GSEs (Fannie/Freddie),FHA&HUD

Winding Down FNMA Programs?

Posted on Tuesday, August 10, 2010

FNMA says it is retiring one of its foreclosure prevention options. The GSE’s HomeSaver Advance (HSA) program will be taken off the table on September 30.

Fannie explained that HSA volume has shrunk significantly as other foreclosure prevention workouts, particularly modifications, have increased.

The company introduced the HomeSaver program in 2008, to bring delinquent first-lien borrowers current when a repayment plan was not feasible. Fannie called HSA “the preferred option to a capitalization-only modification” at the time.
Under the program, servicers were allowed to extend unsecured personal loans to delinquent homeowners of up to $15,000 to cure arrearages of principal, interest, taxes, insurance, and other advances and fees. The loan was payable over 15 years at a fixed rate of 5 percent, with no payments or interest accrual for the first six months.

The HomeSaver Advance program was considered a good workout option when struggling homeowners needed a short-term fix to gain back their financial footing. But as housing woes began to spiral out of control and widespread economic factors, such as rising and elongated unemployment, pushed already distressed borrowers farther behind the mark, redefault rates on mortgages cured through the HomeSaver program began to mount and Fannie Mae turned to HSA less and less.

HomeSaver Advance loans grabbed the largest share of Fannie’s workouts when it was first introduced in 2008. During that year, the GSE purchased more than 70,000 HSA loans, while completing only 33,000 mortgage mods and fewer than 8,000 repayment plans, according to regulatory filings.

By 2009, Fannie’s loan mods had grown to nearly 100,000. The number of HomeSaver Advance loans it purchased during that same year dropped to under 40,000.

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