1.2.11.2.1 Notifying the MPF Provider

Servicers are required to maintain accurate records and provide the MPF Provider certain notices, in the manner provided for in the Guides.  Some notices are required to be made immediately, including but not limited to discovering any of the following:

• Deterioration of waste, or lack of repair to, any Mortgaged Property, including the presence of hazardous materials or conditions;
• Sale or transfer of any Mortgaged Property that was not in compliance with the Guides;
• Material litigation involving any Mortgaged Property;
• Vacancy or abandonment of any Mortgaged Property;
• Occupancy of the Mortgaged Property by a tenant, if the related Mortgage Loan documents indicate such property is to be owner-occupied;
• A material default under the terms of any Security Instrument, Note, condominium project or PUD constituent document or similar obligations of the Borrower (except in the case of a monetary default of the Borrower already addressed under the requirements for Delinquency management set forth in the Guides); or
• Any other situation that may materially and adversely affect any Mortgage Loan or Mortgaged Property.

1.3.11.3.1 MPF Program Master Servicer

The terms and conditions of this Servicing Guide will be administered by the MPF Bank, the MPF Provider acting on behalf of the MPF Bank, or the Master Servicer acting on behalf of the MPF Provider. The Master Servicer is authorized to require the Servicer to perform its obligations hereunder and under the Applicable Agreement. Computershare will serve as the Master Servicer. The MPF Bank or the MPF Provider may, at any time, without the Servicer's consent, direct in writing that all or part of the functions of the Master Servicer be performed by another entity designated for such functions and time periods as the MPF Bank or the MPF Provider deems appropriate. The Servicer must comply with the instructions of such entity as if it were the Master Servicer.

Correspondence relating to the servicing and administration of the Mortgage Loans should be directed to the Master Servicer.

1.3.21.3.2 Master Servicer Prior Approvals

The Master Servicer may waive some requirements for prior approval in this Servicing Guide so long as the Servicer:

• Maintains Delinquency rates for Mortgage Loans at or below industry standards for mortgages of similar types in similar locations;
• Achieves Foreclosure time intervals at or below Fannie Mae’s standards for the states in which the Mortgaged Properties are located; and
• Maintains Foreclosure losses at or below Fannie Mae’s standards for mortgages of similar types in similar locations.

This waiver must be in writing and may be withdrawn at any time at the sole discretion of the MPF Bank, MPF Provider, or the Master Servicer.

1.4.11.4.1 Servicer as Independent Contractor

The Servicer is an independent contractor of the MPF Bank for the purpose of collecting Mortgage Loan payments, processing and collecting insurance claims, foreclosing, and otherwise enforcing the terms of the Mortgage Loan documents after default.

The Servicer shall act on behalf of the MPF Bank for the purpose of disposing of real estate owned (“REO”) properties.

All services, duties and responsibilities of the Servicer under the Applicable Agreement and the Guides shall be performed and carried out by the Servicer as an independent contractor, and none of the provisions in the Guides (except where expressly provided) shall be deemed to make, authorize or appoint the Servicer as agent, partner, or representative of the MPF Bank, MPF Provider, or Master Servicer or any of their affiliates. Nothing in the Guides or in the Applicable Agreements shall be deemed or construed to create a partnership or joint venture between the parties hereto.

The Servicer’s authority as an independent contractor is strictly limited to those acts necessary to carry out its Servicing Responsibilities in accordance with the Guides and the Applicable Agreements. Except where express permission was received from the Master Servicer or MPF Provider in writing, the Servicer is not authorized to waive any right or remedy of the Mortgage Loan documents.

1.4.21.4.2 Servicer Performance

Upon breach of any requirement, including, without limitation, the occurrence of any Event of Default, or of any of the Servicer's representations, warranties or covenants contained in the Guides or in the Applicable Agreements, the Servicer must:

• Promptly notify the MPF Bank and MPF Provider in writing of the nature of the breach, the date on which the breach occurred or began, and the Servicer's plans, if any, for curing the breach; and
• Effect a cure of the breach, if deemed curable by the MPF Bank, within thirty (30) days after the occurrence or onset of the breach.

If the breach is not deemed curable or if no complete cure has been effected, the MPF Bank may, in its sole discretion, require the Servicer to purchase or repurchase any Mortgage Loan which has been impaired or has suffered a material impairment of value. 

1.4.31.4.3 Servicer Authority – Legal Representation

The Servicer has the full authority to do or cause to be done all things as may be necessary and appropriate to perform the Servicing responsibilities in its own name and right as if the Mortgage Loans were owned by it for its own account. In employing attorneys, filing claims in bankruptcy, probate, and other courts, or when appearance in any court is to be made, any such employment, filing, or appearance shall be done in the Servicer’s name unless the Applicable Law, the Guides, Master Servicer, MPF Bank or MPF Provider authorize or direct the Servicer to take such action in the MPF Bank’s name. 

1.7.11.7.1 Applicable Standards

Notwithstanding the presence or absence of language in certain sections of the Servicing Guide or the Applicable Agreement that expressly requires compliance with Applicable Standards, the Servicer must service the Mortgage Loans and fulfill all other obligations under this Servicing Guide and the Applicable Agreement in strict conformance with the Applicable Standards, which are any requirements contained in:

• The Guides;
• The applicable sections of the Fannie Mae Servicing Guide, including but not limited to Chapter A2-1, Servicer Duties and Responsibilities;
• The Applicable Agreements;
• Any other contractual obligation of the Servicer;
• The reasonable and customary practices of prudent mortgage lending institutions that service mortgage loans of the same type as the Mortgage Loans in the jurisdiction in which the relevant Mortgaged Properties are located;
• The terms of the Mortgage Loan documents; and
• All Applicable Laws (See also MPF Program Guide, Chapter 7).

1.7.21.7.2 Servicing Files

The Servicer must maintain an individual Mortgage Loan File for each Mortgage Loan by either storage of:

• The physical documents; or
• Images of the documents on:
  • Optical disks;
  • Microfilm;
  • Micro-fiche; or
  • Other electronic storage medium.

The storage medium must be marked in a way that clearly identifies the MPF loan numbers contained therein.

Any electronic storage of the documents must be in accordance with the Applicable Standards and must meet the following requirements:

• The process must accurately reproduce originals onto a durable medium;
• The MPF loan number and the Servicer loan number must be clearly marked;
• The contents of the media must be easily transferable to legible hard copies;
• The Servicer must retain the original recorded Mortgage, the original of any Assignments; the original Conventional mortgage insurance certificate, the Government Loan insurance certificate or guaranty certificate; and originals of any documents that change the mortgage terms, unless such documents are held by the Custodian; and
• The Servicer must make backup copies of the electronic files and retain the backup copies off-site to protect against fire and other hazard losses.

If the copies, optical storage or magnetic media become damaged or lost for any reason, the Servicer must bear the entire cost of restoring each Mortgage Loan File and any other related documents.

Mortgage Loan Files must be made available for review by the MPF Bank, the MPF Provider, the Master Servicer, the applicable investor or Government Agency, their representatives, agents, or examiners. If the requestor requires legible hard copies, the Servicer bears the cost for reproducing and delivering the hard copies.

Each Mortgage Loan File, at a minimum, must contain the following information/documents:

• Borrower correspondence letters and responses;
• Loan transaction/payment histories;
• Consolidated conversation notes and telephone contact attempts;
• Any assumption, modification, or other documents;
• Legal notices;
• Documentation of any modifications to the Mortgage Loan or releases of any collateral for the Mortgage Loan;
• A copy of the tax service contract;
• Routine form letters, all customer service/collection/bankruptcy/foreclosure/claims information, and full loan accounting history;
• Any documents required to be maintained in the Mortgage Loan File in accordance with the MPF Traditional Selling Guide;
• Any approval required to have been obtained from the MPF Provider, Investor, or applicable Government Agency, pursuant to the Guides, as to any of the items listed above; and
• All other records, data and documents customarily maintained in a Mortgage Loan File in accordance with Applicable Standards, including the Fannie Mae Servicing Guides.

1.7.31.7.3 Mortgage Records

The Servicer must maintain records to show the payment history for each Mortgage Loan, including the date of each transaction, funds credited to the account, and disbursements made from the account.

