
forwarded to:
Frank Yanez
Tom Yoder
Lender Memo 08-19
Telephone
972-773-7379
972-773-7966
Email
frank_yanez@fanniemae.com
tom_yoder@fanniemae.com
7
Attachment A
Mortgage Loan Delinquency Resolution
Dual Track Timeline
This timeline is hypothetical and represents the minimum time frames that should be
followed for all delinquent Mortgage Loans. Specific delinquencies may require action to be
taken sooner. For example, the Borrower may have filed for bankruptcy protection, and
therefore, the timeline should be implemented on an accelerated basis.
Date
March 1
Track 1
• Borrower's Mortgage Loan
payment is due. Servicer could
technically send out a default
notice on the 2nd; but, as practical
matter would not unless Lender
knew Borrower was not going to
pay.
Track 2
March 2-31
• Servicer calls Borrower to find out
cause of missed payment and
whether default will be cured by
the end of the month or if default
will continue into the 2nd month
[April].
• The Servicer may contact Fannie
Mae Special Asset Management or
Servicer Relationship Management
at any time prior to charging the
Late Fee to discuss collection
efforts and whether the Borrower
will be able to cure the
Delinquency. The recommendation
of an early transfer to Special
Servicing may be discussed.
March 11
(or day when
Late Fee can be
assessed)
• If payment is not received,
Borrower is subject to a Late Fees.
March 15
(or day after
Late Fee can be
assessed)
• If no payment is received, then,
under Lender's letterhead, send
out “No Payment” form letter
(Exhibit V-17).3
March 15-30
• If full payment received after Late
Fee can be assessed, under
Lender's letterhead, send out “Late
Payment – No Fees” form letter
(Exhibit V-12)2 or “Late Payment –
Fees Assessed” form letter (Exhibit
V-13).2
3
The exhibit references used herein refer to the numbered exhibits found in the Fannie Mae DUS Guide.
The number of days before a late fee can be assessed cited in the various letters should be adjusted for
the actual number of days specified in the applicable Mortgage Loan Documents.
Lender Memo 08-19
8
• If partial payment received after
Late Fee is incurred, under
Lender's letterhead, send out
“Partial Payment – No Fees” form
letter (Exhibit V-14),2 “Partial
Payment –Fees Assessed” (Exhibit
V-15),2 or “Late and Partial
Payment –Fees Assessed” (Exhibit
V-16).2
March 17
• Servicer reports status of
delinquent Mortgage Loans via
Delinquency Early Warning System
on eServicing and certifies that all
delinquent Mortgage Loans have
been reported.
• Before meeting with Borrower to
discuss a potential workout, have
“Prenegotiation Letter” (Exhibit V182 or Exhibit V-192) executed by
Lender, Fannie Mae and Borrower.
March 18-31
• Fannie Mae and the Servicer
determine whether a delinquent
Mortgage Loan is Primary or
Secondary Risk. If Primary Risk,
the Mortgage Loan will be special
serviced by Fannie Mae, and if
Secondary Risk, the Servicer will
perform the special servicing.
March 31
• If full payment is not received by
end of month, default interest
starts and is imposed from the
Date of Default [March 1].
April 1
• Borrower's next Mortgage Loan
payment is due.
April 1-30
• Servicer continues dialog with
Borrower to assess whether
default will be cured by end of
month or if default will continue
into the 3rd month [May].
April 15
• Due diligence begins for Servicing
Transfer Memo/Special Servicing
Action Plan; will likely involve
meeting with Borrower to obtain
factual information and
documents.
Lender Memo 08-19
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• Fannie Mae remains in contact with
the Servicer to discuss collection
efforts and whether the Borrower
will be able to cure the
delinquency. The recommendation
of an immediate transfer to Special
Servicing may be discussed.
April 10-30
• For Primary Risk Mortgages
Servicer completes Servicing
Transfer Memo and forwards to
Fannie Mae SAM or other 3rd party
Special Servicer as Fannie Mae
dictates.
• For Secondary Risk Mortgages
Servicer completes Special
Servicing Action Plan and forwards
to Fannie Mae SAM or other 3rd
party as Fannie Mae dictates.
May 1
May and June
Lender Memo 08-19
• If payment is not received,
Engagement of Counsel Letter
(Exhibit V-20) is executed.
• Once legal counsel is engaged, all
written correspondence with
Borrower must be from legal
counsel.
• Based on whether the loan is
• Legal counsel starts process to
Primary Risk or Secondary Risk,
enforce assignment of rents and
Fannie Mae or the Servicer, as
begins foreclosure process.
applicable, will determine which
Course of Action it elects. For
Primary Risk Mortgages, Fannie
Mae will select Course of action.
For Secondary Risk Mortgages,
Servicer will select Course of
action in accordance with Special
Servicing Action Plan.
• Election to be made in writing not • Primary Risk Mortgage Loans:
later than May 30 [90th day from
Foreclosure action continues
March 1 Date of Default].
regardless of election of remedy
Preferably, election is made sooner
unless joint workout is elected and
than 90 day time frame.
election is approved by Fannie Mae.
