Servicing Guide

Published September 9, 2020

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What actions must be taken to satisfy the mortgage loan and release the lien after a loan is paid off?

After verifying the amount required to pay the mortgage loan in full has been received, the servicer must perform all of the tasks specified in the following table in accordance with C-1.2-04, Satisfying the Mortgage Loan and Releasing the Lien. 

The servicer must...
 

Remove Fannie Mae’s interest (or that of the mortgagee of record) from all applicable property insurance policies.

 

Notify the taxing authorities that future tax bills should be sent to the borrower (or to the servicer of the first lien mortgage loan if only a second lien mortgage loan is paid off).

 

Prepare and execute the appropriate release or satisfaction documents identified by the Fannie Mae loan number and, if applicable, the MERS MIN.

 

Send the satisfaction or release documents, and a request for the assignment of the custody documents, to the following address:

Fannie Mae

Vendor Oversight

Legal Document Execution

13150 Worldgate Drive

Herndon, VA 22070

Note: Fannie Mae will return the executed documents promptly to the servicer.

 

Notify the mortgage insurer or guarantor of the payoff.

 

If the mortgage loan is an eMortgage, update the MERS eRegistry with information of the payoff, charge-off, or assumption.

 

Advise MERS to deactivate the MERS registration for the mortgage loan, if applicable.

If the eMortgage is secured by property in a state that requires the return of a paper Note upon loan payoff, provide the borrower of an eMortgage a paper copy of the eNote marked “Copy” and “Paid-In-Full” and include:

  • a letter to the borrower explaining that the borrower is receiving a paper copy of the eNote which was originally registered in the MERS eRegistry, and that the servicer has caused the eNote to be deactivated on the MERS eRegistry due to payment in full, and

  • other documents and information required by applicable law.

 

Remit Fannie Mae’s share of the payoff proceeds in accordance with the remittance schedule established for the remittance type under which the mortgage loan is reported.

 

Code the payoff as Action Code 60 when it next reports a Transaction Type 96 (LAR) to Fannie Mae through Fannie Mae’s investor reporting system.

Note: The servicer must not pass on to the borrower or to Fannie Mae any penalty fee it has to pay because it failed to process the release and satisfaction documents within the required time frame.

For more information please see Servicing Guide F-1-09, Processing Mortgage Loan Payments and Payoffs. 

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If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

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