Fannie Mae Single Family 2012 Servicing Guide March 14, 2012 Fannie Mae Copyright Notice (1) 2012 Fannie Mae. No part oI this Servicing Guide may be reproduced in any Iorm or by any means without Fannie Mae`s prior written permission, except as may be provided herein or unless otherwise permitted by law. Limited permission to download and/or print a copy oI the PDF version oI this Servicing Guide Irom Fannie Mae-controlled Web sites is granted solely Ior internal business purposes, which permission Fannie Mae may revoke in its sole discretion. Limited permission to reproduce this Servicing Guide in print in whole or in part and limited permission to distribute electronically parts oI this Servicing Guide are granted to Fannie Mae-approved servicers strictly Ior their own use in the servicing oI mortgage loans Ior Fannie Mae. Fannie Mae may revoke these limited permissions by written notice to any or all Fannie Mae-approved servicers. Trademarks are the property oI their respective owners. A Iull version oI the Servicing Guide is also available Ior viewing on the AllRegs Web site oI Mortgage Resource Center, Inc., ('MRC), which posts the Servicing Guide under license Irom and with the express permission oI Fannie Mae. II there should ever be a diIIerence between the Servicing Guide as it appears on the AllRegs Web site and this version, the diIIerence is an error. In such event, this version shall be deemed the correct authoritative version. Material discrepancies between the two versions, identiIied by Fannie Mae or otherwise brought to our attention, may be addressed by Announcement. (2) Disclaimer: You acknowledge and agree (individually and on behalI oI the entity Ior which you are accessing the Servicing Guide) that you (and the entity Ior which you are accessing the Servicing Guide) may not make any claim against Fannie Mae Ior any errors, and Fannie Mae shall not be liable to you (or the entity Ior which you accessing the Servicing Guide) Ior any losses or damages whatsoever resulting directly or indirectly Irom any errors. Foreword March 14, 2012 Page iii Servicing Guide Foreword This update oI the Servicing Guide (Guide) includes the incorporation oI all Guide Announcements (deIined below) issued September 1, 2010, through September 2, 2011. Announcements issued aIter September 2, 2011, must be retained and reIerred to until they are included in the Guide in a Iuture update. Amendments to the Servicing Guide Fannie Mae may at any time alter or waive any oI the requirements oI its Guide, impose other additional requirements, or rescind or amend any and all material set Iorth in its Guide. The servicer must make sure that its staII is thoroughly Iamiliar with the content and requirements oI the Guide as it now exists and as it may be changed Irom time to time. The Guide is amended periodically through the issuance oI Announcements, Lender Letters, and Notices that introduce new or modiIied policies and/or provide clariIications, special guidance, and updates to documents posted on eFannieMae.com. Fannie Mae communicates its Single-Family servicing policies and processes in the Iollowing ways: - Announcements Describe new, supplemental, or modiIied policies and procedures and amend the Guide or documents posted on eFannieMae.com. Announcements are numbered as: SVC-2012-##. - Lender Letters Announce new or modiIied policies and procedures that are not documented in the Guide, such as policy changes that are temporary in nature (initiatives or pilots), reminders oI existing policies, upcoming Guide updates, or updates to documents posted on eFannieMae.com. Lender Letters are numbered as: LL-2012-##. - Notices Provide inIormation that servicers need but that does not require an update to the text in the Guide, such as updates to documents posted on eFannieMae.com. Notices can be identiIied by the date published (and are not numbered). Foreword March 14, 2012 Page iv Announcements, Lender Letters, and Notices are incorporated into the Guide by reIerence, and as such, are legally binding. Lender Letters and Notices are not included in the Guide but continue to be in eIIect and legally binding until any sunset date speciIied in the Lender Letter or Notice or until amended by a subsequent Lender Letter, Notice, or Announcement. Notification of Changes and Servicing Guide Updates Fannie Mae notiIies servicers oI changes and updates to its Guide policies and proceduresas communicated in Announcements, Lender Letters, and Noticesin two ways: - by posting the documents on eFannieMae.com and the AllRegs Web sites, and - by e-mail notiIication oI those postings to servicers that subscribe to Fannie Mae`s e-mail subscription service and select the option 'Servicing News. Fannie Mae does not mail printed copies oI Guide updates, Announcements, Lender Letters, or Notices. Servicers that want printed copies may download and print PDF Iiles oI the documents posted on eFannieMae.com. Forms, Exhibits, and Content Incorporated by Reference InIormation about the speciIic Iorms that servicers must use in IulIilling the requirements contained in the Guide is provided in context within the Guide. Servicers can access the actual Iorms in several ways: - eFannieMae.com via the Single Family page; and - the AllRegs Web site via embedded links in the Iree electronic version oI the Guide (and through a searchable database with a Iull subscription to AllRegs Online). Some materials are only reIerenced in the Guide and are posted in their entirety on eFannieMae.com. In addition, Irom time to time, Fannie Mae Foreword March 14, 2012 Page v issues speciIic guidance, which is incorporated into the Guide by reIerence. Such speciIic inIormationwhether it currently exists or is subsequently createdand the exhibits reIerenced in the Guide now or later are legally a part oI this Guide. Conceptual Organization Conceptually, this Guide covers the standard requirements Ior servicing all Fannie Mae-owned or Fannie Mae-securitized one- to Iour-unit mortgage loans. In developing the Guide, Fannie Mae considered the various interrelationships that have an eIIect on how a particular requirement should be interpreted or on how a speciIic procedure should be implemented, recognizing that the interrelationships do not always conIorm to hard and Iast rules. Content Organization This Guide is organized into 12 parts; each part is summarized below: - Part I Lender Relationships reIerences the process Ior becoming a Fannie Mae-approved servicer oI residential home mortgage loans, describes the terms oI the servicer`s contractual relationship with Fannie Mae, discusses the ongoing obligations a servicer must meet to maintain its eligibility as a Fannie Mae-approved servicer, and deIines a servicer`s general business obligations. - Part II Mortgage and Property Insurance discusses a servicer`s responsibility Ior ensuring that any mortgage insurance, hazard or Ilood insurance, or any special insurance coverages Fannie Mae requires are maintained in a way that will at all times protect Fannie Mae`s interest in the mortgages serviced Ior Fannie Mae. - Part III General Servicing Functions discusses the general administrative Iunctions involved in servicing Iirst and second mortgage loans that occur on an ongoing basis, as well as a Iew Iunctions that are unique to a particular type oI mortgage loan or to a special, nonrecurring circumstance. These Iunctions may begin when mortgage loan payment records are established Ior a new mortgage loan and oIten continue until a mortgage loan is paid oII, repurchased, or otherwise removed Irom Fannie Mae`s records. Foreword March 14, 2012 Page vi - Part IV Special Adjustable-Rate Mortgage Loan Functions discusses those special loan administration Iunctions related to the required periodic monthly payment and interest rate changes Ior adjustable-rate mortgages (ARMs) and graduated-payment adjustable-rate mortgages (GPARMs). - Part V Special Reverse Mortgage Loan Functions the content oI this part can be Iound in the Fannie Mae Reverse Mortgage Loan Servicing Manual on eFannieMae.com. - Part VI Mortgage Loan Removals or Reclassifications discusses the servicer`s responsibilities when a mortgage is removed Irom Fannie Mae`s accounting records or an MBS pool because the borrower pays it oII, the servicer or the originating lender repurchases it, Fannie Mae automatically reclassiIies it as a portIolio mortgage (in order to remove a delinquent mortgage Irom an MBS pool), or Fannie Mae authorizes the servicer to assign it to HUD (under special assignment procedures available Ior certain FHA Section 221 mortgages). - Part VII Delinquency Management and Default Prevention describes Fannie Mae`s requirements and procedures Ior servicing whole mortgage loans, participation pool mortgage loans, and MBS mortgage loans Irom the time they Iirst become delinquent or deIault is deemed to be reasonably Ioreseeable (imminent) through the development oI special relieI measures or Ioreclosure prevention alternatives to avoid Ioreclosure proceedings. - Part VIII Foreclosures, Conveyances and Claims, and Acquired Properties describes Fannie Mae`s requirements and procedures Ior conducting Ioreclosure proceedings, conveying properties to the insurer or guarantor, Iiling claims under the insurance or guaranty contract, and disposing oI acquired properties that Fannie Mae holds Ior sale. It does not address any special requirements that may have been imposed under the terms oI a negotiated purchase transaction. The servicer is responsible Ior taking all steps necessary to ensure that the terms oI a negotiated contract are Iollowed. - Part IX Custodial and Remittance Accounting discusses the diIIerent accounting Iunctions that relate to the Iinancial aspects oI Foreword March 14, 2012 Page vii servicing mortgage loans that are in either a Iirst- or second-lien position. These Iunctions are continuing processes Irom the time the mortgage loan is closed until it is liquidated. - Part X Fannie Mae Investor Reporting System discusses Fannie Mae`s general requirements Ior the mortgage accounting system it uses Ior reporting on the status oI regularly amortizing one- to Iour-unit mortgages it either holds in its portIolio or has pooled to back an MBS issue. It explains the turnaround documents Fannie Mae provides to the servicer, procedures Ior correcting reporting errors, the transactions the servicer must report to Fannie Mae, and any special requirements Fannie Mae has Ior speciIic remittance types. - Part XI Fannie Mae Reverse Mortgage Reporting System the contents oI this part can be Iound in the Fannie Mae Reverse Mortgage Loan Servicing Manual on eFannieMae.com. - Part XII Glossary and Table of Acronyms and Abbreviations deIines terms and phrases used throughout the Guide. Effective Dates for the Servicing Guide The eIIective date Ior each section is the date that is shown in parentheses next to each section title. II multiple changes with diIIerent eIIective dates were made to the same section, only the most recent eIIective date is shown. Access Options Fannie Mae currently oIIers the current and previous versions oI the