The servicer must remit P&I to Fannie Mae on scheduled/scheduled remittance type MBS mortgage loans regardless of whether it actually receives payments from the borrower. For a delinquent mortgage loan, the servicer must advance the remittance until the delinquent mortgage loan is reclassified as actual/actual remittance or removed from the MBS pool.
If an MBS mortgage loan is delinquent, the servicer must ensure that Fannie Mae receives the scheduled P&I payment when it is due, in accordance with Remitting to Fannie Mae for Delinquent Mortgage Loans in C-3-01, Responsibilities Related to Remitting P&I Funds to Fannie Mae. The servicer can either
- use funds it has on hand for any prepaid P&I installments, curtailments, and payoffs to offset payment shortfalls that occur as the result of mortgage loan delinquencies; or
- advance its own funds to cover the payment shortfalls, if there are insufficient collects on hand from prepaid P&I installments, curtailments, and payoffs not yet due to Fannie Mae.
To ensure it has adequate controls over this process, the servicer must maintain a record of all delinquency advances that were funded by prepaid installments in any given month and perform appropriate reconciliations of this activity.
For more information please see: C-3-01, Responsibilities Related to Remitting P & I Funds to Fannie Mae and F-1-21, Remitting and Accounting to Fannie Mae.