Fannie Mae Addresses FHFA Limiting Mortgage Servicer Advance Obligations
On April 29, 2020, Fannie Mae updated Lender Letter 2020-02 to address the announcement by the Federal Housing Finance Agency (FHFA) that it was aligning the mortgage servicer advance requirements of Fannie Mae with those of Freddie Mac so that a servicer will have no further obligation to make advances once it has advanced four months of missed payments on a loan.
Fannie Mae advises that it is “currently evaluating operational changes to discontinue servicer advances of scheduled remittances of principal and interest payments for delinquent scheduled/scheduled remittance mortgage loans (delinquency advances) after the four consecutive missed monthly payments for mortgage loans serviced under the special servicing option.” Fannie Mae indicates that the changes will become effective for August 2020 remittance activity (based on July 2020 reporting activity) and that additional guidance will be provided in the coming weeks.
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