Servicing Guide

Published June 13, 2018

Staffing Requirements

The servicer must comply with the staffing requirements outlined in the following table.

The servicer must…

Have sufficient staffing levels and properly trained staff (including third-party providers of its outsourced servicing activities) to

  • carry out all aspects of their servicing duties in accordance with the timing requirements of the Servicing Guide,

  • maintain acceptable performance standards, and

  • provide borrowers with assistance when it is requested.

Ensure that its staff is able to effectively communicate with borrowers whose mortgage loans it services by either

  • employing multilingual staff, if applicable, to communicate with the diversity of borrowers whose mortgage loans it services, or

  • making translation services available to the borrower.

Develop an approach to managing delinquent borrowers that

  • provides continuity of contact with the borrower, and

  • allows the borrower to contact one individual or a dedicated team of individuals in the servicer’s organization to obtain accurate information on the various workout options available.

When using a team approach, the servicer must provide the borrower with the ability to request and speak to, or leave a message for, a specific person from the assigned team.

Ensure the staff

  • completes the review of a borrower’s appeal of a mortgage loan modification determination if different than those responsible for the initial evaluation and decision on the complete BRP, and

  • tracks all information related to appeals in the mortgage loan servicing file.

Fannie Mae encourages the servicer to develop a borrower delinquency management model that allows the borrower to contact one individual or a dedicated team of individuals in the servicer’s organization to obtain accurate information on the various workout options available to him or her. If the servicer develops such a model, the individual or dedicated team of individuals should also be able to handle and resolve borrower issues throughout the delinquency management process and provide updates on the status of any request for a workout option and the status of pending foreclosure proceedings. The goal of the model is to ensure the servicer presents all workout options and more effectively moves the borrower through the default prevention process to resolution.

Training Requirements

The servicer must design and implement a training program that includes:

  • the fundamentals of all Fannie Mae workout options programs;

  • familiarity with F-2-11, Fannie Mae’s Workout Hierarchy;

  • training on an annual basis and as training needs are identified through quality assurance reviews;

  • delivery of continual training programs to all employees and agents on policy changes communicated through future Announcements, Lender Letters, and any other correspondence that Fannie Mae may issue; and

  • training on compliance with applicable laws and regulations.

Additionally, the servicer’s foreclosure and bankruptcy staff must be knowledgeable about Fannie Mae’s workout options.

Establishing Written Policies or Procedures

The servicer must have fully documented written policies and/or procedures that address all aspects of mortgage servicing to ensure that its staff, and any outsourcing and third-party vendors used by the servicer, consistently comply with Fannie Mae’s requirements.

The following table describes some, but not all, of the requirements for written policies and/or procedures.

Topic Policy or Procedure Requirements

Oversight of outsourcing and third-party vendors

The servicer must establish policies and procedures in place to ensure that all outsourcing firms and third-party vendors used by the servicer are fully compliant with the requirements of the Servicing Guide, where applicable, and ensure that any individual or entity involved in the servicing of mortgage loans owned by Fannie Mae is not included on the FHFA’s Suspended Counterparty Program list available on FHFA’s website. This includes, but is not limited to, any activity related to marketing, maintenance, or the sale of Fannie Mae acquired properties.

Automatically drafting payments from the borrower’s bank account

If the servicer uses automatic drafting arrangements or allows other non-traditional payment methods, it must have controls and procedures in place to ensure that it will still be able to meet all of Fannie Mae’s applicable requirements for custodial and remittance accounting in A4-1-02, Establishing Custodial Bank Accounts and C-3-01, Responsibilities Related to Remitting P&I Funds to Fannie Mae.

Responsibilities for ARM loan servicing

The servicer must establish procedures to

  • ensure that it follows the terms of other negotiated plans when it makes interest rate and payment change adjustments,

  • monitor the appropriate indexes for any negotiated ARM plans to ensure that it uses the latest available value for the index to determine an interest rate change, and

  • ensure prompt referral to the foreclosure prevention unit to evaluate workout options, if appropriate.

