Servicing Management Default Underwriter (SMDU ) Release Notes for SMDU Version 7.7 January 12, 2017 During the weekend of January 20, 2018, Fannie Mae will implement SMDU Version 7.7, which includes new functionality and updates as described below. The changes described in these Release Notes apply to all prequalification and trial structuring requests submitted to SMDU after the implementation of Version 7.7. Therefore, a final structuring request made to SMDU may not include the changes included in these Release Notes. To implement this Release, SMDU will not be available to process transactions from 10:00 PM Eastern Time on January 19, 2018, until 4:00 PM Eastern Time on January 20, 2018. ALIGNMENT WITH FANNIE MAE POLICY With this Release: SMDU will be synchronized with Fannie Mae Lender Letter LL-2017-08, which announced the Updates to Imminent Default Evaluation for a Conventional Mortgage Loan Modification. This functionality will be available to: o A servicer using a B2B platform ( B2B servicer ) who is using Interface (schema) Version 7.0 o A servicer who is using the SMDU User Interface (UI) Although SMDU will be synchronized with LL-2017-08, SMDU will continue to accept results of an imminent default evaluation performed outside of SMDU until July 1, 2018, which is the policy s mandatory effective date. Refer to the following pages for more information on when and how SMDU will evaluate for imminent default. SMDU Will Run an Imminent Default Evaluation (IDE) When: 1. Evaluating a loan for a modification ( auto decisioning ) 2. Creating a case for a loan modification that was not decisioned by SMDU. 3. Fannie Mae s Stand-Alone IDE Tool is used to conduct an independent imminent default evaluation prior to the loan being evaluated for a modification. 2018 Fannie Mae. Trademarks of Fannie Mae. 1 of 9
Important Notes: Refer to pages 4-5 for the list of mandatory imminent default data elements required for using SMDU to perform an IDE as part of auto decisioning, case creation and/or using the Stand-Alone IDE tool. The updated policy for an IDE requires a servicer to complete a new data element called # 30 Days Delinquent In 6 Months. This data element indicates the number of times the loan was 30 days delinquent within the previous six months. Refer to pages 6-8 for additional information on how to complete this field. A servicer using the UI should also refer to the SMDU UI User Guide for details on using SMDU to evaluate for imminent default via the UI. The updated SMDU UI User Guide will be available via the UI and/or the SMDU Web Page following the Release. 1. SMDU Evaluation of Imminent Default as Part of a Loan Modification Evaluation ( Auto Decisioning ) Prior to July 1, 2018: o For SMDU to evaluate a loan for imminent default on a prequalification and/or a trial structuring request a servicer must provide all the mandatory IDE data elements and leave data fields Loan Imminent Default Indicator (DD#35) and Source of Imminent Default (DD#472) blank. If a servicer does not provide the mandatory IDE data elements then the servicer must complete DD#35 and DD#472. o When a servicer provides the mandatory IDE data elements, completes the Loan Imminent Default Indicator field (DD#35) and indicates the Source of Imminent Default (DD#472) is Servicer Imminent Default Evaluation, SMDU will evaluate for imminent default and the SMDU results will be used in the workout evaluation. o When a servicer provides the mandatory IDE data elements, indicates the Loan Imminent Default Indicator field (DD#35) is No and the Source of Imminent Default (DD#472) is either Freddie Mac Imminent Default Model or Servicer Evaluation of Borrower Hardship SMDU will evaluate the loan for imminent default. If SMDU determines the loan does meet the imminent default criteria (DD#34= ) SMDU will use that information as part of the prequalification and/or trial structuring request. When this scenario occurs SMDU will return the following message in the SMDU response. SMDU has sufficient data to evaluate Imminent Default. Modification evaluation is based on SMDU's Imminent Default result. (Message 6449) On or after July 1, 2018: o A servicer must provide the IDE data elements and can no longer indicate the Source of Imminent Default (DD#472) is the Freddie Mac Imminent Default Model nor the Servicer Evaluation of Borrower Hardship. 2017 Fannie Mae. Trademarks of Fannie Mae. 2 of 9
