Browse the Guide
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Part A Doing Business with Fannie Mae
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Subpart A1, Contractual Obligations
- Chapter A1-1, Understanding the Lender Contract
- Chapter A1-2, Termination of the Lender Contract without Cause
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Chapter A1-3, Repurchases, Indemnifications, and Make Whole Payment Requests
- A1-3-01, Requirements for Voluntary Repurchase
- A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations
- A1-3-03, Repurchase Obligations Related to Bifurcated Mortgage Loans
- A1-3-04, Reporting the Repurchase
- A1-3-05, Redelivering a Mortgage Loan
- A1-3-06, Automatic Reclassification of MBS Mortgage Loans
- Chapter A1-4, Breach of Contract and Nonperformance
- Subpart A2, Getting Started with Fannie Mae
- Subpart A3, Maintaining Fannie Mae Seller/Servicer Status
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Subpart A4, Setting Up Servicer Operations
- Chapter A4-1, Establishing and Implementing Internal Operations for All Mortgage Loans and Acquired Properties
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Chapter A4-2, Requirements for Delinquent Mortgage Loans and Mortgage Loans at Risk of Default
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Section A4-2.1, Establishing Default Management Strategies
- A4-2.1-01, Preventing Defaults and Managing Delinquencies
- A4-2.1-02, Property Inspection Vendor Management and Oversight
- A4-2.1-03, Managing Short Sales
- A4-2.1-04, Establishing Contact with the Borrower
- A4-2.1-05, Requirements for Collection and Foreclosure Prevention Strategies Unique to Second Lien Mortgage Loans
- A4-2.1-06, Adverse Action Notification Certification
- A4-2.1-07, Servicer's Duties and Responsibilities Related to Mortgage Loans with an Outstanding Non-Interest-Bearing Balance
- Section A4-2.2, Requirements for Default-Related Law Firms
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Section A4-2.1, Establishing Default Management Strategies
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Subpart A1, Contractual Obligations
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Part B Escrow, Taxes, Assessments, and Insurance
- Chapter B-1, Escrow Account Administration
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Chapter B-2, Property Insurance Requirements
- B-2-01, Property Insurance Requirements Applicable to All Property Types
- B-2-02, Property Insurance Requirements for One- to Four-Unit Properties
- B-2-03, Master Property Insurance Requirements for Project Developments
- B-2-04, Individual Property Insurance Requirements for Units in Project Developments
- Chapter B-3, Flood Insurance Requirements
- Chapter B-4, Additional Insurance Requirements
- Chapter B-5, Property and Flood Insurance Loss Events and Claim Settlements
- Chapter B-6, Lender-Placed Insurance
- Chapter B-7, Liability and Fidelity/Crime Insurance Requirements for Project Developments
- Chapter B-8, Mortgage Insurance
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Part C Mortgage Loan Payment Processing, Remitting, Accounting, and Reporting
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Chapter C-1, Processing Mortgage Loan Payments
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Section C-1.1, Processing Scheduled Mortgage Loan Payments
- C-1.1-01, Servicer Responsibilities for Processing Mortgage Loan Payments
- C-1.1-02, Processing Payment Shortages or Funds Received When a Mortgage Loan Modification Is Pending
- C-1.1-03, Automatically Drafting Payments from the Borrower’s Bank Account
- C-1.1-04, Accepting Biweekly Payments from Third-Party Payment Contractors
- Section C-1.2, Processing Unscheduled Mortgage Loan Payments
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Section C-1.1, Processing Scheduled Mortgage Loan Payments
- Chapter C-2, Servicing ARM Loans
- Chapter C-3, Remitting and Accounting
- Chapter C-4, Reporting
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Chapter C-1, Processing Mortgage Loan Payments
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Part D Providing Solutions to a Borrower
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Subpart D1, Assisting the Borrower with Property-Related Issues and Legal Actions
- Chapter D1-1, Requests for the Release of Property and/or Charge-Off of a Mortgage Loan
- Chapter D1-2, Servicing Renovation Mortgage Loans
