Chapter 3

Custodial Accounts

Section 301	Generally

301.01	Maintenance

Requirements

For all funds collected per the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , you must:

establish and maintain the following per this Chapter:
- P&I Custodial AccountsP&I Custodial AccountsCustodial Account for principal and interest deposits. ;
- T&I Custodial AccountsT&I Custodial AccountsCustodial Account for the deposit of T&I and other impound escrow funds. ; and
- Collateral Agreement Custodial AccountsCollateral Agreement Custodial AccountsCustodial account established by the Servicer for depositing funds received from the Borrower for Collateral Agreements. ; and
maintain strict control of all funds in your custody.

Operating Procedures

You must maintain all accounts and related records:

for all
- Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. ,
- Drafting AccountsDrafting AccountsCustodial Account established by the Lender for the benefit of Fannie Mae and for which Fannie Mae has authority to transfer funds. , and
- Clearing AccountsClearing AccountsLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer…;
using sound accounting and cash management practices; and
enabling Fannie Mae to audit them at any time.

301.02	Fannie Mae's Rights

Requirements

Fannie Mae has a security interest in 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. Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. and may require you to:

transfer funds from an institution (even if it is an Eligible Depository) into another Eligible Depository;
move funds to a trust account;
ensure funds are fully insured with the FDICFDICFederal Deposit Insurance Corporation , NCUSIFNCUSIFNational Credit Union Share Insurance Fund administered by the National Credit Union Administration. , or other acceptable governmental insurer or guarantor;
remit more frequently while allowing funds to remain in the existing Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. ; and
take other actions based on risks, account size, and other factors.

301.03	Eligible Depositories and Ratings

301.03A	Eligible Depository

Requirements

You must ensure all Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. are demand deposit or money market accounts maintained at an Eligible Depository. An Eligible Depository is:

a Federal Reserve Bank;
a Federal Home Loan Bank; or
depository institution if it complies with the following.

Depository Institution...	Must...
Accounts	Be insured by the Federal Deposit Insurance Corporation, or National Credit Union Share Insurance Fund.
Rating	Have an applicable Federal or State rating of “well capitalized”, or if unrated, meet the capital requirements for a “well capitalized” rating.
Minimum Financial Ratings for Assets $20 Billion or More	If rated by both S&P and Moody’s, meet all of the following: for S&P: an “A-2” short-term issuer rating; and a “BBB” long-term issuer rating; and for Moody’s: a “P-3” short-term bank deposit rating; and a “Baa2” long-term bank deposit rating. If only rated by S&P, have: an “A-2” short-term issuer rating; and a “BBB” long-term issuer rating. If only rated by Moody’s, have: a “P-3” short-term bank deposit rating; and a “Baa2” long-term bank deposit rating.
Minimum Financial Ratings for Assets Less than $20 Billion	Meet at least 1 of the following: For S&P: an “A-2” short-term issuer rating; and a “BBB” long-term issuer rating. For Moody’s: a “P-3” short-term bank deposit rating; and a “Baa2” long-term bank deposit rating. For IDC Financial Publishing, Inc., or its successor, a 175. For Kroll Bond Rating Agency, Inc., or its successor, a C+.

Operating Procedures

You may establish the account within your own institution if you

are an Eligible Depository, and
do not use your general ledger or internal operating account for Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. .

301.03B	Verifying Depository Ratings

Requirements

You must monitor the financial viability of custodial fund depositories.

If a depository or its holding company does not meet the Eligible Depository ratings per Part V, Chapter 3: Custodial Accounts, Section 301.03A: Eligible Depository, you must transfer the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. to an Eligible Depository within 30 days.

Operating Procedures

To determine an Eligible Depository:

use the most recent financial ratings issued within the past 3 months; and
confirm the ratings every 3 months.

