Fannie Mae issued Lender Letter LL-2026-01, updating retention workout options and disaster-related foreclosure proceedings policy. Per the Lender Letter, Fannie Mae:
- Updated the allowable forbearance plan term increments by requiring forbearance plan terms be in increments of no greater than 3 months at a time and must not be extended beyond a date that would:
- Exceed a cumulative term of 12 months as measured from the start date of the initial forbearance plan, or
- Result in the mortgage loan becoming greater than 12 months delinquent;
- Added a new requirement for when servicers must submit forbearance plan cases that exceed Servicer Guide thresholds to Fannie Mae for review and decision;
- Clarified that the number of previous mortgage loan modifications does not impact the borrower’s eligibility for a Fannie Mae Flex Modification in accordance with the reduced eligibility criteria for a borrower with a disaster-related hardship and that payments received that reduce the amount of delinquency after the date of evaluation for a Fannie Mae Flex Modification do not impact the borrower’s eligibility in accordance with the reduced eligibility criteria for a borrower with a disaster-related hardship, provided that the mortgage loan is at least 30 days delinquent prior to the commencement of the Fannie Mae Flex Modification Trial Period Plan; and
- Replaced existing policy for initiating and suspending legal proceedings for disaster-impacted properties and borrowers with updated foreclosure proceedings.
Revisions related to the above policies must be implemented by servicers on and after May 1, 2026 for all forbearance plan term structuring, forbearance plan term extensions for borrowers with a disaster-related hardship, Fannie Mae Flex Modification evaluations, and referrals of mortgage loans for disaster-impacted properties to foreclosure proceedings or continuation of certain foreclosure proceedings as referenced in this Lender Letter.
Click to view the Fannie Mae Lender Letter 2026-01: https://www.tenaco.com/wp-content/uploads/2026/02/Fannie-Mae-Lender-Letter-2026-01-02-11-26.pdf