2. Creating a Case for a Loan Not Decisioned By SMDU in Fannie Mae s Servicing Solutions System (HomeSaver Solutions Network/HSSN) SMDU will run an imminent default evaluation when it is used to create a case in Fannie Mae s servicing solutions system for a loan that was not decisioned by SMDU. Although SMDU will run an IDE it will not impede the creation of a case in the servicing solutions system. o SMDU will perform an IDE when the case creation request contains the mandatory IDE data elements and both the Loan Imminent Default Indicator (DD#35) and Source of Imminent Default (DD#472) are left blank. o If an imminent default evaluation was determined outside of SMDU the following information should be included in the case creation request: Mandatory IDE data elements Loan Imminent Default Indicator (DD#35) Source of Imminent Default (DD#472) 3. Fannie Mae Stand-Alone IDE and Reporting Tool A servicer can use this functionality to conduct an independent imminent default evaluation prior to the loan being evaluated for a modification or when creating a case in Fannie Mae s servicing solutions system for a loan that was not decisioned by SMDU. o Refer to pages 4-5 for the mandatory IDE request data elements. o Refer to the table below (page 4) for the applicable information that will be returned in the Stand-alone IDE Response. A servicer using the SMDU UI should refer to the SMDU UI User Guide for a screen shot of the stand-alone IDE response. 2017 Fannie Mae. Trademarks of Fannie Mae. 3 of 9
Fannie Mae Stand-Alone IDE Response Data Element Ref ID # SMDU Derived Imminent Default Indicator (New Data Element) (DD#34) Qualifying Gross Monthly Income Pre-Workout (DD#39) Front Ratio Pre-Workout (DD#59) Months Past Due (DD#62) First Payment Date at Origination (DD#68) Monthly Housing Expense Pre-Workout (DD#111) Total Cash Reserves (DD#424) IDE Pre- Eligibility Indicator (New Data Element) (DD#966) IDE Credit Indicator (New Data Element) (DD#967) IDE Hardship Indicator (New Data Element) (DD#968) Mandatory IDE Request Data Elements ( IDE Request ) Below is a list of mandatory and applicable data elements that must be provided by the servicer in order for SMDU to run an imminent default evaluation as part of an auto decisioning request, case creation request, and/or IDE Stand-Alone request. IDE Data Element Ref ID # Mandatory for SMDU to Perform IDE Credit Score (DD#17) Notes Property Usage Type Code (DD#27) Property Number of Units (DD#28) Loan Pre-Workout Principal and Interest Payment (DD#44) Last Paid Installment Date (DD#87) Monthly Real Estate Tax (DD#103) Hardship Reason Code (DD#150) 2017 Fannie Mae. Trademarks of Fannie Mae. 4 of 9
IDE Data Element Ref ID # Mandatory for SMDU to Perform IDE Asset Type (DD#455) Notes The following asset types will be used to determine total cash reserve amount (DD#424). Checking Account, Savings Account, Money Market/Mutual Fund, Severance Package, Other Liquid Asset, Stock, Trust/Annuity Funds, Bond, Cash on Hand, and Certificate of Deposit, Gift IDE will not consider the following: Automobile, Boats RV, Life Insurance, Other no-liquid asset, Real Estate not for sale, and Retirements Funds IRA 401K Asset (DD#456) If there are no assets select Asset Type Checking and enter Zero in Asset. Income Type (DD#457) Income Monthly (DD#458) Expense Type (DD#459) Must be populated with a valid expense enumeration type. Expense Monthly Payment (DD#460) Must be Zero, even if a borrower has no expenses. If there are no expenses, chose a valid expense enumeration type and send Expense Monthly Payment as Zero. Borrower Occupancy Indicator # 30 Days Delinquent In 6 Months Association Due/Fees Monthly Hazard Insurance Loan Imminent Default Indicator (DD#471) (DD#960.22/ DD#961.22) (DD#40) (DD#102) (DD#35) Current Escrow Shortage (DD#474) Loan Imminent Default Indicator Source Type Code Monthly Flood Insurance (DD#472) (DD#489) Refer to pages 6-8 for examples on how to complete this data element. If DD#35 is populated then DD#472 needs populated and viceversa. If DD#35 is populated then DD#472 needs populated and viceversa. 2017 Fannie Mae. Trademarks of Fannie Mae. 5 of 9
Understanding the New Data Element: # 30 Days Delinquent In 6 Months (DD #961.22) The data field Number of 30 days delinquencies in the previous 6 months is a new data element and is only used by SMDU to evaluate for imminent default. Please review the four different scenarios to help aid you in completing this new data element. Example #1: For an evaluation made in July 2018 within the 6 month history in the table below 2018 IDI Calendar Month End Jan Feb Mar Apr May Jun LPI Date 1-Jan 1-Jan 1-Jan 1-Jan 1-Jan 1-Jan Due Date 1-Feb 1-Feb 1-Feb 1-Feb 1-Feb 1-Feb Months Delinquent 0 1 2 3 4 5 30 Days Delinquent X DD 961.22 Value 1 In this example, at the end of January, the loan has a LPI date of 1/1/2018, making the loan current, 0 months delinquent. By the end of February, the borrower had not made their payment, as a result at the end of February they were one month (30 days) delinquent. This would add one tally mark in the number of 30 day delinquencies for the reporting period. By the end of March, the borrower had not made a payment, as a result, the loan LPI date remains 1/1/2018, making the loan two months (60 days) delinquent. No additional payments were made in April, May or June, therefore the LPI date through June remains 1/1/2018. In April, the loan in is three months delinquent (90 days delinquent); in May is four months delinquent (120 days), and in June is five months delinquent (150 days). None of those months qualify as a 30 day delinquency. Therefore when being evaluated in July, for the prior 6 month period from 1/1/2018 to 6/30/2018, the borrower is considered to have experienced one 30 day delinquency and # 30 Days Delinquent In 6 Months (DD#961.22) should be populated with a value of 1. 2017 Fannie Mae. Trademarks of Fannie Mae. 6 of 9