Notifying the borrower of balloon mortgage loan maturity

The servicer must establish and consistently apply a policy that specifically addresses the determination of the “effective receipt date and time” for requests to refinance balloon mortgage loans.

Insurance loss events

The servicer must have written policies and procedures to

  • protect the interests of Fannie Mae and the borrower when an insurance loss event occurs,

  • determine when a licensed contractor is required and make those policies and procedures available to Fannie Mae upon request, and

  • apply any insurance loss proceeds in excess of the cost to repair.

Automatic termination of conventional MI

The servicer must establish appropriate monitoring procedures to ensure that borrower-purchased MI is automatically terminated when required by Fannie Mae.

Fees assessment for special services

The servicer must have written policies that address the following points:

  • the types or categories of fees and, if known, specific amounts of fees that may be assessed to borrowers for services that are above and beyond the ordinary and customary activities performed by the servicer covered by its servicing fee and related income;

  • that any fees charged to borrowers (or reimbursed by Fannie Mae) must be related to work actually done by the servicer, either directly or indirectly through third parties, including affiliates of the servicer;

  • that the assessment of any fees (other than foreclosure and bankruptcy-related fees that are incurred to enforce the mortgage loan obligation) are allowed pursuant to the provisions of Fannie Mae’s Guides, and are clearly disclosed to borrowers in advance of the rendering of the service (where practical) or subsequently (e.g., on monthly statements). (For any service requested by the borrower for which there are options or alternatives for free or reduced costs for similar services (e.g., mail versus fax charges), such services must be explained to the borrower before the service is provided.); and

  • that fees may be charged on a repetitive basis only when required or permitted by Fannie Mae’s Guides or otherwise clearly supported by the circumstances relating to a particular mortgage loan.

Eligible transfers of property ownership for exempt transactions

The servicer must implement policies and procedures to promptly communicate with a potential successor in interest of the borrower and to confirm successors in interest status in accordance with applicable law. Policies and procedures to manage exempt transactions must allow the transferee to

  • continue making monthly payments, and

  • pursue an assumption of the mortgage loan or a workout option, as applicable.

Prohibited Refinance Practices The servicer must implement policies and procedures consistent with Selling GuideB2-1.2-04, Prohibited Refinancing Practices.

Post-delivery servicing transfers

The servicer must have adequate procedures relating to the boarding of new mortgage loans subsequent to acquisition of servicing pursuant to a servicing transfer to avoid any delayed application of borrower payments of principal, interest, taxes, or insurance, if applicable.

Call center operations

The servicer must have a written policy that addresses inbound call coverage for the customer service, collections, and foreclosure prevention departments and maintaining contact method standards and service levels. See Call Center Coverage Requirements in A4-2.1-04, Establishing Contact with the Borrower for additional information.

Collection procedures

The servicer must have procedures in place to immediately address a one-payment delinquency to prevent it from becoming more serious. The servicer must have a policy in place for collection call campaigns.

Behavioral model tool

The servicer must have written policies and procedures to manage mortgage loans considered high risk by the model and that address the utilization of the model, if the servicer uses such a tool.

Borrower’s appeal of the denial of any mortgage loan modification for a principal residence

The servicer must have comprehensive processes and written policies and procedures to respond to a borrower’s appeal of the denial of any mortgage loan modification trial period plan in connection with a borrower’s complete BRP as required by applicable law, that is received

  • 90 days or more before a scheduled foreclosure sale or if the foreclosure sale date is unknown, and

  • with respect to a mortgage loan secured by a principal residence.

Forbearance plan

The servicer must establish written policies and procedures that describe how to

  • determine borrower’s hardship status,

  • determine when a forbearance plan requires a payment and how the payment is determined, and

  • document the decision-making process when applying discretion or business judgment.

Completing the preforeclosure sale review

The servicer must have written policies and procedures requiring a review of the mortgage loan servicing file at least 30 days prior to the scheduled foreclosure sale.

Foreclosure, conveyance, and claim oversight

The servicer must have appropriate policies, procedures, and controls to ensure that foreclosures, conveyances, and claims are processed in accordance with the provisions of

  • the requirements of the FHA, HUD, VA, RD or the mortgage insurer, and

  • any special requirements of Fannie Mae.

