For scheduled/actual remittances, the servicer must pass through one more months’ worth of interest than the number of delinquent installments.
The servicer must pass through to Fannie Mae:
- one month's interest for the reporting period that includes the LPI date for the mortgage loan, and
- one month's interest for each successive month of delinquency.
For delinquent mortgage loans, the servicer is authorized to recover its advances for delinquent interest during the fourth month of delinquency. To recover this interest advance, the servicer must report a negative interest remittance amount for the mortgage loan when reporting the Transaction Type 96 LAR for the month in which the mortgage loan becomes four months delinquent. This amount represents the first three months of advanced interest. Fannie Mae will reimburse the servicer for the additional month of interest it advances (fourth month) after the servicer reports the loan liquidation (as Action Code 70, 71, or 72) with Transaction Type 96 (Summary Loans) or Transaction Type 96 and 97 (Detailed Reporting Loans) LAR.
The following table illustrates the correct timing for reporting delinquencies, advancing interest, and recovering advanced interest for an S/A whole mortgage loan or a participation pool mortgage loan (other than one that was part of a concurrent mortgage loan sale) that had an LPI date of April 2017:
Note: The remaining one month of interest will be paid to servicer after it reports the liquidation of the mortgage loan.
For more information see Investor Reporting Manual Chapter 2-04, Reporting Specific Payment Transactions to Fannie Mae (02/14/2018)