Servicing Guide

Published October 14, 2020

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Future Cash Simplification Changes to Investor Reporting – Process Requirements

Table of Contents 
Future Cash Simplification Changes to Investor Reporting – Fannie Mae Process Requirements    
Fannie Mae-Initiated Monthly P&I Drafts for S/A & S/S Remittance Portfolio Loans

Current Process    
Changes to Process    

Additional Investor Reporting Operating Enhancements    
Changes to the Cash Reconciliation Cycle

Current Process
Changes to Process    

Cash Adjustments as Necessary for S/A & S/S Remittance Portfolio Loans

Current Process    
Changes to Process    

Service Members Civil Relief Act Loans (SCRA) Cash Adjustment for S/S PFP Loans

Current Process    
Changes to Process    

Fannie Mae to Draft Servicers for Borrower Contribution on Delinquency Modified S/A & S/S Portfolio Loans

Current Process    
Changes to Process

Summary Comparison of Changes    
Summary of Reports in Fannie Mae Connect    
Summary of Fannie Mae’s SURF TM Reports    
Fannie Mae Cash Activity Period Timelines

1. Fannie Mae Current: Cash Activity Period Timelines for all Remittance Types    
2. Fannie Mae After Change: Cash Activity Period Timelines for S/A & S/S Portfolio loans    
3. Fannie Mae After Change: Cash Activity Period Timelines for A/A Portfolio loans    
4. SCRA Fannie Mae Before Change: Cash Activity Period Timelines for S/S PFP loans    
5. SCRA Fannie Mae After Change: Cash Activity Period Timelines for S/S PFP loans    
6. Borrower Contribution Fannie Mae Before Change: Cash Activity Period Timelines for S/A & S/S Cash loans    
7. Borrower Contribution Fannie Mae After Change: Cash Activity Period Timelines for S/A & S/S Cash loans    
8. Remittance Detail Principal & Interest Report example with details for the Interest Due Column    
For More Information

Future Cash Simplification Changes to Investor Reporting – Fannie Mae Process Requirements
Updated February 11, 2020

A key goal for the future state of Master Servicing involves simplifying the Investor Reporting cash remittance and reconciliation process.  As announced in Lender Letter LL-2019-07, Fannie Mae is updating its Single-Family Investor Reporting requirements:

 

Impact by Remittance Type

 

 

Actual/Actual (A/A)

 

S/S MRS

 

S/A

 

S/S Swap MBS

 

Fannie Mae-Initiated Principal and Interest (P&I) Drafts for Scheduled/Scheduled (S/S) and Scheduled/Actual (S/A) Portfolio Mortgage Loans

No Change

(Servicer-Initiated)

No Change

(Fannie Mae-Initiated)

 

Additional Investor Reporting Operational Enhancements

  • modify the cash reconciliation cycle to reduce lag time between reporting and cash cycle close

 

 

 

 

No Change (Currently BD-2)

 

  • draft borrower contribution (unapplied funds) on mortgage loan modifications on the scheduled P&I draft date

 

No Change

(Servicer-Initiated)

 

 

No change

 

  • draft/reimburse the net of SCRA adjustments

No change

S/S PFP Loans Only

No change

No change

 

With Servicing Guide Announcement SVC-2019-08 Fannie Mae announced an August 2020 effective date for these changes and Fannie Mae will initiate the draft for reported July activities in August 2020.  Servicers must implement these changes for cash remittance and reconciliation activity by the August 2020 effective date.
Fannie Mae-Initiated Monthly P&I Drafts for S/A & S/S Remittance Portfolio Loans

Current Process
Currently, instructions for remitting monthly P&I payments to Fannie Mae for S/A remittance type mortgage loans are provided in the following table:

The servicer must...

Report its remittance for all funds due to Fannie Mae via the Cash Remittance System (CRS) in time for the funds to be available for Fannie Mae’s use by the 20th calendar day of each month.

Note: If the 20th calendar day is not a business day, the servicer must report these remittances by the preceding business day.

Transmit the remittance transaction via CRS by 4 p.m. ET on the 19th of each month.

Note: If the 19th calendar day is not a business day, the servicer must transmit the remittance transaction before 4 p.m. ET on the last preceding day.

