Servicing Guide

The Servicing Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Servicing Guide in PDF format.

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During a suspended payment forbearance plan, what happens to the interest on the mortgage loan?

During a forbearance plan, interest is not paid but still accrues.  After the forbearance plan is complete, if the borrower is approved for another workout option, the type of workout option offered will determine how the interest is handled.  For example, if the mortgage loan is modified via an Extend Modification for Disaster Relief, the missed principal and interest payments will not be capitalized into the new modified UPB.  Instead, the term of the mortgage loan will be extended by the number of missed payments.  Alternatively, if the borrower receives a Cap and Extend Modification for a Disaster Relief or a Flex Modification based on the Unique Requirements for a Borrower Impacted by a Disaster Event after the forbearance, the accrued interest is capitalized into the new modified UPB. See Servicing Guide D2-3.2-05, Fannie Mae Cap and Extend Modification for Disaster Relief and D2-3.2-06, Fannie Mae Flex Modification, as well as Lender Letter LL-2017-09R, Fannie Mae Extend Modification for Disaster Relief.

Note: This FAQ is from the Fannie Mae COVID-19 Frequently Asked Questions.

See below for more information on COVID-19:

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