Guide, related Announcements, Lender Letters, and Notices through a variety oI mediums, including: - using a Iree electronic version on the AllRegs Web site through a link Irom eFannieMae.com; - a subscription paid directly to AllRegs Ior an enhanced electronic version with additional Ieatures and a higher degree oI Iunctionality (than the Iree version); and Foreword March 14, 2012 Page viii - the current and several past Guides are available in PDF Iormat on eFannieMae.com. Technical Issues In the event oI technical diIIiculties or system Iailures with eFannieMae.com, the delivery oI the 'Servicing News option oI Fannie Mae's e-mail subscription service, or the AllRegs Web site, users may contact the Iollowing resources: - For eFannieMae.com and Fannie Mae's e-mail subscription service, use the 'Contact Us or 'Legal links on the Web site to ask questions or obtain more inIormation. - For the AllRegs Web site, submit an e-mail support request Irom the Web site or contact AllRegs Customer Service at (800) 848-4904. When Questions Arise This Guide provides inIormation about normal and routine servicing matters. II the servicer Ieels that a particular situation is not covered or that the procedures may not apply because oI certain circumstances, it should contact its PortIolio Manager, Servicing Consultant, or the National Servicing Organization`s Servicer Solutions Center at 1-888-FANNIE5 (888-326-6435). Also, servicers may need to contact other groups within Fannie Mae as speciIied in this Guide. Foreword Contents March 14, 2012 Page ix Contents FOREWORD............................................................................................................................................ iii PART I: LENDER RELATIONSHIPS ........................................................................................... 100-1 Chapter 1. Approval Qualification................................................................................................... 101-1 Chapter 2. Contractual Relationship............................................................................................... 102-1 Section 201 Mortgage Selling and Servicing Contract (06/01/07).................................................. 102-1 Section 201.01 Contractual Representations and Warranties (06/10/11) .................................... 102-2 Section 201.02 Representation and Warranty Requirements Ior the Servicing oI All Mortgage Loans (06/10/11) .................................................................................................... 102-3 Section 201.03 Mortgage Insurance Representation and Warranty Requirements (10/01/11) ... 102-3 Section 201.04 Nature oI Mortgage Loan Transactions (06/10/11) ............................................ 102-5 Section 201.05 IndemniIication Ior Losses (06/10/11)................................................................ 102-5 Section 201.06 Concurrent Servicing TransIers (07/20/06) ........................................................ 102-6 Section 201.07 Pledge oI Servicing Rights (03/29/10)................................................................ 102-8 Section 201.08 Termination oI Servicing Arrangement Without Cause (04/01/09) ................. 102-12 Section 201.09 Breach oI Contract (09/16/08) .......................................................................... 102-15 Section 201.10 Remedies Ior Breach oI Contract and NonperIormance (12/31/08)................. 102-16 Section 201.11 Imposition oI Compensatory Fees (08/31/10) .................................................. 102-20 Section 201.12 Imposition oI Sanctions (06/30/02) .................................................................. 102-25 Section 201.13 Suspension oI New Servicing (06/30/02) ......................................................... 102-26 Section 202 Servicer`s Basic Duties and Responsibilities (12/08/08)........................................... 102-26 Section 202.01 Servicer`s Duties and Responsibilities Ior MBS Mortgage Loans (12/08/08)............................................................................................................................. 102-30 Section 202.02 Processing oI Funds (01/31/03) ........................................................................ 102-35 Section 202.03 Delinquency Advances (09/30/05) ................................................................... 102-35 Section 202.04 Servicing Advances (01/31/03)......................................................................... 102-36 Section 202.05 Written Procedures (01/31/03).......................................................................... 102-37 Section 202.06 Execution oI Legal Documents (01/31/03)....................................................... 102-37 Section 202.07 Note Holder Status Ior Legal Proceedings Conducted in the Servicer`s Name (05/23/08) ................................................................................................................... 102-38 Section 203 Servicing Compensation (01/31/03) .......................................................................... 102-40 Section 203.01 Servicing Fees (09/30/05) ................................................................................. 102-40 Section 203.02 Yield DiIIerential Adjustments (01/31/03)....................................................... 102-41 Section 203.03 Late Charges (07/10/09) ................................................................................... 102-43 Section 203.04 Fees Ior Special Services (11/01/04) ................................................................ 102-43 Section 203.05 Prepayment Premiums (01/31/03) .................................................................... 102-45 Foreword Contents March 14, 2012 Page x Section 204 Changes in Servicer`s Organization (04/01/09)......................................................... 102-46 Section 205 Post-Delivery TransIers oI Servicing (09/30/06)....................................................... 102-46 Section 205.01 PortIolio DeIinition (01/31/03) ......................................................................... 102-50 Section 205.02 Servicing Fee (01/31/03)................................................................................... 102-50 Section 205.03 Assumption oI Warranties and Other Obligations (01/31/03).......................... 102-51 Section 205.04 NotiIying Borrowers (01/31/03) ....................................................................... 102-52 Section 205.05 NotiIying Third Parties (01/31/03) ................................................................... 102-52 Section 205.06 TransIer oI Individual Mortgage Loan Files and PortIolio InIormation (02/01/05)............................................................................................................................. 102-54 Section 205.07 TransIer oI P&I and T&I Funds (05/01/00)...................................................... 102-58 Section 205.08 Submission oI Final Accounting Reports/Remittances (01/31/03) .................. 102-59 Section 205.09 Preparing Mortgage Assignments (01/31/03)................................................... 102-60 Section 205.10 TransIer oI Custodial Documents (09/30/05) ................................................... 102-64 Section 205.11 Transitional Responsibilities (01/31/03)........................................................... 102-66 Section 206 Subservicing (06/24/04)............................................................................................. 102-67 Section 206.01 General Requirements Ior Subservicing Arrangements (06/24/04).................. 102-67 Section 207 Repurchase or Mortgage Substitution Requirements (11/29/10) .............................. 102-70 Section 207.01 Mortgage Loan Repurchases Requested by Fannie Mae (09/30/05) ................ 102-72 Section 207.02 Repurchase Requested by Fannie Mae as a Result oI Mortgage Insurance Coverage Violations (10/01/11)............................................................................................ 102-74 Section 207.03 Timing oI Repurchase, Make-Whole, and Appeal Rights (06/30/11) .............. 102-75 Section 207.04 Repurchase as Result oI Improper Servicing (01/31/03).................................. 102-77 Section 207.05 Servicer`s Optional Repurchase oI PortIolio Mortgage Loans (01/31/03)....... 102-77 Section 207.06 Servicer`s Optional Repurchase oI Certain MBS Mortgage Loans (09/30/05)............................................................................................................................. 102-77 Section 207.07 Servicer`s Mandatory Repurchase oI Certain MBS Mortgage Loans (12/08/08)............................................................................................................................. 102-78 Section 207.08 Substitution in Lieu oI Repurchase oI MBS Mortgage Loans (01/31/03)........ 102-80 Chapter 3. Maintaining Eligibility ................................................................................................... 103-1 Section 301 Internal Audit and Management Control Systems (11/01/04)..................................... 103-1 Section 301.01 Servicer`s Audit and Control Systems (01/31/03) .............................................. 103-2 Section 301.02 Fannie Mae`s Quality Control Reviews (08/21/10)............................................ 103-2 Section 302 Net Worth and Liquidity Requirements (12/31/09)..................................................... 103-5 Section 302.01 Decline in Net Worth (09/16/08) ........................................................................ 103-6 Section 302.02 ProIitability (09/16/08) ....................................................................................... 103-6 Section 302.03 Minimum Capital Requirements (09/16/08)....................................................... 103-6 Section 302.04 Cross DeIault Provisions (09/16/08)................................................................... 103-7 Section 302.05 Recourse Obligation (09/16/08).......................................................................... 103-7 Section 302.06 Repurchase Limitation (09/16/08) ...................................................................... 103-8 Foreword Contents March 14, 2012 Page xi Section 303 Financial Statements and Reports (09/16/08).............................................................. 103-8 Section 303.01 Financial Statements (09/30/00) ......................................................................... 103-9 Section 303.02 Special Financial Reports (07/02/08)................................................................ 103-10 Section 303.03 Failure to Submit Required Financial Reports (07/02/08)................................ 103-10 Section 304 Required Servicer Rating (09/16/08)......................................................................... 103-11 Section 305 Lender Record InIormation (09/30/00)...................................................................... 103-11 Section 305.01 Submitting the Lender Record InIormation Form (09/30/00) .......................... 