Code of Massachusetts Regulations › 761 CMR - MASSACHUSETTS HOME MORTGAGE FINANCE AGENCY › Title 761 CMR 22.00 - Servicer's Guide › LOAN SERVICING › Section 22.12 - Liquidating Plans, Special Forbearance Relief, and Modifications

Current through Register 1525, July 5, 2024
MHMFA grants Servicers broad discretion to extend appropriate relief to Borrowers who encounter hardship, yet who are cooperative and have proper regard for their obligations. Servicers should be readily available to Borrowers to offer skilled financial counseling and advice. Servicers should make personal contact with delinquent Borrowers as soon as possible in order to achieve a solution which will bring Mortgage Loans current as soon as possible. It is expected that Servicers will be fully familiar with various forms of relief to Borrowers provided for herein, and will employ such relief wherever appropriate rather than recommending termination of the Mortgage Loan. However, no such relief should be granted to any Borrower unless there is a reasonable expectation that the relief granted will result in bringing and maintaining the Mortgage Loan current.
Prior to granting relief as herein provided, Servicer should inspect the property and ascertain that the reason for the default and attitude and circumstances of Borrower justify the relief to be granted. Servicer is responsible for satisfying all applicable FHA, VA or private mortgage insurance requirements with respect to the relief granted. Servicer is responsible for collection from Borrower of any recording or similar costs incidental to the granting of relief.
Where relief is appropriate, Servicer should determine whether the relief should be:
(a) a "liquidation Agreement" giving Borrower a definite period in which to bring the Mortgage Loan current by immediately commencing payments in excess of the regular monthly installment;
(b) a "Special Forbearance Relief Agreement" reducing or suspending the regular monthly installments for a specified period of time; or
(c) a "Modification Agreement" of the Mortgage Loan repayment provisions which may include an extension of the original maturity date.
(1)
Liquidating Agreement
. Servicer is authorized in its discretion to enter into a Liquidating Agreement which shall provide that the total delinquency will be repaid (commencing immediately) within the shortest period practicable, and in any case not to exceed 12 months from the date of execution.
The Liquidating Agreement must be executed by Borrower and by servicer in the form of a letter agreement if the earliest unpaid installment is more than 45 days past due in the case of Conventional Loans and more than 60 days past due in the case of FHA/VA Mortgage Loans. Servicer shall report to MHMFA the terms of the Liquidating Agreement executed if more than 60 days (Conventional) or 90 days (FHA/VA) delinquent, but need not forward a copy to MHMFA.
(2)
Special Forbearance Relief Agreement
. A "Special Forbearance Relief Agreement" is a written agreement to reduce or suspend regular payments for a forbearance period of up to 12 months in the case of Conventional Mortgage Loans and 18 months for FHA/VA Mortgage Loans, after which regular payments are required to be resumed.
The Prior approval of a Special Forbearance Relief Agreement by MHMFA is required. Servicer shall obtain any necessary approval of FHA, VA or MHMFA prior to executing a Special Forbearance Relief Agreement. After approval of the terms by MHMFA and any others required, Servicer shall prepare the agreement, have it executed by all parties and forward a copy of the completed agreement to MHMFA.
If Borrower fails to comply with Borrower's obligations under the Special Forbearance Relief Agreement, Servicer shall, before the failure has continued for 60 days, either;
(a) recommend a new Special Forbearance Relief Agreement with Borrower, provided the aggregate forbearance period does not exceed 12 months in the case of Conventional Mortgage Loans or 18 months for FHA/VA Mortgage Loans;
(b) recommend a modification of the Mortgage Loan; or
(c) recommend foreclosure or acceptance of a deed in lieu thereof. (See 761 CMR 22.16 and 22.17.)
(3)
Modification Agreement
. The modification or extension of a Mortgage Loan shall be recommended by Servicer when, in its estimation, a change in the terms of payment of the Mortgage Loan presents the best means of recovering fully the maximum principal and interest. MHMFA approval of a proposed Modification Agreement is required. If MHMFA approves a recommended Modification Agreement, Servicer shall have the Modification Agreement prepared and obtain the consent in writing of any co-maker, guarantor, surety, or other obligors, which written consents shall be affixed to the Modification Agreement. Where necessary to protect MHMFA's interest, Servicer shall obtain the consent of any junior lien holder and confirmation by the title insurer that no loss in the priority of the lien is incurred. Any necessary recordation shall be made by Servicer at Borrower's expense. When a Modification Agreement is executed, Servicer shall supply copies to MHMFA and Borrower, and shall retain the original in the Loan File. Servicer must satisfy all requirements of the FHA, VA or private insurance and must forward a copy of the Modification Agreement to the FHA, VA or private mortgage insurance carrier.
MHMFA shall not be responsible for the legal adequacy of any Liquidation Agreement, Modification Agreement, Special Forbearance Relief Agreement or any other document relating thereto, all of which is Servicer's responsibility.