Fannie Mae's near-term future will likely include a return to traditional default management policies, according to John Harris, a senior director within the government-sponsored enterprise's servicing organization.
Speaking at the California Mortgage Bankers Association's Western States Loan Servicing Conference in Las Vegas, Harris said he expects repayment plans to rebound and Fannie Mae to move back to concurrently pursuing foreclosure and loss mitigation. Harris added that Fannie Mae is moving away from the cashflow model of loan modifications because they have not performed well.
‘We're going back to what I'd call the old-fashioned loss mitigation strategies,’ he explained. ‘You get the borrower on the phone, you get the reason for default, you get their capacity and their intent, and based upon that information, you then put them on the best [foreclosure] alternative that has the highest likelihood of success….[W]e want to identify what the best solution is and go straight to that solution.’
Harris said that he expects Fannie Mae's workout hierarchy, which forks loss mit options based on whether a borrower's hardship is temporary or permanent, will probably be revamped, and that there will be a renewed focus on foreclosure timelines. He additionally hinted that a new, ‘very aggressive’ version of the Fannie Mae's Deed For Lease program will be forthcoming, and that a targeted modification program for investor loans may hit the market sometime next year.