103-12 Section 305.02 Fidelity and Errors and Omissions Coverages (12/04/98)................................ 103-12 Section 305.03 Compliance With IRS Requirements (09/30/05).............................................. 103-12 Section 305.04 Escrow Deposit Accounts (06/30/02) ............................................................... 103-13 Section 305.05 ARM Interest Rate and Payment Changes (05/01/07)...................................... 103-13 Section 305.06 Eligibility oI Document Custodians/Custodial Depositories (06/30/02) .......... 103-13 Section 305.07 Compliance with Applicable Law (04/09/01)................................................... 103-14 Section 305.08 Potential Adverse Changes (04/09/01) ............................................................. 103-14 Section 305.09 Authority to Transact Business with Fannie Mae (04/09/01)........................... 103-14 Section 305.10 'Full File Reporting to Credit Repositories (01/31/03) .................................. 103-14 Section 305.11 Subservicing Arrangements (01/31/03) ............................................................ 103-15 Section 306 Fidelity Bond and Errors and Omissions Coverage (01/31/03)................................. 103-15 Section 306.01 Fidelity Bond Coverage (06/30/02) .................................................................. 103-17 Section 306.02 Errors and Omissions Coverage (01/31/03)...................................................... 103-18 Section 307 Compliance with Applicable Laws (09/30/06).......................................................... 103-19 Section 308 Compliance with Requirements oI Insurer/Guarantor (01/31/03)............................. 103-20 Section 309 ConIlict oI Interest/ConIidentiality (10/01/11).......................................................... 103-20 Section 310 Questionable ReIinance Practices (09/30/05)............................................................ 103-21 Section 310.01 Prearranged ReIinancing Agreements (06/30/02) ............................................ 103-22 Section 310.02 Agreements to Advance Borrower Payments (01/31/03) ................................. 103-23 Section 310.03 Conditional Tenders oI Payment (01/31/03)..................................................... 103-23 Section 311 Responsible Lending Practices (01/31/03) ................................................................ 103-24 Section 312 Borrower Inquiries (01/01/11) ................................................................................... 103-26 Section 313 Fannie Mae Trade Name and Trademarks (04/01/09)............................................... 103-27 Chapter 4. Mortgage Loan Files and Records ................................................................................ 104-1 Section 401 Ownership oI Mortgage Loan Files and Records (01/31/03) ...................................... 104-2 Section 402 Electronic Records (10/31/08) ..................................................................................... 104-3 Section 402.01 Transactions with Fannie Mae (01/31/03) .......................................................... 104-4 Section 402.02 Transactions with Third Parties (01/31/03) ........................................................ 104-5 Section 403 Document Custodians and Custody oI Mortgage Documents (12/10/08)................... 104-8 Section 404 Custody oI Mortgage Documents (10/30/09) .............................................................. 104-9 Section 404.01 Fannie Mae`s DDC (12/19/08) ......................................................................... 104-10 Section 404.02 Other Document Custodians (10/30/09) ........................................................... 104-10 Foreword Contents March 14, 2012 Page xii Section 404.03 Monitoring the Financial Rating oI Document Custodians (10/30/09) ............ 104-11 Section 404.04 Eligibility Requirements Ior Document Custodians (02/01/09) ....................... 104-12 Section 404.05 Operational Requirements Ior All Document Custodians (02/01/09) .............. 104-14 Section 404.06 Independent Custody Department (02/01/09)................................................... 104-15 Section 404.07 Insurance Requirements Ior Document Custodians (10/01/06)........................ 104-16 Section 404.08 Commingling oI Fannie Mae Custodial Documents (12/10/08)....................... 104-18 Section 404.09 Change in Document Custodian`s Organization or Ownership (12/10/08)...... 104-18 Section 404.10 CertiIication Requirements Ior Document Custodians (03/31/07) ................... 104-19 Section 404.11 Release oI Custodial Documents (10/30/09) .................................................... 104-19 Section 404.12 TransIer oI Documents to DiIIerent Custodian (01/31/03)............................... 104-19 Section 405 Types oI Records (01/31/03) ..................................................................................... 104-23 Section 405.01 Individual Mortgage Loan Files (08/24/03)...................................................... 104-24 Section 405.02 Mortgage Loan Payment Records (01/31/02)................................................... 104-27 Section 405.03 IdentiIying ManuIactured Home Mortgage Loans (03/28/11) ......................... 104-28 Section 405.04 Accounting Reports (03/31/02)......................................................................... 104-28 Section 406 Record Retention and Data Integrity (01/31/03) ....................................................... 104-28 Section 406.01 Record Retention Requirements (01/31/03) ..................................................... 104-28 Section 406.02 Data Integrity (01/31/03) .................................................................................. 104-28 Section 406.03 Record Storage Formats (01/31/03).................................................................. 104-29 Section 407 Access to Records (01/31/03) .................................................................................... 104-29 Section 408 MERS-Registered Mortgage Loans (01/31/03)......................................................... 104-30 Section 408.01 Termination oI MERS Registration Ior Active Mortgage Loan (01/31/03) ..... 104-31 Section 408.02 Termination oI Servicer`s MERS Membership (01/31/03) .............................. 104-32 Exhibit 1: Limited Power oI Attorney to Execute Documents...................................................... 104-33 Exhibit 2: Servicing Fees Ior PortIolio Mortgage Loans and MBS Mortgage Loans ................... 104-37 Exhibit 3: Historical Yield DiIIerential Adjustment Provisions.................................................... 104-39 PART II: MORTGAGE AND PROPERTY INSURANCE........................................................... 200-1 Chapter 1. Mortgage Insurance........................................................................................................ 201-1 Section 101 FHA Mortgage Insurance (01/31/03) .......................................................................... 201-2 Section 101.01 Automatic Cancellation oI FHA MIP (01/31/03) ............................................... 201-3 Section 101.02 Borrower-Initiated Cancellation oI FHA MIP Based on Partial Prepayment (01/31/03)............................................................................................................................... 201-3 Section 101.03 Borrower-Initiated Cancellation oI FHA Mortgage Insurance Based on Current Property Value (01/31/03) ......................................................................................... 201-4 Section 101.04 Termination oI Coinsurance Period (01/31/03) .................................................. 201-4 Section 102 Conventional Mortgage Insurance (04/15/11)............................................................. 201-5 Section 102.01 Replacement Policies (08/02/07) ........................................................................ 201-7 Section 102.02 Disclosures Required by Homeowners Protection Act oI 1998 ......................... 201-8 Foreword Contents March 14, 2012 Page xiii Section 102.03 Automatic Termination oI Mortgage Insurance (06/01/05)................................ 201-9 Section 102.04 Termination Ior Loan ModiIications (06/01/05)............................................... 201-14 Section 102.05 Borrower-Initiated Cancellation Based on Original Property Value (01/31/03)............................................................................................................................. 201-14 Section 102.06 Borrower-Initiated Cancellation Based on Current Property Value (12/21/07)............................................................................................................................. 201-19 Exhibit 1: Automatic Termination oI Conventional Mortgage Insurance..................................... 201-25 Exhibit 2: Borrower-Initiated Cancellation oI Conventional Mortgage Insurance Based on Original Value........................................................................................................................... 201-27 Exhibit 3: Borrower-Initiated Cancellation oI Conventional Mortgage Insurance Based on Current Value............................................................................................................................ 201-29 Chapter 2. Hazard Insurance ........................................................................................................... 202-1 Section 201 Payment oI Insurance Premiums (02/01/05) ............................................................... 202-1 Section 202 Acceptable Policies (06/30/02).................................................................................... 202-2 Section 202.01 Rated Insurance Underwriters (09/30/05)........................................................... 202-3 Section 202.02 Other Acceptable Insurance Underwriters (08/31/06)........................................ 202-3 Section 202.03 Mortgage Impairment Coverage (09/30/05) ....................................................... 202-4 Section 202.04 Reinsurance Arrangements (09/30/05) ............................................................... 202-4 Section 203 Coverage Required Ior Home Mortgage Loans (01/31/03)......................................... 202-5 Section 203.01 Amount oI Coverage (01/31/03)......................................................................... 202-5 Section 203.02 Deductible Amount (05/25/06) ........................................................................... 202-6 Section 204 Coverage Required Ior Units in PUD Projects (01/31/03) .......................................... 202-6 Section 204.01 Coverage Ior the Unit Mortgage Loan (05/25/06).............................................. 202-6 Section 204.02 Coverage Ior the Common Areas (05/25/06)...................................................... 202-7 Section 205 Coverage Required Ior Units in Condo Projects (12/16/08)........................................ 202-9 Section 205.01 Amount oI Coverage (06/30/02)....................................................................... 