1.7.41.7.4 Record Retention (10/1/25)

For more convenient storage, the Servicer may scan (or otherwise condense, including the use of computer imaging) most of the papers required to document and service the Mortgage Loan. Servicers must ensure any documents processed, stored, or transmitted electronically, comply with Fannie Mae Servicing Guide A2-5-01 Ownership and Retention of Individual Mortgage Loan Files and Records, in addition to any requirements in the MPF Guides that do not conflict with the Fannie Mae guide requirements.

The Servicer must maintain the mortgage loan file in accordance with A2-5-01, Ownership and Retention of Individual Mortgage Loan Files and Records, in addition to any requirements in the MPF Guides that do not conflict with the Fannie Mae guide requirements.

However, the Servicer shall retain  copy of the recorded Security Instrument, the original of any Assignments (except for any original Assignment that the Custodian may be holding), the original PMI certificate or applicable Government Agency mortgage insurance certificate or loan guaranty, and originals of any documents that modify the loan terms (unless required that they be sent to the MPF Bank or MPF Provider). When the Servicer uses any form of reduced (condensed) documents, it shall be able to promptly reproduce legible, exact duplications of the original documents if they are needed for any reason.

The Servicer is responsible for promptly delivering to the Custodian any documents that come into its possession which are required to be maintained in the Collateral File.

After a Security Instrument is re-conveyed or assigned, or a Mortgaged Property disposed of, the Servicer must keep the individual Mortgage Loan File for at least seven (7) years (from the date of payoff or the date of disposition).  

1.7.51.7.5 Release of Documents (12/20/24)

The Note and the Assignment must remain in the Custodian's possession, except as needed by the Servicer from time to time as appropriate for Servicing of a Mortgage Loan. When items from the Collateral File are needed, the Servicer must submit a Request for Release of Documents (Form SG340-X) to the Custodian.

The Custodian will release the requested Collateral File upon receipt of a properly executed Request for Release of Documents form. The Servicer will be responsible for the Collateral File while it is in the Servicer's possession and will be deemed to hold such Collateral File in trust for the MPF Bank. The Servicer must safeguard the Collateral File until it is returned to the Custodian, which includes protecting it from external elements (such as fire), identifying it as an MPF Bank asset, and keeping it separate from other unrelated documents.

If the Mortgage Loan has not been paid in full or otherwise liquidated, the Servicer shall promptly return the Collateral File when it is no longer required by the Servicer.

The MPF Provider will notify Servicers on a monthly basis regarding Collateral Files that have been released for non-liquidation purposes for more than ninety (90) days.

Within 24 hours of receipt of notification from the MPF Provider, the Servicer must respond to the MPF Provider with the reason the Collateral File has not been returned to the document Custodian. The Servicer’s response must indicate one of the following:

• The Mortgage Loan has been paid in full, repurchased, or liquidated as a result of Foreclosure, short sale, or Mortgage Release. The Servicer must provide an updated Form SG340-X with reason “1”, “2”, or “4” selected;
• The Servicer no longer needs the documents, and the Servicer will return the documents to the Custodian; or
• The Servicer still needs the released documents, and the reason for the continuing need of the documents.

1.7.61.7.6 Release of Lien (4/15/25)

At payoff, liquidation, or as otherwise necessary, the Servicer is responsible for releasing the lien of the Security Instrument, including executing the appropriate satisfaction, release, or reconveyance on behalf of the MPF Bank, and for complying with all Applicable Laws requiring timely release or reconveyance.

The Servicer must complete the appropriate Request for Release of Documents (Form SG340-X) and submit it to the Custodian no later than the second business day of the month following payoff/liquidation (i.e. Request for Release of Documents for all January payoffs must be submitted by the 2nd business day of February). A monthly request may be submitted by using one SG340-X form accompanied by an excel spreadsheet listing all MPF Xtra paid off loans for which Servicer is requesting release of the Notes.  Any Servicer failing to submit timely requests will be subject to a $10 monthly late fee. Such fee will be imposed every month a required release remains unsubmitted to the Custodian. Any specific instructions pertaining to endorsement and/or disposition of the original Mortgage Loan documents must accompany the Request for Release of Documents form.

The Custodian shall return the original Note by UPS or FedEx (using number provided by the PFI at onboarding) once the Mortgage Loan is paid in full or otherwise liquidated. The Servicer is responsible for complying with Applicable Law with respect to the Note being altered to indicate the Mortgage Loan has been paid in full.

The Mortgage Loan must also be deactivated on MERS if the Mortgage Loan is registered with MERS.

1.7.71.7.7 Disclosure of Servicer Information

The Servicer must furnish to the MPF Bank or any other investor upon request, and to keep up to date, a description of the Servicer and its activities, suitable, in the MPF Bank's or other investor’s discretion, for disclosure purposes related to securitization. The Servicer consents to the inclusion of such description in any prospectus, private placement memorandum, or offering circular. The Servicer recognizes that they MPF Bank will rely upon the truthfulness and accuracy of such description, including when using Mortgage Loans as collateral for mortgage-backed securities or similar transactions.

1.7.81.7.8 Lien Priority

The Servicer must take all such actions as are reasonably necessary to preserve the lien and its priority upon the Mortgaged Property securing each Mortgage Loan at all times. 

1.7.91.7.9 Delinquency Ratio Exceeding MPF Program’s Standard

The Servicer shall maintain monthly total portfolio Delinquency ratios at or below the maximum allowable total delinquent ratio as determined by its MPF Bank. 

A Servicer may be disqualified or suspended if the Servicer’s 30-, 60-, or 90-day Delinquency rate or REO property rate for Mortgage Loans is more than 50% higher than the average 30-, 60-, or 90-day Delinquency rate or REO property rate for all Mortgage Loans owned by MPF Banks or delivered under the MPF Program nationally or for loans which are secured by Mortgaged Properties located in the same geographic area (which may include Standard Metropolitan Statistical Area, county, or state) as the loans being serviced by the Servicer and with similar mortgage and borrower characteristics (for example, origination year, loan to value ratio, documentation type, etc.).

1.7.101.7.10 Customer Contact

Servicers must promptly respond to all inquiries received from Borrowers about the terms of their Mortgage Loans, the status of their accounts, loss mitigation, or any actions the Servicer took (or did not take) in servicing their Mortgage Loans.

If a borrower’s written inquiry includes a request for the number of the Fannie Mae pool or trust related to their loan, the Servicer must reach out to the MPF Provider in order to obtain the requested information.

The Servicer’s staff must be able to communicate with Borrowers in a manner reasonably expected to be understandable to the Borrower.

The Servicer shall not refer Borrowers to the MPF Bank or the MPF Provider for resolution of issues that are the Servicer’s responsibility. 

If Servicer requires information from Master Servicer, MPF Provider, or Investor to respond to such Borrower inquiry, Servicer must allow at least 5Business Days for the request to be processed, and, to avoid delays, should ensure the request include at minimum the following information:

• MPF loan number;
• Borrower name(s);
• Who inquiry was received from and relationship to Borrower (Note that any request received related to inquiry from alleged successors in interests will be assumed to have been confirmed as a Successor in Interest by Servicer pursuant to its policies and procedures);
• Deadline for response to inquiry, and whether the deadline is regulatory;
• Copy of the original inquiry (if received in writing); and
• Any other relevant loan or borrower information that may be needed to provide response to Servicer’s request.

1.7.111.7.11 Rescission Notices

The Servicer must immediately notify the MPF Provider of the Mortgage Loan when a rescission notice is received from or on behalf of a Borrower. To avoid delays, the notification to the MPF Provider must include at minimum the following information:

• MPF loan number;
• Borrower name(s);
• Loan product, name of Investor(s) and any applicable Government Agency insuring or guaranteeing the Mortgage Loan;
• Who inquiry was received from and relationship to Borrower (Note that any request received related to inquiry from alleged successors in interests will be assumed to have been confirmed as a Successor in Interest by Servicer pursuant to its policies and procedures);
• Date and method notice of rescission was received by Servicer;
• Copy of the Notice of Rescission;
• Copy of any other communication received from Borrower or Borrower’s representative related to the rescission;
• Status of loan (If loan is in foreclosure or bankruptcy: name and contact information of attorney representing Servicer and attorney representing Borrower); and
• Any other relevant loan or borrower information that may be needed to address the rescission demand.

1.7.121.7.12 Other Loan Inquiries

Servicers must promptly respond appropriately pursuant to Applicable Laws to all inquiries received regarding Mortgage Loans they service, including inquiries from non-authorized individuals, regulators, government representatives etc.…

The Servicer shall not refer such individuals to the Master Servicer, MPF Bank, or MPF Provider for resolution of issues that are the Servicer’s responsibility.

