Chapter 1

Servicing

Section 101

Generally
101.01

Relationship

Requirements

You must:

  • service all Portfolio Mortgage LoansPortfolio Mortgage LoansMortgage Loan purchased by Fannie Mae and held as of a certain date regardless of whether it is a Cash Mortgage Loan or an MBS Mortgage Loan. on Fannie Mae's behalf per the GuideGuideMultifamily Selling and Servicing Guide controlling all Lender and Servicer requirements unless a Lender Contract specifies otherwise. ; and
  • not engage any PersonPersonLegal person, including an individual, estate, trust, corporation, partnership, limited liability company, financial institution, joint venture, association, or other organization or entity (whether governmental or private). on the Restricted Vendor List to perform any service for, or be involved in any way with, the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. servicing.
101.02

Standard

Requirements

You must:

  • always protect Fannie Mae’s interest in the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. ;
  • collect all amounts due from the BorrowerBorrowerPerson who is the obligor per the Note. for Fannie Mae and any MBS InvestorMBS InvestorFor MBS Mortgage Loans, either a Third Party MBS Investor for Lender-Arranged Sales, or the Multifamily Trading Desk. ;
  • service each Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. per these documents until your obligations end in the following order of priority:
  1. Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ;
  2. Disclosure DocumentsDisclosure DocumentsDocuments for an Investor for a particular Securitized Mortgage Loan, which may include the MBS Trust Agreement, Prospectus, and any related documents. ;
  3. Lender ContractLender ContractProgram Documents per the Multifamily Selling and Servicing Agreement. ;
  4. GuideGuideMultifamily Selling and Servicing Guide controlling all Lender and Servicer requirements unless a Lender Contract specifies otherwise. ; and
  5. commercially sound servicing practices and business judgment exercised by prudent institutional servicers for comparable mortgage loans in the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). jurisdiction;
  • perform additional servicing duties when directed by Fannie Mae; and
  • hold any retained subservicer to this standard.
101.03

Servicing File

Requirements

You must:

  • maintain a separate Servicing FileServicing FileYour file for each Mortgage Loan serviced. for each Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. ; and
  • permit Fannie Mae to periodically examine your Servicing FilesServicing FilesYour file for each Mortgage Loan serviced. .

Operating Procedures

The Servicing FileServicing FileYour file for each Mortgage Loan serviced. must:

1.  Per the Multifamily Servicing File Content Requirements (Form 4800), include a copy of all

  • Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. origination documents,
  • underwriting documents,
  • Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , and
  • servicing documents.

2.  Fully document your actions for each Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. .

3.  Be in paper or electronic imaged form.

4.  Comply with all record retention requirements per the Program Rules.

101.04

Loan Document Compliance

Requirements

For each Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , you must:

  • monitor the Borrower'sBorrower'sPerson who is the obligor per the Note. compliance with all Loan DocumentLoan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. terms and conditions; and
  • appropriately address noncompliance.
Section 102

Uniform Commercial Code (UCC) Financing Statements
102.01

Filing Documents

Requirements

You must maintain Fannie Mae's first LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. security interest in the Personal PropertyPersonal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. by filing all necessary UCCUCCUniform Commercial Code financing statements and continuations by the earlier of:

  • the date any outstanding filing lapses; or
  • any applicable jurisdiction filing deadline.

Guidance

For all Mortgage LoansMortgage LoansMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , you should effectively monitor

  • UCCUCCUniform Commercial Code financing statements, and
  • continuation filing deadlines.

Operating Procedures

Each Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. Servicing FileServicing FileYour file for each Mortgage Loan serviced. must include a file-stamped copy of the UCCUCCUniform Commercial Code financing statements filed for the Personal PropertyPersonal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. , including

  • initial filings,
  • continuations,
  • assignments, and
  • other amendments.
102.02

UCC Continuations, Amendments, and Terminations

Operating Procedures

You are authorized and required to file:

  1. All UCCUCCUniform Commercial Code continuation statements in all appropriate jurisdictions.
  2. Any UCCUCCUniform Commercial Code financing statement amendments to correct any scrivener’s error.

