D2-3.2-03, Government Mortgage Loan Modifications (02/18/2026)

Before recommending a mortgage loan modification or extension for a government mortgage loan to Fannie Mae, the servicer must first obtain the approval of the FHA, HUD, VA, or the RD, as applicable, using any documentation the mortgage insurer or guarantor requires.

For an MBS mortgage loan, the servicer must first determine whether the mortgage insurer or guarantor requires transfer of the mortgage loan to it in order to obtain the benefits of the insurance or guaranty program, as described in the Mandatory Repurchase of Certain MBS Mortgage Loan requirements in A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment ObligationsA1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations. If such mandatory repurchase requirement does not apply, servicers must follow the requirements in D2-3.1-02, Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage LoanD2-3.1-02, Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan.

After the servicer obtains all applicable approvals, it must prepare and fully execute the mortgage loan modification agreement required by the FHA, HUD, VA or the RD or, if none is explicitly required, the Agreement for Modification, Re-Amortization or Extension of a Mortgage (Form 181).

The servicer must follow the procedures in Executing and Recording the Mortgage Loan Modification Agreement in F-1-15, Processing a Government Mortgage Loan ModificationF-1-15, Processing a Government Mortgage Loan Modification for executing and, if applicable, recording the mortgage loan modification agreement.

For a completed FHA mortgage loan modification, the servicer must provide all documents to FHA in the time frame that it requires. In the event FHA issues a request for repayment of the incentive payment or partial claim, the servicer must repay the funds.