A4-2.1-07, Servicer's Duties and Responsibilities Related to Mortgage Loans with an Outstanding Non-Interest-Bearing Balance (10/11/2023)

 The servicer must attempt to contact a borrower with a mortgage loan subject to an outstanding non-interest-bearing balance (e.g., such as that resulting from a payment deferral or a Fannie Mae Flex Modification) prior to the maturity date or projected date of payoff, in order to determine if the borrower can afford to pay the total amount due or requires assistance. As early as 180 days but no later than 150 days prior to the maturity date or the projected date of payoff of the interest-bearing UPB of a mortgage loan subject to an outstanding non-interest-bearing balance, the servicer must provide written notice to the borrower informing the borrower that the non-interest-bearing balance is coming due and provide both the due date and the outstanding balance. If the servicer has not established contact with the borrower and discussed the outstanding non-interest-bearing balance that is due, the servicer must send an additional written notice to the borrower as early as 75 days but no later than 60 days before the maturity date or the projected payoff date of the interest-bearing UPB.

Upon establishing contact with the borrower, the servicer must discuss with the borrower the outstanding non-interest-bearing balance that is coming due and determine based on communication with the borrower whether they are able to pay the non-interest-bearing balance on the maturity date or the projected payoff date. If the servicer determines the borrower cannot afford to pay the total amount due, then the servicer must discuss potential repayment options based on the borrower's circumstances and submit the case to Fannie Mae's SF CPM division (see F-4-02, List of ContactsF-4-02, List of Contacts) for review and approval.

The servicer is authorized to send additional notices at its discretion leading up to the maturity date or the interest-bearing UPB payoff date; however, notices cannot be sent any earlier than 180 days prior to the maturity date or the projected payoff date.

When sending the required written notifications to borrowers, the servicer must use the Borrower Notification of Non-Interest-Bearing Balance, or its equivalent. While use of the Borrower Notification of Non-Interest-Bearing Balance is optional, it reflects the minimum level of information that the servicer must communicate and illustrates a level of specificity that complies with the requirements of this Servicing Guide. Also, the servicer must ensure the notice complies with applicable law.