Servicing Guide

Published September 9, 2020

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Per the Fannie Mae Investor Reporting Manual, how should a servicer report during the first reporting cycle for a "same month" MBS mortgage loan?

When a mortgage loan in an MBS pool is closed in the same month that the pool is issued, the borrower does not owe the servicer a monthly payment until after the servicer's first monthly remittance must be made to Fannie Mae. Therefore, the servicer must use its own funds to advance the interest that is scheduled to be passed through to Fannie Mae for the mortgage loan in that month and to make the first guaranty fee remittance. The interest advance represents one month's interest, calculated on the issue date principal balance of the mortgage loan and using either:  

  • the pass-through rate for the pool (for a fixed-rate mortgage loan),  
  • the pool accrual rate (for an ARM in a stated-structure pool), or  
  • the accrual rate for the mortgage loan (for an ARM in a weighted-average structure ARM Flex® pool).

The servicer's first remittance for a mortgage loan submitted for “same month” pooling will be an interest-only remittance, unless the borrower sends the servicer a curtailment before the first payment is due on the mortgage loan. This means that the servicer must not report a scheduled principal reduction.  The following table provides additional scenarios and Fannie Mae’s requirements for each of those scenarios associated with “same month” MBS mortgage loans. 

If the servicer…

Then…

reports a regular scheduled principal payment for one of these mortgage loans for the first reporting cycle

the transaction will “hard reject.”

receives a curtailment for one of these mortgage loans

the servicer must reduce the actual mortgage loan balance by the amount of the curtailment as well as report the curtailment in the Principal Remittance.

receives a prepaid installment for one of these mortgage loans during the month the MBS pool is issued, but after the pool was delivered to Fannie Mae 

 

 

the servicer must report the reduced mortgage loan balance to Fannie Mae as the “actual UPB” but not report any principal remittance. 

Note: Not reporting a Principal Remittance on this LAR ensures that the Scheduled UPB will continue to equal the issue date balance. 

 

 

The following chart illustrates how a servicer would report a Transaction Type 96 (Loan Activity Record) for its December reports (for mortgage loans in a pool that had a November issue date) to reflect the application for a current mortgage loan (one for which no payment has come due), a prepaid mortgage loan, and a current mortgage loan that has had a $100 curtailment applied. 

Loan

Identification

LPI Date

Actual Unpaid Balance

Interest Remitted

Principal Remitted

Current

January 2017

$100,000.00

$1,000.00

Prepaid

February 2017

$99,980.00

$1,000.00

Curtail

January 2017

$99,900.00

$1,000.00

$100.00

 

For more information see Fannie Mae Investor Reporting Manual Chapter 4, Special Loan Handling

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