202-10 Section 205.02 Special Endorsements (09/30/96) ..................................................................... 202-11 Section 205.03 Deductible Amount (05/25/06) ......................................................................... 202-12 Section 205.04 Named Insured (06/30/02) ................................................................................ 202-12 Section 205.05 Notices oI Changes or Cancellation (06/30/02)................................................ 202-12 Section 206 Coverage Required Ior Units in Cooperative Projects (06/30/02)............................. 202-12 Section 206.01 Amount oI Coverage (01/31/03)....................................................................... 202-13 Section 206.02 Special Endorsements (01/31/03) ..................................................................... 202-13 Section 206.03 Deductible Amount (05/25/06) ......................................................................... 202-13 Section 206.04 Named Insured (01/31/03) ................................................................................ 202-14 Section 206.05 Notices oI Changes or Cancellation (01/31/03)................................................ 202-14 Section 207 Additional Coverages (01/31/03)............................................................................... 202-14 Section 207.01 Earthquake (or Typhoon) Insurance (01/31/03) ............................................... 202-14 Section 207.02 Rent Loss Insurance (08/31/04) ........................................................................ 202-14 Foreword Contents March 14, 2012 Page xiv Section 207.03 Construction Site Insurance (01/31/03) ............................................................ 202-15 Section 207.04 Optional Coverages (01/31/03)......................................................................... 202-15 Section 208 Mortgage Clauses (06/06/11)..................................................................................... 202-16 Section 209 Evidence oI Insurance (01/31/03).............................................................................. 202-17 Section 209.01 Short-Form CertiIicate oI Insurance (01/31/03) ............................................... 202-17 Section 209.02 'Master or 'Blanket Policies (01/31/03) ....................................................... 202-18 Section 209.03 Data Files in Lieu oI Policies (01/31/03).......................................................... 202-18 Section 210 Replacement Policies (01/31/03) ............................................................................... 202-19 Section 211 Changes in Coverage (01/31/03) ............................................................................... 202-19 Exhibit 1: Formula Ior Determining Amount oI Required Hazard Insurance Coverage............... 202-21 Chapter 3. Flood Insurance .............................................................................................................. 203-1 Section 301 Payment oI Flood Insurance Premiums (01/31/03) ..................................................... 203-1 Section 302 Special Flood Hazard Areas (01/31/03)....................................................................... 203-2 Section 303 Acceptable Flood Insurance Policies (01/31/03) ......................................................... 203-3 Section 304 Coverage Ior First-Lien Mortgage Loans (05/25/06) .................................................. 203-3 Section 305 Coverage Ior Second-Lien Mortgage Loans (05/25/06).............................................. 203-4 Section 306 Coverage Ior Project Developments (01/31/03) .......................................................... 203-5 Section 306.01 PUD Projects (05/25/06)..................................................................................... 203-5 Section 306.02 Condo Projects (05/25/06) .................................................................................. 203-6 Section 306.03 Co-op Projects (05/25/06)................................................................................... 203-6 Section 307 Properties Located in the Coastal Barrier Resources System or Otherwise Protected Area (05/25/06)........................................................................................................... 203-7 Section 308 Flood Zone Remappings (01/31/03) ............................................................................ 203-8 Chapter 4. Special Coverage for Project Developments ................................................................ 204-1 Section 401 Liability Insurance (01/31/03) ..................................................................................... 204-1 Section 402 Fidelity Insurance (01/31/03)....................................................................................... 204-2 Chapter 5. Insurance Losses ............................................................................................................. 205-1 Section 501 Insurance Claim Settlements (08/24/05)...................................................................... 205-1 Section 501.01 Disposition oI Insurance Proceeds Other Than Ior Natural Disasters (08/24/05)............................................................................................................................... 205-2 Section 501.02 Report oI Hazard Insurance Loss (08/24/05)...................................................... 205-4 Section 502 Uninsured Losses (08/24/05) ....................................................................................... 205-5 Chapter 6. Lender-Placed Property Insurance............................................................................... 206-1 Foreword Contents March 14, 2012 Page xv PART III: GENERAL SERVICING FUNCTIONS....................................................................... 300-1 Chapter 1. Mortgage Loan Payments .............................................................................................. 301-1 Section 101 Scheduled Mortgage Loan Payments (03/01/06)......................................................... 301-1 Section 101.01 Negative Amortization (01/31/03)...................................................................... 301-3 Section 101.02 Buydown Funds (01/31/03) ................................................................................ 301-3 Section 101.03 Payment Shortages (01/31/03)............................................................................ 301-3 Section 101.04 Payment Overages (01/31/03)............................................................................. 301-4 Section 101.05 Notice to IRS (01/31/03)..................................................................................... 301-5 Section 101.06 Automatic DraIting (01/31/03) ........................................................................... 301-5 Section 102 Unscheduled Mortgage Loan Payments (01/31/03) .................................................... 301-5 Section 102.01 Additional Principal Payments (01/31/03).......................................................... 301-6 Section 102.02 Repayment oI Advances (01/31/03) ................................................................... 301-7 Section 102.03 Payments in Full (01/31/03)................................................................................ 301-7 Section 102.04 Repayment Plans (06/01/07)............................................................................... 301-7 Section 102.05 Military Indulgence (09/30/05)........................................................................... 301-8 Section 102.06 Pending Mortgage Loan ModiIications (01/31/03) ............................................ 301-8 Section 102.07 Waiver oI Principal Collections (01/31/03)........................................................ 301-8 Section 103 Escrow Deposit Accounts (10/29/10) .......................................................................... 301-9 Section 103.01 Waiver oI Escrow Deposits (10/29/10)............................................................... 301-9 Section 103.02 Interest on Escrows (01/31/03) ......................................................................... 301-11 Section 103.03 Additional Deposits (01/31/03)......................................................................... 301-11 Section 103.04 Advances to Cover Expenses (01/31/03).......................................................... 301-12 Section 103.05 Annual Analysis (01/31/03).............................................................................. 301-12 Section 104 Mortgage Account Statements (01/31/03)................................................................. 301-12 Section 105 TPR (05/18/07) .......................................................................................................... 301-13 Exhibit 1: Military Indulgence....................................................................................................... 301-15 Exhibit 2: Special InIormation Worksheet (Ior Military Indulgence) ........................................... 301-29 Chapter 2. Taxes and Assessments................................................................................................... 302-1 Section 201 Taxes and Ground Rents (08/24/03)............................................................................ 302-1 Section 202 Special Assessments (01/31/03) .................................................................................. 302-2 Chapter 3. Property Inspections....................................................................................................... 303-1 Section 301 Properties in Disrepair (01/31/03) ............................................................................... 303-1 Section 302 Vacant, Tenant-Occupied, or Abandoned Properties (10/01/11) ................................ 303-3 Section 303 Properties Securing Delinquent Mortgage Loans (10/01/11) ...................................... 303-4 Section 303.01 Delinquency under Repayment Plan (11/29/99)................................................. 303-5 Section 303.02 Need Ior Emergency Repairs (11/29/99) ............................................................ 303-6 Foreword Contents March 14, 2012 Page xvi Section 304 PreIoreclosure Inspections (10/01/11) ......................................................................... 303-6 Section 305 Post-Ioreclosure Inspections (01/31/03) ...................................................................... 303-8 Chapter 4. Transfers of Ownership ................................................................................................. 304-1 Section 401 FHA Mortgage Loans with No Due-on-Sale Provision (01/31/03)............................. 304-2 Section 402 FHA Mortgage Loans with Due-on-Sale Provision (01/31/03)................................... 304-3 Section 403 VA Mortgage Loans with No Due-on-Sale Provision (01/31/03)............................... 304-4 Section 404 VA Mortgage Loans with Due-on-Sale Provision (01/31/03)..................................... 