301.04	Investments and Interest

Requirements

You must:

comply with the interest-bearing requirements per the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. when establishing accounts;
not invest Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. funds, other than typical demand deposit or money market account earnings (e.g., interest); and
when required by law or the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , pay the BorrowerBorrowerPerson who is the obligor per the Note. Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. earnings.

Operating Procedures

You may establish interest-bearing Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. if:

they comply with all applicable local, state, and federal laws and regulations regarding BorrowerBorrowerPerson who is the obligor per the Note. funds;
funds can be withdrawn on demand without prior notice; and
either
- there is no early withdrawal penalty, or
- the number of withdrawals is limited, but you are responsible for any excess withdrawal penalties.

Guidance

You may retain any Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. earnings you are not required to pay the BorrowerBorrowerPerson who is the obligor per the Note. .

301.05	Clearing Accounts

Requirements

You must:

not use any Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. as a Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer…; and
establish a Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… per Part V, Chapter 3: Custodial Accounts, Section 306: Clearing Accounts if deposits and disbursements cannot be made directly to or from the Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. .

301.06	Liability

301.06A	Losses

Requirements

You are responsible for any:

Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. losses; and
damages Fannie Mae suffers due to funding delays, even if you complied with the GuideGuideMultifamily Selling and Servicing Guide controlling all Lender and Servicer requirements unless a Lender Contract specifies otherwise. .

If you incur losses, Fannie Mae will not:

reimburse them; or
include them in any 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. loss sharing calculation.

301.06B	Overdrafts

Requirements

You must ensure a Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. is never overdrawn.

Operating Procedures

If an overdraft occurs, you must advance your own funds within 1 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. to cure the overdraft.

Section 302	Administration

302.01	Notifications

Operating Procedures

Within 30 days of opening or closing a Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. , or changing the Eligible Depository or Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. information:

Step 1: You and the depository institution must execute the applicable:

Letter of Authorization for Multifamily P&I Custodial Account (Form 2050);
Letter of Authorization for Multifamily T&I Custodial Account (Form 2052); or
Letter of Authorization for Multifamily Collateral Agreement Custodial Account (Form 2051).

Step 2: You must submit the executed document per the form’s instructions.

302.02	Titling

Operating Procedures

You must:

Ensure all Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. are titled:

[You], as agent, trustee, and/or bailee for Fannie Mae and/or payments of various mortgagors and/or various owners of interests in mortgage-backed securities (Custodial Account).

Submit:
- a copy of a
  - signature card,
  - bank statement, or
  - system generated screen print; and
- the applicable Letter of Authorization per Part V, Chapter 3: Custodial Accounts, Section 302.01: Notifications.

302.03	Deposits

Requirements

You must deposit any funds no later than the second 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. (including any time funds are in a Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… or general ledger account) after receiving them.

Operating Procedures

For deposits:

Establish a daily cutoff ensuring collections are credited to the appropriate Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. no later than the 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. after receiving them.
Ensure collections deposited to the Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… are credited to the applicable Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. by:
- for non-ACHACHElectronic Automated Clearing House network for processing U.S. banking transactions. funds, the first 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. after receiving them; or
- for ACHACHElectronic Automated Clearing House network for processing U.S. banking transactions. funds, the second 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. after receiving them, but this does not extend your deadline to remit funds to Fannie Mae.

Section 303	P&I Custodial Accounts

303.01	Accounts and Deposits

Requirements

You must:

Maintain 1 separate P&I Custodial AccountP&I Custodial AccountCustodial Account for principal and interest deposits. for each of these 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. categories:
- Cash Mortgage LoansCash Mortgage LoansMortgage Loan purchased by Fannie Mae in exchange for cash. and PFP Mortgage LoansPFP Mortgage LoansMortgage Loan originally purchased as a Cash Mortgage Loan or held in Fannie Mae’s portfolio, but subsequently securitized as an MBS. ;
- MBS Mortgage LoansMBS Mortgage LoansMortgage Loan purchased by Fannie Mae in exchange for an issued MBS backed by the Mortgage Loan. , including
  - MBS Mortgage LoansMBS Mortgage LoansMortgage Loan purchased by Fannie Mae in exchange for an issued MBS backed by the Mortgage Loan. issued using a REMICREMICReal Estate Mortgage Investment Conduit election after January 1, 2021, and
  - MBS for BondsMBS for BondsFannie Mae MBS: issued to credit enhance tax-exempt Bonds; or exchanged for Bonds redeemed at MBS issuance. ;
- Credit Enhancement Mortgage LoansCredit Enhancement Mortgage LoansMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. or transactions with Credit Enhancement InstrumentsCredit Enhancement InstrumentsAgreement 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. ;
- REMICREMICReal Estate Mortgage Investment Conduit transactions submitted in the Multifamily Negotiated Transactions (MFNT) application; and
- any other Securitized Mortgage LoansSecuritized Mortgage LoansMortgage Loan backing an MBS, PFP MBS, or REMIC. .
Not commingle P&I Custodial AccountP&I Custodial AccountCustodial Account for principal and interest deposits. funds among 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. categories. For example, P&IP&IPrincipal and interest funds for an MBS Mortgage LoanMBS Mortgage LoanMortgage Loan purchased by Fannie Mae in exchange for an issued MBS backed by the Mortgage Loan. may not be commingled with P&IP&IPrincipal and interest funds for a Cash Mortgage LoanCash Mortgage LoanMortgage Loan purchased by Fannie Mae in exchange for cash. , even for the same BorrowerBorrowerPerson who is the obligor per the Note. .
Use P&I Custodial AccountsP&I Custodial AccountsCustodial Account for principal and interest deposits. for all BorrowerBorrowerPerson who is the obligor per the Note. P&IP&IPrincipal and interest 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. payments, including any
- unscheduled principal or interest payments,
- Delinquency AdvancesDelinquency AdvancesYour required advances for scheduled monthly Mortgage Loan principal and/or interest per your Lender Contract, or the Guide. , or
- recovered Delinquency AdvancesDelinquency AdvancesYour required advances for scheduled monthly Mortgage Loan principal and/or interest per your Lender Contract, or the Guide. .

Guidance

You may commingle P&IP&IPrincipal and interest funds 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. within the same 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. category.

303.02	Withdrawals

Requirements

You must only withdraw funds from the P&I Custodial AccountP&I Custodial AccountCustodial Account for principal and interest deposits. to:

Remit funds to Fannie Mae.
Reimburse a Delinquency AdvanceDelinquency AdvanceYour required advances for scheduled monthly Mortgage Loan principal and/or interest per your Lender Contract, or the Guide. recovered from subsequent collections.
Remove funds erroneously deposited.
Transfer interest or typical demand deposit or money market account earnings.
Pay the Guaranty FeeGuaranty FeeFee retained by Fannie Mae for credit enhancing a Mortgage Loan or assuming credit risk on a Mortgage Loan, and which may be expressed as a percentage. (unless you received a notice of default from any Security Trust Indenture guarantor).
Remove fees, charges, or other amounts deposited on a temporary basis, including
- late charges,
- Servicing FeesServicing FeesFee a Servicer receives for collecting payments, managing operational procedures, and assuming your portion of credit risk for a Mortgage Loan, and which may be expressed as a percentage. , or
- unsecuritized excess spread (i.e., when a Mortgage Loan'sMortgage Loan'sMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. Pass-Through RatePass-Through RateMortgage Loan Gross Note Rate minus the Guaranty Fee, minus the Servicing Fee. is greater than the MBS Pool'sMBS Pool'sMBS Security backed by MBS Mortgage Loans. Pass-Through RatePass-Through RateMortgage Loan Gross Note Rate minus the Guaranty Fee, minus the Servicing Fee. ).
Clear and close the account.
Transfer any funds to 1 or more other Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. per this Chapter.