If Servicer requires information from MPF Provider to respond to such inquiry, Servicer must allow at least 5 Business Days for the request to be processed, and, to avoid delays, should ensure the request include at minimum the following information:

• MPF loan number;
• Borrower name(s);
• Who inquiry was received from and relationship to Borrower (Note that any request received related to inquiry from alleged successors in interests will be assumed to have been confirmed as a Successor in Interest by Servicer pursuant to its policies and procedures);
• Deadline for response to inquiry, and whether the deadline is regulatory;
• Copy of the original inquiry (if received in writing); and
• Any other relevant loan or borrower information that may be needed to provide response to Servicer’s request.

1.7.131.7.13 Occupancy Status

The Servicer shall maintain accurate records of the occupancy status of Mortgaged Properties, including any changes in occupancy they have been made aware of.  In addition, Servicers must immediately advise the notify the MPF Provider via email, upon discovering that the Mortgaged Property is no longer owner-occupied, including when it is vacant, abandoned or occupied by a tenant, if the related Mortgage Loan documents indicate such property is to be owner-occupied, and provide recommendations with applicable supporting documentation as to any actions that are to be taken as a result of the change in occupancy status.

1.7.141.7.14 MERS Registered Mortgage Loans

If the Servicer uses MERS or if the use of MERS is required under a particular servicing option, in addition to complying with the requirements of the MERS Membership Agreement, Servicers of MERS registered Mortgage Loans must check for electronic messages from MERS. If an unidentified notice related to a Mortgage Loan is received, the Servicer must take any appropriate and timely action based on the notice, and advise MERS that it is the Servicer of the Mortgage Loan.

1.7.151.7.15 Execution by MPF Bank

If the MPF Bank’s signature is required on any document (e.g. for payment in full, Assumption, or Foreclosure), the Servicer must provide a written notice to the MPF Provider requesting the MPF Bank’s execution and certifying the reason that the execution is required. Servicer must allow at least 5 Business Days for the request to processed, and, to avoid delays, should ensure the request include at minimum the following information:

• MPF loan number;
• Borrower name(s);
• Explanation as to why request is being made, including any deadlines related to legal processes; and
• Any other supporting documentation or relevant loan or borrower information that may be needed to respond to Servicer’s request.

1.7.161.7.16 Late Charges

The Servicer must collect late charges pursuant to the terms of the note and in accordance with the Applicable Standards. However, the Servicer cannot collect a late charge that is more than five percent (5%) of the late Principal and Interest Payment and/or collect a late charge on a monthly payment received on or prior to the 15th calendar day of the month.

The Servicer should use discretion when considering a request for waiver of late charges, taking into consideration delinquency history, etc.

The Servicer must accept a late full monthly payment without the late charge included, unless Applicable Law states otherwise or acceptance of the payment would pose a risk to the Servicer during legal proceedings.

1.7.171.7.17 Property Address Change

When the Servicer has determined that the property address has changed, the Servicer must email the MPF Provider at [email protected] with the following information:

• MPF loan number;
• Borrower name;
• Old property address;
• New property address; and
• Documentation reflecting the property address change.

1.7.181.7.18 Electronic Signatures

Electronic signatures are acceptable provided the document is permitted to be electronically signed by applicable laws and the MPF Program, including the requirements provided in MPF Program Guide Section “7.4 Electronic Signatures in Global and National Commerce Act (E-SIGN)”.

In addition to the above requirements, PFIs must ensure that recording offices (if document is meant to be recorded), and all guarantor, insurer, Investor, or Government Agency (as applicable) permit electronic signatures and their requirements for the use of such electronic signatures are met.

See Fannie Mae Selling Guide A2-4.1-03, Electronic Records, Signatures, and Transactions.

1.7.191.7.19 Notarization Standards

Certain loan documents and instruments may require notarization under applicable laws to allow for either recognition, enforcement, or recordation of the loan document or instrument. PFIs must ensure the notarization complies with applicable laws, MPF Program requirements, recording offices (if document is meant to be recorded) requirements, and all guarantor, insurer, Investor, or Government Agency (as applicable) requirements.

For the MPF Program requirements refer to MPF Program Guide section – “7.4.2 “Notarization Standards”. See Fannie Mae Selling Guide A2-4.1-04, Notarization Standards.

1.7.201.7.20 Business Continuity and Information Security Programs (4/23/25)

In addition to MPF Program requirements for business continuity and information security programs, PFIs/Servicers must meet Fannie Mae requirements for such programs, including those provided for in A2-1-01, General Servicer Duties and Responsibilities of the Fannie Mae Servicing Guide and the Fannie Mae Information Security and Business Resiliency Supplement.

All notices required to be made by Servicers to Fannie Mae in such sections should instead be made to the MPF Service Center through the MPF Customer Service Portal or contacting MPF Service Center ([email protected] or 877.345.2673).

1.9.11.9.1 Subservicing

The Servicer must obtain written consent from the MPF Bank and MPF Provider to delegate all of its servicing responsibilities to a subservicer. If servicing is performed by a subservicer, all financial transactions regarding this servicing must take place through the Servicer’s DDA with the MPF Bank.

1.9.21.9.2 Delegations Not Requiring Consent

The Servicer may elect to delegate by agency, subcontract, or otherwise the following Servicing duties without the written consent of the MPF Bank or MPF Provider:

• Professional collection agencies to perform those duties and functions for the collection of delinquent amounts due on any Mortgage Loan that are customarily performed by such agencies in the locality where the related Mortgaged Property is located;
• Title insurance companies, escrow companies and trust companies to issue or provide reports reflecting the condition of title to any Mortgaged Property and services incidental to the Foreclosure or acquisition in lieu of Foreclosure of any Mortgaged Property, or the sale or disposition of any Mortgaged Property acquired by the Servicer;
• Attorneys licensed to practice in the state in which the Mortgaged Property is located to perform customary legal services in connection with the Foreclosure or acquisition of such Mortgaged Property or the sale or disposition of such Mortgaged Property acquired by the Servicer at or in lieu of Foreclosure, or for the collection of delinquent sums owed on any Mortgage Loan;
• Professional property inspection companies and appraisers to conduct routine inspections of Mortgaged Property and to provide written inspection reports, as required hereunder;
• Title companies, escrow companies and real estate tax service companies to provide periodic reports of the amount of real estate taxes due on any Mortgaged Property and the due date s of each required installment, and the payment of taxes;
• Credit bureaus or credit reporting companies to provide credit reports on Borrowers or persons who have applied to assume Mortgage Loans;
• Construction companies, contractors and laborers to provide labor, materials and supplies necessary to protect, preserve and repair Mortgaged Property, as required hereunder;
• Lock box providers or payment processing administrators to provide payment processing services; and
• Property insurance servicing companies to provide periodic reports as to the amount of property insurance premiums due on any Mortgaged Property and the due date of each required premium payment.

2.1.12.1.1 General

Permanent accounting records shall be maintained for each Mortgage Loan. The records shall indicate MPF Bank ownership of each Mortgage Loan, the MPF loan number, and the Servicer loan number.  The Servicer shall maintain the accounting records in accordance with generally accepted accounting principles and Applicable Standards.

The Servicer’s records system must be capable of producing for each Mortgage Loan an account transcript itemizing the following:

• Current unpaid Principal Balance;
• Scheduled Principal Balance;
• Interest paid to date;
• Principal and interest payment;
• Interest collected for each monthly payment;
• Principal collected for each monthly payment;
• Escrow Funds collected for each monthly payment;
• The date, amount, and distribution of each payment received;
• Curtailments;
• Current outstanding balances of principal and interest deposits, advances, taxes and insurance deposits, and unapplied payments;
• Due date of next payment;
• Amount and nature of each disbursement;
• Other transactions affecting the amounts due from or payable to the Borrower; and
• Any servicing reports or loan histories.

The system shall also provide for immediate disclosure of any overdraft and insufficiency in escrow balances.

2.1.22.1.2 Maintaining Outstanding Balances

The Servicer shall maintain accurate outstanding balances for each Mortgage Loan. Each scheduled payment, whether collected singly or together with all monthly payments on the same Mortgage Loan, shall be applied first to interest and then to principal according to an amortization schedule.  Payments and/or delinquencies shall not be capitalized into the loan balance.

