Fannie Overhauls Core Servicing Requirements

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Fannie Mae announced today that it has amended core requirements for servicers managing both its fixed and adjustable rate loans, including new requirements for default management and loan administration. Key among the changes are new requirements for approved custodial depositories, including a revised set of guidelines covering which institutions will be considered eligible for servicers’ deposit receipts. Servicers will be subject to a 120-deadline to transfer funds out of a non-approved bank.

Fannie also said it is changing requirements for full payoffs, allowing servicers to elect whether to record payoffs on the date payment was received or on the last date interest was charged. The election will be recorded annually, and will not carry through to subservicers, who will be responsible for their own elections. For foreclosures, Fannie is amending its requirements to require that foreclosure be initiated within 200 days of delinquency. In the past, Fannie had not provided servicers with a specific outside date by which foreclosure must begin. Other changes include the following:

  • forebearances may only be granted for no more than four contiguous months
  • repayment plans must bring borrowers current within 18 months from start of adjusted payments
  • any loan past due for 24 months must be repurchased from its MBS pool
  • new servicing requirements for all loans sold for cash but later securitized into a MBS pool; servicers are being notified of affected loans and will be expected to adhere to relevant MBS pooling and servicing agreements

Senior vice president Pamela Johnson said that no effective date for these changes has been set as of yet, although Fannie expects to see the changes implemented by June 2007. “We first want to give servicers an opportunity to fully understand the enhancements, consider the impact to their business processes, and determine how much time will be necessary to implement them,” she said. For more information: see “Introduction of the Fannie Mae Single-Family MBS Master Trust Agreement,” Dec. 29, 2006.

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