Currently, instructions for remitting monthly P&I payments to Fannie Mae for S/S remittance type portfolio mortgage loans are provided in the following table:

The servicer must...

Report its remittance for all funds due to Fannie Mae via CRS in time for the funds to be available for Fannie Mae’s use by the 18th calendar day of each month.

Note: If the 18th calendar day is not a business day, the servicer must report these remittances by the preceding business day.

Transmit the remittance transaction via CRS by 4 p.m. ET on the 17th of each month.

Note: If the 17th calendar day is not a business day, the servicer must transmit the remittance transaction before 4 p.m. ET on the last preceding day.

Changes to Process
After the change in process, instructions for remitting monthly P&I payments to Fannie Mae for S/A remittance type mortgage loans will be provided in the following table:

The servicer must...

Make all funds due to Fannie Mae available for drafting by the 20th calendar day of each month, or the preceding business day if the 20th is not a business day.

Note: To assist a servicer in ensuring it will have sufficient funds on hand in its drafting account, Fannie Mae will provide the Remittance Detail – P&I Report for P&I remittances by the third business day on Fannie Mae’s website. 

After the change in process, instructions for remitting monthly P&I payments to Fannie Mae for S/S remittance type portfolio mortgage loans will be provided in the following table:

The servicer must...

Make all funds due to Fannie Mae available for drafting by the 18th calendar day of each month, or the preceding business day if the 18th is not a business day.

Note: To assist a servicer in ensuring it will have sufficient funds on hand in its drafting account, Fannie Mae will provide the Remittance Detail – P&I Report for P&I remittances by the third business day on Fannie Mae’s website.

When the changes become effective, servicers will no longer be required to report its monthly P&I remittance due to Fannie Mae via CRS for S/A & S/S portfolio loans.  Fannie Mae will initiate the draft request for monthly P&I due based on the loan activity reports (LARs) received and processed by Fannie Mae.  This new process will reduce touch points and eliminate manual operations for remitting monthly P&I for S/A & S/S portfolio loans while aligning the remittance process with the current process for S/S MBS loans.  Additionally, the Schedule 3 reconciliation will no longer be required for S/A & S/S portfolio loans once the servicers complete the post implementation shortage/surplus settle-up process.

Fannie Mae to provide the servicers the Remittance Detail – P&I Report with loan level details for P&I remittances by the third business day on Fannie Mae’s website.  The P&I Draft Notifications Report with summary servicer level remittance information will also be available by the third business day on Fannie Mae Connect.  Additional loan level draft adjustment details for these monthly P&I remittances will be displayed in the Loan Servicing Data Utility’s (LSDU) Cash Position Search and the adjustment details will be available for download in LSDU.  Servicers will have the monthly P&I remittance data available by the third business day prior to the scheduled drafting dates to ensure they have sufficient notification for the monthly P&I drafts on the 18th and 20th calendar days.

 Servicers will continue to use CRS to update their bank account information for S/A and S/S portfolio loans.  However, servicers will no longer be able to submit requests for amounts to be drafted for monthly P&I for S/A and S/S portfolio loans.  There will be no change to cash portfolio loans with the Actual/Actual (A/A) remittance type as servicers will still be expected to submit their A/A monthly P&I draft requests to Fannie Mae via CRS.  Effective, 07/18/2020, servicers will no longer be able to initiate draft requests via CRS with Remittance code of 002 for Scheduled/Actual portfolios and with Remittance Code of 003 for Scheduled/Scheduled.  

Additional Investor Reporting Operating Enhancements
Changes to the Cash Reconciliation Cycle 

Current Process
The current Cash Reconciliation Cycle is open until the twenty seventh calendar day following the Loan Activity Reporting Cycle closed on the second business day, allowing analysts to perform various adjustments to clear out shortages and surpluses within servicer’s loan portfolios for all portfolio loans S/A, S/S and A/A.  If cash reconciliation adjustments are processed by the twenty seventh calendar day, the details for the adjustments are available in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect for the current month’s activity.  If cash reconciliation adjustments are processed after the twenty seventh calendar day, the details for the adjustments are available in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect for next month’s activity.

