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.