Unless Fannie Mae granted you a Limited Power of AttorneyLimited Power of AttorneyLegal document authorizing a Servicer to execute certain Loan Documents related to the asset management of a Mortgage Loan as attorney-in-fact on behalf of Fannie Mae. , you are not authorized to

  • sign or file any UCCUCCUniform Commercial Code financing statement amendment other than for a scrivener’s error, or
  • terminate any UCCUCCUniform Commercial Code financing statement.

Guidance

See Part V, Chapter 4: Asset Management: Loan Document Administration, Section 403: Execution of Documents by Servicer – Limited Power of Attorney for more information.

Section 103

Letters of Credit
103.01

Servicing File

Requirements

You must immediately deliver to Fannie Mae:

  • the original Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. ; and
  • any new, replacement, or amended Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. delivered to you.

Operating Procedures

In your Servicing FileServicing FileYour file for each Mortgage Loan serviced. , you must keep a copy of any

  • Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. , and
  • the associated Achievement AgreementAchievement AgreementAgreement requiring the Borrower to provide a letter of credit, cash, or guaranty as additional collateral to support the Mortgage Loan amount and specifying the terms for releasing the collateral. or other Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. .
103.02

Certification

Operating Procedure

With any new or replacement Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. , you must

103.03

Monitoring Expiration Dates

Operating Procedures

You must:

  • effectively monitor each Letter of Credit'sLetter of Credit'sLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. expiration date; and
  • ensure Fannie Mae receives an acceptable renewal or replacement Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit.
    • by the deadline per the Achievement AgreementAchievement AgreementAgreement requiring the Borrower to provide a letter of credit, cash, or guaranty as additional collateral to support the Mortgage Loan amount and specifying the terms for releasing the collateral. or other Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. , or
    • if no deadline is specified, at least 5 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. before the Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. expires.

If you do not provide a renewal or replacement Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. , Fannie Mae will present a sight draft against the expiring Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. .

103.04

Replacement Letter of Credit

Operating Procedures

You must ensure any replacement Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. has an expiration date at least 30 days after the applicable Achievement AgreementAchievement AgreementAgreement requiring the Borrower to provide a letter of credit, cash, or guaranty as additional collateral to support the Mortgage Loan amount and specifying the terms for releasing the collateral. or other Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. expiration date.

103.05

Verifying Issuer Ratings
103.05A

Monitoring

Operating Procedures

While each Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. is outstanding, you must:

103.05B

Rating Noncompliance

Operating Procedures

If the rating of the financial institution issuing or confirming the Letter of Credit does not comply with... You must...
Part I, Chapter 2: Mortgage Loan, Section 204.02: Issuers and Ratings

Promptly notify Multifamily Business OperationsMultifamily Business OperationsTeam that can be contacted at [email protected]. even if the Achievement AgreementAchievement AgreementAgreement requiring the Borrower to provide a letter of credit, cash, or guaranty as additional collateral to support the Mortgage Loan amount and specifying the terms for releasing the collateral. or other Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument.

 

  • provides different acceptable issuer rating criteria, or
  • does not authorize Fannie Mae to act if the rating falls.
Rating criterial in the Achievement Agreement or other Collateral Agreement
  • Promptly notify Multifamily Business OperationsMultifamily Business OperationsTeam that can be contacted at [email protected]. .
  • Require the BorrowerBorrowerPerson who is the obligor per the Note. to provide a replacement or confirming Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. from an acceptably rated institution by the:
    • replacement deadline per the Achievement AgreementAchievement AgreementAgreement requiring the Borrower to provide a letter of credit, cash, or guaranty as additional collateral to support the Mortgage Loan amount and specifying the terms for releasing the collateral. or Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. ; or
    • earlier of
      • 30 days after notifying the BorrowerBorrowerPerson who is the obligor per the Note. , or
      • 5 Business DaysBusiness DaysAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. before the Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. expires.
103.06

Managing Draws and Releases
103.06A

Letter of Credit Draws

Requirements

You must promptly notify Multifamily Asset ManagementMultifamily Asset ManagementTeam that can be contacted at [email protected]. and Multifamily Business OperationsMultifamily Business OperationsTeam that can be contacted at [email protected]. if a Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. draw is appropriate.

