Servicing Guide

Published September 9, 2020

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What requirements must be followed when reapplying principal payments to cure a delinquency?

At the borrower’s request, the servicer is authorized to reapply principal prepayments to cure a delinquency if the mortgage loan is either 

  • a portfolio mortgage loan; or

  • a participation pool mortgage loan (which is not a mortgage loan that has been pooled to back an MBS issue, including PFP mortgage loans); and as long as all of the following conditions apply:

    • the borrower submits a written request;

    • the reapplication of the principal prepayment does not result in the mortgage loan balance being higher than it would have been had the original amortization schedule for the mortgage loan been followed;

    • the borrower has not previously received modification assistance program funds from an HFA. See D2-3.1-05, Interacting with Housing Finance Agencies and Hardest Hit Fund Programs for additional information; and

    • the borrower agrees to submit any additional funds that are needed to supplement the prepayment so that the total delinquency can be cured. If the borrower cannot raise the additional funds, the servicer is authorized to combine the reapplication of a principal prepayment with a workout option. See D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options for additional information.

For more information please see: C-1.2-01, Processing Additional Principal Payments

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