- Chapter D1-3, Providing Assistance to a Borrower Impacted by a Disaster Event
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Chapter D1-4, Transfers of Ownership
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Section D1-4.1, Information Relating to Transfers of Ownership Applicable to All Mortgage Loans
- D1-4.1-01, Determining Whether a Transfer of Ownership Is Permitted
- D1-4.1-02, Allowable Exemptions Due to the Type of Transfer
- D1-4.1-03, Allowable Exceptions Due to State Law Restrictions (“Window-Period” Mortgage Loans)
- D1-4.1-04, Transfers of Ownership by Grant Deed
- D1-4.1-05, Enforcing the Due-on-Sale (or Due-on-Transfer) Provision
- Section D1-4.2, Information Relating to Transfers of Ownership on Conventional Mortgage Loans
- Section D1-4.3, Information Relating to Transfers of Ownership on Government Mortgage Loans
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Section D1-4.1, Information Relating to Transfers of Ownership Applicable to All Mortgage Loans
- Chapter D1-5, Call Provision Enforcement
- Chapter D1-6, Addressing Notices of Liens, Legal Action, Property Forfeitures or Seizures, or Other Actions
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Subpart D2, Assisting a Borrower Who is Facing Default or in Default
- Chapter D2-1, Working with a Borrower Who is Facing Default
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Chapter D2-2, Requirements for Contacting a Borrower
- D2-2-01, Achieving Quality Right Party Contact with a Borrower
- D2-2-02, Outbound Contact Attempt Requirements
- D2-2-03, Sending a Payment Reminder Notice
- D2-2-04, Sending a Borrower a Solicitation Package for a Workout Option
- D2-2-05, Receiving a Borrower Response Package
- D2-2-06, Sending a Breach or Acceleration Letter
- D2-2-07, Resolving an Appeal of a Mortgage Loan Modification Trial Period Plan Denial for a Principal Residence
- D2-2-08, Interviewing Face-to-Face with a Borrower for Certain FHA and HUD Mortgage Loans
- D2-2-09, Additional Borrower Contact Requirements for the Servicer of a Second Lien Mortgage Loan
- D2-2-10, Requirements for Performing Property Inspections
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Chapter D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options
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Section D2-3.1, Preparing to Implement a Home Retention or Liquidation Workout Option
- D2-3.1-01, Determining the Appropriate Workout Option
- D2-3.1-02, Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan
- D2-3.1-03, Working with a Borrower that has a Group Home Mortgage Loan
- D2-3.1-04, Offering a Workout Option When Also Servicing a Subordinate Lien Mortgage Loan
- D2-3.1-05, Interacting with Mortgage Assistance Fund Program Providers
- D2-3.1-06, Notifying Fannie Mae of Lead-Based Paint Citations
- Section D2-3.2, Home Retention Workout Options
- Section D2-3.3, Home Liquidation Workout Options
- Section D2-3.4, Other Workout Options to Assist a Borrower
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Section D2-3.1, Preparing to Implement a Home Retention or Liquidation Workout Option
- Chapter D2-4, Reporting Delinquent Mortgage Loans and Workout Options
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Subpart D1, Assisting the Borrower with Property-Related Issues and Legal Actions
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Part E Default-Related Legal Services, Bankruptcy, Foreclosure Proceedings, and Acquired Properties
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Chapter E-1, Referring Default-Related Legal Matters and Non-Routine Litigation to Law Firms
- Section E-1.1, Referring a Mortgage Loan to a Law Firm
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Section E-1.2, Timing of the Referral to a Law Firm
- E-1.2-01, Timing of the Bankruptcy Referral
- E-1.2-02, Timing of the Foreclosure Referral for Mortgage Loans Generally
- E-1.2-03, Timing of the Foreclosure Referral for Second Lien Conventional Mortgage Loans Not Secured by a Principal Residence
- E-1.2-04, Timing of the Foreclosure Referral for Government Mortgage Loans
- Section E-1.3, Handling Non-Routine Litigation
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Chapter E-2, Managing Bankruptcy Proceedings
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Section E-2.1, Bankruptcy Proceedings in General
- E-2.1-01, General Servicing Requirements for Mortgage Loans Under Bankruptcy Protection
