Servicing Guide

Published September 9, 2020

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How should an escrow account be administered for a borrower with a mortgage loan modification?

Administering an Escrow Account in Connection With a Mortgage Loan Modification

The following table outlines the escrow requirements when a servicer enters a mortgage loan modification.

The servicer must...
 

Revoke any escrow deposit account waiver and establish an escrow deposit account prior to the beginning of the trial payment period in accordance with Fannie Mae’s requirements, unless the borrower is current on the payments for taxes, special assessments, property and flood insurance premiums, premiums for borrower-purchased MI, ground rents, and similar items and the mortgage loan modification is a Fannie Mae Flex Modification in accordance with Evaluating or Soliciting a Borrower with a Disaster-Related Hardship for a Fannie Mae Flex Modification and Evaluating a Borrower Who Defaulted After Completing a Disaster Payment Deferral for a Fannie Mae Flex Modification in D2-3.2-07, Fannie Mae Flex Modification.

 

Analyze an existing escrow account to estimate the periodic escrow deposit required to ensure adequate funds are available to pay future charges, taking into consideration T&I premiums that may come due during any trial period. In the event the initial escrow analysis or next annual analysis identifies an escrow shortage, the servicer is authorized to collect such funds from the borrower over a term of up to 60 months, unless the borrower decides to pay the shortage up-front. 

 

Ensure the borrower’s monthly mortgage loan payments, including trial period payments, include an escrow payment. See the applicable mortgage loan modification program in Section D2–3.2, Home Retention Workout Options for additional information. 

For more information, see Servicing Guide B-1-01: Administering an Escrow Account and Paying Expenses.

 

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