304-5 Section 405 RD Mortgage Loans (03/01/06)................................................................................... 304-7 Section 406 HUD Section 184 Mortgage Loans (03/01/06)............................................................ 304-7 Section 407 Conventional Mortgage Loans with No Due-on-Sale Provision (04/21/09) ............... 304-8 Section 408 Conventional Mortgage Loans with Due-on-Sale Provision (01/31/03) ..................... 304-9 Section 408.01 Participating Lender`s Policy Applies (09/30/96) .............................................. 304-9 Section 408.02 Exempt Transactions (01/31/03)....................................................................... 304-10 Section 408.03 TransIer under Existing Terms (07/31/03) ....................................................... 304-12 Section 408.04 TransIer Subject to State Law Restrictions (01/31/03)..................................... 304-15 Section 408.05 Title TransIers through Grant Deeds (01/31/03) .............................................. 304-17 Section 408.06 Accelerate the Debt Ior Due-on-Sale Provision (06/01/07).............................. 304-19 Chapter 5. Notices of Liens or Legal Actions.................................................................................. 305-1 Section 501 Uncontested Routine Legal Actions (01/31/03) .......................................................... 305-2 Section 502 Contested Routine Legal Actions (01/31/03) .............................................................. 305-3 Section 503 Nonroutine Legal Actions (01/31/03).......................................................................... 305-3 Chapter 6. Property Forfeitures and Seizures ................................................................................ 306-1 Section 601 Controlling the Process (01/31/03) .............................................................................. 306-2 Section 602 Justice Department`s Pre-Seizure Contacts (01/31/03) ............................................... 306-2 Section 603 Justice Department`s Contacts during ForIeiture Proceedings (01/31/03).................. 306-4 Section 604 Justice Department`s Post-Seizure Contacts (01/31/03).............................................. 306-4 Section 605 Contacts by Other Parties (01/31/03)........................................................................... 306-5 Chapter 7. Releases of Security ........................................................................................................ 307-1 Section 701 Release or Grant oI an Easement (01/31/03) ............................................................... 307-2 Section 701.01 Releasing a BeneIicial Easement (01/31/03) ...................................................... 307-2 Section 701.02 Granting a Burdensome Easement (01/31/03).................................................... 307-3 Section 702 Release oI Oil, Gas, or Mineral Rights (01/31/03) ...................................................... 307-5 Section 703 Release oI Personal Property (01/31/03) ..................................................................... 307-6 Section 704 Partial Release oI Real Property (01/31/03) ................................................................ 307-6 Section 705 Partition oI Real Property (01/31/03) .......................................................................... 307-8 Section 706 Substitution oI Security (01/31/03).............................................................................. 307-9 Foreword Contents March 14, 2012 Page xvii Section 707 Condemnation or Taking by Eminent Domain (01/31/03)........................................ 307-11 Section 707.01 Partial Taking oI Property (01/31/03)............................................................... 307-12 Section 707.02 Total Taking oI Property (01/31/03)................................................................. 307-12 Section 707.03 Borrower`s Abandonment oI Property or Failure to Respond to OIIer (01/31/03)............................................................................................................................. 307-12 Section 708 Waiver oI Certain Rights under the Mortgage Loan (01/31/03) ............................... 307-13 Section 709 Executing Legal Documentation (09/30/06).............................................................. 307-13 Section 710 Reporting Application oI Cash Consideration to Debt (01/31/03) ............................ 307-14 Chapter 8. Balloon Mortgage Loan Maturity................................................................................. 308-1 Section 801 NotiIying Borrower beIore Balloon Maturity Date (05/15/97) ................................... 308-3 Section 801.01 Content oI Balloon Maturity Notice (05/15/97) ................................................. 308-4 Section 801.02 Borrower`s Declaration oI Intent (05/15/97) ...................................................... 308-6 Section 801.03 Quoting the New Interest Rate (05/15/97).......................................................... 308-7 Section 802 Determining Eligibility Ior ReIinancing (05/15/97).................................................... 308-8 Section 802.01 Borrower`s Payment History (05/15/97) ............................................................ 308-9 Section 802.02 Property Ownership (05/15/97) ........................................................................ 308-11 Section 802.03 Borrower`s Occupancy Status (03/30/10)......................................................... 308-12 Section 802.04 Property Lien Status (01/31/03)........................................................................ 308-14 Section 802.05 Acceptability oI New Note Rate (05/15/97) ..................................................... 308-17 Section 803 Processing an Approved Transaction (09/30/06)....................................................... 308-18 Section 803.01 Terms oI New ReIinance Mortgage (03/30/10)................................................ 308-19 Section 803.02 Required Legal Instruments (03/30/10) ............................................................ 308-22 Section 803.03 Title Insurance Coverage (05/15/97) ................................................................ 308-23 Section 803.04 Transaction Costs (03/30/10)............................................................................ 308-24 Section 804 Final Accounting Ior the Balloon Mortgage Loan (05/15/97)................................... 308-28 Section 804.01 Borrower Elects to Exercise ReIinance Option (06/01/07) .............................. 308-29 Section 804.02 Borrower Does Not Elect to Exercise Available Option (03/30/10) ................ 308-33 Section 804.03 Forbearance (09/01/11)..................................................................................... 308-37 Section 805 Delivering a ReIinanced Mortgage (03/30/10).......................................................... 308-39 Section 805.01 Cash Deliveries (05/15/97) ............................................................................... 308-40 Section 805.02 MBS Pool Deliveries (06/01/05) ...................................................................... 308-41 Section 805.03 Delivery Documentation (03/30/10) ................................................................. 308-41 Section 805.04 Loan Delivery Data (05/15/97)......................................................................... 308-42 Exhibit 1: Declaration oI Intent ..................................................................................................... 308-43 Chapter 9. Call Provision Enforcement........................................................................................... 309-1 Section 901 Call Options (01/31/03) ............................................................................................... 309-1 Section 902 Cross-DeIault Provisions (01/31/03) ........................................................................... 309-1 Foreword Contents March 14, 2012 Page xviii Chapter 10. Conversion to Biweekly Payments .............................................................................. 310-1 Section 1001 Disclosures to Borrower (01/31/03) .......................................................................... 310-1 Section 1002 Remittances to Fannie Mae (01/31/03)...................................................................... 310-2 Chapter 11. Assistance in Disasters.................................................................................................. 311-1 Section 1101 Evaluating the Damage (06/01/07) ............................................................................ 311-1 Section 1102 Special RelieI Measures (12/08/08)........................................................................... 311-2 Section 1102.01 Special RelieI Requirements (12/08/08)........................................................... 311-3 Section 1102.02 Status oI Mortgage Loan (01/31/03)................................................................. 311-4 Section 1102.03 Discontinuance oI Legal Action (08/24/05) ..................................................... 311-5 Section 1103 Insurance Claim Settlements (08/24/05).................................................................... 311-6 Section 1103.01 Current Mortgage Loans (08/24/05) ................................................................. 311-6 Section 1103.02 Mortgage Loans 30 Days to Less Than 90 Days Delinquent or That Are Current Under the Terms oI a Bankruptcy Plan (08/24/05) ............................................ 311-9 Section 1103.03 Mortgage Loans 90 Days or More Delinquent, Mortgage Loans That Are Delinquent Under the Terms oI a Bankruptcy Plan, and Mortgage Loans in Foreclosure (08/24/05).......................................................................................................... 311-11 Section 1103.04 Deposit oI the Insurance Proceeds (08/24/05) ................................................ 311-11 Section 1104 Uninsured Losses (08/24/05) ................................................................................... 311-12 Chapter 12. Completion of Property Rehabilitation Work........................................................... 312-1 Section 1201 Terms oI Rehabilitation or Renovation Work (06/30/02) ......................................... 312-1 Section 1202 Rehabilitation or Renovation Escrow Account (06/30/02)........................................ 312-2 Section 1203 Completion oI Rehabilitation or Renovation (06/30/02)........................................... 312-4 Chapter 13. Second-Lien Mortgage Loans...................................................................................... 313-1 Section 1301 Coordination with First-Lien Mortgage Loan Servicer (01/31/03) ........................... 313-1 Section 1302 Advances to Protect Second-Lien Mortgage Loan Investment (01/31/03) ............... 313-1 Section 1302.01 Advances Ior the Second-Lien Mortgage Loan (01/31/03) .............................. 