Section 304	T&I Custodial Accounts

304.01	Deposits

Requirements

You must:

use T&I Custodial AccountsT&I Custodial AccountsCustodial Account for the deposit of T&I and other impound escrow funds. for
- all BorrowerBorrowerPerson who is the obligor per the Note. payments for T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. per Part V, Chapter 3: Custodial Accounts, Section 304.02: T&I Impositions, and
- Servicing AdvancesServicing AdvancesAll amounts required to be paid by the Borrower, for all taxes and assessments against each Property, all insurance premiums for insurance for each Property to insurance carrier(s) acceptable to Fannie Mae, in accordance with the Guide, and any other payment, as determined by Fannie Mae,… you make for these items; and
not commingle T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. funds with
- P&I Custodial AccountP&I Custodial AccountCustodial Account for principal and interest deposits. funds, or
- Collateral Agreement Custodial AccountCollateral Agreement Custodial AccountCustodial account established by the Servicer for depositing funds received from the Borrower for Collateral Agreements. funds.

Operating Procedures

You may establish:

1 T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. for all T&IT&ITaxes or assessments that may become a Lien on the Property and insurance premiums. deposits from 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. ; or
2 separate T&I Custodial AccountsT&I Custodial AccountsCustodial Account for the deposit of T&I and other impound escrow funds. , with funds for all
- Cash Mortgage LoansCash Mortgage LoansMortgage Loan purchased by Fannie Mae in exchange for cash. in 1 T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. , and
- Securitized Mortgage LoansSecuritized Mortgage LoansMortgage Loan backing an MBS, PFP MBS, or REMIC. in the other T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. .

You must obtain Fannie Mae’s consent to establish a separate T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. for an individual

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. , or
BorrowerBorrowerPerson who is the obligor per the Note. .

304.02	T&I Impositions

Requirements

Unless precluded by the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , you must:

collect monthly payments from the BorrowerBorrowerPerson who is the obligor per the Note. ;
ensure all T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. are timely paid, including:
- real estate taxes;
- special assessments;
- water and sewer assessments;
- PILOTsPILOTsPayment In Lieu Of Taxes. ;
- insurance premiums;
- ground lease rents; and
- all other charges or obligations that could become a LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. against the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ; and
pay any penalty or late fee if you fail to make timely payments.

Guidance

You may:

Charge the BorrowerBorrowerPerson who is the obligor per the Note. for any penalty or late fee incurred if the failure to timely pay was due to insufficient T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. funds.
Use qualified third-party vendors (that you manage and monitor) to
- collect T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. funds, and
- pay T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. .

304.03	Shortfalls

Requirements

T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. shortfalls must be paid by

the BorrowerBorrowerPerson who is the obligor per the Note. , or
you (i.e., a Servicing AdvanceServicing AdvanceAll amounts required to be paid by the Borrower, for all taxes and assessments against each Property, all insurance premiums for insurance for each Property to insurance carrier(s) acceptable to Fannie Mae, in accordance with the Guide, and any other payment, as determined by Fannie Mae,…).

304.04	Prohibited Uses

Requirements

You must not use any T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. funds to:

supplement a shortfall in the Borrower'sBorrower'sPerson who is the obligor per the Note. monthly P&IP&IPrincipal and interest payment to Fannie Mae;
reimburse yourself for any Servicing AdvanceServicing AdvanceAll amounts required to be paid by the Borrower, for all taxes and assessments against each Property, all insurance premiums for insurance for each Property to insurance carrier(s) acceptable to Fannie Mae, in accordance with the Guide, and any other payment, as determined by Fannie Mae,… unless it is recovered from subsequent collections for that 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. ; or
supplement a shortfall in a Borrower'sBorrower'sPerson who is the obligor per the Note. taxes or insurance payment using another Borrower'sBorrower'sPerson who is the obligor per the Note. tax or insurance deposits.