- E-2.1-02, Confirming Bankruptcy Information
- E-2.1-03, Suspending Debt Collection Efforts
- E-2.1-04, Expected Servicer/Attorney Interaction During Bankruptcy Proceedings
- E-2.1-05, Filing a Notice of Appearance and Sending Proper Notices
- E-2.1-06, Reviewing Bankruptcy Reorganization Plans
- E-2.1-07, Preparing and Filing a Proof of Claim
- E-2.1-08, Monitoring Borrower Payments and Critical Dates
- E-2.1-09, Identifying Workout Opportunities
- E-2.1-10, Dealing with Delays in the Bankruptcy Process
- E-2.1-11, Remitting P&I for MBS Mortgage Loans That Are Part of a Bankruptcy
- Section E-2.2, Managing Bankruptcies by Chapter
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Section E-2.3, Servicing Special Circumstance Bankruptcies
- E-2.3-01, Identifying Abusive Filers
- E-2.3-02, Addressing Individuals with Fractional Interests in a Security Property
- E-2.3-03, Handling Cramdowns of the Mortgage Debt
- E-2.3-04, Bankruptcies Involving Mortgage Loans Secured by Investment Properties
- E-2.3-05, Bankruptcies Involving Multiple Fannie Mae Mortgage Loans
- E-2.3-06, Responding to Bankruptcies Identified After Foreclosure Sale
- E-2.3-07, Cross-Border Insolvency Proceedings
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Section E-2.1, Bankruptcy Proceedings in General
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Chapter E-3, Managing Foreclosure Proceedings
- Section E-3.1, Foreclosure Proceedings in General
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Section E-3.2, Initiating and Processing Foreclosure Proceedings
- E-3.2-01, Conducting Prereferral Review
- E-3.2-02, Initiating Foreclosure Proceedings on a First Lien Conventional Mortgage Loan
- E-3.2-03, Initiating Foreclosure Proceedings on a Second Lien Conventional Mortgage Loan
- E-3.2-04, Postponing Foreclosure Referral for Mortgage Loans Not Secured by a Principal Residence
- E-3.2-05, Expected Servicer/Attorney Interaction During Foreclosure Proceedings
- E-3.2-06, Conducting Borrower Outreach During Foreclosure
- E-3.2-07, Impact of Engagement with a Mortgage Assistance Fund Program Provider
- E-3.2-08, Processing Reinstatements During Foreclosure
- E-3.2-09, Conducting Foreclosure Proceedings
- E-3.2-10, Paying Certain Expenses During the Foreclosure Process
- E-3.2-11, Collecting Under an Assignment of Rents
- E-3.2-12, Performing Property Preservation During Foreclosure Proceedings
- E-3.2-13, Addressing Title Defects Generally
- E-3.2-14, Addressing Title Defects for Bifurcated Mortgage Loans
- E-3.2-15, Allowable Time Frames for Completing Foreclosure
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Section E-3.3, Preparing for the Foreclosure Sale
- E-3.3-01, Completing Preforeclosure Sale Review
- E-3.3-02, Certifying the Status of Workout Negotiations Prior to Foreclosure Sale
- E-3.3-03, Inspecting Properties Prior to Foreclosure Sale
- E-3.3-04, Marketing the Foreclosure Sale and Using Foreclosure Auction Services
- E-3.3-05, Issuing Bidding Instructions
- E-3.3-06, Handling a Suspension or Reduction of the Redemption Period
- E-3.3-07, Pursuing a Deficiency Judgment
- Section E-3.4, When Foreclosure Proceedings Must Be Suspended or Canceled
- Section E-3.5, Servicer Responsibilities Following the Foreclosure Sale
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Chapter E-4, Managing Acquired Properties
- Section E-4.1, Notifying Fannie Mae of Property Acquisitions
- Section E-4.2, Conveying Title to an Acquired Property
- Section E-4.3, Preserving and Managing Properties
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Section E-4.4, Property and Flood Insurance Coverage Requirements
- E-4.4-01, Continuing or Canceling Property Insurance Coverage
- E-4.4-02, Remitting Property Insurance Settlement Proceeds or Unearned Premium Refunds
- E-4.4-03, Canceling Flood Insurance Coverage for Acquired Properties
- E-4.4-04, Remitting Flood Insurance Settlement Proceeds or Unearned Premium Refunds
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Section E-4.5, Filing MI Claims for Liquidated Properties
- E-4.5-01, Filing MI Claims for Conventional Mortgage Loans or for Other Mortgage Loans for which Fannie Mae Bears the Risk of Loss
- E-4.5-02, Filing MI Claims for FHA Mortgage Loans
- E-4.5-03, Filing MI Claims for FHA Coinsured Mortgage Loans
- E-4.5-04, Filing MI Claims for FHA Title I Loans
- E-4.5-05, Filing MI Claims for HUD Section 184 Mortgage Loans
