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The new standards require servicers to implement consistent processes across a number of areas, and hold servicers accountable for noncompliance.

Borrower Contact: Under the new standards, servicers must achieve "quality right party contact" with borrowers, including contacting homeowners within 120 days of delinquency, both verbally and in writing, to complete a mortgage modification or other solution to remain in the home, or enter into an arrangement to exit the home without a foreclosure.

Foreclosure Timelines: Servicers must follow clear timelines for referring loans to foreclosure, setting a date of sale for foreclosed properties, and use of designated counsel, or they will face compensatory fees for timeline violations. Once 120 days of delinquency have passed, the foreclosure process will begin.

Incentives and Compensatory Fees: Fannie Mae will provide incentives for servicers to complete loan workouts earlier in a homeowner's delinquency, and charge compensatory fees when servicers fail to make quality right party contact. Incentives and fees will be based on clear benchmarks. These steps are intended to help improve servicer performance and hold servicers accountable for their effectiveness in assisting homeowners. Compensatory fees remain a possibility for servicers who do not process foreclosures in a timely manner.

Reprinted From C.A.R.