Bankruptcy monitoring and management

The servicer must have written procedures to monitor and manage bankruptcy proceedings effectively.

The servicer must comply with Fannie Mae’s request to review the servicer’s written policies and procedures, as well as examples of the application of those policies and procedures to specific instances.

Business Continuity Procedures

For information on Fannie Mae’s business continuity and disaster recovery procedures see Selling GuideA4-1-01, Maintaining Seller/Servicer Eligibility.

Quality Control Procedures

The servicer must monitor its compliance with Fannie Mae’s requirements through regular QC procedures it establishes and conducts. The servicer must maintain adequate QC procedures and systems to

  • ensure that the mortgage loans are serviced in accordance with sound mortgage banking and accounting principles and in compliance with Fannie Mae’s Guides;

  • guard against misrepresentation and dishonest, fraudulent, or negligent acts by any parties involved in the mortgage loan servicing process;

  • protect against errors and omissions by officers, employees, or other authorized persons;

  • verify and audit routinely the accuracy of the ARM loan adjustment and its facilitation of timely responses to errors identified by the borrower, the servicer’s regulatory agency, or Fannie Mae; and

  • protect Fannie Mae’s investment in the security properties.

The servicer must perform annual QC tests to ensure that all outsourcing firms and third-party vendors used by the servicer are fully compliant with the Servicing Guide. Results of the QC tests must be provided to Fannie Mae upon request.

Failure to maintain adequate QC measures will result in the servicer being in breach of its Lender Contract.

Quality Control Procedures for Delinquency Management and Default Prevention

The servicer must develop a QC program that addresses specific aspects of delinquency management and default prevention. The following table provides some of the requirements for the servicer’s QC program.

The QC program must include, but is not limited to, the following…

Monitoring the effectiveness of collection and foreclosure prevention calls to borrowers.

Conducting periodic reviews of any Behavioral Model Tool to ensure its effectiveness and make details of the model and any analysis available to Fannie Mae upon request.

Note: Fannie Mae reserves the right to require the servicer to discontinue its use for Fannie Mae mortgage loans or implement additional measures for targeting its collection and default management practices.

Determining whether documentation of collection and foreclosure prevention activities is accurately maintained in the servicer’s mortgage loan servicing system.

Monitoring whether workout options are considered in the preferred order in accordance with D2-3.1-01, Determining the Appropriate Workout Option and F-2-11, Fannie Mae’s Workout Hierarchy.

Determining that all appropriate workout options were considered and documented prior to the decision to foreclose.

Determining the adequacy of internal controls and procedures in connection with pre-referral review activities to ensure compliance with these requirements and applicable law.

Determining whether accurate and timely delinquency status information is submitted to Fannie Mae.

Determining that all communications with borrowers comply with the requirements of applicable laws, including debt collection laws such as the FDCPA, the provisions of the United States Bankruptcy Code, and any applicable state laws.

Quality Control of Systems

The servicer’s QC must ensure compliance with Fannie Mae’s requirements and the legal requirements of each jurisdiction in which it operates, be well-documented, and provide for a review of the following systems:

  • delinquent mortgage loan servicing system,

  • system to control and monitor bankruptcy proceedings, and

  • foreclosure monitoring system.

The servicer must

  • conduct regular testing of compliance with applicable laws in all jurisdictions in which it operates,

  • regularly review and assess the adequacy of internal controls,

  • keep a record of any activity under these internal systems,

  • report comprehensive results of all testing to the senior management,

  • promptly take appropriate corrective action if these systems identify a problem area, and

  • make the comprehensive results of all testing and evidence of correction actions taken and the related results available for review upon Fannie Mae’s request.

Related Announcements

The Following table provides references to Announcements that are related to this topic.

Announcements Issue Date
Announcement SVC-2018-04 June 13, 2018
Announcement SVC-2018-01 February 14, 2018
Announcement SVC-2017-04 May 10, 2017