The servicer must maintain the FHA MI, which was in effect when Fannie Mae acquired the mortgage loan, unless the conditions Fannie Mae or FHA imposes for canceling the coverage are met. See B-8.2-03, Termination or Cancellation of FHA Mortgage Insurance and FHA Mortgage Insurance Premiumfor additional information.
When the servicer agrees to cancel the annual FHA MIP, it must reduce the borrower’s monthly mortgage loan payment by any monthly escrow deposit that was being collected to pay the MIP.
Without Fannie Mae's prior written approval, the servicer must not enter into any agreement which has the potential to modify MI loss claim settlements under the terms of the insurance contract.
See Requesting Fannie Mae Approval for Agreements with Government Insurers or Guarantors in F-1-06, Filing an MI Claim for a Liquidated Mortgage Loan or Acquired Property for additional information.