Paying Interest on an Escrow Account
Fannie Mae will not reimburse the servicer when the servicer pays interest on an escrow account, whether required by law or voluntary.
Waiving Escrow Account Requirements
The following table outlines requirements to evaluate a request to waive an escrow account.
The servicer must not waive the individual escrow requirement for
- MIPs for a conventional mortgage loan when premiums are paid monthly; or
- builder’s risk/construction site insurance, taxes, or MI for a construction-to-permanent mortgage loan originated under Fannie Mae’s Native American housing initiative.
Administering an Escrow Account in Connection With a Mortgage Loan Modification
The following table outlines the escrow requirements when a servicer enters a mortgage loan modification.
Manufactured Home Tax Requirements
When the property securing the mortgage loan is a manufactured home, the servicer must ensure the manufactured home and land are taxed as real property and a single tax bill is issued.
If this is not possible, the dwelling must be taxed separately as personal property and the servicer must adjust its system to escrow for both real and personal property taxes. Fannie Mae’s requirements for real estate taxes apply equally to personal property taxes applicable to the dwelling.
Paying a Special Assessment
When a special assessment is imposed on a property, including by a HOA of a PUD or condo, the servicer must
- maintain accurate records on the status of a special assessment that could become a lien against a property, and
- advance its own funds to pay the special assessment to protect the priority of Fannie Mae’s mortgage lien when the HOA notifies the servicer that the borrower is 60 days delinquent in the payment of the special assessment or charges levied by the association.
When pursuing foreclosure on a property in a PUD or condo project, the servicer must
- determine the amount to clear an HOA’s claim of lien and preserve the priority of the mortgage lien and pay the minimum amount necessary no later than 30 days after the foreclosure sale date or acceptance of a Mortgage Release, and
- notify Fannie Mae’s Legal department by submitting a Non-Routine Litigation Form (Form 20) if the HOA refuses to release its claim of lien against a property after reasonable efforts to reach an agreement.
The servicer must follow the procedures in General Expense Reimbursement Requirements in F-1-06, Expense Reimbursement to determine the timing and amount of advances, if any, Fannie Mae will reimburse.
Advancing Funds to Cover Expenses
The servicer must promptly advance the funds to cover an expense when an escrow account has insufficient funds to pay the expense in a timely manner. The servicer must require the borrower to reimburse it for advances because the escrow deposit account did not have sufficient funds to cover an expense or emergency repairs to the property. Any funds the servicer advances must stay in the T&I custodial account until the borrower remits funds sufficient to cure the deficit.
The following table outlines the requirements when the servicer waives the escrow account requirement and the borrower fails to pay the insurance premiums, taxes, or other related charges.
The servicer must follow the procedures in General Expense Reimbursement Requirements in F-1-06, Expense Reimbursement to determine how to obtain reimbursement from future payments, and how to obtain reimbursement from Fannie Mae.
Additional resources: https://www.fanniemae.com/content/guide/svc051017.pdf#page=287