103.06B

Releasing/Reducing Letters of Credit or Other Collateral

Operating Procedures

Unless a Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. is being fully repaid, you must:

  • assess each BorrowerBorrowerPerson who is the obligor per the Note. request to fully release or partially reduce a Letter of CreditLetter of CreditLetter of Credit approved by Fannie Mae per Part I, Chapter 2: Mortgage Loan, Section 204: Letters of Credit. or other collateral;
  • submit your recommendation to Multifamily Asset ManagementMultifamily Asset ManagementTeam that can be contacted at [email protected]. ; and
  • notify the BorrowerBorrowerPerson who is the obligor per the Note. when each request is approved or denied.
Section 104

Bond Transactions and Credit Enhancement Mortgage Loans
104.01

Borrower Obligations
104.01A

Payments

Operating Procedures

Collect all of the following from the BorrowerBorrowerPerson who is the obligor per the Note. :

  • reimbursement of all amounts Fannie Mae paid or is due per any:
    • Credit Enhancement InstrumentCredit Enhancement InstrumentAgreement between Fannie Mae and a Bond Trustee where Fannie Mae provides credit enhancement of a Credit Enhancement Mortgage Loan, Bonds issued to finance a Credit Enhancement Mortgage Loan, or an Interest Rate Hedge Agreement; and if applicable, a Bond liquidity facility. or MBS for BondsMBS for BondsFannie Mae MBS: issued to credit enhance tax-exempt Bonds; or exchanged for Bonds redeemed at MBS issuance. ;
    • Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. or Reimbursement Agreement;
    • BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. ; and
    • Interest Rate Cap AgreementInterest Rate Cap AgreementContract setting forth the terms and conditions of an Interest Rate Cap, Hedge, or Swap. or other interest rate hedge;
  • any Facility Fee and/or Activity Fee for an unreimbursed Liquidity Advance per the Reimbursement Agreement;
  • all amounts required to replenish the PRFPRFAccount you hold accumulating principal amortization payments for variable rate Bond credit enhancements. ;
  • any Prepayment PremiumPrepayment PremiumFor a Mortgage Loan prepayment, amount the Borrower must pay in addition to the prepaid principal and accrued interest per the Loan Documents. or other Termination Fee;
  • any other fees, expenses, or additional costs due per any
    • Credit Enhancement InstrumentCredit Enhancement InstrumentAgreement between Fannie Mae and a Bond Trustee where Fannie Mae provides credit enhancement of a Credit Enhancement Mortgage Loan, Bonds issued to finance a Credit Enhancement Mortgage Loan, or an Interest Rate Hedge Agreement; and if applicable, a Bond liquidity facility. or MBS for BondsMBS for BondsFannie Mae MBS: issued to credit enhance tax-exempt Bonds; or exchanged for Bonds redeemed at MBS issuance. ,
    • Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. ,
    • Reimbursement Agreement, or
    • other Loan DocumentLoan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; and
  • any other amounts due Fannie Mae or the Bond TrusteeBond TrusteeTrustee for a Credit Enhancement Instrument. .
Steps Activity...
Calculate the Amount Due

After receiving the information to calculate the amount due, you must

 

  • immediately invoice the BorrowerBorrowerPerson who is the obligor per the Note. , and
  • remit the funds to the appropriate parties per the Reimbursement Agreement or Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .
Advance Funds Notification

