Fannie Mae and Freddie Mac have instructed their servicers to cooperate with state housing finance agencies (HFAs) as they roll out their foreclosure prevention initiatives under the U.S. Treasury Department's Hardest-Hit Fund (HFF).
Under the HFF, 18 state agencies have been awarded $7.6 billion to design and administer payment-reinstatement programs and programs designed to assist unemployed borrowers. The HFAs will be responsible for communicating decisions to borrowers and forwarding payments to servicers.
As part of the process, the HFAs will work with servicers to validate the status of loans and borrower payment amounts, the government-sponsored enterprises (GSEs) explain, with Freddie Mac noting that servicers must obtain written authorization from borrowers before sharing with the HFAs non-public financial information.
Program details vary by state, and GSE servicers are expected to designate points of contact to work with the HFAs and/or third-party vendors working on the HFAs' behalf.
Servicers may refer potentially eligible borrowers to an HFA in compliance with HFF guidelines, but cannot solicit borrowers for the programs, a Freddie Mac servicer bulletin says.
In a letter to servicers, Fannie Mae explains that a borrower may not be simultaneously in an HFF unemployment-assistance program and a Fannie Mae forbearance agreement. Similarly, a borrower cannot use HFF unemployment-assistance money to make payments under a Home Affordable Modification Program (HAMP) trial plan. Acceptance into the HFF unemployment-assistance program supercedes a HAMP trial.
Additionally, Fannie Mae says it will not participate in principal-reduction programs being piloted by some state HFAs.