Servicing Guide

Published November 10, 2020

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What actions must be taken to reclassify or voluntary repurchase an MBS mortgage loan for a loan modification?

The servicer must ensure that an MBS mortgage loan is removed from the MBS pool for the purposes of modification in accordance with D2-3.1-02, Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan. 

The following table outlines the actions the servicer must take to reclassify a special servicing option MBS mortgage loan or to voluntarily repurchase a regular servicing option mortgage loan or a shared-risk special servicing option mortgage loan for which the servicer’s shared risk liability has not expired based on the mortgage loan status at the time the mortgage loan modification is negotiated. 

If, at the time the mortgage loan modification is negotiated... Then...

the borrower’s payment default is imminent

Fannie Mae will reclassify or the servicer will voluntarily repurchase, as applicable, the mortgage loan during the fourth month of the Trial Period Plan if

  • the borrower has made the fourth payment of a four-month Trial Period Plan, and

  • the servicer has notified Fannie Mae of receipt of the payment on or before the 15th calendar day (the servicer’s reclassification date) of the fourth month of the Trial Period Plan.

payment default has already occurred

Fannie Mae will reclassify or the servicer will voluntarily repurchase, as applicable, the mortgage loan during the third month of the Trial Period Plan if

  • the borrower has made the third payment of a three-month Trial Period Plan, and

  • the servicer has notified Fannie Mae of receipt of the payment on or before the 15th calendar day (the servicer’s reclassification date) of the third month of the Trial Period Plan.

If the final Trial Period Plan payment (either third or fourth Trial Period Plan payment as applicable depending on the original mortgage loan status) is received after the 15th calendar day (the servicer’s reclassification or voluntary repurchase date) of the final month of the Trial Period Plan but before the end of the Trial Period Plan, then it will not be possible to reclassify or voluntary repurchase the mortgage loan from the MBS pool during the final month of the Trial Period Plan. In such event, the servicer must extend the Trial Period Plan one month, and the reclassification or voluntary repurchase date will be the 15th calendar day of such extended month. If the servicer has not notified Fannie Mae of its receipt of the final Trial Period Plan payment on or before the servicer’s reclassification or voluntary repurchase date, the servicer shall extend the Trial Period Plan for an additional month. 

If the required Trial Period Plan payments are not made in accordance with the Trial Period Plan, Fannie Mae will cancel the case in Fannie Mae’s servicing solutions system. 

The following table outlines the actions that the servicer must take after a mortgage loan has completed the Trial Period Plan. 

The servicer must...
 

Confirm that Fannie Mae has reclassified an MBS mortgage loan by obtaining the Purchase Advice from SURF. If Fannie Mae does not include the mortgage loan in its list of mortgage loans due for reclassification before the month in which the modified terms become effective, the servicer must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts).

 

After a mortgage loan is reclassified, follow the existing procedure and update the Officer Signature Date in Fannie Mae’s servicing solutions system to close the mortgage loan modification case.

 

Apply all subsequent payments in accordance with the terms of the modified mortgage loan.

For more information please see Servicing Guide F-1-26: Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan. 

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