Servicing Guide

Published September 9, 2020

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A1-3-06: Automatic Reclassification of MBS Mortgage Loans (09/09/2020)

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Selecting MBS Mortgage Loans for Reclassification by Fannie Mae

Rather than requiring the servicer to repurchase certain delinquent MBS mortgage loans that are serviced under the special servicing option—those for which Fannie Mae has the entire foreclosure loss risk and those for which Fannie Mae and the servicer share the foreclosure loss risk, with Fannie Mae having the responsibility for marketing the acquired property—Fannie Mae will reclassify a mortgage loan that satisfies its selection criteria as an actual/actual remittance type portfolio mortgage loan (however, PFP mortgage loans with an original scheduled/scheduled remittance type will remain a scheduled/scheduled remittance type even after being removed from the pool).

Generally, Fannie Mae will select special servicing option delinquent MBS mortgage loans for reclassification when the mortgage loan is four or more months delinquent, as measured by the LPI date. However, the timing for reclassification will differ for mortgage loans which the servicer reports as having an active forbearance plan, repayment plan or mortgage loan modification Trial Period Plan, as set forth in F-1-26, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan.

Note: MBS mortgage loans subject to a payment deferral will not be selected for automatic reclassification.

Unless there is an active repayment plan, an MBS mortgage loan typically must be removed from its MBS pool no later than when the mortgage loan is 24 months past due, in accordance with Mandatory Repurchase of Certain MBS Mortgage Loans in A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations.

Note: For requirements on removing a regular servicing option delinquent MBS mortgage loan from an MBS pool, refer to A1-3-01, Requirements for Voluntary Repurchase and Mandatory Repurchase of Certain MBS Mortgage Loans in A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations.

The servicer must follow the procedures in F-1-26, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan for handling the mortgage loans that Fannie Mae has selected for reclassification.

All MBS mortgage loans (regular servicing and special servicing option mortgage loans) removed from MBS pools will be held in Fannie Mae’s portfolio subject to repurchase requirements. The servicer remains responsible for the recourse obligation on a regular servicing option mortgage loan that is removed from the pool and held in Fannie Mae’s portfolio.


Changes to the Servicer’s Records

The servicer must change its internal records to reflect the appropriate reclassification remittance type, as described in the Investor Reporting Manual and F-1-26, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan.

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