When a borrower is having trouble making their mortgage payment, one of the first things they need to do – after contacting their servicer – is to complete a mortgage assistance application. Ensuring that the application process is straightforward and as easy to navigate as possible is one of the most important lessons learned from the crisis. With this in mind, the Federal Housing Finance Agency has worked with Fannie Mae and Freddie Mac (the Enterprises) to revise this application form with the objective of simplifying the loan modification process for borrowers so they can get assistance quickly.
This review process led to the Enterprises’ September announcement of a new Mortgage Assistance Application (MAAp) that will replace the Uniform Borrower Assistance Form (UBAF). This announcement coincided with the mandatory implementation of the Flex Modification program on October 1. The MAAp, like the Flex Modification, is designed to balance five principles of loss mitigation learned from the housing crisis – accessibility, affordability, accountability, sustainability, and transparency.1
New Benefits
Prior to being 90 days delinquent, a borrower who is experiencing challenges with their mortgage can fill out the MAAp and submit it to their servicer along with supporting documentation.2 Once the servicer receives the application and supporting documentation, the servicer evaluates the borrower for foreclosure alternatives and works with the borrower to explore their options. Solutions can include a repayment plan, forbearance plan, loan modification, short sale, or deed-in-lieu of foreclosure.
The new MAAp incorporates helpful feedback from borrowers and industry. Extensive borrower testing revealed a number of opportunities to make the form more user-friendly, including;
- Reformatting the form with a cleaner, brighter look, and consolidating related questions on the same page.
- Adding questions that enable borrowers to express their preferred method for being contacted by their servicer between phone, email, and text message.
- Revising and clarifying terms that borrowers identified as being potentially unclear.
- Including, for the first time, information on housing counseling resources, as well as resources for borrowers with limited English proficiency.
- Highlighting next steps to provide the borrower with insight into the process.
In addition to changes on the application form, the MAAp reduces the supporting documentation required to demonstrate a struggling borrower’s hardship and income – a change that will simplify the assistance process for both borrowers and servicers. For instance, the MAAp removes the requirement that a borrower submit IRS form 4506-T (income tax transcript) to document their income except in limited circumstances. For wage earners, income can be documented with the two most recent pay stubs or the two most recent bank statements.
Servicers are encouraged to implement the MAAp immediately, but must implement it by June 1, 2018. Overall, the new application will allow servicers to help borrowers resolve delinquencies more quickly, and keep more people in their homes whenever possible.
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Learn More
Additional information about Fannie Mae's MAAp can be accessed at https://www.fanniemae.com/content/announcement/svc1708.pdf.
Additional information about Freddie Mac's MAAp can be accessed at http://www.freddiemac.com/singlefamily/guide/bulletins/pdf/bll1718.pdf.
1 These loss mitigation principles were outlined in a white paper, Guiding Principles for the Future of Loss Mitigation: How the Lessons Learned from the Financial Crisis Can Influence the Path Forward, published in July 2016 by the U.S. Department of the Treasury, the U.S. Department of Housing and Urban Development (HUD), and FHFA.
2 When a borrower becomes 90 days delinquent, the borrower’s servicer is required to evaluate them for a streamlined Flex Modification.
By: Lori Bowes
Senior Policy Analyst
Office of Housing & Regulatory Policy