In that case foreclosure sale would
be rescheduled until workout is
completed (subject to applicable
law).
• Secondary Risk Mortgage Loans:
Special Servicing Action Plan is
approved and allows the
Foreclosure action to continue.
• Election of remedies implemented.
10
Attachment B
Servicing Transfer Memo Template
The Servicing Transfer Memo provides the minimum information a Special Servicer
would need to begin its phase of the delinquency resolution process under the
guidance provided in this Lender Memo.
1. For Mortgage Loans to be transferred to Fannie Mae Special Servicing on the
expiration of the 60th day, the Servicing Transfer Memo should be started on day
45 and completed no later than day 60.
2. For all delinquent Mortgage Loans on which a determination has been made that
the Borrower will not cure the delinquency during the 60-day period following the
first missed payment, the Servicing Transfer Memo must be completed as soon
as possible after that Mortgage Loan has been transferred to the Special
Servicer.
Direct any questions regarding preparation of the Servicing Transfer Memo to your
Servicer Relationship Manager.
Lender Memo 08-19
1
Servicing Transfer Memo
Date of Transfer
Fannie Mae Loan #
Servicer Loan #
Original UPB
Current UPB
Last Paid Installment
Date
Borrower Name
Owner Occupied?
xx/xx/200x
Property Name
Address
City
State
Zip Code
Main Contact Name
xx/xx/200x
Phone Number
Yes
Property Management:
Third Party
No
Self Managed
Loss Sharing?
Yes
Management Company
(Check box)
Name:
No
If Yes, Loss Sharing Type:
_____________________________________________________________________
Is Mortgage Loan cross-collateralized / cross-defaulted with other
Mortgage Loan(s)?
If yes, Mortgage Loan number(s):
___________________________________________________
Yes
No
Reason(s) for transfer to Special Servicing (Check box):
Payment Default (Mortgage Loan is delinquent and cannot be cured prior to 60 days)
Covenant Default (breach of Mortgage Loan document covenant)
Specify: _________________________________________________________________________
Other Default
Specify: _________________________________________________________________________
Servicer’s Analyses of Borrower (See, DUS Guide Part V, Section 501.06 for guidance on completing this
section):
1.
Summarize Servicer’s conversations with the Borrower, Key Principals, and property management
regarding the reason for default, likelihood and timing of cure by the Borrower, and Borrower’s
commitment to the property.
2.
Was the default economic-related or management-related?
3.
Provide Servicer’s analysis of the Property relative to the market or neighborhood.
4.
Provide Borrower's payment history.
5.
Discuss title insurance update or bring-down to determine whether unauthorized second mortgages
or other unauthorized encumbrances exist, or unauthorized transfers have occurred. (The Servicer
Lender Memo 08-19
1
should discuss the findings of the most recent title insurance update. The most recent title insurance
may have been at origination.
6.
Discuss any Collateral Agreements for Completion/Repair, Replacement Reserves, Achievement or
Deficit Operation and payment activity to determine whether the reserves were adequately funded,
whether the Borrower attempted to maintain the Property in marketable condition and provide
balances of any tax, insurance or other escrows.
7.
Discuss the financial capability of the Key Principals, Principals or guarantors to determine if
additional capital is available. Unless otherwise noted by the Servicer, this information will come from
information at underwriting or if applicable from a recent assumption.
8.
For Properties built before December 31, 1978, after reviewing their underwriting and servicing files,
where available, Servicers must comply with the requirements on lead-based paint set forth in DUS
Guide Part V, Section 501.06. Unless otherwise noted by the Servicer, this information will come
from the environmental report at underwriting.
9.
Address any other issues that may exist and have not already been discussed.
10. Document Checklist. Please complete and forward all required documents listed in the Document
Checklist. Even if Fannie Mae is the custodian, the Servicer is required to submit the Loan
Documents being used to service the loan.
Servicer Contact Information:
Servicer:
Contact Name:
Contact Number:
Email Address:
Signature of Transferee:
Name
Title
Fannie Mae Distribution List:
Special Asset Management (SAM)
Servicer Relationship Management (SRM)
National Account Manager (NAM)
Operations
Special Servicer
Lender Memo 08-19
2
Date
Document Checklist
Document
Supplier
Document Required
Note
Deed of Trust/Mortgage
Subordinate Debt Agreement
Reserve Agreement
Borrower Organizational Documents
Guaranty/Carve Outs Documents
Cross Collateral Agreements
Escrow Agreement
Other Legal Documents
UCC
Other:______________________________
Pre-negotiation Letter
Underwriting Package (at origination)
Appraisal (at origination)
Engineering (at origination)
Environmental (at origination)
Site Map (at origination)
Operating Statement (current)
Rent Roll (current)
Property Inspection (current)
Other:
______________________________
Other:
______________________________
Other:
______________________________
Other:
______________________________
Lender Memo 08-19
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Enclosed
with
package
Comments
Attachment C
Glossary
Course of Action. As stated in the applicable guides.
