Section 206

Application of Monthly Payments

206.01

Fannie Mae Form Loan Documents

For 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. originated using Fannie Mae published NoteNoteCurrent instrument evidencing a Mortgage Loan obligation, including Form 6010 (series), any other note approved by Fannie Mae, and all applicable addenda, schedules, and exhibits. forms, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must apply monthly payments received from the BorrowerBorrowerPerson who is the obligor under the Note. as follows:

Loan Document Version

Application of Payments

Pre-1988 Form Loan Documents using Rider to Multifamily Instrument (Form 4059, 4/88)

ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must apply monthly payments received from the BorrowerBorrowerPerson who is the obligor under the Note. in the following order:

 

  • first, to impositions due under Uniform Covenant 2 of the Security Agreement, including deposits for T&IT&ITaxes or assessments that may become a Lien on the Property and insurance premiums. , and deposits due under a Collateral AgreementCollateral AgreementAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. (e.g., Replacement ReserveReplacement ReserveCustodial Account established by the Lender and funded by deposits from the Borrower over the term of the Mortgage Loan to fund the replacement of capital items at the Property. );
  • then, to interest at the Gross Note RateGross Note RateInterest rate stated in the Loan Documents. ;
  • then, to principal;
  • then, to interest on any Servicing and Delinquency AdvancesDelinquency AdvancesFor Primary Risk Mortgage Loans and Secondary Risk Mortgage Loans, an amount advanced by a primary servicer in respect of regularly scheduled monthly interest or principal due on 1 or more Mortgage Loans, to the extent required under its Lender Contract.  For Secondary Risk Mortgage Loans only, in… made by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). ;
  • then, to principal on any Servicing and Delinquency AdvancesDelinquency AdvancesFor Primary Risk Mortgage Loans and Secondary Risk Mortgage Loans, an amount advanced by a primary servicer in respect of regularly scheduled monthly interest or principal due on 1 or more Mortgage Loans, to the extent required under its Lender Contract.  For Secondary Risk Mortgage Loans only, in… made by the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). ;
  • then, to late charges and other funds due the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). ; and
  • finally, to interest at the default interest rate.

The interest portion of the fixed installment must be determined by computing 30 days interest on the outstanding principal balance as of the last paid installment date.  For this calculation, always use the Gross Note RateGross Note RateInterest rate stated in the Loan Documents. for 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. or the default interest rate, as applicable.

Post-1988 and Pre-1998 Loan Documents using Rider to Multifamily Instrument (Form 4058, 6/93 or Form 4059, 5/93) (the "New Document Loans")

 

and

 

Post-1998 Loan Documents, unless otherwise instructed by Fannie Mae

ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must apply monthly payments received from the BorrowerBorrowerPerson who is the obligor under the Note. in the following order:

 

  • first, to any delinquent interest (other than interest attributable to the default interest rate);
  • then, to any delinquent principal;
  • then, to interest for the current month at the Gross Note RateGross Note RateInterest rate stated in the Loan Documents. ;
  • then, to principal for the current month;
  • then, to reimburse the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). or Fannie Mae for any T&IT&ITaxes or assessments that may become a Lien on the Property and insurance premiums. payments;
  • then, to reimburse the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). or Fannie Mae for any delinquency resolution costs, attorney fees, AppraisalAppraisalWritten statement independently and impartially prepared by a qualified appraiser stating an opinion as to the market value of the Property as of a specific date, supported by the presentation and analysis of relevant market information. fees, environmental assessment costs, or PCAPCAAssessment of the current physical condition and historical operation of the Property. costs;
  • then, to reimburse the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). or Fannie Mae for any payments to protect the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). ;
  • then, to late charges;
  • then, to default interest;
  • then, to T&I Custodial AccountT&I Custodial AccountCustodial Account for the deposit of T&I and other impound escrow funds. deposits; and
  • finally, to Collateral AgreementCollateral AgreementAgreement under which collateral (other than the Property) may be pledged, transferred, or otherwise provided to secure the Borrower’s obligations under a Mortgage Loan. Custodial AccountCustodial AccountAccounts established by the Servicer for depositing P&I payments, T&I funds, Collateral Agreement deposits, and other similar funds. deposits.
206.02

Non-Fannie Mae Form Loan Documents

For 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. not originated using Fannie Mae published NoteNoteCurrent instrument evidencing a Mortgage Loan obligation, including Form 6010 (series), any other note approved by Fannie Mae, and all applicable addenda, schedules, and exhibits. forms, the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must apply monthly payments received from the BorrowerBorrowerPerson who is the obligor under the Note. as required by the relevant Loan DocumentsLoan DocumentsAll documents evidencing, securing, or guaranteeing the debt obligation executed for a Mortgage Loan and approved by Fannie Mae. .  If the Loans Documents do not provide for the order of application of monthly payments, then the ServicerServicerPrimary Person responsible for servicing the Mortgage Loan (e.g.,  the originator, the selling Lender, or a third-party servicer). must follow the requirements for the Fannie Mae Post-1998 Loan Documents as provided in Part V, Chapter 2: Reporting and Remitting, Section 206.01: Fannie Mae Form Loan Documents.