2.1.32.1.3 MPF Loan Number

All reports and correspondence submitted to the MPF Bank, MPF Provider, or Master Servicer regarding a particular Mortgage Loan shall reference the corresponding MPF loan number.

2.1.42.1.4 Release or Destruction of Records

The Servicer must retain canceled checks, bank statements, and all records and accounts in the Mortgage Loan File for the time period required by the applicable Government Agency or Applicable Law, but in no instance, for less than seven (7) years from the date the Mortgage Loan is paid in full, sold, foreclosed, or otherwise liquidated. Electronic copies are acceptable in lieu of hard copies. 

2.3.12.3.1 Custodial Accounts

Any amounts held by the Servicer received in connection with or pertaining to the Mortgage Loans must be held in Custodial Accounts (and clearing accounts) established with one of the following:

• A Federal Home Loan Bank;
• A Federal Reserve Bank;
• An FDIC-Insured Depository; or
• An NCUA-Insured Depository.

If the Servicer is insured by the FDIC or NCUA, the Custodial Accounts may be established with the Servicer.

The MPF Bank reserves the right to require a Servicer to transfer funds out of a depository institution if the MPF Bank determines that it is in its best interest to do so.

2.3.22.3.2 Interest-Bearing Accounts

Custodial Accounts must be demand deposit accounts (DDAs). They may be interest-bearing accounts, provided that the accounts comply with the Applicable Standards and interest is paid separately to the Servicer and not deposited or co-mingled with funds in the Custodial Account. Any interest paid with respect to the Custodial Account will not be the property of the MPF Bank or MPF Provider. 

2.3.32.3.3 Clearing Accounts

The Servicer may utilize clearing accounts, subject to the following requirements:

• The clearing accounts must be established with an institution that meets the requirements for Custodial Accounts (see MPF Xtra Servicing Guide section 2.3.1);
• The titles of such accounts must reflect that they are custodial in nature;
• A single clearing account must not be utilized both as a collection and disbursement clearing account; and
• A check drawn on funds transferred from a P&I Custodial Account or T&I Custodial Account must be deposited to a disbursement clearing account before or at the same time as any checks on the clearing account are issued; The Servicer must maintain adequate records and audit trails to support all debits and credits of each Borrower's payment records and accounts; and Collections deposited to a clearing account must be credited to the appropriate Custodial Account no later than two (2) Business Days following receipt by the Servicer.

2.4.12.4.1 Custodial Account Location

For the MPF Xtra Product, required Custodial Accounts are as follows:

The Servicer must immediately notify the MPF Provider in writing of any change in the account number of a Custodial Account, the title of the account, or those individuals who are authorized signers on the account.

2.4.22.4.2 Principal & Interest Custodial Accounts

If the Servicer maintains its own P&I Custodial Account to temporarily house funds prior to depositing the funds to the P&I Custodial Account held by the FHLBC, the account must be titled as follows:

• "(Name of Servicer), as agent, trustee, and/or bailee for Fannie Mae (or the Federal National Mortgage Association) and/or payments of various mortgagors and/or various owners of interests in Mortgage-backed securities (Custodial Account)." Note that this account is only necessary in the event that the Servicer needs to transfer funds into this account temporarily prior to depositing the required funds into the P&I Custodial Account.

The following funds must be deposited into the P&I Custodial Account held by the MPF Provider no later than 2:00pm Central Time the next business day following the Servicer’s receipt of the funds:

• Principal collections from the Mortgage Loans, including payoffs and Curtailments, together with month-end Curtailment Interest, if applicable;
• Interest collections from Mortgage Loans (net of Servicing Fees);
• Liquidation and Insurance Proceeds (excluding funds held in the T&I Custodial Account or Escrow Account for the repair/restoration of the Mortgaged Property or for offsetting a deficit in the Escrow Account);
• Short sale proceeds; and
• REO disposition proceeds.

The P&I Custodial Account may not be used as a collection clearing account.

Servicers are not permitted to withdraw funds from the P&I Custodial Account. If the Servicer deposits funds in error, the Servicer must adjust future deposits to account for any excess funds.

2.4.32.4.3 Tax & Insurance Custodial Account

Custodial Accounts established for the deposit of taxes and insurance (“T&I”) received in connection with Mortgage Loans shall be titled as follows:

• "(Name of Servicer), as agent and/or trustee for Fannie Mae (or the Federal National Mortgage Association) and payments of various mortgagors, respectively (Custodial Account)."

The following funds must be deposited into the T&I Custodial Account no later than the next Business Day following the Servicer’s receipt of the funds:

• Escrow Funds;
• T&I advances;
• Remaining balance of property insurance loss drafts;
• Buydown Funds (if not held in a separate Buydown Custodial Account);
• Unapplied (suspense) funds;
• Insurance Proceeds held for the repair/restoration of the Mortgaged Property; and
• Liquidation Proceeds that offset a deficit in the Escrow Account.

Optional Deposits

The following funds may be deposited into the T&I Custodial Account or may be held in the Servicer’s own account:

• Late Charges;
• Penalty interest; and
• Assumption Fees.

The Servicer must maintain records for identifying the Escrow Funds deposited into the T&I Custodial Account for each Mortgage Loan.

Permissible Withdrawals

The Servicer may make withdrawals from the T&I Custodial Account for the following reasons, provided the T&I Custodial Account for the Mortgage Loan is never overdrawn:

• Timely payment of the Borrower's escrow items;
• Refunds to the Borrower for excess Escrow Funds;
• Recovery of advances made by the Servicer for escrow items on Borrower’s behalf;
• Payment of interest, if required, to the Borrower on his Escrow Funds;
• Removal of deposits made in error; or
• Termination of the Custodial Account.

2.4.42.4.4 Buydown Funds

T&I funds and Buydown Funds may be commingled in one account, or Buydown Funds may be held in a separate account. 

If a separate account is established, the account must be titled as follows:

• “[Name of Servicer], as agent and/or trustee for Fannie Mae (or the Federal National Mortgage Association) and payments of various Mortgagors, respectively (Custodial Account).”

Buydown funds must be deposited into the Buydown Custodial Account no later than the next Business Day following the Servicer’s receipt of the funds.

The Servicer is required to keep records identifying each Borrower's Buydown Funds deposited into the Buydown Custodial Account in accordance with the terms of the applicable Buydown agreement.

2.10.12.10.1 Re-amortization and Note Modification

Re-amortization and Note modification of a curtailed Mortgage Loan may be completed only when all of the following conditions are met:

• The minimum Curtailment payment applied to the principal balance of the Mortgage Loan is the greater of $5,000 or 10% of the current Principal Balance, and the qualified Curtailment was applied to the Mortgage Loan within sixty (60) calendar days prior to the Note modification date. However, re-amortization cannot commence in the same month that the Curtailment is applied;
• The Note modification does not extend the term or change the Note Rate of the Mortgage Loan;
• The re-amortization and Note modification are in compliance with the Fannie Mae Guide;
• The Note modification provides for full amortization of the Mortgage Loan by the maturity date through regular, equal payments of principal and interest; and
• The re-amortization and Note modification must be completed by using Fannie Mae Form 181. Use of Fannie Mae Form 3179 is not permitted for re-amortizations or Note modifications.

Within two (2) days of the Borrower's signing the Fannie Mae Form 181, the Servicer must notify MPF Loan Accounting by providing a copy of the executed modification agreement to [email protected].

The original signed modification agreement must be retained in the Mortgage Loan File.

2.10.22.10.2 Actual/Actual Remittance Mortgage Loans

2.10.32.10.3 Mortgage Loan Payoffs and Liquidation Proceeds (1/10/25)

A Mortgage Loan may be paid in full by or on behalf of the Borrower at any time. Unlike purchase or repurchase situations, PFIs/Servicers are not required to obtain the MPF Provider’s or MPF Bank’s prior approval before processing a full payoff. The Servicer may not collect any prepayment penalties on any Mortgage Loan. The Servicer is responsible for calculating the amount required to pay off the Mortgage Loan, and all payoffs shall be calculated to the date the payoff is made. A partial month’s interest and Servicing Fee will be pro-rated on a three hundred and sixty-five (365) day year per diem to the date of the payoff. A full month’s payment will be based on a three hundred and sixty (360) day year calculation.

