Introduction

Freddie Mac’s Imminent Default Indicator™ (IDI) is a statistical model that predicts the likelihood of default or serious delinquency for mortgage loans that are less than 60 days past due.  ThisAnnouncement introduces the use of IDI through Fannie Mae’s HomeSaver Solutions® Network (HSSN), requires the use of verified income documentation before entering the borrower into a trial period plan, and changes the amount of maximum cash reserves that are allowed in the
imminent default screen as outlined in Announcement 09-05R, Reissuance of the Introduction of the Home Affordable Modification Program, HomeSaverForbearance™, and New Workout Hierarchy.

In addition, Announcement 09-05R instructed servicers to use the imminent default screen to evaluate borrowers who are current or less than 30 days delinquent.  Fannie Mae is changing the requirement for the imminent default screen to require an imminent default evaluation for all borrowers that are either current or in default but less than  60 days delinquent. This policy change achieves consistency in the treatment of Fannie Mae loans with the treatment of non-GSE loans under the Treasury Department’s Supplemental Directive 09-01.

Eligibility

Effective with the use of IDI, a borrower is not considered in imminent default if the borrower has cash reserves equal to or exceeding $25,000.  If the borrower’s cash reserves are less than $25,000, the loan must be submitted through the IDI. If the IDI result is a “1”, the mortgage loan is categorized as “at risk of imminent default,” and may be considered in imminent default.  However, if the borrower’s cash reserves are less than $25,000 and the IDI result is a “2,” the
mortgage loan is NOT categorized as “at risk of imminent default”. The servicer may further evaluate a borrower for HAMP if the borrower can demonstrate that he or she is experiencing an acceptable hardship.  Acceptable hardships include death, divorce, or legal separation of a
borrower/co-borrower; long-term or permanent illness or disability of a borrower/co-borrower or dependent family member. The servicer must obtain copies of documentation of an acceptable hardship as outlined below.

Death of a borrower/co-borrower:
death certificate, or
obituary or newspaper article reporting the death, and
income documentation prior to the event compared to income documentation of the
remaining borrower after the event.

Long-term or permanent illness or disability of a borrower/co-borrower or persons other than the
borrower/co-borrower who is claimed as a dependent for federal income tax purposes:

  • medical bills,
  • doctor’s certificate of illness or disability,
  • proof of monthly insurance benefits or government assistance (if applicable), or
  • federal income tax return showing medical deductions above the minimum for itemized
  • deductions.

Divorce or legally-documented separation of borrower/co-borrower:

  • divorce decree signed by the court;
  • current credit report evidencing recorded divorce decree;
  • separation agreement signed by the court if separation is legally documented by the court;
  • current credit report evidencing recorded separation agreement; or
  • in cases where the borrowers are unmarried, a recorded quitclaim deed indicating either
  • borrower relinquishes all rights to the property securing the mortgage loan; or
  • income or expense documentation prior to the event compared to the income or expense
  • documentation of the remaining borrower after the event.

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