- E-4.5-06, Filing MI Claims for VA Mortgage Loans
- E-4.5-07, Filing MI Claims for RD Mortgage Loans
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Chapter E-5, Requesting Reimbursement for Expenses Associated with Default-Related Legal Matters
- E-5-01, Requesting Reimbursement for Expenses
- E-5-02, Servicer Responsibilities Prior to Requesting Reimbursement of Attorney Fees and Costs
- E-5-03, Allowable Bankruptcy Fees
- E-5-04, Allowable Foreclosure Fees
- E-5-05, Reimbursing Law Firms/Reimbursement of Uncollected Fees, Costs or Advances
- E-5-06, Technology Fees and Electronic Invoicing
- E-5-07, Other Reimbursable Default-Related Legal Expenses
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Chapter E-1, Referring Default-Related Legal Matters and Non-Routine Litigation to Law Firms
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Part F Servicing Guide Procedures, Exhibits, and Quick Reference Materials
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Chapter F-1, Servicing Guide Procedures
- F-1-01, Servicing ARM Loans
- F-1-02, Escrow, Taxes, Assessments, and Insurance
- F-1-03, Establishing and Implementing Custodial Accounts
- F-1-04, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan
- F-1-05, Expense Reimbursement
- F-1-06, Filing an MI Claim for a Liquidated Mortgage Loan or Acquired Property
- F-1-07, Handling Property Forfeitures and Seizures
- F-1-08, Managing Foreclosure Proceedings
- F-1-09, Processing Mortgage Loan Payments and Payoffs
- F-1-10, Obtaining and Executing Legal Documents
- F-1-11, Post-Delivery Servicing Transfers
- F-1-12, Preparing to Implement a Workout Option
- F-1-13, Processing a Fannie Mae Mortgage Release (Deed-In-Lieu of Foreclosure)
- F-1-14, Processing a Fannie Mae Short Sale
- F-1-15, Processing a Government Mortgage Loan Modification
- F-1-16, Processing a Repayment Plan
- F-1-17, Processing a Transfer of Ownership
- F-1-18, Processing a Workout Incentive Fee
- F-1-19, Processing a Military Indulgence
- F-1-20, Remitting and Accounting to Fannie Mae
- F-1-21, Reporting a Delinquent Mortgage Loan via Fannie Mae’s Servicing Solutions System
- F-1-22, Reporting a Workout Option via Fannie Mae’s Servicing Solutions System
- F-1-23, Reporting to Third Parties
- F-1-24, Requesting Fannie Mae’s Approval via Fannie Mae’s Servicing Solutions System
- F-1-25, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan
- F-1-26, Servicing eMortgages
- F-1-27, Processing a Fannie Mae Flex Modification
- F-1-28, Reviewing a Transfer of Ownership for Credit and Financial Capacity
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Chapter F-2, Exhibits
- F-2-01, Bankruptcy Referral and Completion Timelines
- F-2-02, Incentive Fees for Workout Options
- F-2-03, Compensatory Fee Calculation Examples
- F-2-04, Firm Minimum Requirements
- F-2-05, Historical Yield Differential Adjustment Provisions
- F-2-06, Mortgage Insurer Delegations for Workout Options
- F-2-07, Reporting the Principal Amount for Mortgage Loans with Principal Forbearance
- F-2-08, Servicing Fees for MBS Mortgage Loans
- F-2-09, Servicing Fees for Portfolio Mortgage Loans
- F-2-10, Fannie Mae’s Workout Hierarchy
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Chapter F-3, Acronyms and Glossary of Defined Terms
- F-3-01, Acronyms and Glossary of Defined Terms: A
- F-3-02, Acronyms and Glossary of Defined Terms: B
- F-3-03, Acronyms and Glossary of Defined Terms: C
- F-3-04, Acronyms and Glossary of Defined Terms: D
- F-3-05, Acronyms and Glossary of Defined Terms: E
- F-3-06, Acronyms and Glossary of Defined Terms: F
- F-3-07, Acronyms and Glossary of Defined Terms: G
- F-3-08, Acronyms and Glossary of Defined Terms: H
- F-3-09, Acronyms and Glossary of Defined Terms: I
- F-3-10, Acronyms and Glossary of Defined Terms: J
- F-3-11, Acronyms and Glossary of Defined Terms: K
- F-3-12, Acronyms and Glossary of Defined Terms: L
- F-3-13, Acronyms and Glossary of Defined Terms: M
- F-3-14, Acronyms and Glossary of Defined Terms: N
- F-3-15, Acronyms and Glossary of Defined Terms: O
- F-3-16, Acronyms and Glossary of Defined Terms: P
- F-3-17, Acronyms and Glossary of Defined Terms: Q
- F-3-18, Acronyms and Glossary of Defined Terms: R
- F-3-19, Acronyms and Glossary of Defined Terms: S
- F-3-20, Acronyms and Glossary of Defined Terms: T
- F-3-21, Acronyms and Glossary of Defined Terms: U
- F-3-22, Acronyms and Glossary of Defined Terms: V
- F-3-23, Acronyms and Glossary of Defined Terms: W