The Servicer must deposit all payoff funds or Liquidation Proceeds, including the funds from a short sale and the disposition of an REO property (sale and primary mortgage insurance proceeds), into the P&I Custodial Account with the MPF Provider by 2:00pm Central Time the next Business Day following the Servicer’s receipt of the funds.

The Servicer is also required to notify the appropriate mortgage insurance carrier of the payoff within the timeframe required by the insurer. The Servicer will be responsible for including any unpaid mortgage insurance premiums remittance.

For Mortgage Loans being purchased or repurchased by the PFI/Servicer, see MPF Program Guide section “3.5 Purchase or Repurchase Requirements,” MPF Xtra Servicing Guide section “1.5 Repurchases” and “Exhibit GG-X - MPF Xtra Repurchase Request.”

2.12.12.12.1 General

The Servicer must deposit all funds into the P&I Custodial Account held with the MPF Provider by 2:00pm Central Time the next Business Day following the Servicer’s receipt of the funds.

If the Servicer does not transfer the funds by the required deadline, the MPF Bank may (in addition to exercising all other available remedies) charge the following compensatory fees:

• For the first instance of a late funds transfer: a fee that is determined by multiplying the calculated late transfer amount by the number of days the transfer is late divided by three hundred sixty (360) and then multiplying that product by the sum of the prime interest rate published in The Wall Street Journal’s prime rate index and three percent (3%). However, in no instance would the compensatory fee for late transfers for any given month be less than two hundred fifty dollars ($250).
• For the second instance of a late funds transfer (if it occurs within one (1) year of the first instance): a fee that is determined by multiplying the calculated late transfer amount by the number of days the transfer is late divided by three hundred sixty (360) and then multiplying that product by the sum of the prime interest rate published in The Wall Street Journal’s prime rate index and three percent (3%). However, in no instance would the compensatory fee for late transfers for any given month be less than five hundred dollars ($500).
• For subsequent instances of late funds transfers (if they occur within one (1) year of the most recent instance): a fee that is determined by multiplying the calculated late transfer amount by the number of days the transfer is late divided by three hundred sixty (360) and then multiplying that product by the sum of the prime interest rate published in The Wall Street Journal’s prime rate index and three percent (3%). However, in no instance would the compensatory fee for late transfers for any given month be less than one thousand dollars ($1,000). 

Fannie Mae may assess compensatory fees if it believes that a Servicer is failing to comply with the servicing requirements. Compensatory fees may be assessed due to the action a Servicer failed to take or took on a particular Mortgage Loan and to compensate Fannie Mae for damages. 

2.12.22.12.2 Payoff and Liquidation Remittances (1/10/25)

When calculating interest on a payoff, Servicers must meet the requirements in this section and must also follow the actual/actual remittance calculation requirements in Fannie Mae Servicing Guide Chapter F-1-09: Processing Mortgage Loan Payments and Payoffs.

The Servicer must deposit all payoff and Liquidation Proceeds into the P&I Custodial Account with the MPF Provider by 2:00pm Central Time the next Business Day following the Servicer’s receipt of the funds.

The Liquidation interest payable to the MPF Bank must be calculated as follows:

• Based on the unpaid principal balance of the mortgage loan,
• As of the last paid installment date for the last reporting cycle, not including the date of payoff except for FHA loans, and
• A full month’s interest due from the Borrower should be calculated on a 360–day year (30 / 360 day basis) and a partial month’s interest due up to, but not including, the date of payoff should be based on a 365–day year (actual days / 365 day basis).

Any remaining Escrow Funds must be refunded to the Borrower within thirty (30) days of the payoff date. 

For additional information on how to calculate interest Servicers may refer to the Fannie Mae Investor Reporting Manual.

For Mortgage Loans being purchased or repurchased by the PFI/Servicer, see MPF Program Guide section “3.5 Purchase or Repurchase Requirements,” MPF Xtra Servicing Guide section “1.5 Repurchases” and “Exhibit GG-X - MPF Xtra Repurchase Request.”

2.12.32.12.3 Modification Agreement Remittances

Modification agreement payments must be deposited into the P&I Account with the MPF Provider by 2:00pm Central Time the next Business Day following the Servicer’s receipt of the funds.

2.13.12.13.1 Conventional Insured Loans

The Servicer shall not agree to a short sale on an insured Conventional Loan unless the Servicer has obtained the respective mortgage insurer’s written approval.

The Servicer may negotiate and complete the short sale without seeking the MPF Provider’s approval if the sale proceeds and mortgage insurance claim proceeds are greater than or equal to the total indebtedness.

If the short sale and mortgage insurance settlement proceeds combined, will be less than the total indebtedness, then the Servicer shall not accept the offer or proceed until it has obtained express permission from the MPF Provider. The Servicer shall indemnify the MPF Bank against any loss of principal and interest, or other deduction in the mortgage insurance claim payment arising from the Servicer’s breach of the mortgage insurance policy or the Applicable Standards.

The Servicer must report the status change on the Delinquent Mortgage & Bankruptcy Status Report (Exhibit B). The Servicer is also required to notify the MPF Provider within two (2) Business Days of the close of the sale by submitting copies of the buyer and seller’s Settlement Statements, closing statements or escrow instructions, an estimate of total advances made to date, and a copy of the proceeds check.

The Servicer is required to deposit all short sale proceeds to the P&I Custodial Account with the MPF Provider by 2:00pm Central Time the next Business Day following the Servicer’s receipt of the funds.

2.13.22.13.2 Short Payoff Reporting (IRS Form 1099)

The Servicer must comply with all applicable Internal Revenue Service reporting requirements, including IRS 1099 reporting requirements, on all short sales. The Servicer filing must show the Servicer’s loan number and the MPF Bank loan number for identification purposes.

The Servicer should carefully review and follow IRS instructions for completing and filing the applicable forms. Servicers who fail to timely file the correct IRS form(s) must pay any penalties the IRS may assess.

2.14.12.14.1 Daily Investor Reporting (12/20/24)

Servicers are required to utilize the daily reporting method, all Mortgage Loans with activity must be reported to the Master Servicer by 12:00 pm (Noon) Eastern Time (ET) on the Business Day after the activity occurs. Daily Reports must show the cumulative activity for each Mortgage Loan as of the previous day.

If there is no activity on a given day, a loan level activity report does not have to be submitted to the Master Servicer.

The Servicer must ensure the following requirements are met:

• All Mortgage Loans without activity for the month must be reported to the Master Servicer by 12:00 pm (Noon) ET on the 22^nd Calendar Day of the month. If the 22^nd Calendar Day falls on a weekend or holiday, then must be reported by 12:00 pm (Noon) ET on the Business Day prior to the 22^nd Calendar Day.
• Mortgage Loans delivered from the 1^st-21^st of the month with no activity must be reported on the 22^nd Calendar Day of the month. Mortgage Loans delivered from the 22^nd Calendar Day through the last Business Day of the month with no activity must be reported to the Master Servicer on the first Business Day of the following month.
• All removal transactions (payoffs, Foreclosures, short sales, Deeds-in-lieu of Foreclosure, and third party sales) must be included on the daily report and reported to the Master Servicer by 12:00pm (Noon) ET the next Business Day.
• The Master Servicer will process repurchase removals on the Servicers behalf, Servicers must report the loan on the last activity days and include the amounts in Form SG300 and Form SG301-X as a removal transaction in their monthly reporting.

Servicers must submit the Daily Investor Report by uploading them to https://www.servicerconnect.com. Servicers should contact the Master Servicer for assistance with preparing and/or submitting the reports. 

2.14.22.14.2 Monthly Accounting Reports (12/20/24)

In addition to the daily reports, Servicers are required to submit Monthly Accounting Reports for the MPF Xtra product that cover the period including the first calendar day of the month through the last calendar day of the month.

All Monthly Accounting Reports must be completed and forwarded to the Master Servicer no later than 12:00pm (Noon) Eastern Time on the first (1st) Business Day of the month following the reporting month (See MPF Investor Reporting Calendar – Exhibit A-X).

Servicers must submit the Monthly Accounting Reports (with correct naming convention) by uploading them to https://www.servicerconnect.com. Servicers should contact the Master Servicer for assistance with preparing and/or submitting the reports.

The Servicer must complete and forward to the Master Servicer all forms and reports provided for in this Servicing Guide, and such additional forms or reports reasonably requested by the Master Servicer.