313-2 Section 1302.02 Advances Ior the First-Lien Mortgage Loan (01/31/03)................................... 313-3 Section 1303 Subordination oI Second-Lien Mortgage Loan (09/30/96) ....................................... 313-3 PART IV: SPECIAL ADJUSTABLE-RATE MORTGAGE LOAN FUNCTIONS ................... 400-1 Chapter 1. Conversions to Fixed-Rate Mortgage Loans................................................................ 401-1 Section 101 Eligibility Criteria (01/31/03) ...................................................................................... 401-1 Section 102 Election to Convert (01/31/03) .................................................................................... 401-2 Section 103 Terms oI Conversion (01/31/03).................................................................................. 401-3 Section 104 Determining the New Fixed Rate (01/31/03) .............................................................. 401-3 Section 104.01 Monthly Conversion Options (01/31/03)............................................................ 401-4 Section 104.02 Other Conversion Options (01/31/03) ................................................................ 401-5 Foreword Contents March 14, 2012 Page xix Section 105 Determining the New Monthly Payment (01/31/03) ................................................... 401-5 Section 106 Reporting Conversions Ior PortIolio Mortgage Loans (01/31/03) .............................. 401-6 Section 107 Repurchase oI Converted MBS Mortgage Loan (01/31/03)........................................ 401-6 Exhibit 1: Exercising/Reporting ARM Conversions Ior PortIolio Mortgage Loans....................... 401-9 Chapter 2. Interest Rate Changes .................................................................................................... 402-1 Section 201 Monitoring the Index (11/16/09) ................................................................................. 402-1 Section 202 Lookback Period (01/31/03) ........................................................................................ 402-3 Section 203 Interest Rate Based on Latest Index Value (01/31/03) ................................................ 402-4 Section 203.01 Plans With No Rate Caps (01/31/03).................................................................. 402-4 Section 203.02 Plans With Rate Caps (07/31/03)........................................................................ 402-4 Section 204 Interest Rate Based on Change in Index Value (01/31/03) ......................................... 402-7 Section 205 EIIect oI Servicemembers Civil RelieI Act (09/30/05) ............................................... 402-8 Exhibit 1: Interest Rate Change Characteristics Ior Certain ARM/GPARM Plans......................... 402-9 Chapter 3. Payment Changes............................................................................................................ 403-1 Section 301 Fully Amortizing ARM Plans (07/31/03).................................................................... 403-1 Section 302 ARM Plans Amortized at a Payment Rate (01/31/03)................................................. 403-2 Section 302.01 Adjustment Ior Negative Amortization Limit (01/31/03)................................... 403-3 Section 302.02 Optional Payment Caps (01/31/03)..................................................................... 403-3 Section 303 ARM Plans with Payment Caps (01/31/03)................................................................. 403-4 Section 304 ARM Plans with Optional Graduated-Payment Period (01/31/03) ............................. 403-5 Section 305 Graduated-Payment ARM Plans (01/31/03)................................................................ 403-6 Section 305.01 Subsequent Amortization at a Payment Rate (01/31/03).................................... 403-6 Section 305.02 Optional Payment Caps (01/31/03)..................................................................... 403-7 Section 305.03 Optional Second Graduated-Payment Period (01/31/03) ................................... 403-8 Section 305.04 Optional Multiple Graduated-Payment Periods (01/31/03).............................. 403-10 Exhibit 1: Payment Change Characteristics Ior Certain ARM/GPARM Plans............................. 403-11 Chapter 4. Notices to the Borrower.................................................................................................. 404-1 Section 401 Interest Rate/Payment Change at Same Interval (01/31/03)........................................ 404-1 Section 401.01 Fully Amortizing Plans (07/31/03) ..................................................................... 404-1 Section 401.02 Plans With Payment Caps (01/31/03) ................................................................. 404-3 Section 402 Interest Rate/Payment Change at DiIIerent Intervals (01/31/03) ................................ 404-5 Section 402.01 More Frequent Interest Rate Changes (01/31/03)............................................... 404-5 Section 402.02 More Frequent Payment Changes (01/31/03) ..................................................... 404-6 Chapter 5. Correction of Adjustment Errors.................................................................................. 405-1 Section 501 Nature oI Adjustment Errors (01/31/03)...................................................................... 405-2 Section 502 Legal Actions Related to Errors (01/31/03)................................................................. 405-5 Foreword Contents March 14, 2012 Page xx Section 503 IdentiIying Adjustment Errors (01/31/03) ................................................................... 405-5 Section 503.01 ARM Audits (01/31/03)...................................................................................... 405-6 Section 503.02 Borrower Inquiries (01/31/03) ............................................................................ 405-7 Section 504 Determining Extent oI Adjustment Errors (01/31/03)................................................. 405-7 Section 504.01 VeriIying Interest Rate/Payment Adjustments (09/30/96) ................................. 405-8 Section 504.02 Reamortizing the Mortgage Loan (09/30/96) ................................................... 405-10 Section 504.03 IdentiIying Borrower Overcharges and Undercharges (09/30/96) ................... 405-10 Section 504.04 Calculating New Monthly Payments (01/31/03) .............................................. 405-12 Section 505 ReIunding (or Crediting) Overcharges (01/31/03) .................................................... 405-13 Section 505.01 Incorrect Interest Rate Only (01/31/03)............................................................ 405-14 Section 505.02 Incorrect Interest Rate and Monthly Payment (01/31/03) ................................ 405-14 Section 505.03 Incorrect Monthly Payment Only (01/31/03) ................................................... 405-15 Section 506 NotiIying Borrowers About Corrections (01/31/03) ................................................. 405-16 Section 507 EIIect on Remittances / Fannie Mae Investor Reporting System Reports (01/31/03)................................................................................................................................. 405-18 Exhibit 1: Correction oI ARM Adjustment Errors .....................................................................405-5-21 PART V: SPECIAL REVERSE MORTGAGE FUNCTIONS ..................................................500-5-1 PART VI: MORTGAGE LOAN REMOVALS OR RECLASSIFICATIONS............................ 600-1 Chapter 1. Payments-in-Full............................................................................................................. 601-1 Section 101 NotiIication oI Mortgage Loan PayoII (01/31/03) ...................................................... 601-1 Section 102 PayoII Amount (01/31/03)........................................................................................... 601-2 Section 102.01 Interest Calculation (01/31/03) ........................................................................... 601-2 Section 102.02 Prepayment Premiums (09/28/04) ...................................................................... 601-3 Section 102.03 Use oI Deposit Account (or Unapplied) Funds (01/31/03)................................. 601-3 Section 102.04 Use oI Buydown Account Funds (01/31/03) ...................................................... 601-3 Section 102.05 Additional Servicer Responsibilities Related to a HomeSaver Advance Note (06/16/08)....................................................................................................................... 601-4 Section 103 SatisIying the Mortgage Loan (01/31/03).................................................................... 601-4 Section 103.01 Fannie Mae Is Mortgagee oI Record (01/31/03)................................................. 601-5 Section 103.02 Fannie Mae Is Not Mortgagee oI Record (01/31/03).......................................... 601-6 Section 104 Payment oI Recordation Fees (01/31/03) .................................................................... 601-6 Section 105 Escrow ReIunds (01/31/03) ......................................................................................... 601-8 Section 106 Remitting PayoII Proceeds (01/31/03) ........................................................................ 601-8 Section 106.01 Actual/Actual Remittance Types (01/31/03) ...................................................... 601-8 Section 106.02 Scheduled/Actual Remittance Types (01/31/03) ................................................ 601-9 Section 106.03 Scheduled/Scheduled Remittance Types (06/01/07) .......................................... 601-9 Foreword Contents March 14, 2012 Page xxi Chapter 2. Repurchases..................................................................................................................... 602-1 Section 201 Repurchase oI Regular Servicing Option MBS Mortgage Loans and Repurchase oI Mortgage Loans Previously Removed Irom MBS Pool (12/31/08) ................... 602-1 Section 202 Repurchase Proceeds (01/31/03) ................................................................................. 602-1 Section 203 Reporting the Repurchase (01/31/03) .......................................................................... 602-2 Chapter 3. Reclassification of MBS Mortgage Loans..................................................................... 603-1 Section 301 List oI Approved ReclassiIications (09/30/05)............................................................ 603-2 Section 302 Removal oI Mortgage Loans (12/08/08) ..................................................................... 603-2 Section 302.01 Mortgage Loans Reported as Forbearance Ior Six Consecutive Months (12/08/08)............................................................................................................................... 603-3 Section 302.02 Mortgage Loans Reported as a Repayment Plan Ior 18 Months (12/08/08) ...... 603-4 Section 302.03 Mortgage Loans Delinquent Ior 24 Months (12/08/08) ................................... 