Servicing Guide

Published September 9, 2020

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Fannie Mae Single-Family Reverse Mortgage Loan Servicing Manual June 12, 2019 (Chapter 1, Reverse Mortgage Loan Products

See below for Chapter 1, Reverse Mortgage Loan Products  

To see other Chapters of the Fannie Mae Single-Family Reverse Mortgage Loan Servicing Manual, please click on any of the chapters below:

Chapter 2: Doing Reverse Mortgage Loan Business with Fannie Mae

Chapter 3: General Servicing Requirements

Chapter 4: Assisting Borrowers At Risk of Default or In Default

Chapter 5: Processing Claims and Managing Acquired Properties

Chapter 6: Reporting through eBoutique

Chapter 7: Quick Reference Materials

 

This Chapter contains the following Topics:

 

1-01, Home Keeper Mortgage Loans (05/28/2014)

The Home Keeper mortgage loan is a conventional reverse mortgage loan that is designed to assist older homeowners in converting the equity in their homes to cash.

This topic contains information on the following:

Determining the Principal Limit

The principal limit is the amount of cash that is available when a Home Keeper mortgage is originated. It is a function of

  • the age and number of borrowers,
  • the value of the property, and
  • whether the borrower chose an equity share feature, for some older mortgage loans originated before August 10, 2000.

The borrower’s original principal limit is reduced by

  • any allowable closing costs or third-party fees that the borrower wants to finance,
  • an allocation for the expected servicing fees that will be paid over the life of the mortgage loan, and
  • if applicable, set-asides to reserve funds for the payment of the first year’s property charges and the costs of property repairs that must be completed as a condition of granting the mortgage loan, as well as by any mortgage loan advances that will be made at loan closing.

The principal limit that remains after these adjustments are made, which is called the “net principal limit at origination,” is the amount used to determine the line of credit or scheduled payments that will be available to the borrower.

Payment Plan Options

The following table describes the types of payment plans offered through which a borrower may obtain mortgage loan advances.

Payment Plan

Frequency of Disbursement

Tenure payment plan

Scheduled equal monthly payments beginning on the first day of the month after the mortgage loan is closed.

Line of credit payment plan

Unscheduled payments to be made to the borrower whenever a disbursement is requested from the servicer. The borrower must specify the amount of the disbursement each time payment is requested. The borrower may request that the entire amount of the line of credit be disbursed at closing.

Modified tenure payment plan

The borrower sets aside part of the principal limit as a line of credit to receive

  • scheduled equal monthly payments based on the reduced principal limit beginning on the first day of the month after the mortgage loan is closed and
  • unscheduled payments that may be requested at any time as prescribed in the line of credit payment plan.

For the tenure, line of credit, and modified payment plans, the payments will continue to be made to the borrower as long as

  • the principal limit has not been reached,
  • the borrower occupies the property as the principal residence, and
  • the borrower has not violated any of the mortgage covenants that would result in the mortgage loan becoming due and payable (see 4-02, Acceleration of the Debt).

The borrower selects a payment plan at closing. However, the borrower may change from one payment plan to another as often as he or she wishes. When the borrower changes the payment plan,

  • a new monthly payment and/or line of credit is established; however, any funds in a set-aside account will not be affected, and
  • the servicer may charge the borrower up to $50 to process each request for a payment plan change.

The borrower also may choose to have the scheduled payments under his or her current payment plan suspended for a period of time and then restarted, without having to pay a plan change processing fee.

Determining the Borrower’s Mortgage Loan Balance

The beginning balance is the sum of all disbursements the seller/servicer made to, or on behalf of, the borrower at closing. The mortgage loan balance will increase over time

  • as payments to, or on behalf of, the borrower are made;
  • as adjustments for accrued interest and servicing fees are capitalized at the end of each month;
  • as interest and servicing fee accruals or the payment of set-aside funds on the borrower’s behalf take place even if the borrower’s scheduled payments have been suspended or the borrower does not request a line of credit withdrawal for that month; and/or
  • if the borrower changes payment plans and chooses to finance the processing fee.

A borrower may obtain a mortgage loan advance (either as a scheduled payment or as an unscheduled line of credit draw), repay the mortgage loan advance, and then withdraw the same funds again. Any partial repayments of mortgage loan advances that a borrower makes will decrease the borrower’s mortgage loan amount equally and will be available for future withdrawal as long as the mortgage loan remains outstanding. Also see 3-05, Managing Partial Repayments or Payments in Full.

1-02, Home Equity Conversion Mortgage Loans (05/28/2014)

A HECM loan is an FHA-insured reverse mortgage loan that is designed to assist older homeowners in converting the equity in their homes to cash. The servicer must follow all applicable requirements of the HECM program found in HUD Handbook 4235.1 REV-1: Home Equity Conversion Mortgages, Handbook 4330.1 REV-5: Administration of Insured Home Mortgages, all related HUD Mortgagee Letters, and all other guidance provided by HUD.

 

To see other Chapters of the Fannie Mae Single-Family Reverse Mortgage Loan Servicing Manual, please click on any of the chapters below:

Chapter 2: Doing Reverse Mortgage Loan Business with Fannie Mae

Chapter 3: General Servicing Requirements

Chapter 4: Assisting Borrowers At Risk of Default or In Default

Chapter 5: Processing Claims and Managing Acquired Properties

Chapter 6: Reporting through eBoutique

Chapter 7: Quick Reference Materials

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