The Monthly Accounting Report forms include, but are not limited to, the following:

• Monthly Summary and Remittance Report (Form SG300);
• Monthly Remittance Recap – MPF Xtra ( Form SG301-X); and
• Any other report that impacts the Monthly Remittance.

2.14.32.14.3 Electronic Format (5/27/25)

The electronic daily reporting format must be in one of the following single, complete, usable, and loadable loan level data file formats acceptable to the Master Servicer:

• ASCII File Format ( Exhibit C);
• Excel File Format ( Exhibit C); or
• LAR 96 File Layout ( Exhibit C-X)*.

*The MPF Program is transitioning to the LAR 96 File Layout. To begin using the LAR 96 File Layout ( Exhibit C-X), Servicers must notify the Master Servicer by submitting Form SG370-X. Servicers must continue reporting using their current layout until they receive approval and written confirmation of the effective date of the change from the Master Servicer. Electronic reports can be uploaded directly to the Master Servicer's website (https://www.servicerconnect.com). Servicers should contact the Master Servicer for assistance with the preparation of electronic reports.

2.14.42.14.4 Late Reporting Fee (12/20/24)

Mortgage Loans without activity for the month that are not reported to the Master Servicer by 12:00 pm (Noon) ET on the 22nd Calendar Day of the month, Monthly Accounting Report and Delinquent Mortgage & Bankruptcy Status Report filed incomplete or not filed by the applicable MPF Investor Reporting Calendar due date (see Exhibit A-X) are considered late. Each occurrence of late Investor Reporting, or incomplete Monthly Accounting Reports or a late or incomplete Delinquent Mortgage Report will be subject to a late reporting fee.

A written notice of noncompliance will be sent to the Servicer for all instances of a late Investor Reporting, Monthly Accounting or Delinquent Mortgage & Bankruptcy Status report. In addition to the monetary late fees, beginning with the third late and/or incomplete report or transmission, as applicable, the MPF Provider reserves the right to invoke additional remedies, which may include declaring an Event of Default as grounds for termination of the Servicer.

Late fees for late Investor Reporting, Monthly Accounting Reports, and late or incomplete Delinquent Mortgage and Bankruptcy Status Reports are assessed using an escalating scale that is based on the number of late and / or incomplete reports or transmissions in the most recent consecutive twelve (12) month period: 

• One-hundred dollars ($100) for the first occurrence of a late and / or incomplete report or transmission;
• Two-hundred-fifty dollars ($250) for the second occurrence of a late and / or incomplete report or transmission; and
• Five-hundred dollars ($500) for the third and all subsequent occurrences of a late and / or incomplete report or transmission during the remainder of the consecutive twelve (12) month period beginning with the first occurrence.

The MPF Bank and MPF Provider reserve the right to change the late reporting fees at any time and at their sole discretion.

2.14.52.14.5 Other Reports (12/20/24)

When applicable, the Servicer must also complete the following forms and either retain the forms in the Mortgage Loan File or submit them in accordance with the specific instructions on each form:

• Property Inspection Report (Form SG331);
• Notice of Acquired or Conveyed Property (Form SG334);
• Request for Release of Documents (Form SG340-X);
• Property Insurance Loss Draft Notification (Form SG342); and
• MI Cancellation Notice (Form SG343).

2.17.12.17.1 Escrow Account and Interest Payment Summary

The Servicer will provide Borrowers, without charge, an annual statement in summary form of the Borrower’s escrow account, which must include: 

• Beginning and ending balances;
• Deposits made on the account; and
• Disbursements made on the account.

In addition, the Servicer will provide Borrowers, without charge, a statement at calendar year end as to the total amount of interest and real estate taxes paid by the Borrower during the year.

2.17.22.17.2 Detailed Ledger Analysis

In addition, at least annually, the Servicer will provide Borrowers, without charge, a detailed ledger analysis to determine the adequacy of monthly escrow contributions. Following the review of such ledger, the Servicer should make any necessary adjustments in the monthly contribution to assure the accumulation of sufficient funds to meet anticipated expenses.

2.17.32.17.3 Borrower Disclosures

Servicers are required to provide Borrowers with any and all disclosures required by Applicable Law, including, but not limited to, disclosures required by the Homeowners Protection Act of 1998 and CFPB regulations.

3.1.13.1.1 Amount of Compensation

In consideration for the Servicing of the Mortgage Loans in accordance with this Servicing Guide and the Applicable Agreement, absent an Event of default by the Servicer, the Servicer shall be entitled to retain the Servicing Fee for each Mortgage Loan as specified in the associated Master Commitment from the interest actually collected with respect to such Mortgage Loan.

The Servicing Fee for each Mortgage Loan shall be payable solely from the interest portion of the related monthly payment paid by the Borrower or the interest portion, if any, of:

• The proceeds from Foreclosure or any judgment, write of attachment or levy against the Borrower or the Borrower's assets;
• Funds paid in connection with any payoff;
• Insurance Proceeds; or
• Liquidation Proceeds.

The Servicer shall have the right to withhold and retain the applicable Servicing Fee from the funds received by the Servicer on account of Borrower payments or other recoveries (including net REO proceeds) prior to the remittance of such payments to the MPF Bank. The Servicing Fee is determined each month by multiplying one-twelfth the applicable Servicing Fee rate by the scheduled Principal Balance of the Mortgage on the last day of the preceding month.

In an Event of default by the Servicer, subject to the Applicable Standards, the Servicer shall also be entitled to retain as additional compensation any late charges, penalty interest, assumption fees paid by the Borrower, or any other similar amounts not required pursuant to the Guides to be deposited into the Custodial P&I Account.

The Servicer shall pay all expenses incurred by it in connection with its servicing activities and shall not be entitled to reimbursement except as specifically provided for in the Guides or Applicable Agreements.

6.1.16.1.1 Notification of the MPF Provider (12/3/25)

As outlined in the Fannie Mae Servicing Guide, Servicers are authorized to process Borrower requests without obtaining prior approval, provided the request meets all applicable Fannie Mae requirements. For each request, Servicers must gather the required documentation pursuant to Fannie Mae’s requirements, retain the documentation in the mortgage loan file, and notify the MPF Provider once the request has been processed by submitting the Form SG341: Release of Security via eMAQCSplus.

6.1.26.1.2 Submission for Exceptions (12/3/25)

If upon the evaluation of the Borrower's request the Servicer determines that it does not meet all the applicable requirements as outlined in the Fannie Mae Servicing Guide, but the Servicer determines that extenuating circumstances exist, the Servicer must submit the request for an exception. The request must be submitted via eMAQCSplus using the Form SG341: Release of Security. For all exceptions, Servicers must be granted prior approval before processing the Borrower’s request. Submission of a recommendation for exception must be accompanied by all supporting documentation that is relevant to the recommendation.

8.1.18.1.1 Property Inspections

The Servicer must perform property inspections in accordance with Fannie Mae Servicing Guide Chapter D2-2-10: Requirements for Performing Property Inspections. The cost for all required property inspections must be advanced by the Servicer. The Servicer must comply with all applicable mortgage insurer requirements concerning property inspections.

If a Mortgaged Property is found to be vacant, abandoned, or non-owner occupied, or if evidence of hazardous waste is found on the Mortgaged Property, the Servicer shall immediately report the results of the inspection in writing to the MPF Provider. The Servicer must comply with all Applicable Laws, when a Mortgage Property is determined to be vacant or abandoned, these actions may include, but are not limited to, registering the property with the municipality or securing the property in a specified manner.

In addition, if a property inspection indicates emergency repairs are required to protect the Mortgaged Property or if there is any environmental litigation affecting the Mortgaged Property, the Servicer must immediately contact the MPF Provider. 

8.2.18.2.1 Reporting to the MPF Provider (9/10/24)

The Servicer must submit to the MPF Provider, by the second (2^nd) Business Day of each month, a Delinquent Mortgage & Bankruptcy Status Report (Servicing Guide Exhibit B submitted via eMAQCSplus) containing the status of:

• all Delinquent Mortgage Loans that are thirty (30)* or more days delinquent as of the last day of the preceding month; and
• all Borrowers who are in Bankruptcy status must be reported regardless of the status of the loan (current/delinquent).

* If a payment is not made in the month in which it is due, the Mortgage Loan is considered delinquent and must be included on the Delinquent Mortgage & Bankruptcy Status Report (Exhibit B) as if it was 30 days or more delinquent, even if the month has less than 30 days.