603-5 Section 303 Changes to the Servicer`s Records (01/31/03) ............................................................ 603-5 Section 304 Reporting Subsequent Activity to Fannie Mae (01/31/03).......................................... 603-6 Section 305 Reimbursement oI Servicer`s Advances (04/01/10).................................................... 603-6 Section 306 Retention oI Custody Documents (01/31/03) .............................................................. 603-7 Chapter 4. Special FHA Assignments .............................................................................................. 604-1 Section 401 Monitoring Potential Assignments (01/31/03) ............................................................ 604-1 Section 402 Completing the Assignment (01/31/03)....................................................................... 604-2 Section 403 Submitting the Claim (01/31/03) ................................................................................. 604-3 PART VII: DELINQUENCY MANAGEMENT AND DEFAULT PREVENTION................... 700-1 Chapter 1. Servicing Standards........................................................................................................ 701-1 Section 101 Written Procedures (10/01/11)..................................................................................... 701-1 Section 102 Quality Assurance Program Ior Delinquency and DeIault Prevention (10/01/11)...... 701-1 Section 103 StaIIing and Training (10/01/11) ................................................................................. 701-3 Section 104 Escalated Cases (10/01/11).......................................................................................... 701-4 Section 104.01 StaIIing Requirements Ior Escalated Cases (10/01/11) ...................................... 701-5 Section 104.02 Escalation Resolution Process (10/01/11) .......................................................... 701-6 Section 104.03 Case Resolution (10/01/11)................................................................................. 701-7 Chapter 2. Collection Procedures..................................................................................................... 702-1 Section 201 Quality Right Party Contact (10/01/11)....................................................................... 702-1 Section 202 Inbound Call Coverage (10/01/11) .............................................................................. 702-2 Section 203 Outbound Call Attempts (10/01/11) ............................................................................ 702-3 Section 204 Behavioral Model Tool (10/01/11) .............................................................................. 702-4 Section 205 Letters (10/01/11) ........................................................................................................ 702-5 Section 205.01 Borrower Solicitation Letters (10/01/11)............................................................ 702-5 Foreword Contents March 14, 2012 Page xxii Section 205.02 Post ReIerral to Foreclosure Solicitation Letter (10/01/11)................................ 702-6 Section 205.03 Borrower Solicitation Package (10/01/11).......................................................... 702-7 Section 205.04 Borrower Response Package (10/01/11)............................................................. 702-9 Section 205.05 Servicer Incentives and Compensatory Fees Ior Borrower Response Packages (10/01/11).............................................................................................................. 702-11 Section 205.06 Acknowledgement oI Borrower Response Package (10/01/11) ....................... 702-12 Section 205.07 Incomplete InIormation Notices (10/01/11) ..................................................... 702-13 Section 205.08 Evaluation Notices (10/01/11) .......................................................................... 702-14 Section 205.09 Breach or Acceleration Letters (10/01/11) ....................................................... 702-16 Section 206 Late Notices (01/01/11) ............................................................................................. 702-17 Section 207 Payment Change NotiIication (01/01/11) .................................................................. 702-18 Section 208 Face-to-Face Interviews (01/31/03)........................................................................... 702-18 Section 209 Contact With Junior Lienholders (01/31/03) ............................................................. 702-18 Section 210 Contact With First-Lien Mortgage Loan Servicer (01/31/03) ................................... 702-18 Section 211 NotiIying Credit Repositories (11/01/04) .................................................................. 702-18 Exhibit 1: Major Credit Repositories............................................................................................. 702-21 Chapter 3. Delinquency Prevention ................................................................................................. 703-1 Section 301 Assessing Late Charges (07/10/09) ............................................................................. 703-2 Section 302 Accepting Partial Payments (06/01/07) ....................................................................... 703-3 Section 303 Using an Attorney to Collect Payments (01/31/03)..................................................... 703-3 Section 304 Collecting Under an Assignment oI Rents (01/31/03)................................................. 703-4 Section 305 Reapplying Principal Prepayments (06/01/07) ............................................................ 703-4 Section 306 Listing Property Ior Sale/Rental (01/31/03) ................................................................ 703-5 Section 307 ReIerring to Counseling Agencies (01/31/03) ............................................................. 703-5 Section 308 OIIering Early Delinquency Counseling (01/31/03) ................................................... 703-5 Section 308.01 Choosing the Counselor (01/31/03) .................................................................... 703-6 Section 308.02 Objectives oI Counseling (01/31/03) .................................................................. 703-7 Section 308.03 Laying the Groundwork (01/31/03) .................................................................... 703-8 Section 308.04 The Counseling Session (01/31/03) .................................................................... 703-9 Section 309 Third-Party NotiIication Ior Mortgage Loans Subject to Resale Restrictions or Community Land Trust Ground Lease (05/01/06) ........................................................................ 703-10 Chapter 4. Special Relief Measures.................................................................................................. 704-1 Section 401 Fannie Mae`s Workout Hierarchy (10/20/09) ............................................................. 704-3 Section 402 Temporary Indulgence (01/31/03) ............................................................................... 704-3 Section 403 Forbearance (10/01/11)................................................................................................ 704-4 Section 403.01 Forbearance Ior Unemployed Borrowers (09/21/10)........................................ 704-11 Section 403.02 Unique Hardships (08/16/10)............................................................................ 704-11 Foreword Contents March 14, 2012 Page xxiii Section 404 Repayment Plan (10/01/11) ....................................................................................... 704-17 Section 404.01 Repayment Plan Incentive Fee (08/11/08)........................................................ 704-20 Section 405 Military Indulgence (09/30/05).................................................................................. 704-21 Section 406 Disaster RelieI (01/01/09).......................................................................................... 704-21 Chapter 5. Bankruptcy Proceedings ................................................................................................ 705-1 Section 501 Selection oI Bankruptcy Attorneys and Avoiding Delays in Case Processing (01/01/11)................................................................................................................................... 705-1 Section 501.01 Fannie MaeRetained Attorneys (01/01/11)....................................................... 705-2 Section 501.02 Servicer-Retained Bankruptcy Attorneys (01/01/11) ......................................... 705-5 Section 501.03 Allowable Attorney Fees (01/01/11) .................................................................. 705-6 Section 501.04 Reimbursement oI Expenses (02/01/11)........................................................... 705-10 Section 502 Bankruptcy Management Process (01/01/11)............................................................ 705-11 Section 502.01 ConIirming Bankruptcy InIormation (01/01/11) .............................................. 705-13 Section 502.02 Establishing Documentation Files (01/01/11) .................................................. 705-13 Section 502.03 ReIerring Case to Bankruptcy Attorney (01/01/11).......................................... 705-13 Section 502.04 Suspending Debt Collection EIIorts (10/17/05) ............................................... 705-17 Section 502.05 Bankruptcy Notices and Filing a Notice oI Appearance (01/01/11)................. 705-17 Section 502.06 Obtaining and Reviewing Statements and Schedules (01/01/11) ..................... 705-18 Section 502.07 Reviewing Bankruptcy Reorganization Plans (01/01/11)................................. 705-19 Section 502.08 Preparing and Filing a ProoI oI Claim (01/01/11) ............................................ 705-20 Section 502.09 Attending Initial Meeting oI Creditors (01/31/03)............................................ 705-21 Section 502.10 Monitoring Borrower Payments and Critical Dates (01/01/11)........................ 705-22 Section 502.11 Foreclosure Prevention Opportunities (01/01/11) ............................................ 705-22 Section 502.12 Delays in the Bankruptcy Process (01/01/11)................................................... 705-25 Section 503 Managing Chapter 7 Bankruptcies (01/01/11)........................................................... 705-26 Section 503.01 Current Mortgage Loan (01/01/11)................................................................... 705-27 Section 503.02 Delinquent Mortgage Loan (01/01/11) ............................................................. 705-27 Section 504 Managing Chapter 11 Bankruptcies (01/01/11)......................................................... 705-28 Section 504.01 The Reorganization Plan (01/01/11)................................................................. 705-28 Section 504.02 Delinquent Payments (10/17/05) ...................................................................... 