Guidance

You may use a Borrower'sBorrower'sPerson who is the obligor per the Note. own tax or insurance deposits to cover a shortfall in the Borrower'sBorrower'sPerson who is the obligor per the Note. tax or insurance obligation if you adjust future deposits per Part V, Chapter 3: Custodial Accounts, Section 308.04B: Insufficient Funds.

304.05	No Financing for T&I Impositions

Requirements

To pay any T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. , you must not

provide financing to the BorrowerBorrowerPerson who is the obligor per the Note. , or
allow the BorrowerBorrowerPerson who is the obligor per the Note. to obtain financing.

Section 305	Collateral Agreement Custodial Accounts

305.01	Deposits

Requirements

If required by the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , you must establish Collateral Agreement Custodial AccountsCollateral Agreement Custodial AccountsCustodial account established by the Servicer for depositing funds received from the Borrower for Collateral Agreements. for the Borrower'sBorrower'sPerson who is the obligor per the Note. deposits for any:

Completion/Repair EscrowCompletion/Repair EscrowCustodial Account funded on the Mortgage Loan Origination Date for Completion/Repairs or capital improvements per the Loan Documents. ;
Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. ;
operating deficit escrow; and
other Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. escrow.

Operating Procedures

You may establish

1 account for all Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. deposits, or
a separate Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. 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. ;
- Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. type;
- BorrowerBorrowerPerson who is the obligor per the Note. ; or
- Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. .

305.02	Full Disbursement

Operating Procedures

You must close the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. per Part V, Chapter 3: Custodial Accounts, Section 302.01: Notifications after you

complied with the Collateral AgreementCollateral AgreementAgreement granting a security interest in Mortgage Loan collateral not covered by the Security Instrument. , and
disbursed all Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. funds.

Section 306	Clearing Accounts

Requirements

When establishing a Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer…, you must:

use an Eligible Depository;
title the account to reflect it is custodial; and
inform the depository in writing it is a custodial account.

Operating Procedures

If you use a Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… for deposits and disbursements, you:

must establish a separate account for collections and disbursements;
may use debit and credit memos to transfer funds between the Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… and the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. ; and
are not required to title the Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… in Fannie Mae’s name, but your records must show Fannie Mae’s interest in the deposits.

Guidance

All Clearing AccountsClearing AccountsLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… should have a zero balance at the close of each 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. .

Section 307	Drafting Accounts

307.01	Establishing Drafting Accounts

Guidance

You may use Drafting AccountsDrafting AccountsCustodial Account established by the Lender for the benefit of Fannie Mae and for which Fannie Mae has authority to transfer funds. to simplify transferring funds to Fannie Mae.

Requirements

You must comply with Part V, Chapter 3: Custodial Accounts, Section 306: Clearing Accounts when establishing a Drafting AccountDrafting AccountCustodial Account established by the Lender for the benefit of Fannie Mae and for which Fannie Mae has authority to transfer funds. .

307.02	Consolidated Custodial Accounts

Requirements

Topic	You must...
Securitized Mortgage Loans (Other Than PFP MBS)	Use separate consolidated Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. for drafting: P&IP&IPrincipal and interest remittances for Securitized Mortgage LoansSecuritized Mortgage LoansMortgage Loan backing an MBS, PFP MBS, or REMIC. (other than PFP MBSPFP MBSMBS backed by a PFP Mortgage Loan. ); and remittances for 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. categories per Part V, Chapter 3: Custodial Accounts, Section 303.01: Accounts and Deposits.
Corporate/General Lender Accounts	Not designate your corporate, general ledger, or other internal operating account as a Drafting AccountDrafting AccountCustodial Account established by the Lender for the benefit of Fannie Mae and for which Fannie Mae has authority to transfer funds. .
Records	Maintain records of the commingled fund sources on an individual 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. basis.

Topic

You must...

