Fannie Mae: Commercial Loan Modifications …not just for Residential Markets!

Fannie Mae is always on the look out, like any servicer, for the best solutions that in the long run lose them the least amount of money. Commercial owners and owners of investment properties rarely see the benefits of these programs. Since October of 2009, a little more than a year ago this date, Fannie Mae did away with their HomeSaver Forbearance™ (HSF) and brought in the Payment Reduction Plan™ (PRP). The plan only covers the Principal/Interest as opposed to the previous ones that covered Principal, Interest, Taxes, Insurance, and any Association Dues (PITIA). This plan was probably given a hair cut due to the overall drop in property values as the overall assistance level has definitely taken a hit.

The program only covers a 6 month period and is much like a Forbearance plan on a residential property. The plan itself if failed, as there has already been a reduction of payment, is not favorable to find a final program modifying the terms of the loan permanently. The reduction in the payment is generally limited to a drop in the payment of no more than 30% where it currently sat prior to any modifications. Here are some further details on the guidelines:

Feature	HomeSaver Forbearance (HSF)	Payment Reduction Plan (PRP)
Payment Reduction Amount	Payments can be reduced up to 50 percent of the PITIA at the time the forbearance is implemented	Payments can be reduced up to 30 percent of the contractual monthly payments of P&I only
Loan Type	Only owner-occupied properties are eligible for the program	Includes non-owner occupied properties (investment properties and second homes)
Servicer Incentive Payment	Paid upon entrance into HSF	Paid upon mortgage loan being brought to a permanent foreclosure prevention solution Amount will be in addition to the fee paid for the permanent foreclosure prevention solution

For More Information: https://www.efanniemae.com/sf/servicing/prp/