Fannie Mae will notify you of the amount disbursed on or after each disbursement date for any:

 

  • Credit Enhancement InstrumentCredit Enhancement InstrumentAgreement between Fannie Mae and a Bond Trustee where Fannie Mae provides credit enhancement of a Credit Enhancement Mortgage Loan, Bonds issued to finance a Credit Enhancement Mortgage Loan, or an Interest Rate Hedge Agreement; and if applicable, a Bond liquidity facility. or MBS for BondsMBS for BondsFannie Mae MBS: issued to credit enhance tax-exempt Bonds; or exchanged for Bonds redeemed at MBS issuance. ;
  • Loan DocumentLoan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; or
  • other BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. .
Payment Timing

You must remit all BorrowerBorrowerPerson who is the obligor per the Note. payments per the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. or Fannie Mae’s instructions.


If you do not pay Fannie Mae or the Bond TrusteeBond TrusteeTrustee for a Credit Enhancement Instrument. until the next Business DayBusiness DayAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. , you must

 

  • invest the funds overnight, and
  • remit all investment earnings to Fannie Mae or the Bond TrusteeBond TrusteeTrustee for a Credit Enhancement Instrument. with the payment.

 

For BorrowerBorrowerPerson who is the obligor per the Note. payments received after 4:00 p.m. Eastern Time, you must use your best efforts to invest the funds.
104.01B

Principal Reserve Fund

Requirements

You must ensure no PRFPRFAccount you hold accumulating principal amortization payments for variable rate Bond credit enhancements. withdrawal occurs without Fannie Mae's approval.

Operating Procedures

For each Credit Enhancement Mortgage LoanCredit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. , you must:

  • Review the Bond Trustee'sBond Trustee'sTrustee for a Credit Enhancement Instrument. reported PRFPRFAccount you hold accumulating principal amortization payments for variable rate Bond credit enhancements. balance.
  • Collect from the BorrowerBorrowerPerson who is the obligor per the Note. any amount withdrawn from the PRFPRFAccount you hold accumulating principal amortization payments for variable rate Bond credit enhancements. , including withdrawals reimbursing Fannie Mae for amounts it paid per the
    • Credit Enhancement InstrumentCredit Enhancement InstrumentAgreement between Fannie Mae and a Bond Trustee where Fannie Mae provides credit enhancement of a Credit Enhancement Mortgage Loan, Bonds issued to finance a Credit Enhancement Mortgage Loan, or an Interest Rate Hedge Agreement; and if applicable, a Bond liquidity facility. or MBS for BondsMBS for BondsFannie Mae MBS: issued to credit enhance tax-exempt Bonds; or exchanged for Bonds redeemed at MBS issuance. , or
    • Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .
104.02

Cash Collateral Agreements

Requirements

You must:

  • ensure any control agreement perfecting Fannie Mae’s security interest in pledged collateral remains in full force and effect; and
  • not invest, apply, or release any collateral under a Cash Collateral or other Security Agreement.
104.03

UCC Filings

Operating Procedures

For UCCUCCUniform Commercial Code filings per Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. or BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. documents, you must:

  • instruct each Bond TrusteeBond TrusteeTrustee for a Credit Enhancement Instrument. to file UCCUCCUniform Commercial Code continuation statements at least 90 days before the filing expires; and
  • confirm the filing occurred before expiration.
104.04

Remarketing Agent Changes

Requirements

For BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. transactions that remarket on scheduled mandatory tender and remarketing dates where Fannie Mae provides BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. liquidity support, you must ensure any new Remarketing AgentRemarketing AgentPerson selected by the Issuer to reset the interest rate on the Bonds in order to resell any Bonds tendered by investors on the interest rate reset date. complies with Part III, Chapter 19: Bond Transactions and Credit Enhancement Mortgage Loans, Section 1903.02: Remarketing Agent.