Servicers that report Mortgage Loans as 30+ days delinquent reporting Action Codes 0 (No Action), 12 (Relief Provision), or 20 (Loss Mitigation) on their monthly Exhibit B: Delinquent Mortgage & Bankruptcy Status Report, will receive an automated email notifications from eMAQCSplus with the MPF Xtra Supplemental Data excel attachment requesting additional mortgage loan information. Servicers must submit the additional reporting information to the MPF Provider by uploading the file to eMAQCSplus within five (5) business days.

Exhibit B must be uploaded with the following additional provisions:

• The “Delinq_Status_Code” field of the Standard File Layout is to be completed using the Delinquency Status Codes provided in Appendix 1 of Exhibit B; and
• The “Delinq_Reason_Code” field of the Standard File Layout is to be completed using the Delinquency Reason Codes provided in Appendix 2 of Exhibit B.

8.2.28.2.2 Report to Insurers

The Servicer must provide notice of Delinquency to the applicable mortgage insurer within the time frames and using the methods required by the insurer. The Servicers shall furnish to the insurer all reports requested by the insurer and/or as required in the insurance policy.

8.4.18.4.1 Short Sale

For short sale requirements, the Servicer must comply with the requirements of Fannie Mae Servicing Guide Chapter D2-3.3-01, Fannie Mae Short Sale.  Prior to offering a short sale, Servicer must adequately document a request for short sale and must submit the request for approval to the MPF Provider through eMAQCSplus. Servicers must allow at least 5 Business Days for any request to the MPF Provider to be processed.  To avoid any delays, Servicers must ensure a submission is complete and accurate.

8.4.28.4.2 Deed-in-Lieu of Foreclosure

When a Mortgaged Property is subject to a Deed-in-Lieu of Foreclosure the Servicer must comply with the requirements of Fannie Mae Servicing Guide Chapter D2-3.3-02, Fannie Mae Mortgage Release (Deed-in-Lieu of Foreclosure).

Prior to offering a deed-in-lieu of foreclosure, Servicer must adequately document a request for deed-in-lieu and must submit the request for approval to the MPF Provider through eMAQCSplus. Servicers must allow at least 5 Business Days for any request to the MPF Provider to be processed.  To avoid any delays, Servicers must ensure a submission is complete and accurate.

The servicer must notify the MPF Provider that it has acquired a property within twenty-four (24) hours after the deed-in-lieu of foreclosure was executed by submitting Form SG334 (Notice of Acquired or Conveyed Property submitted via eMAQCSplus). If the Servicer does not report to the MPF Provider within the required time-frame, the investor may charge the servicer $100 per day until the Servicer notifies the MPF Provider of the acquired property. The fee will not be enforced if the Servicer provides a reasonable explanation for the delay, however, the Servicer must indemnify the Investor for all losses, expenses, judgments, costs, and attorney fees that the Investor sustains as a result of its failure to submit the information in a timely manner.

9.2.19.2.1 Reporting to the Master Servicer

During the period that the loan modification is in effect, the Servicer reports the loan modification in their Monthly Accounting Reports to the Master Servicer.

9.2.29.2.2 Tax Reporting

The Servicer will be responsible for completing certain forms or providing other information required under the IRS Code, and/or by state taxing authorities for temporary loan modifications. If at any time, any debt, as defined by the Code or state authorities, is canceled, the Servicer shall forward to each Borrower and the IRS, such forms and information within the control of the Servicer as are required by the Applicable Laws.

9.2.39.2.3 Disclosures and Notices

Some actions taken by Servicers in the context of reviewing and granting modifications may necessitate the use of certain federal or state required disclosures. Servicers are responsible for ensuring that all disclosures and notices required under Applicable Law (e.g. ECOA, TILA, RESPA, FCRA, and FDCPA) are provided to the Borrowers, and if applicable, any individuals with interest in the Mortgaged Property. 

10.3.110.3.1 Attorney/Trustee Referral

When commencing a Foreclosure proceeding, the Servicer must select the attorney/trustee in compliance with the following Fannie Mae Servicing Guide Chapters:

• A4-2.2: Requirements for Default-Related Law Firms;
• E-1: Referring Default-Related Legal matters and Non-Routine Litigation to Law Firms; and
• E-1.2: Timing of the Referral to a Law Firm.

All referrals to attorneys for default-related legal services on MPF Xtra Mortgages, including loss mitigation, foreclosure, and bankruptcy actions, must be made to law firms selected and retained directly by the Servicer and reviewed by Fannie Mae. Fannie Mae will not approve the law firm, but will issue a determination about the law firm based on the information submitted by the Servicer to its MPF Bank. It is recommended that all servicers identify an attorney they would like to retain for the purposes of default-related legal services and move forward with this new process, even if there are no delinquent Mortgages in the servicer’s portfolio at this time. This will allow a smoother transition into the process and help avoid any possible delays in the handling of these loans should delinquent Mortgages arise in the future.

Default-Related Legal Service Attorneys Resources

To assist Servicers in the selection and retention of law firms that may be able to provide default-related legal services in a jurisdiction in which the Servicer anticipates needing default-related legal services, there are several resources to find such law firms:

These resources are only intended to provide some possible sources of information that the Servicer may find helpful in locating a law firm that the Servicer may wish to contact regarding default-related legal services. By providing the above listed resources, the MPF Program is not endorsing the organization, its website, the website contents or any attorney listed therein. The MPF Program is not responsible for the website’s content or the Servicer’s reliance on the information contained therein.

The Servicer shall submit a complete referral package to a qualified, experienced attorney/trustee who will perform in accordance with Applicable Law, and professional standards of conduct. The Servicer is expected to monitor the attorney/trustee it chooses to retain to ensure the Foreclosure is completed in a timely and cost-effective manner.

The Servicer is required to keep the attorney/trustee advised of any significant negotiations for modifications, repayment plans or workout agreements under consideration, so as not to impair or impede the Foreclosure process in the event the plan fails and Foreclosure must be resumed.

10.3.210.3.2 Allowable Time Frames

The maximum allowable days in which “routine” Foreclosure proceedings must be completed within each State are found in Fannie Mae’s Foreclosure Time Frames and Compensatory Fee Allowable Delays Exhibit and Fannie Mae Servicing Guide Chapters E-3.2-15: Allowable Time Frames for Completing Foreclosure and A1-4.2-02: Compensatory Fees for Delays in the Liquidation Process. If the Foreclosure proceedings for a Mortgage Loan exceed the maximum number of allowable days and no reasonable explanation for the delay is provided through monthly delinquency status reporting, the Servicer will be required to pay a compensatory fee. Some examples of reasonable explanations for delays include bankruptcy, probate, military indulgence, contested Foreclosure or consideration for an approved modification program. 

10.3.310.3.3 Expense Limitations

Servicers are responsible for reviewing and approving attorney’s fees before requesting reimbursement to ensure they are in compliance with the guidelines as laid out in the Fannie Mae Servicing Guide (See Section E-1: Referring Default Related Legal Matters and Non-Routine Litigation to Law Firms and Section E-3.2-10: Paying Certain Expenses During the Foreclosure Process). Servicers must continue to ensure that fees and expenses charged to the Borrower are permitted under the terms of the Note, Security Instrument, and Applicable Laws and are prorated to reasonably relate to the amount of work actually performed.

To request reimbursement for expenses incurred during the Foreclosure process, see Fannie Mae Servicing Guide Chapters E-5, Requesting Reimbursement for Expenses Associated with Default-Related Legal Matters, and F-1-05, Expense Reimbursement.

All expense reimbursement requests must be submitted to the MPF Provider.

10.6.110.6.1 Rescission of Foreclosure Sale

The Servicer must notify the MPF Provider as soon as they receive notice that the Foreclosure sale may be rescinded. The Servicer is to provide the MPF Provider following information when requesting approval of a rescission of a Foreclosure sale:

• The date and time Foreclosure sale was cried;
• If a bankruptcy was filed the same day as the Foreclosure sale was held, the bankruptcy filing with the date and time (if the party filing the bankruptcy was not the Borrower, then the Servicer must provide documentation to show the transfer of ownership from the Borrower to the party filing Bankruptcy);
• If there is another reason for the Foreclosure sale not to be valid: incorrect NOD, TOS or some other documentation regarding the Foreclosure sale; and
• When the Servicer found out about the possible rescission.

