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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A2-3-01: Servicer Compensation (12/14/2016)

This topic contains the following:


Servicing Fees

Servicing fees are payable to the servicer from the time Fannie Mae purchases or securitizes a mortgage loan until it is liquidated (or otherwise removed from an MBS pool or Fannie Mae’s active accounting records), as long as the servicer collects or remits the mortgage loan payments.

As compensation for servicing mortgage loans for Fannie Mae, Fannie Mae pays the servicer servicing fees and allows it to retain the following:

  • late charges,

  • fees charged for special services,

  • yield differential adjustments, and

  • in some cases, either a share or all of any applicable prepayment premiums that Fannie Mae permits under the terms of a negotiated contract.

As described in the Lender Contract, the servicer bears the cost of servicing mortgage loans sold to Fannie Mae, except as expressly provided otherwise in Fannie Mae’s Guides. The servicing fee that Fannie Mae pays the servicer and the other revenue sources consistent with the Guides are intended to compensate the servicer for a variety of standard activities associated with the servicing of mortgage loans.

The servicer may not sell, assign, transfer, pledge, or hypothecate its servicing compensation (or any portion of it) or enter into any agreement that would result in the sale, assignment, transfer, pledge, or hypothecation of that income or its servicing rights, except under the conditions and circumstances specified in A2-7-02, Pledge of Servicing Rights and Transfer of Interest in Servicing Income.


Calculating and Collecting Servicing Fees

The exact servicing fee that applies to any given mortgage loan appears on the trial balance report that is produced by Fannie Mae’s investor reporting system (see the Investor Reporting Manual).

Because servicing fees are computed on the same UPB and for the same period as the interest portion of the monthly installment, the servicer generally can base its servicing fee calculation on the interest collected. However, when a mortgage loan is undergoing negative amortization, servicing fees must be based on the interest amount that is accrued, rather than on the amount that was actually collected.

For mortgage loans where military indulgence is warranted or required under the SCRA, see D2-3.4-01, Military Indulgence, for the calculation of servicing fees.

The servicer is authorized to obtain its servicing fee compensation by way of the methods in the following table.

If the servicing fee is paid… Then the servicer is authorized to obtain its servicing fee compensation by…

on a monthly basis

  • deducting its fee from each borrower’s payment before it is deposited to the custodial account, or

  • writing itself a check against its custodial account for the amount of servicing fee that is due each month.

upon liquidation of the mortgage loan

  • deducting its fee from the amount sent to Fannie Mae when the borrower pays off his or her mortgage loan,

  • deducting its fee from the proceeds of a third-party foreclosure sale if sold for total mortgage indebtedness, or

  • deducting its fee from the amount remitted to redeem an acquired property if the property is redeemed for total mortgage indebtedness.

Depending on the type of mortgage loan, the servicer is authorized to retain additional servicing compensation as described in the following table.

If the mortgage loan is a… Then the servicer is authorized to retain as additional servicing compensation the amount by which the mortgage coupon rate exceeds…

portfolio mortgage loan

  • Fannie Mae’s PTR for a mortgage loan, or

  • Fannie Mae’s required yield for a participation interest.

MBS mortgage loan

  • the PTR for a fixed-rate MBS mortgage loan,

  • the pool accrual rate for a stated-structure ARM MBS pool, or

  • the accrual rate for the mortgage loan for a weighted-average ARM MBS pool, to the extent that it is greater than the minimum allowable retained servicing spread but less than the maximum allowable retained servicing spread.

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