Page Comparison

Lender’s and Servicer’s Obligations to Maintain Procedures for Curing Violations

Lenders and servicers must have specific processes in place to cure any failure to comply with Texas Constitution Section 50(a)(6) identified with respect to a loan sold to or serviced on behalf of Fannie Mae by one of the authorized means, as required by the “Lender Certification” requirements described above. A lender’s or servicer’s failure to cure within 60 days after being notified of a failure to comply may, under Texas law, result in the forfeiture of all principal and interest due under the Texas Section 50(a)(6) loan. However, any action taken, or not taken, in connection with a failure to comply with Texas Constitution Section 50(a)(6), even if such action is a result of the lender’s or servicer’s effort to cure a failure to comply, that results in any of the following constitutes a breach of the lender’s selling representations and warranties and/or servicing obligations and requirements:

• a forfeiture of any principal or interest due under the mortgage loan;

• invalidation of the mortgage as a first lien;

• abatement of accrual of interest and the borrower’s obligations under the mortgage loan;

• reduction in the principal amount of the mortgage loan; or

• any modification of the amount, interest rate, term, or other provision of the mortgage loan.

Such action, taken or not taken, shall be deemed a failure to correct a significant defect and/or a servicing defect that permits Fannie Mae to exercise any of the remedies provided in the Lender Contract, including the right to require repurchase of the loan.

If the lender or servicer receives notice from a borrower that a lender (or the mortgage originator, if the lender or the servicer is not the originator) failed to comply with Texas Constitution Section 50(a)(6), the lender or servicer must immediately, but no later than seven business days after receipt, take the following actions:

• inform Fannie Mae’s Legal department by submitting a Non-Routine Litigation (Form 20) and include the borrower notice in its submission; and,

• collaborate with Fannie Mae on the appropriate response, including any cure that may be necessary, within the 60-day-time frame provided by the requirements of Texas Constitution Section 50(a)(6).