Delinquency Early Warning System or DEWS. Fannie Mae’s web-based application
within eServicing used by Lenders to report delinquent Mortgage Loans. Access to
eServicing is through www.efanniemae.com.
Dual Track Approach. Pursuing two paths concurrently: Dialogue with the Borrower;
and Foreclosure process.
eServicing. Fannie Mae’s web-based application housing, among other things, the
Delinquency Early Warning System or DEWS. Access to eServicing is through
www.efanniemae.com.
Last Paid Installment (LPI) Date. The due date of the last monthly payment received
from the Borrower.
Payment Due Date. The date the Mortgage Loan payment is due as provided in the
Mortgage Loan Documents, usually the first day of a calendar month. Some Mortgage
Loans, however, may carry a due date other than the first day of a calendar month.
Special Asset Management (SAM). Multifamily Special Asset Management is the
Special Servicing group within Fannie Mae that performs its Special Servicing functions.
Special Servicer. A Special Servicer (which may be Fannie Mae, the Servicer, or a
third-party special servicer contracted by Fannie Mae to provide such services)
responsible for implementing the Special Servicing for a Mortgage Loan.
Special Servicing.
Special Servicer.
Loss mitigation and default resolution activities carried out by a
Special Servicing Action Plan. The Servicer's loss mitigation plan intended to be
followed for a Secondary Risk Mortgage, in the form attached
Lender Memo 08-19
1
Attachment D
Special Servicing Action Plan Template
The Special Servicing Action Plan provides the necessary information Fannie Mae
needs to review the Servicers Course of Action.
1. For Mortgage Loans to be transferred to Special Servicing on the expiration of
the 60 day collection period, the Special Servicing Action Plan must be started
on day 45 and completed no later than day 60.
2. For all delinquent Mortgage Loans on which a determination has been made that
the Borrower will not cure the delinquency during the 60 day collection period,
the Special Servicing Action Plan must be completed as soon as possible after
that Mortgage Loan has been transferred to the Special Servicer.
Direct any questions regarding preparation of the Special Servicing Action Plan to your
Special Asset Manager contact.
Once completed the Special Servicing Action Plans must be sent to your Fannie Mae
Special Asset Manager or their designee. .
Lender Memo 08-19
1
Fannie Mae Special Servicing Action Plan
Date of Action Plan
Fannie Mae Loan #
Servicer Name
Servicer Loan #:
Original UPB
Current UPB
Original Appraisal
Value
Last Paid Installment
Date
Borrower Name
Owner Occupied?
xx/xx/200x
Property Name
Address
City
Deal Contract #:
State
Zip Code
Original Appraisal Date
xx/xx/200x
Origination Date
Main Contact Name
Property Management:
Yes
Third Party
No
Self Managed
Loss Sharing?
Yes
Management Company
(Check box)
Name:
No
If Yes, Loss Sharing Type:
_____________________________________________________________________
Is Loan cross-collateralized / cross-defaulted with other loan(s)?
Yes
No
If yes, loan number(s): ___________________________________________________
Valuation
Current Value
Date of Current Value
Source of Value:
Potential Loss
Amount:
Value Analysis
Broker Opinion of Value, New Appraisal, Other (please specify)
Potential Loss Amount May equal 0
Please describe the main reasons for the change in the original or most
recent value. If a new value is not available please advise when it will
be available.
Reason(s) for transfer to Special Servicing (Check box):
Payment Default (loan is delinquent and cannot be cured prior to 60 days)
Covenant Default (breach of loan document covenant)
Specify: _________________________________________________________________________
Other Default
Specify: _________________________________________________________________________
Attorney to be
Retained (Y/N)
Name of Firm
Lender Memo 08-19
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Contact Name:
Contact Number:
Date firm was
retained:
Course of Action Recommended (Check box):
Servicer Workout
Joint Fannie Mae/Servicer Workout
Specify: _________________________________________________________________________
Foreclosure
Other (Specify): _____________________________________________________________
Action Taken to Date
Please describe the events that led up to the default. Please include number of times borrower has been
contacted and borrower response, if any.
Financial Condition
Please describe the current financial condition. Include DSCR and occupancy trends.
Physical Condition
Please describe the current physical condition. Include a discussion of previous inspection results and how
they compare with today.
Course of Action Narrative
Please describe why you choose the Course of Action.
Estimated Resolution Date:
Estimated Resolution Date
Resolution Costs (Budget):
Total Estimated Costs (please see page X for expense backup)
Servicer Information:
Servicer:
Contact Name:
Contact Number:
Email Address:
New Action Plan (Yes/No):
If No, date of previous plan:
Lender Memo 08-19
3
Signature of Transferee:
Name
Title
Date
Name
Title
Date
Lender Memo 08-19
4
Fannie Mae:
Action Plan Decision
(Approval/Rejection):
Contact Name:
Contact Number:
Email Address:
Signature of Fannie Mae:
Special Servicing Estimated Budget
Expense Type
Budget
Professional Fees
Attorney Fees
Brokers
Physical Needs Assessment
Environmental
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Other (Specify)
Lender Memo 08-19
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