- F-3-24, Acronyms and Glossary of Defined Terms: X
- F-3-25, Acronyms and Glossary of Defined Terms: Y
- F-3-26, Acronyms and Glossary of Defined Terms: Z
- Chapter F-4, Servicing Guide Resources
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Chapter F-1, Servicing Guide Procedures
A2-4-01, Quality Control Reviews (08/17/2016)
- Overview
- Notification of a Quality Control Review
- Timely Delivery of Individual Mortgage Loan Files
- Document Submission Requirements
- Fannie Mae’s Quality Control Review
- Requirements Specific for Servicing Quality Control Reviews
- Fannie Mae Quality Control Report
- Appeal of Fannie Mae QC Review Decisions
- Servicing Review File Requirements
- Underwriting or Servicing Reviews of Acquired Properties
Overview
Fannie Mae may review mortgage loans it has purchased or securitized (including those with early payment defaults, those that have been foreclosed, as well as any other mortgage loan) to ensure that its underwriting, eligibility, and servicing requirements have been met.
When Fannie Mae’s quality assurance risk assessment identifies a mortgage loan as having a higher degree of risk, Fannie Mae may perform a post-foreclosure full file QC review to evaluate the seller/servicer’s initial underwriting of the mortgage loan and, if applicable, the actions the seller/servicer took in servicing the mortgage loan. In such cases, Fannie Mae will notify the seller/servicer about the type of review Fannie Mae will perform and the scope of the review.
Notification of a Quality Control Review
The seller/servicer is notified which mortgage loans Fannie Mae has selected for review via written or electronic notification. Electronic notification will be delivered via Loan Quality Connect if the seller/servicer has signed up for it.
Timely Delivery of Individual Mortgage Loan Files
The seller/servicer must send the requested documentation for an underwriting or servicing review so that Fannie Mae receives the review file within 30 days after Fannie Mae notifies the seller/servicer that it has selected a mortgage loan for review. Fannie Mae, in its sole discretion, may request the documentation in a shorter or longer period of time based upon circumstances at the time.
Fannie Mae will make every effort to work with the seller/servicer when extenuating circumstances prevent it from delivering documentation in a timely manner. However, if a seller/servicer delays in providing the requested information, Fannie Mae, in its sole discretion, reserves the right to require indemnification, repurchase (depending on the circumstances of the individual case) of these mortgage loans, or other alternatives. When a seller/servicer has a pattern of extensive delays or unresponsiveness, Fannie Mae may consider this a breach of contract and consider other actions against the seller/servicer, up to and including termination.
Document Submission Requirements
The seller and servicer must maintain a complete individual mortgage loan file and be able to produce copies of the complete individual mortgage loan file upon Fannie Mae’s request. The servicing review file must include supporting documents for all requests for expense reimbursement it has submitted or intends to submit to Fannie Mae (for example, vendor invoices and third-party invoices from the vendor rendering services), in addition to other servicing and liquidation information such as
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property inspection reports,
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copies of delinquency repayment plans,
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copies of disclosures of ARM loan interest rate and payment changes,
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documents related to insurance loss settlements, and
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foreclosure records, as stated in the Servicing Guide.
In all instances, the servicer must document its compliance with all Fannie Mae policies and procedures, including, but not limited to, timelines that are required by the Servicing Guide. The servicer must maintain in the individual mortgage loan file all documents and system records that preserve Fannie Mae’s ownership interest in the individual mortgage loan.
When Fannie Mae requests both a mortgage loan origination and a mortgage loan servicing file, the seller/servicer must package the material as a single PDF file.