705-29 Section 504.03 Servicing aIter ConIirmation oI Plan (01/01/11) .............................................. 705-30 Section 505 Managing Chapter 12 Bankruptcies (01/01/11)......................................................... 705-33 Section 506 Managing Chapter 13 Bankruptcies (01/01/11)......................................................... 705-34 Section 506.01 The Reorganization Plan (01/01/11)................................................................. 705-34 Section 506.02 Pre-Petition and Post-Petition Payments (01/01/11)......................................... 705-35 Section 507 Special Circumstance Bankruptcies (10/17/05)......................................................... 705-39 Section 507.01 Abusive Filers (10/17/05) ................................................................................. 705-39 Section 507.02 Individuals with Fractional Interests in a Security Property (10/17/05)........... 705-42 Section 507.03 Cramdowns oI the Mortgage Debt (01/01/11).................................................. 705-42 Foreword Contents March 14, 2012 Page xxiv Section 507.04 Mortgage Loans Secured by Investment Properties (07/01/97) ....................... 705-49 Section 507.05 Balloon Mortgage Loans (01/01/11)................................................................. 705-49 Section 507.06 Multiple Fannie Mae Mortgage Loans (01/31/03)............................................ 705-50 Section 507.07 Post-Ioreclosure Filings (01/01/11) .................................................................. 705-51 Section 507.08 Cross-Border Insolvency Proceedings (10/17/05) ............................................ 705-52 Exhibit 1: Expected Servicer/Attorney Interactions and Required Documents ............................ 705-53 Exhibit 2: Mortgage Loan Status Data Ior Bankruptcy ReIerrals ................................................. 705-57 Exhibit 3: Electronic Public Access Providers .............................................................................. 705-61 Chapter 6. Foreclosure Prevention Alternatives............................................................................. 706-1 Section 601 Determining a Borrower`s Eligibility Ior Foreclosure Prevention Alternatives (10/01/11)................................................................................................................................... 706-3 Section 601.01 Requesting Preliminary Financial InIormation (10/01/11)................................. 706-4 Section 601.02 Hardship Documentation (10/01/11) .................................................................. 706-5 Section 601.03 Using HSSN (01/31/03)...................................................................................... 706-6 Section 602 Mortgage Loan ModiIications (01/01/09) ................................................................... 706-7 Section 602.01 ModiIying Government Mortgage Loans (05/01/10) ......................................... 706-9 Section 602.02 ModiIying Conventional Mortgage Loans (10/01/11)...................................... 706-11 Section 602.03 Escrow Accounts (06/25/10)............................................................................. 706-33 Section 602.04 Reporting to Fannie Mae (03/18/10)................................................................. 706-34 Section 602.05 RedeIault (06/25/10) ......................................................................................... 706-39 Section 603 Mortgage Assumptions (01/31/03) ............................................................................ 706-40 Section 604 PreIoreclosure Sales (01/31/03)................................................................................. 706-42 Section 604.01 IdentiIying Potential Candidates (01/31/03)..................................................... 706-43 Section 604.02 Contacting Selected Borrowers (03/01/09)....................................................... 706-43 Section 604.03 Determining the Market Value oI the Property (07/15/11) .............................. 706-45 Section 604.04 Discussing the Sale With the Mortgage Insurer (01/31/03).............................. 706-46 Section 604.05 Requesting Fannie Mae`s Approval (01/31/03)................................................ 706-47 Section 604.06 Mortgage Insurance Claims (01/31/03) ............................................................ 706-47 Section 604.07 Accounting and Reporting (06/01/11) .............................................................. 706-48 Section 605 Assignments to the Insurer or Guarantor (01/31/03) ................................................. 706-50 Section 605.01 FHA Mortgage Loans (09/30/05) ..................................................................... 706-50 Section 605.02 FHA Title I Loans (01/31/03) ........................................................................... 706-51 Section 605.03 HUD Section 184 Mortgage Loans (09/30/05)................................................. 706-51 Section 605.04 VA Mortgage Loans (01/31/03)........................................................................ 706-52 Section 605.05 Conventional Mortgage Loans (01/31/03)........................................................ 706-53 Section 606 Deeds-in-Lieu oI Foreclosure (07/15/11) .................................................................. 706-53 Section 606.01 D4L Program (11/05/09)................................................................................... 706-56 Section 607 VA No-Bid Buydowns (01/31/03)............................................................................. 706-60 Section 608 Second-Lien Mortgage Loan Charge-OIIs (01/31/03) .............................................. 706-62 Foreword Contents March 14, 2012 Page xxv Section 609 Home AIIordable ModiIication Program (04/21/09)................................................. 706-63 Section 609.01 HAMP Eligibility (06/01/10)............................................................................ 706-63 Section 609.02 Underwriting (4/21/09) ..................................................................................... 706-66 Section 609.03 Mortgage Loan ModiIication Process (06/01/10)............................................. 706-82 Section 609.04 Monthly Statements (04/21/09) ........................................................................ 706-97 Section 609.05 RedeIault and Loss oI Good Standing (04/21/09) ............................................ 706-97 Section 609.06 Servicer Delegation, Duties, and Responsibilities (04/21/09) .......................... 706-98 Section 609.07 Reporting Requirements (06/01/10) ................................................................. 706-99 Section 609.08 Fees and Compensation (04/21/09) ................................................................ 706-105 Section 609.09 FHA HOPE Ior Homeowners (4/21/09) ......................................................... 706-109 Section 610 Home AIIordable Foreclosure Alternatives Program (08/01/10) ............................ 706-109 Section 610.01 Foreclosure Prevention Alternatives (08/01/10)............................................. 706-111 Section 610.02 Eligibility (08/01/10) ...................................................................................... 706-111 Section 610.03 Standard Documents (08/01/10) ..................................................................... 706-115 Section 610.04 Borrower Solicitation and Response (08/01/10)............................................. 706-117 Section 610.05 Determining the Estimated Sales Price oI the Property (08/01/10)................ 706-117 Section 610.06 Review oI Title (08/01/10).............................................................................. 706-118 Section 610.07 PreIoreclosure Sale Process (08/01/10) .......................................................... 706-119 Section 610.08 Deed-in-Lieu OIIer (08/01/10) ....................................................................... 706-125 Section 610.09 Use oI Electronic Records (08/01/10)............................................................. 706-126 Section 610.10 Temporary Suspension oI Foreclosure (08/01/10) ......................................... 706-126 Section 610.11 Payments Pending Sale or Deed-in-Lieu (08/01/10) ...................................... 706-128 Section 610.12 Release oI First-Lien Mortgage Loan (08/01/10) ........................................... 706-128 Section 610.13 Mortgage Insurance (08/01/10)....................................................................... 706-129 Section 610.14 Reporting Requirements (08/01/10) ............................................................... 706-130 Section 610.15 Fees and Incentive Compensation (08/01/10)................................................. 706-136 Section 610.16 Record Retention (08/01/10)........................................................................... 706-139 Section 611 Mandatory Pre-Filing Mediation Policy Ior Mortgage Loans in Florida (01/01/11)............................................................................................................................... 706-140 Section 611.01 Process Requirements (01/01/11) ................................................................... 706-141 Section 611.02 ReIerral (10/01/11).......................................................................................... 706-141 Section 611.03 Preparation oI Retention/Liquidation OIIers (01/01/11) ................................ 706-144 Section 611.04 Mediation (01/01/11) ...................................................................................... 706-145 Section 611.05 Mortgage Insurance (01/01/11)....................................................................... 706-148 Section 611.06 Delinquency Status Reporting (01/01/11) ...................................................... 706-148 Section 611.07 Fees and Administrative Costs: Form 571 Process (01/01/11)....................... 706-149 Section 611.08 Attorney Fees Ior Mediation (01/01/11) ......................................................... 706-149 Section 611.09 Borrower Incentive (01/01/11) ....................................................................... 706-150 Section 611.10 Allowable Subordinate-Lien Payments (01/01/11) ........................................ 706-151 Foreword Contents March 14, 2012 Page xxvi Section 612 Second-Lien ModiIication Program (2MP) (01/01/11) ........................................... 706-151 Section 612.01 2MP Eligibility (01/01/11).............................................................................. 706-151 Section 612.02 2MP Mortgage Loan ModiIication Process (01/01/11) .................................. 706-153 Section 612.03 Use oI Suspense Accounts and Application oI Payments (01/01/11)............. 706-163 Section 612.04 Reporting Requirements (01/01/11) ............................................................... 706-163 Section 612.05 Mortgage Insurers (01/01/11) ......................................................................... 706-167 Se