Curtailments must be applied as follows:
If… |
Then… |
a principal curtailment is received |
• if the principal curtailment being applied is less than the interest-bearing UPB, the servicer must apply such curtailment to the interest-bearing UPB.
• if the principal curtailment is greater than or equal to the interest-bearing UPB, then the servicer must apply such curtailment in the following order: 1. to the principal forbearance, if any; and 2. to the interest-bearing UPB. (4-02) |
For more information see Fannie Mae LL 2020-07.