Fannie Mae is bringing the servicing of its HomeSaver Advance program in-house.

The government-sponsored enterprise has been using Dyck O'Neal Inc., an Arlington, Texas, collection agency, to service the advances, which are unsecured loans of up to $15,000 that cover past-due amounts on a mortgage.

But in a notice to lenders last week, Fannie said that beginning today it will take over the certification, billing and collection on these loans.

Brian Faith, a spokesman for the GSE, said Tuesday that it reviewed its "overall approach to implementing the HSA option and have reorganized some functions in-house versus outsourced, etc."

Despite the change, Dyck O'Neal will remain "a valued vendor partner" for other programs, Faith said.

Dyck O'Neal did not return a call seeking comment.

Fannie launched the advance program in February of last year to help homeowners catch up with mortgage payments and allow the GSE to avoid the expense of purchasing nonperforming loans out of securitized pools. In a report to Congress last month, Federal Housing Finance Agency examiners found that 70% of borrowers who received HomeSaver Advances had redefaulted. Since then Fannie has indicated it is backing away from the program.

In the lender notice, it also warned that data and document errors on the advances may be violations of the Truth-in-Lending Act.

The federal government can "impose penalties and other sanctions" for such violations, and mortgage servicers are required to "take whatever action is necessary to resolve TILA errors," Fannie said.

Any data and document errors that remain unresolved after 30 days will result in the note being rejected and cancelled, the GSE said. HomeSaver Advance notes typically are rejected when the borrower listed to receive the advance is not the same as the borrower named on the first-lien mortgage, Fannie said.

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