Servicing Guide

Published December 11, 2019

F-1-15: Processing a Fannie Mae Short Sale (11/14/2018)

This Servicing Guide Procedure contains the following:

Calculating the Borrower’s Housing Expense-to-Income Ratio

The servicer must determine the borrower’s housing expense-to-income ratio as outlined in Evaluating a Borrower’s Ability to Make a Cash Contribution in D2-3.3-01, Fannie Mae Short Sale.

The borrower’s monthly gross income is defined as the borrower’s monthly income amount before any payroll deductions and includes the following items, as applicable:

  • wages and salaries;

  • overtime pay;

  • commissions;

  • fees;

  • tips;

  • bonuses;

  • housing allowances;

  • other compensation for personal services;

  • Social Security payments (including Social Security received by adults on behalf of minors or by minors intended for their own support); and

  • monthly income from annuities, insurance policies, retirement funds, pensions, disability or death benefits, rental income, and other income such as adoption assistance.

    Note:The servicer must not consider unemployment insurance benefits or any other temporary sources of income related to employment (such as severance payments), as part of the monthly gross income for mortgage loans.

The servicer must then divide the borrower’s monthly housing expense on the property securing the mortgage loan, which includes the following items (as applicable), by the borrower’s monthly gross income:

  • P&I;

  • property and flood insurance premiums;

  • real estate taxes;

  • ground rent;

  • special assessments;

  • HOA dues (including utility charges that are attributable to the common areas, but excluding any utility charges that apply to the individual unit); and

  • co-op corporation fee (less the pro rata share of the master utility charges for servicing individual units that is attributable to the borrower’s unit).

Note: The servicer must exclude monthly mortgage insurance premiums from the monthly housing expense-to-income calculation.

Obtaining a Property Valuation

The servicer must obtain a property valuation in accordance with Obtaining a Property Valuation in D2-3.3-01, Fannie Mae Short Sale. The property valuation must be dated or have been refreshed by Fannie Mae within 90 calendar days of the short sale approval.

The following table provides additional requirements for all property valuations for a short sale.

The servicer must…

Submit property valuation orders using the VMS application and the VMS Valuation Order Template.

Note: To obtain access to the VMS application, the servicer must complete a VMS User Setup Template and submit it to

Include the cost of the property value order in the MI claim.

The results of the property value will be available through Fannie Mae’s servicing solutions system within seven to ten calendar days from the date the servicer submits the order.

Announcement Issue Date
Announcement SVC-2018-08 November 14, 2018
Announcement SVC-2017-05 June 21, 2017