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.

View All Servicing Policy Updates

Download PDF

Hint: Ask in a form of a question.

For best results, pose your search like a question.

F-1-15: Processing a Fannie Mae Short Sale (06/10/2020)

This Servicing Guide Procedure contains the following:

Calculating the Borrower’s Housing Expense-to-Income Ratio

The servicer must determine the borrower’s housing expense-to-income ratio as outlined in Evaluating a Borrower’s Ability to Make a Cash Contributionin D2-3.3-01, Fannie Mae Short Sale.

The borrower’s monthly gross income is defined as the borrower’s monthly income amount before any payroll deductions and includes the following items, as applicable:

  • wages and salaries;

  • overtime pay;

  • commissions;

  • fees;

  • tips;

  • bonuses;

  • housing allowances;

  • other compensation for personal services;

  • Social Security payments (including Social Security received by adults on behalf of minors or by minors intended for their own support); and

  • monthly income from annuities, insurance policies, retirement funds, pensions, disability or death benefits, rental income, and other income such as adoption assistance.

    Note:The servicer must not consider unemployment insurance benefits or any other temporary sources of income related to employment (such as severance payments), as part of the monthly gross income for mortgage loans.

The servicer must then divide the borrower’s monthly housing expense on the property securing the mortgage loan, which includes the following items (as applicable), by the borrower’s monthly gross income:

  • P&I;

  • property and flood insurance premiums;

  • real estate taxes;

  • ground rent;

  • special assessments;

  • HOA dues (including utility charges that are attributable to the common areas, but excluding any utility charges that apply to the individual unit);

  • co-op corporation fee (less the pro rata share of the master utility charges for servicing individual units that is attributable to the borrower’s unit); and

  • any escrow shortage currently included as part of the full monthly contractual payment.

Note: The servicer must exclude monthly mortgage insurance premiums from the monthly housing expense-to-income calculation.

Obtaining a Property Valuation

The servicer must obtain a property valuation in accordance with Obtaining a Property Valuation in D2-3.3-01, Fannie Mae Short Sale. The property valuation must be dated or have been refreshed by Fannie Mae within 90 calendar days of the short sale approval.

The following table provides additional requirements for all property valuations for a short sale.

The servicer must…

Submit property valuation orders using the VMS application and the VMS Valuation Order Template.

Note: To obtain access to the VMS application, the servicer must complete a VMS User Setup Template and submit it to

Include the cost of the property value order in the MI claim.

The results of the property value will be available through Fannie Mae’s servicing solutions system within seven to ten calendar days from the date the servicer submits the order.

Have You Tried Ask Poli?

Poli knows. Just ask.

Ask Poli features exclusive Q&As and
more—plus official Selling & Servicing

Try Ask Poli

Related Articles

Is there an expiration date for a value used in a liquidation workout?

The servicer must obtain a property valuation for a Short Sale in accordance with Obtaining a Property Valuation in D2-3.3-01, Fannie Mae Short Sale. The...

Read more

What are the requirements for obtaining a property valuation when processing a Fannie Mae Short Sale?

The servicer must obtain a property valuation in accordance with Obtaining a Property Valuation in D2-3.3-01, Fannie Mae Short Sale. The property...

Read more

Have guide questions? Get answers to all of your policy questions, straight from the source.

Get Started
Having Issues with Seeing this Page Correctly?

Use Firefox or Chrome   How to do a hard refresh in Internet Explorer
We recommend that you use the latest version of FireFox or Chrome.

Download Firefox
Download Chrome
  A hard refresh will clear the browsers cache for a specific page and force the most recent version of a page.
    Hold the Ctrl key and press the F5 key.

Email Us
If you still have Technical Support questions, feel free to