© 2018 Fannie Mae Single Family Selling Guide
Overview
A principal curtailment is the application of funds that are used to reduce the unpaid principal balance of the mortgage loan. Fannie Mae permits certain curtailments prior to loan delivery provided that the delivery data reflects the curtailment as described below.
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If the curtailment is made at the time of closing, the amount must be clearly documented on the settlement statement. If the curtailment is applied after closing, but before delivery, the mortgage loan file (or servicing file) must be documented with the amount of the curtailment and the reason or source of the curtailment (for example, lender refund or borrower).Additional Information: https://www.fanniemae.com/content/guide/selling/b2/1.4/05.html
Delivery Instructions
The following table describes the requirements for the delivery of certain data elements that may (or may not) be impacted by a curtailment applied prior to the delivery of the loan to Fannie Mae:
Loan Delivery Field Name Delivery Requirements Due to Curtailment Original Loan Amount (Sort ID 319) The loan amount as disclosed on the note (without reduction for any principal curtailment). P & I (Fixed-rate) (Sort ID 268)
P & I (ARMs) (Sort ID 436)
The principal and interest amount as reflected on the note without reduction for any principal curtailment.
Note: If a principal curtailment has been applied and the loan has been recast over the remaining term prior to delivery to Fannie Mae, the loan is not eligible for delivery.
Issue Date UPB (Sort ID 385) The scheduled unpaid principal balance including reductions for any principal curtailment applied prior to delivery. Last Paid Installment Date (Sort ID 440) Do not advance the last paid installment date to account for the application of a principal curtailment. Current UPB (Sort ID 442) The current unpaid principal amount including reductions for any principal curtailment applied prior to delivery. Maturity Date (Sort ID 256) The maturity date as reflected on the note without regard to the effect of any principal curtailment that has been applied. Aggregate Curtailment Amount (Sort ID 438) The dollar amount of any principal curtailment applied to the loan prior to loan delivery.
Refer to C1-2-02, Loan Data and Documentation Delivery Requirements (04/03/2018), for additional information and resources regarding loan delivery.
Related Announcements
The table below provides references to the Announcements that have been issued that are related to this topic.
Announcements Issue Date Announcement SEL–2015–07 June 30, 2015 Announcement SEL–2013–01 January 17, 2013