Servicing Guide

Published September 9, 2020

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Fannie Mae Single-Family Balloon Mortgage Loan Servicing Manual 11/12/2014 (Chapter 1, Notifying the Borrower of Balloon Mortgage Loan Maturity)

See below for Chapter 1, Notifying the  Borrower of Balloon Mortgage Loan Maturity 

To see other Chapters of the Fannie Mae Single-Family Balloon Mortgage Loan Servicing Manual, please click on any of the chapters below:

Chapter 2, Processing the Refinancing of a Matured Balloon Mortgage Loan 

Chapter 3, Performing Final Accounting and Reporting for a Balloon Mortgage Loan

 

This Chapter contains the following Topics:

 

1-01, Servicer Responsibilities (11/12/2014)

The following table outlines the servicer's responsibilities related to servicing mature balloon mortgage loans.

The servicer must…

 

Notify the borrower of the upcoming balloon payment as follows:

  • 180 days prior to the balloon maturity date, send notification detailing the pending balloon payment due, and
  • 60 days prior to the balloon maturity date, make at least one telephone call and/or mail a reminder letter to the borrower who does not submit a written request to exercise the conditional refinance option.

 

Comply with the balloon mortgage loan instruments, all applicable laws and conventional mortgage insurer requirements.

 

Retain all documentation related to the resolution of the matured balloon mortgage loan in the mortgage loan file.

 

1-02, Content of the Balloon Mortgage Loan Maturity Notice (11/12/2014)

In addition to the requirements in the balloon mortgage loan instruments, the balloon maturity notice must also provide the information shown in the following table, tailored to meet the borrower’s individual circumstances.

Information that Must Be Provided in the Balloon Maturity Notice

 

A requirement for the borrower to submit evidence of the occupancy status of the property no later than 30 days after the written request for the refinancing is submitted.

See also 2.1-03, Verifying Ownership, Property Lien Status, and the Status of Any Other Liens for further details on required documentation.

 

An explanation of the process for completing the refinancing, including, but not limited to the following:

  • the borrower's responsibilities (including the requirement that all payments that become due before the effective date of any refinance be made without occurrence of a 30–day delinquency),
  • the dates by which specific actions must be taken and the consequences of not meeting those dates, and
  • the documents that need to be executed, and how the execution is to be accomplished.

 

Information about the balloon payment amount, including, but not limited to the following:

  • the UPB,
  • accrued interest, and
  • any unpaid late charges that will be due on the balloon maturity date.

The servicer must also explain the consequences of the borrower's not paying the final payment on the balloon maturity date if he or she chooses not to exercise the conditional refinancing option.

 

1-03, Timing of the Balloon Maturity Notice (11/12/2014)

If the mortgage loan debt has not been accelerated, then the servicer must:

  • send the required balloon maturity notice that is appropriately tailored to fit the individual borrower and mortgage loan circumstances – the notice should not interfere or conflict with any other collection-related or foreclosure-related activity; and
  • subsequently send an acceleration letter if the servicer finds it necessary to accelerate the debt before the balloon maturity date.

 

To see other Chapters of the Fannie Mae Single-Family Balloon Mortgage Loan Servicing Manual, please click on any of the chapters below:

Chapter 2, Processing the Refinancing of a Matured Balloon Mortgage Loan

Chapter 3, Performing Final Accounting and Reporting for a Balloon Mortgage Loan

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