10.8.110.8.1 Loss Mitigation

The Servicer should not foreclose on a Delinquent Mortgage Loan if there is a reasonable chance of avoiding Foreclosure. If the reason for default appears to be long term or too serious for short term relief measures to be effective, the Servicer should consider permanent Foreclosure prevention alternatives. Any loss mitigation plan proposed by the Servicer after initiating Foreclosure must be submitted to the MPF Provider and receive approval. However, the Servicer may not pursue Foreclosure while still pursuing loss mitigation options with the Borrower.

10.8.210.8.2 Taxes and Insurance

The Servicer must pay all taxes and/or insurance premiums when due. The Servicer shall maintain property insurance in an amount sufficient to rebuild unit and include a vacancy clause on the property. 

10.8.310.8.3 Homeowners Association (HOA) Dues

For Mortgaged Properties that are located in states that provide for homeowners association (HOA) assessment lien priority over a previously recorded mortgage document, the Servicer must take steps to protect the priority of the Mortgage Loan lien. Necessary steps the Servicer must take include, but are not limited to:

• Payment of the amount due, generally the lowest of:
  • The actual delinquent assessment balance and allowed costs;
  • The maximum amount due from the foreclosing first mortgage entity based on the provisions in the project’s declarations; or
  • The maximum amount due from a foreclosing first mortgage entity under the relevant state statute.
• Clearing the priority lien within thirty (30) days after the Foreclosure sale date or acceptance of a deed in lieu of foreclosure.

10.8.410.8.4 Reporting to the MPF Provider

The Servicer must report the current status of the Foreclosure proceedings to the MPF Provider on the monthly Delinquent Mortgage & Bankruptcy Status Report.

10.8.510.8.5 After the Foreclosure Sale

The Servicer must comply with Fannie Mae Servicing Guide Chapter E-3.5: Servicer Responsibilities Following the Foreclosure Sale.

12.1.112.1.1 Notice of Legal Action

The Servicer is not authorized to accept service on behalf of the MPF Provider or the MPF Bank, and shall so advise anyone attempting to serve either entity through the Servicer.

The MPF Provider reserves the right to direct litigation involving a Mortgage Loan, and the Servicer and any law firm retained to handle the litigation must cooperate fully with the MPF Provider in the prosecution, defense, or handling of the matter.

In instances in which the Note and/or Security Instrument provides for the Borrower to reimburse any legal fees and costs incurred by the MPF Bank or the Servicer, the Servicer shall instruct its legal counsel to notify the Borrower about his or her responsibility for such expenses. The Servicer’s legal counsel should attempt to handle such matters by stipulation or any other expeditious manner that will reduce the fees and costs that the Borrower has to pay.

Additionally, if the Security Instrument has MERS as nominee for lender, as the named beneficiary, and MERS is named in the action or proceeding, the Servicer shall immediately notify MERS and otherwise comply with all MERS requirements in regard to such litigation, as more fully set forth in MERS rules. In particular, the Servicer should be aware of Rule 14 MERS System Rules of Membership, which requires notification to MERS regarding “Legal Filings” that raise certain MERS-related challenges as detailed therein.

12.1.212.1.2 Notification Time Frames

The Servicer shall provide appropriate notice of any legal action in accordance with the timeframes below.

The Servicer must forward any of the following to the MPF Service Center, within five (5) Business Days of receipt by the Servicer:

• A petition or complaint in a lawsuit naming the Servicer as defendant which involves the origination or servicing of any Mortgage Loan, or which alleges that the Servicer has failed to comply with any Applicable Laws in its mortgage origination or servicing activities;
• A petition or complaint in a lawsuit attempting to establish the existence of a class of plaintiffs that includes mortgagors whose Mortgage Loans are being serviced by the Servicer or mortgagors whose Mortgage Loans were originated by the Servicer;
• Correspondence involving a Mortgage Loan that threatens legal action or alleges violation by the Servicer or any other person of any Applicable Laws with respect to a Mortgage Loan; or
• Correspondence from a state or federal regulator involving the alleged violation by the Servicer of any Applicable Laws in its mortgage origination or servicing activities.

The Servicer must forward any of the following to the MPF Service Center, within two (2) Business Days after receipt by the Servicer:

• A petition or complaint in a lawsuit naming the MPF Provider, any MPF Bank or the Master Servicer as a party to the lawsuit; or
• A petition or application for temporary injunction or other temporary equitable relief which involves the mortgage servicing activities of the Servicer.

The Servicer must forward to the MPF Provider, within three (3) Business Days after receipt by the Servicer, a copy of any motion or pleading of any type in a Foreclosure or bankruptcy action which asserts a counterclaim or alleges the right to recover damages from the Servicer, an MPF Bank or the MPF Provider. 

12.1.312.1.3 Servicer Initiating Litigation

The Servicer shall not initiate litigation on the MPF Provider or MPF Bank’s behalf (except as otherwise provided in the Guides), unless it obtains prior written consent from the MPF Provider or MPF Bank.

12.1.412.1.4 Retained Counsel

In the event that the Servicer is made aware that the MPF Bank, the MPF Provider, the Servicer, or the PFI that sold the Mortgage Loan to the MPF Bank is a named defendant in a lawsuit related to a Mortgage Loan it is servicing, the Servicer shall contact the MPF Provider. The MPF Provider will either approve the Servicer’s retaining counsel or require that the case be turned over to the MPF Provider for referral to the counsel of the MPF Provider’s choice. Whenever the Servicer retains counsel on behalf of the MPF Provider, it shall do so in accordance with the Guides. Where the defendant is an MPF Bank, the MPF Provider will discuss case handling and retention of counsel with the MPF Bank and will notify the Servicer of the direction to be taken.

In situations where an attorney must be retained immediately to protect the MPF Provider and/or MPF Bank’s interests, such as to oppose an ex parte application for a temporary restraining order, and MPF Provider and/or MPF Bank approval cannot be obtained timely, the Servicer may retain counsel on the MPF Provider and/or MPF Bank’s behalf, to appear and oppose the application. The MPF Provider shall immediately be advised, and copies of all pleadings shall be forwarded to the MPF Provider’s Office of General Counsel.

If a case is to be handled by the Servicer’s legal counsel, the Servicer will be notified of the MPF Provider staff attorney to whom their counsel shall report. The Servicer’s legal counsel shall cooperate, coordinate, and follow the direction of the assigned staff attorney, and report to the MPF Provider staff attorney at frequent intervals, depending on the progress of the case.

The Servicer should provide the MPF Provider with copies of all pleadings, motions, responses, replies and briefs with sufficient time in advance of any deadline to review and comment upon the proposed filings.

The Servicer of a Mortgage Loan that is the subject of litigation should notify retained counsel if it intends to offer any Mortgage Loan modification or other Foreclosure-avoidance alternative and provide retained counsel with sufficient opportunity in advance of the solicitation to review and provide comments in connection with any solicitation materials.

12.1.512.1.5 Counsel Selected and Retained by Servicer

All Counsel selected and retained by the Servicer to represent the MPF Provider and/or MPF Bank shall:

• Be knowledgeable and experienced in the applicable field of law;
• Be financially responsible; and
• Immediately advise the assigned MPF Provider and/or MPF Bank staff attorney of any actual, potential, or apparent conflict of interest.

12.1.612.1.6 Referring to Other Counsel

If at any time during the progress of the case, the MPF Provider or MPF Bank determines the case should be referred to other counsel, the Servicer will be advised in writing.

12.1.712.1.7 Attorney’s Fees

The MPF Provider and/or MPF Bank will review the Servicer’s legal counsel’s bills in relation to the reports made to the MPF Provider and/or MPF Bank’s staff attorney by the Servicer’s legal counsel.  The MPF Provider and/or MPF Bank will reimburse the Servicer only for fees determined by the MPF Provider and/or MPF Bank to be reasonable, and which have actually been paid by Servicer. The fees charged shall not exceed those charged by the legal counsel retained by the Servicer or others for the same or similar legal services and representation. To the extent allowed by law, the Servicer’s legal counsel shall endeavor to recover all costs and fees from the Borrower, or other responsible party.

12.2.112.2.1 HOA Liens

For Mortgaged Properties that are subject to a homeowners association (HOA) and that are located in states that provide HOA assessment lien priority over a previously recorded mortgage loans, the Servicer must take all steps necessary to protect the priority lien of the Mortgage Loan. In states where particular actions or steps are required to receive notices of Foreclosure action taken by the HOA or others, Servicer must ensure all such actions or steps are taken.