Changes to Process
With Fannie Mae drafting principal and interest for S/A and S/S portfolio loans based on the accepted loan activity reports processed, there will not be any need for using the existing cash reconciliation process.

The S/A and S/S portfolio loans will be removed from the current cash reconciliation process that results in Shortage Surplus Adjustments.  Fannie Mae will move the cash reconciliation cycle close to the second business day of the month for S/A and S/S remittance portfolio loans which is the same day as the loan activity reporting cycle close.

 For S/A and S/S portfolio loans, Investor Reporting will allow adjustments at loan level, if any adjustments are needed.  If a cash adjustment is processed by the second business day, the amount will be part of the current month’s P&I draft on CD18 (for S/S loans) and CD20 (for S/A loans).  The adjustment amount will be included in the current month’s interest amount within the interest due amount field in the Remittance Detail – P&I Report for P&I remittances.  The adjustment details will be displayed in LSDU's Cash Position Search at loan level with adjustment details available in LSDU for download.  In addition, servicers will have access to Remittance Details – Cash Adjustments file with loan level adjustment for remittance types of S/A and S/S portfolio loans via B2B and available in LSDU for download.

 If a cash adjustment is processed after the second business day, the amount will be part of next month’s P&I draft within the interest due amount field in the Remittance Detail – P&I Report for P&I remittances and be displayed in LSDU's Cash Position Search at loan level and available for download. 

Fannie Mae will move the cash reconciliation cycle close to the third business day of the month for Actual/Actual (A/A) remittance portfolio loans, the day following the loan activity reporting cycle close on the second business day of the month.  If cash reconciliation adjustments are processed by the third business day, the amount will be reflected in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect and LSDU’s Cash Position Search for the current month’s activity.  However, if the cash reconciliation adjustments are processed after the third business day, the amount will be reflected in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect and LSDU ’s Cash Position Search for the next month’s activity. 
Cash Adjustments as Necessary for S/A & S/S Remittance Portfolio Loans

Requirement Change

Activity

Fannie Mae Current

Fannie Mae After Change

 

Cash Adjustments as necessary for Scheduled/Actual (S/A) & Scheduled/Scheduled (S/S) Remittance Portfolio Loans

 

Cash Adjustments for Scheduled/Actual (S/A) & Scheduled/Scheduled (S/S) Remittance Portfolio Loans

Shortage/Surplus Adjustments based on Adjustment Type transactions within Investor Reporting

For S/A & S/S portfolio loans:

Fannie Mae-Initiated net of monthly P&I draft

S/S Draft Date: 18th CD

S/A Draft Date: 20th CD

based on Adjustment Type transactions within Investor Reporting

 

For A/A portfolio loans:

No change to existing process

Current Process
The following table illustrates business activities and adjustment types currently used for any necessary cash adjustments made for all portfolio loans S/A, S/S and A/A:

Business Activity

Adjustment Type

Fannie Mae Current

Cash sent to/received from clearing account for Service Members Civil Relief Act Loans (SCRA) interest reimbursed to servicers via shortage surplus adjustment for S/S PFP loans 

System to/from Clearing

Recurring Shortage Surplus Adjustment

Cash sent to/received from clearing account for Delinquency Modification adjustments

System to/from Clearing

As Needed Shortage Surplus Adjustment

Business as usual adjustments for various/miscellaneous activities

System to/from Clearing

As Needed Shortage/Surplus Adjustments

Borrower Contribution (Unapplied Funds) applied to interest from Delinquency Modification

Unapplied Funds to Interest

As Needed Shortage Surplus Adjustment

AR/AP Adjustment for Interest differences from LARs with soft rejects

AR/AP Adjustment

As Needed Shortage Surplus Adjustment

Cash transferred from the current activity period to the next activity period to account for cash intended for the next period

Activity Period to Activity Period

As Needed Adjustment

with Very Low Volume

Cash transferred between branches of the same servicer to reconcile the cash remitted at the nine-digit servicer level

Branch to Branch

As Needed Adjustment

with Very Low Volume

Cash Transferred from one remittance type to another remittance type for cash reconciliation

Remittance Type to Remittance Type

As Needed Adjustment

with Very Low Volume

Cash Transferred to Falcon from Investor Reporting

System to Falcon

As Needed Adjustment

with Very Low Volume

Shortage/Surplus adjustments are currently processed at the nine-digit servicer level on S/A, S/S and A/A Portfolio loans with adjustment details available in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect.