The complete mortgage loan file must include clear copies of any required documents. Documents must be provided in the required format, via the Loan Quality Connect System to ensure successful delivery.
Fannie Mae’s Quality Control Review
Fannie Mae has QC policies and procedures in place for its review of performing and non-performing mortgage loans. Fannie Mae uses a statistically valid approach in selecting a random sample of new mortgage loan deliveries for review. The random sample is augmented with targeted, discretionary sampling, which aids in the measurement of the overall quality of mortgage loan deliveries. The QC process evaluates individual mortgage loan files on a comprehensive basis with the primary focus of confirming that mortgage loans meet Fannie Mae’s underwriting and eligibility requirements. Fannie Mae will continue to review any servicing files requested with the primary focus of confirming that the mortgage loan has been serviced in accordance with the Lender Contract.
The QC process also provides the seller/servicer with data and feedback about the quality of its mortgage loan origination process. The goal is to engage the seller/servicer in frequent, meaningful exchanges of information about trends in the quality of delivered mortgage loans and to inform the seller/servicer about significant underwriting deficiencies identified through the QC review process. Together, Fannie Mae and its sellers/servicers should share a commitment to improving the quality of mortgage loan originations. Fannie Mae requires that the seller/servicer implement and enforce strong underwriting processes and, if necessary, will work with the seller/servicer to develop action plans to improve origination quality.
Fannie Mae’s QC policies are administered by its LQC. The selection process may change at any time to address concerns.
Requirements Specific for Servicing Quality Control Reviews
Fannie Mae will utilize delinquent mortgage loan status code data and other information collected from the servicer during other interactions to identify delays in the default management process. Fannie Mae may elect to perform a servicing review to further evaluate the actions the servicer took in servicing those mortgage loans.
Fannie Mae will notify the servicer of the intention to perform a desk review or an on-site review. The servicer must submit the requested documentation or make it available for an on-site review in the time frame specified in the notification. If the servicer fails to do so, Fannie Mae may exercise available remedies, including compensatory fees, without first reviewing the individual mortgage loan file. The list of documents that must be included in any servicing review file Fannie Mae request are outlined in Servicing Review File Requirements.
Fannie Mae will communicate any performance deficiencies noted to the servicer. Unless Fannie Mae elects to immediately terminate the servicer’s right to service the mortgage loans, the servicer will be given an opportunity to explain any mitigating circumstances or factors that justify the servicing actions it took or did not take within the time frame specified by Fannie Mae in its communication of the performance deficiencies.
Fannie Mae’s evaluation of the actions the servicer took in servicing the mortgage loan will focus primarily on determining whether the servicer took all of the appropriate steps to cure the delinquency or avoid foreclosure (through Fannie Mae’s various relief provisions or foreclosure prevention alternatives) and, if a foreclosure could not be avoided, on confirming that the servicer completed the legal actions within Fannie Mae’s required time frames.
For the most part, Fannie Mae will rely on various reports that are produced by its automated delinquency and foreclosure prevention management systems to evaluate the servicer’s performance. However, when Fannie Mae’s analysis of these reports indicates that there is a possibility that the servicer’s delinquency management performance is poor or if Fannie Mae believes certain servicing files should be reviewed for other reasons, Fannie Mae may require the servicer to submit a servicing review file for a mortgage loan to Fannie Mae’s SF CPM division (see
).If Fannie Mae identifies deficiencies in its evaluation of the servicing review file, it will communicate them to the servicer. The servicer, in most instances, will be given an opportunity to explain any mitigating circumstances or factors that justify the servicing actions it took (or did not take).
When the servicer’s review identifies significant deficiencies, it may offer to purchase the property from Fannie Mae when it submits the complete individual mortgage loan file (rather than waiting for the results of Fannie Mae’s review). Fannie Mae will entertain such offers–as long as they will make Fannie Mae whole and are permitted by the Trust Agreement, if applicable–since Fannie Mae would no longer have to be concerned about the property disposition process.
