Servicing Guide

Published June 10, 2020

The Servicing Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Servicing Guide in PDF format.

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F-1-02: Escrow, Taxes, Assessments, and Insurance (12/12/2018)

This Servicing Guide Procedure contains the following:


Determining Property Insurance Coverage Amounts

The servicer must ensure that the property insurance coverage amount meets the requirements in Determining Minimum Coverage Amounts in B-2-02, Property Insurance Requirements for Mortgage Loans Secured by a One- to Four-Unit Property.

The following table outlines the actions that the servicer must take to determine whether the insurance coverage amount meets Fannie Mae’s requirements.

Step Servicer Action
1

Compare the insurable value of the improvements (as established by the property insurer) to the UPB of the mortgage loan.

If... Then...

the insurable value of the improvements is less than the UPB

the insurable value will be the amount of coverage required.

the UPB of the mortgage loan is less than the insurable value of the improvements

go to Step 2.

2

Calculate 80% of the insurable value of the improvements.

If the resulting amount is... Then...

equal to or less than the UPB of the mortgage loan

the UPB will be the amount of coverage required.

greater than the UPB of the mortgage loan

this calculated figure will be the amount of coverage required.

The following table provides examples of calculating the amount of coverage required.

Category Property A Property B Property C

Insurable Value of the Improvements

$90,000

$100,000

$100,000

UPB

$95,000

$90,000

$75,000

80% of the Insurable Value of the Improvements

$80,000

$80,000

Amount of Coverage Required

$90,000

$90,000

$80,000


Instructing Mortgage Insurers to Release Data

The servicer must provide instructions for an MI company to release information to Fannie Mae in accordance with B-8.1-01, Conventional Mortgage Insurance Servicer Responsibilities.

The following table provides steps the servicer must follow when instructing the MI company to release details to Fannie Mae.

Step Servicer Action
1

Use the disclosure template and release instructions posted on Fannie Mae’s website or any other form that is acceptable to the mortgage insurer and that results in the release of the requested data to Fannie Mae.

2

Return the disclosure template and release instructions (or its equivalent) to each mortgage insurer using the contact information posted on Fannie Mae’s website.

Note: Language that accomplishes the same objective may also be included in any other written agreement between the servicer and mortgage insurer, such as a master primary policy, as long as it covers both mortgage loans currently insured by the mortgage insurer as well as those that become insured or may become insured in the future. Under such circumstances, separate instructions need not be returned to each mortgage insurer using the posted contacts.


Notifying Fannie Mae of Mortgage Insurance Rescissions, Claim Denials, or Cancellations

The servicer must notify Fannie Mae of MI rescissions, claim denials, or cancellations for all mortgage loans in accordance with B-8.1-01, Conventional Mortgage Insurance Servicer Responsibilities.

The following table provides steps the servicer must follow for notifying Fannie Mae of MI rescissions, claim denials, or cancellations.

If the mortgage loan is... Then the servicer must...

active

Report to Fannie Mae the Action Code 54 (MI Terminated—High Risk Loan) in the LAR that relates to the month in which the notification was received from the mortgage insurer. The Action Date must be the date of the notification received from the mortgage insurer. If the servicer cannot report the Action Code through the LAR file, then it must do so through SURF.

liquidated

Notify Fannie Mae of MI rescissions, claim denials, or cancellations by sending an email to mi_mail@fanniemae.com.

Note: Notification for active and liquidated mortgage loans must include the Fannie Mae and servicer loan numbers and a description of the rescission, mortgage insurer-initiated cancellation, or claim denial.


Ordering Property Values for Mortgage Insurance Termination

The servicer must cancel borrower-purchased MI at the request of the borrower in accordance with Borrower-Initiated Termination of Conventional Mortgage Insurance Based on Original Value of the Property or Borrower-Initiated Termination of Conventional Mortgage Insurance Based on Current Value of the Property, as applicable in B-8.1-04, Termination of Conventional Mortgage Insurance.

On one-unit properties, the servicer must order an interior and exterior BPO, or appraisal if the servicer determines it is required by law, using Fannie Mae's servicing solutions system. On two- to four- unit properties, the servicer must order an interior and exterior appraisal using Fannie Mae's servicing solutions system.

The BPO or appraisal to determine the current value of the property is at the expense of the borrower and the servicer must only order the valuation after the servicer receives the applicable fee. The borrower must be charged the cost of the BPO or appraisal based on the following table.

Valuation Type Cost
BPO $150
Restricted appraisal one-unit $325
Appraisal two- to four-unit $750

If the borrower is requesting MI termination based on current value of the property because of property improvements made by the borrower since origination, the servicer must include details provided by the borrower of the property improvements to Fannie Mae.

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