Changes to Process
The following table illustrates business activities and adjustment types for any necessary cash adjustments for S/A & S/S portfolio loans when the changes become effective:

Cash adjustments will be processed as necessary at loan level adjusting the ‘Interest due column’ in the Remittance Detail – P&I Report.  Fannie Mae will draft/reimburse for the cash adjustment amount automatically and it will be netted against the current month’s P&I draft on CD18 (for S/S loans) and CD20 (for S/A loans) for cash adjustments made by the second business day.

If cash adjustments are processed after the second business day, Fannie Mae will draft/reimburse for the cash adjustment amount automatically and it will be netted against the interest due amount column in next month’s Remittance Detail – P&I Report. 

The breakdown and detail for the cash adjustment amounts will be reflected in LSDU.  All the adjustment types are displayed with loan level amounts in the LSDU loan level detail download with the amounts summarized at the 9-digit servicer level prior to the loan level detail download and the adjustment details will be available for download in LSDU.  In addition, servicers will have access to Remittance Details – Cash Adjustments file with loan level adjustment for remittance types of S/A and S/S portfolio loans via B2B and available in LSDU for download. These new cash adjustment types and changes to the process are applicable to S/A and S/S portfolio loans only, with A/A portfolio loans maintaining the current cash adjustment types and current process. 

Service Members Civil Relief Act Loans (SCRA) Cash Adjustment for S/S PFP Loans

Requirement Change

Activity

Fannie Mae Current

Fannie Mae After Change

 

SCRA Cash Adjustments S/S PFP Loans

 

 

SCRA Cash Adjustments S/S PFP Loans

 

Recurring Shortage/Surplus Adjustments based on Adjustment Type transactions within Investor Reporting

For S/S PFP loans:

Fannie Mae-Initiated net of monthly P&I draft

S/S Draft Date: 18th CD

S/A Draft Date: 20th CD

based on Adjustment Type transactions within Investor Reporting

 

For S/A, S/S & A/A portfolio loans and S/S SWAP loans:

No change to existing process

Current Process
For SCRA loans, servicers submit the 1022 form to the Sailors and Soldiers mailbox by BD9.  These SCRA loans can have the following remittance types and current operating process:

  • S/S PFP loans:  

The interest amount is remitted by servicers at the higher pre-SCRA note rate rather than the lower SCRA rate and the servicers are reimbursed the difference via shortage surplus adjustment (System to/from Clearing).

  • S/A, S/S and A/A cash loans:  

The note and lender pass thru rates are adjusted down to the lower SCRA rate.  The lower SCRA rate is used to calculate the lower P&I payment amount which is used by the servicer to submit their monthly P&I remittance and no draft adjustment is required.  

  • S/S Swap loans:

The excess interest amount which is the regular note rate interest amount over the SCRA rate interest amount is reimbursed to servicers via ACH. 

This SCRA activity with recurring shortage surplus adjustments is for S/S PFP loans, with the details for the adjustments available in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect.  

Changes to Process

For SCRA loans, servicers will continue to submit the 1022 form to the Sailors and Soldiers mailbox by BD9.  These SCRA loans can have the following remittance types and revised operating process:

  • S/S PFP loans:  

The SCRA adjustment will reduce the interest due amount to reflect interest calculated using the lower SCRA rate.  The interest adjustment amount will be netted on the interest due amount on the Remittance Detail – P&I Report in FM Connect along with adjustment details available for download in LSDU.  If a SCRA adjustment is processed after BD2, the P&I draft amount will be adjusted in the next month’s P&I draft and reflected in the following month’s Remittance Detail – P&I Report.

  • S/A, S/S and A/A Cash Portfolio loans (No Change):  

The note and lender pass thru rates are adjusted down to the lower SCRA rate.  The lower SCRA rate is used to calculate the lower P&I payment amount which is used by the servicer to submit their monthly P&I remittance and no draft adjustment is required.  

