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Evaluate whether it is appropriate to waive the escrow account requirement based on the mortgage loan documents and applicable law.

Deny a request to waive escrow requirement for

a mortgage loan if

• the borrower has received a prior mortgage loan modification, or previously been approved for an escrow waiver and failed to make all payments timely, as required,

• the borrower has experienced any delinquency in the 12 months immediately preceding the request,

• the borrower has experienced a 60+-day delinquency in the 24 months immediately preceding the request,

• the borrower has not met a 24-month aging requirement from either

  • the date of origination, or

  • following the completion of a repayment plan.

• the principal balance for the mortgage loan is greater than or equal to 80% of the original appraised value.

Maintain the basis for the waiver decision and any disclosures provided to the borrower, if applicable, in the mortgage loan servicing file. The servicer must make this information available to Fannie Mae upon request.

Revoke any escrow deposit account waiver and establish an escrow deposit account in accordance with Fannie Mae’s requirements, unless the mortgage loan modification is a Streamlined Modification Post Disaster Forbearance (see D2-3.2-09, Fannie Mae Streamlined Modification Post Disaster Forbearance for additional information) or a Cap and Extend Modification for Disaster Relief (see D2-3.2-10, Fannie Mae Cap and Extend Modification for Disaster Relief for additional information) and the borrower is current on the payments for taxes, special assessments, property and flood insurance premiums, premiums for borrower-purchased MI, ground rents, and similar items.

Analyze an existing escrow account to estimate the periodic escrow deposit required to ensure adequate funds are available to pay future charges, taking into consideration T&I premiums that may come due during any trial period. In the event the initial escrow analysis identifies a shortage, collect such funds from the borrower over a 60-month period unless the borrower decides to pay the shortage up-front. When the servicer calculates the repayment of the escrow shortage over a 60-month period, any subsequent shortage that may be identified in the next annual analysis cycle must be spread out over the remaining term of the initial 60-month period.

Ensure the borrower’s monthly mortgage loan payments, including trial period payments, include an escrow payment. See the applicable mortgage loan modification program in Section D2–3.2, Home Retention Workout Options for additional information.

Advance the payment, including any late payment penalties, from its own funds.

Revoke any escrow waiver and establish an escrow account in accordance with Fannie Mae’s requirements to collect funds to repay the advances and pay future bills.

Announcement SVC-2017–04

May 10, 2017