Lender Letter LL-2026-01 Updates to retention workout options and disaster-related foreclosure proceedings policy

Impact. This guidance restructures your forbearance operations around standardized three-month increments with a 12-month cap and introduces mandatory Fannie Mae approvals for extensions beyond Guide limits. For disaster-impacted borrowers, you must now obtain written foreclosure approval and submit detailed property assessments to Fannie Mae within five business days, creating new approval bottlenecks in your default timeline.

Risk. Compliance teams face examination risk around the new approval workflows and documentation requirements, particularly the five-day submission deadline for disaster properties. Operations will struggle most with timeline management as foreclosure referrals now require pre-approval rather than post-notification, potentially extending holding periods and increasing carrying costs.

Recommended Action. Update your servicing procedures immediately to reflect the three-month forbearance structure and build the Forbearance Exception Request Template into your workflow systems. Train your loss mitigation and foreclosure teams on the new approval requirements and establish clear escalation paths to meet the five-day disaster property submission deadline.

Watch. Monitor Fannie Mae's response times to exception requests and foreclosure approvals, as processing delays could significantly impact your portfolio performance metrics and regulatory timelines through 2026.