  • S/S Swap loans (No Change):

The excess interest amount which is the regular note rate interest amount over the SCRA rate interest amount is reimbursed to servicers via ACH. 

Additionally, there will be no changes to the servicers current practices for LAR 96 reporting on SCRA loans which will continue.  This SCRA activity with recurring cash adjustments is for S/S PFP loans, with the cash adjustment processed at loan level adjusting the ‘Interest due column’ in the Remittance Detail – P&I Report and details will be reflected in LSDU with adjustment details available for download in LSDU.  In addition, servicers will have access to the Remittance Details – Cash Adjustments file with loan level adjustment for remittance types of S/A and S/S portfolio loans via B2B and available in LSDU for download. 

Fannie Mae to Draft Servicers for Borrower Contribution on Delinquency Modified S/A & S/S Portfolio Loans

Current Process
The shortage surplus cash adjustments for the borrower contribution (borrower contribution) activity is the as needed adjustment with the highest volume of activity.  Fannie Mae requires Servicers to enter the borrower contribution amount into HSSN/SMDU when a new delinquency modification case is created and submitted to Fannie Mae.  The new delinquency modification case is then closed and successfully bridged to Investor Reporting which results in drafting of the borrower contribution amounts which is automatically generated  via shortage surplus adjustments.  Servicers submit remittance requests for all loans with all remittance types via CRS for borrower contribution on delinquency modified loans.  The details of the borrower contribution amounts are available in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect.  Fannie Mae reimburses the servicer when a delinquency modification case is cancelled with those details also available in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect.

Changes to Process
Fannie Mae will continue to require servicers to enter borrower contribution amount in HSSN/SMDU when a new delinquency modification case is created and submitted to Fannie Mae.  For S/A and S/S portfolio loans, when a new delinquency modification case is closed or cancelled and successfully bridged to Investor Reporting, Fannie Mae will adjust for the borrower contribution amount automatically and it will be netted against the current month’s P&I draft on CD18 (for S/S loans) and CD20 (for S/A loans) for cases closed and successfully bridged to Investor Reporting by the second business day.  The borrower contribution amount will be included within the current month’s interest amount within the interest due amount field in the Remittance Detail – P&I Report for P&I remittances.  However, if the borrower contribution amount is processed after the second business day, Fannie Mae will adjust for the borrower contribution amount automatically and will be netted against the next month’s P&I draft.  The borrower contribution amount will be included within the next month’s interest amount within the interest due amount field in the Remittance Detail – P&I Report for P&I remittances.  The breakdown and detail for the borrower contribution amounts will be reflected in LSDU.  The borrower contribution adjustment type is displayed with loan level amounts in the LSDU loan level detail download with the amounts summarized at the 9-digit servicer level prior to the loan level detail download and the adjustment details will be available for download in LSDU.  In addition, servicers will have access to Remittance Details – Cash Adjustments file with loan level adjustment for remittance types of S/A and S/S portfolio loans via B2B and available in LSDU for download. This new process for borrower contribution is applicable to S/A and S/S portfolio loans only. 

Servicers will still be expected to submit remittance requests for A/A via CRS for borrower contribution on delinquency modified loans and continue to work with Fannie Mae analysts using the existing shortage surplus adjustments process.  The timeline for the borrower contribution shortage surplus adjustments will be changed with the cash reconciliation cycle closing on the third business day of the month for A/A remittance portfolio loans.  If the borrower contribution adjustments are processed by the third business day, the amount will be reflected in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect and displayed in LSDU at loan level for the current month’s activity.  However, if the borrower contribution adjustments are processed after the third business day, the amount will be reflected in the Current Cycle Shortage Surplus Adjustments Report in Fannie Mae Connect and displayed in LSDU at loan level for the next month’s activity.  

Summary Comparison of Changes

The Summary of Reports in Fannie Mae Connect can be found here

The Summary of Fannie Mae’s SURF TM Reports can be found here

The Fannie Mae Cash Activity Period Timelines can be found here 

For More Information
Please contact Master Servicing at 1-800-2-FANNIE (Option 1, Option 6) if you have any questions about these changes.

 

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