Servicing Guide

Published June 10, 2020

The Servicing Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Servicing Guide in PDF format.

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A1-4.1-01: Defining a Breach of Contract (06/21/2017)

Any of the following events constitute a breach of the servicer’s contractual obligations:

  • The servicer’s failure to comply with any provision of the Lender Contract including, but not limited to, the following:

    • a failure to establish and maintain satisfactory accounts for the deposit of Fannie Mae’s and borrowers’ funds;

    • the use of Fannie Mae’s or borrowers’ funds in any manner other than as permitted by this Servicing Guide including, but not limited to

      • the failure to deposit all funds collected for the mortgage loans into the proper custodial account not later than the first business day following their receipt, or

      • the failure to remit all funds due Fannie Mae within the required time frames;

    • the failure to ensure that the servicing-related policies for servicing all Fannie Mae-issued MBS mortgage loan pools (including those PFP) are in compliance with this Servicing Guide and that the mortgage loans in the MBS pools are all serviced in a consistent manner;

    • the failure to bear the risk of loss from borrower defaults for MBS pools serviced under the regular servicing option;

    • the failure to maintain adequate and accurate accounting records and mortgage loan servicing records, in accordance with Fannie Mae’s requirements;

    • the failure to take prompt and diligent action consistent with applicable law to collect sums past due on the mortgage loans or to take any other diligent action that Fannie Mae or acceptable industry practice reasonably requires with respect to mortgage loans that are in default; or

    • the failure to take diligent action consistent with applicable law to foreclose any mortgage loan that is in default, whether or not resulting from the acts or omissions of a law firm or other person or entity the servicer chooses to effect such foreclosure.

  • Unacceptable performance as determined by Fannie Mae with regard to the servicer’s compliance with the Lender Contract, including, but not limited, to servicer performance measurements as described in the Servicing Guide, STAR Program results and the requirements of any written performance improvement plan.

  • The servicer’s insolvency, the adjudication of the servicer as a bankrupt, the appointment of a receiver, the servicer’s execution of a general assignment for the benefit of its creditors, or any change in the servicer’s financial status that, in Fannie Mae’s opinion, materially and adversely affects its ability to provide satisfactory servicing of the mortgage loans (if any of these events should occur, no interest in any mortgage loan or pool of mortgage loans shall be deemed an asset or liability of the servicer’s successors or assigns, nor shall any interest pass by operation of law without Fannie Mae’s consent).

  • The sale of a majority interest in the servicer or a change in the corporate status or structure of a corporate servicer without Fannie Mae’s prior written consent.

  • A change in the servicer’s financial or business condition, or in its operations, which, in Fannie Mae’s sole judgment, is material and adverse.

  • The servicer’s failure to meet Fannie Mae’s standards and requirements for eligible servicers if, in Fannie Mae’s opinion, the failure materially and adversely affects the servicer’s ability to comply with the provisions of the Lender Contract.

  • The finding by a court of competent jurisdiction that the servicer, or any of its principal officers, has committed an act that constitutes civil fraud, or the conviction of the servicer or its officer(s) for any criminal act that is related to the servicer’s mortgage loan servicing activities, if Fannie Mae believes that such act materially and adversely affects the servicer’s reputation or the reputation or interests of Fannie Mae.

  • The placement of the servicer on probation or restriction of its activities in any manner by a federal or state government agency that would materially and adversely affect the servicer’s ability to comply with the terms or conditions of the Lender Contract.

  • Any judgment, order, finding or regulatory action to which the servicer is subject that would materially and adversely affect the servicer’s ability to comply with the terms or conditions of the Lender Contract.

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