Securitized Mortgage Loans
(Other Than PFP MBS)

Use separate consolidated Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. for drafting:

P&IP&IPrincipal and interest remittances for Securitized Mortgage LoansSecuritized Mortgage LoansMortgage Loan backing an MBS, PFP MBS, or REMIC. (other than PFP MBSPFP MBSMBS backed by a PFP Mortgage Loan. ); and
remittances for 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. categories per Part V, Chapter 3: Custodial Accounts, Section 303.01: Accounts and Deposits.

Corporate/General Lender Accounts

Not designate your corporate, general ledger, or other internal operating account as a .

Records

Maintain records of the commingled fund sources on an individual basis.

Operating Procedures

Topic	You...
Establishing Accounts	Must submit a Letter of Authorization (Form 2050).
Timely Remittance	Must move all funds due into the account to ensure timely remittance to Fannie Mae.
Cash Mortgage Loans	May temporarily commingle P&IP&IPrincipal and interest funds for all Cash Mortgage LoanCash Mortgage LoanMortgage Loan purchased by Fannie Mae in exchange for cash. categories per Part V, Chapter 3: Custodial Accounts, Section 303.01: Accounts and Deposits into 1 consolidated Drafting AccountDrafting AccountCustodial Account established by the Lender for the benefit of Fannie Mae and for which Fannie Mae has authority to transfer funds. under your master 5-digit ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. number.
Securitized Mortgage Loans	May temporarily commingle P&IP&IPrincipal and interest funds for all Securitized Mortgage LoanSecuritized Mortgage LoanMortgage Loan backing an MBS, PFP MBS, or REMIC. categories per Part V, Chapter 3: Custodial Accounts, Section 303.01: Accounts and Deposits into 1 consolidated Drafting AccountDrafting AccountCustodial Account established by the Lender for the benefit of Fannie Mae and for which Fannie Mae has authority to transfer funds. under your master 5-digit ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. number.
P&I Funds	May designate 1 Drafting AccountDrafting AccountCustodial Account established by the Lender for the benefit of Fannie Mae and for which Fannie Mae has authority to transfer funds. for P&IP&IPrincipal and interest funds 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. category per Part V, Chapter 3: Custodial Accounts, Section 303.01: Accounts and Deposits under each of your 9-digit ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. numbers.
Commingling Timing	Cannot commingle funds earlier than 1 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. before the funds will be drafted.
System	Must, for both Cash Mortgage LoansCash Mortgage LoansMortgage Loan purchased by Fannie Mae in exchange for cash. and Securitized Mortgage LoansSecuritized Mortgage LoansMortgage Loan backing an MBS, PFP MBS, or REMIC. , use the Cash Remittance SystemCash Remittance SystemMultifamily system where you set up and maintain banking instructions for Fannie Mae’s drafting of remittances per Part V, Chapter 2: Reporting and Remitting, Section 209: Remittance Procedures. to designate specific Custodial AccountsCustodial AccountsAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. from which Fannie Mae remittances can be automatically drafted per Part V, Chapter 2: Reporting and Remitting, Section 209.03: Cash Remittance System.

Section 308	Recordkeeping and Reconciliations

308.01	Account Analysis and Reconciliation

Requirements

You must analyze and reconcile each Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. and associated Clearing AccountsClearing AccountsLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… monthly.

Operating Procedures

At a minimum, your reconciliation must include:

a depository reconciliation;
the cashbook balance composition; and
an explanation of line items.

Fannie Mae may review your reconciliation including:

an explanation of any adjustments you made;
the specific cashbook balances; and
any individual components.

While Fannie Mae does not prescribe a recordkeeping method to generate a cashbook balance, you must:

maintain the integrity of the Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. balances reported on your reconciliations;
be able to substantiate each cashbook component; and
retain sufficient detail to perform the following cashbook computation:

Function	Beginning Cashbook Balance
+	Receipts
-	Disbursements
+/-	Cashbook Adjustments
=	Ending Cashbook Balance

308.02	Records

Operating Procedures

You must maintain adequate documentation supporting the Borrower'sBorrower'sPerson who is the obligor per the Note. payment records, including Clearing AccountClearing AccountLender account at an Eligible Depository used either for receiving funds for various loans and for the benefit of multiple investors, and from which segregated funds are transferred to specific Custodial Accounts held solely for the benefit of Fannie Mae, or disbursing funds after transfer… credits and charges.

