Fannie Mae changes rules

WASHINGTON -- Fannie Mae on Monday rolled out new rules that require home loan servicers to communicate more directly with borrowers who have fallen behind on mortgage payments and expedite arrangements aimed at helping homeowners avoid foreclosure.

The new standards require servicers to take a more consistent approach to how they deal with troubled borrowers, beginning in the initial months after a loan becomes delinquent, through any efforts to modify the terms of the loan and, if necessary, through the foreclosure process.

Under the new rules laid out Monday by Fannie Mae, loan servicers must contact homeowners verbally and in writing within the first 120 days after a loan becomes delinquent and complete a loan modification or other option that keeps the borrower in their home. Alternatively, the servicer can enter into an arrangement with the borrower that gets them out of the house without going through the foreclosure process.

Fannie Mae asserts that the standards will increase the likelihood that servicers will contact homeowners early in the default process, one of the most important factors in preventing foreclosure.