When Fannie Mae has received the origination and/or servicing review file, it will begin the process of reviewing the file(s) to determine whether the mortgage loan met Fannie Mae’s origination, eligibility and/or servicing standards. If Fannie Mae concludes that a repurchase demand should be issued on a mortgage loan pursuant to the origination defect remedies framework, Fannie Mae generally will issue a request for repurchase (calling for the servicer to take title to the property and pay Fannie Mae for its full investment in it). Fannie Mae may, on occasion, give the servicer the option of having Fannie Mae dispose of the property (and agreeing to indemnify Fannie Mae for any loss Fannie Mae incurs in connection with the sale), or require the lender to fully reimburse Fannie Mae for its loss through a demand for a make whole payment in the event that Fannie Mae sells the property or accepts a purchase offer prior to notifying the servicer that the mortgage loan did not meet Fannie Mae’s eligibility or underwriting requirements.
In the event the servicing defect identified by Fannie Mae also turns out to be a breach of any provision of any MI policy issued with respect to a mortgage loan, the seller/servicer is not released from any breach of the Lender Contract that may result if the MI company insuring the loan rescinds, cancels, denies, or curtails the MI benefit due to the same or similar acts or omissions that make up the defect.
Fannie Mae Quality Control Report
Fannie Mae provides the seller/servicer with ongoing feedback about their overall QC performance. The feedback identifies defect types, reporting on frequent or common defects, and describes quality trend analyses and significant underwriting deficiencies identified through the QC review process. This information is provided through a variety of methods that range from regular electronic transmissions to more formal periodic discussions.
When Fannie Mae identifies a defective mortgage loan, it may in its sole discretion, impose a condition to retaining the mortgage loan, such as requiring the seller/servicer to agree to an alternative remedy to repurchase. In some cases, as permitted by the Lender Contract, Fannie Mae will issue a repurchase or make whole payment request to the seller/servicer.
The Servicing Guide contains timelines by which the seller/servicer must pay Fannie Mae the funds that are due in connection with a demand for a servicing remedy in
. If the seller/servicer delays in this or has a pattern of unresponsiveness, Fannie Mae may consider this an independent breach of contract and consider other actions against the seller/servicer, up to and including termination.Certain servicing repurchase alternatives may be available only to certain seller/servicers that are in good standing with Fannie Mae. See Servicer Responses to a Demand in
for more information.Appeal of Fannie Mae QC Review Decisions
Fannie Mae maintains processes for the seller/servicer to appeal a demand for a servicing remedy, including an IDR process, in certain instances. See the Selling Guide for more information on the origination defect remedies framework appeals process and Servicer Responses to a Demand in
for more information on the servicing defect remedies framework appeal and escalation processes. A demand for a repurchase servicing remedy or reimbursement may be rescinded or withdrawn because the seller/servicer provides documentation within the time period specified by Fannie Mae (when Fannie Mae determines that a breach of the Lender Contract may be corrected).Servicing Review File Requirements
The following table provides a list of the documentation that must be included in the servicing review file.
✓ | The servicer must include in the servicing review file... |
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The collection history for the default that led to the foreclosure or mortgage release (including the reason for the default, delinquency notices sent, and copies of borrower’s previous payment histories). |
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A summary of all attempts to develop a workout plan or arrange a workout option, including evidence of any communication with Fannie Mae. |
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A bankruptcy tracking log, or a separate report indicating the dates of any bankruptcy filings and the dates that any lifting of a bankruptcy stay was attempted and attained. |
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The foreclosure tracking log, or a separate report indicating the date that the case was referred to the foreclosure attorney and the date of the foreclosure sale, as well as summarizing any communications with Fannie Mae about delays in the foreclosure process (including delays resulting from the presence of hazardous waste, natural disasters, massive layoffs, etc.) or departures from standard foreclosure procedures (such as using judicial foreclosure in a power of sale state). |
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Any other type of information that is requested, given the type of review. |
The outside of the servicing review file must clearly identify the case, as follows:
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servicing file for acquired property;
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mortgage remittance type (A/A, S/A, or S/S);
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servicing option (special or shared risk);
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Fannie Mae mortgage loan number;
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servicer mortgage loan number;
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borrower’s name; and
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property address.
Underwriting or Servicing Reviews of Acquired Properties
When Fannie Mae receives an offer to purchase an acquired property that is also subject to an underwriting or servicing review, Fannie Mae may accept the purchase offer without first notifying the servicer, whether or not a final decision has been reached with respect to the review. If, after completion of the review, Fannie Mae determines that the mortgage loan did not meet its eligibility or underwriting requirements and Fannie Mae has incurred a loss by selling the property, the seller/servicer will be required to fully reimburse Fannie Mae for its loss.
There are no recently issued Announcements related to this topic.