308.03	For T&I Custodial Accounts

Requirements

You must maintain and administer all BorrowerBorrowerPerson who is the obligor per the Note. funds held in a T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. on an individual 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. basis.

Operating Procedures

At a minimum, 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. in a T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. , you must account for:

T&I ImpositionT&I ImpositionAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. payment deadlines and amounts funded from the account;
monthly funds due for deposit;
funds received and deposited;
withdrawals; and
amounts you advance for T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. .

308.04	Borrower's T&I Impositions and Custodial Accounts

308.04A	Analysis Timing

Operating Procedures

You must:

Analyze your T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. records:
- annually 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
- when a material change occurs in a Borrower'sBorrower'sPerson who is the obligor per the Note. T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. .
Determine if the Borrower'sBorrower'sPerson who is the obligor per the Note. T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. funds, plus the Borrower'sBorrower'sPerson who is the obligor per the Note. required monthly deposits, are sufficient to timely pay all upcoming T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. .

308.04B	Insufficient Funds

Operating Procedures

If the Borrower'sBorrower'sPerson who is the obligor per the Note. T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. funds are insufficient to timely pay all T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. , you must

bill the BorrowerBorrowerPerson who is the obligor per the Note. for any shortage, and/or
increase the Borrower'sBorrower'sPerson who is the obligor per the Note. monthly T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. deposit.

After adjusting the Borrower'sBorrower'sPerson who is the obligor per the Note. future deposits, you may use those funds for a shortfall in either taxes or insurance.

308.04C	Surplus

Requirements

You must not maintain a surplus of more than 2 monthly T&IT&ITaxes or assessments that may become a Lien on the Property and insurance premiums. payments in the T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. .

Operating Procedures

If the T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. has a surplus of more than 2 monthly T&IT&ITaxes or assessments that may become a Lien on the Property and insurance premiums. payments, you must:

refund the BorrowerBorrowerPerson who is the obligor per the Note. the amount of the surplus above the 2 monthly T&IT&ITaxes or assessments that may become a Lien on the Property and insurance premiums. payments; or
reduce the Borrower'sBorrower'sPerson who is the obligor per the Note. required monthly T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. deposit to reduce the surplus to no more than 2 monthly T&IT&ITaxes or assessments that may become a Lien on the Property and insurance premiums. payments within 12 months.

You cannot refund any T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. surplus if the BorrowerBorrowerPerson who is the obligor per the Note. or any other party has defaulted under any of the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. beyond any grace or cure period.

308.05	Annual Statements

Operating Procedures

By January 31st of each year, you must issue the BorrowerBorrowerPerson who is the obligor per the Note. a T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. statement reporting all activity during the preceding calendar year. You can provide this statement

in writing, or
via electronic access.

Guidance

Your annual T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. statement must include:

Borrower'sBorrower'sPerson who is the obligor per the Note. fund balance at the beginning of the year;
total BorrowerBorrowerPerson who is the obligor per the Note. deposits into the account;
total withdrawals you made;
itemized list of specific T&I ImpositionsT&I ImpositionsAmounts for taxes, insurance, and other charges assessed against or owing on the Property which you deem necessary to protect the Property and/or prevent Liens imposed on it. and other charges (e.g., real estate taxes, insurance premiums, etc.) you paid with the withdrawals;
Borrower'sBorrower'sPerson who is the obligor per the Note. fund balance at the end of the year; and
amount of interest, if any, paid or credited to the BorrowerBorrowerPerson who is the obligor per the Note. on their funds.