Example 2: For an evaluation made in July 2018 within the 6 month history in the table below 2018 IDI Calendar Month End Jan Feb Mar Apr May Jun LPI Date 1-Jan 1-Jan 1-Jan 1-Feb 1-May 1-Jun Due Date 1-Feb 1-Feb 1-Feb 1-Mar 1-Jun 1-Jul Months Delinquent 0 1 2 2 0 0 30 Days Delinquent X DD 961.22 Value 1 In this example, at the end of January the loan has a LPI date of 1/1/2018, making the loan current, 0 months delinquent. By the end of February, the borrower had not made their payment, as a result at the end of February they were one month (30 days) delinquent. This would add one tally mark in the number of 30 day delinquencies for the reporting period. By the end of March, the borrower had not made a payment, as a result, the loan LPI date remains 1/1/2018, making the loan two months (60 days) delinquent. In April the borrower made a payment advancing the LPI date to 2/1/2018 and keeping the loan two months (60 days) delinquent. In May the borrower made three payments, advancing the LPI date to 5/1/2018 and bringing the loan current. In June the borrower made a payment, advancing the LPI date to 6/1/2018 remaining current at the end of the 6 month review cycle. Therefore, when being evaluated in July, for the 6 month period from 1/1/2018 to 6/30/2018, the borrower is considered to have experienced one 30 day delinquency and # 30 Days Delinquent In 6 Months (DD#961.22) should be populated with a value of 1. 2017 Fannie Mae. Trademarks of Fannie Mae. 7 of 9
Example 3: For an evaluation made in July 2018 within the previous 6 month history in the table below 2018 IDI Calendar Month End Jan Feb Mar Apr May Jun LPI Date 1-Jan 1-Jan 1-Jan 1-Feb 1-May 1-May Due Date 1-Feb 1-Feb 1-Feb 1-Mar 1-Jun 1-Jun Months Delinquent 0 1 2 2 0 1 30 Days Delinquent X X DD 961.22 Value 2 In this example, at the end of January the loan has a LPI date of 1/1/2018, making the loan current, 0 months delinquent. By the end of February, the borrower had not made their payment, as a result at the end of February they were one month (30 days) delinquent. This would add one tally mark in the number of 30 day delinquencies for the reporting period. By the end of March, the borrower had not made a payment, as a result, the loan LPI date remains 1/1/2018, making the loan two months (60 days) delinquent. In April the borrower made a payment, advancing the LPI date to 2/1/2018 and keeping the loan two months (60 days) delinquent. In May the borrower made three payments, advancing the LPI date to 5/1/2018 and bringing the loan current. In June, the borrower missed a payment, keeping the LPI date at 5/1/2018 becoming 1 month (30 days) delinquent for the last month of the review cycle. Therefore, when being evaluated in July, for the 6 month period from 1/1/2018 to 6/30/2018, the borrower is considered to have experienced two 30 day delinquency and # 30 Days Delinquent In 6 Months (DD#961.22) should be populated with a value of 2. Example 4: For an evaluation made in July 2018 within the 6 month history in the table below 2018 IDI Calendar Month End Jan Feb Mar Apr May Jun LPI Date 1-Nov 1-Dec 1-Mar 1-Apr 1-May 1-Jun Due Date 1-Dec 1-Jan 1-Apr 1-May 1-Jun 1-Jul Months Delinquent 2 2 0 0 0 0 30 Days Delinquent DD 961.22 Value 0 In this example, at the end of January, the loan has a LPI date of 11/1/2017, making the loan 2 months (60 days) delinquent. By the end of February, the borrower had made a payment advancing the LPI date to 12/01/2017, keeping the loan two months (60 days) delinquent. By the end of March, the borrower had made three payments, as a result, the loan LPI date was advanced to 3/1/2018, making the loan current, 0 months delinquent. In April, May and June the borrower made regular monthly payments, keeping the loan current. Therefore, when being evaluated in July, for the 6 month period from 1/1/2018 to 6/30/2018, the borrower is considered to have experienced zero 30 day delinquency and # 30 Days Delinquent In 6 Months (DD#961.22) should be populated with a value of 0. 2017 Fannie Mae. Trademarks of Fannie Mae. 8 of 9
MISCELLANEOUS UPDATES The following message will be returned when a submissions is made to SMDU while it is in maintenance mode: Error Code 503 SMDU application is under maintenance mode response for AD, CM and Imminent Default. Introduce new information-related feature denoted by an icon -- SMDU UI Only o Please refer to the What s New section of the SMDU UI User Guide for more information SCHEDULED DOWNTIME To implement this Release, SMDU will not be available to process transactions from 10:00 PM Eastern Time on January 19, 2018, until 4:00 PM Eastern Time on January 20, 2018. Please do not submit transactions to SMDU during this period. Questions? Please contact SMDU Operations at smdu_support@fanniemae.com. QUESTIONS AND MORE INFORMATION If you have questions and/or need additional information about this Release and/or SMDU please contact your Fannie Mae Servicing Portfolio Manager. 2017 Fannie Mae. Trademarks of Fannie Mae. 9 of 9