A4-1-01, Staffing, Training, Procedures, and Quality Control Requirements (07/12/2023)

Have sufficient staffing levels and properly trained staff (including third-party providers of its outsourced servicing activities) to

• carry out all aspects of their servicing duties in accordance with the timing requirements of the Servicing Guide,

• maintain acceptable performance standards, and

• provide borrowers with assistance when it is requested.

Ensure its staff is able to effectively communicate with borrowers whose mortgage loans it services by either

• employing multilingual staff, if applicable, to communicate with the diversity of borrowers whose mortgage loans it services, or

• making translation services available to the borrower.

Develop an approach to managing delinquent borrowers that

• provides continuity of contact with the borrower, and

• allows the borrower to contact one individual or a dedicated team of individuals in the servicer’s organization to obtain accurate information on the various workout options available.

When using a team approach, the servicer must provide the borrower with the ability to request and speak to, or leave a message for, a specific person from the assigned team.

Ensure the staff

• completes the review of a borrower’s appeal of a mortgage loan modification determination if different than those responsible for the initial evaluation and decision on the complete BRP, and

• tracks all information related to appeals in the mortgage loan servicing file.

Oversight of outsourcing and third-party vendors

The servicer must establish policies and procedures in place to ensure all outsourcing firms and third-party vendors used by the servicer are fully compliant with the requirements of the Servicing Guide, where applicable, and ensure any individual or company involved in the servicing of mortgage loans owned by Fannie Mae is not included on the FHFA’s Suspended Counterparty Program list available on FHFA’s website. This includes, but is not limited to, any activity related to marketing, maintenance, or the sale of Fannie Mae acquired properties.

Automatically drafting payments from the borrower’s bank account

If the servicer uses electronic direct debit or allows other non-traditional payment methods, it must have controls and procedures in place to ensure it will still be able to meet all of Fannie Mae’s applicable requirements for custodial and remittance accounting in A4-1-02, Establishing Custodial Bank AccountsA4-1-02, Establishing Custodial Bank Accounts and C-3-01, Responsibilities Related to Remitting P&I Funds to Fannie MaeC-3-01, Responsibilities Related to Remitting P&I Funds to Fannie Mae.

Responsibilities for ARM loan servicing

The servicer must establish procedures to

• ensure it follows the terms of other negotiated plans when it makes interest rate and payment change adjustments,

• monitor the appropriate indexes for any negotiated ARM plans to ensure it uses the latest available value for the index to determine an interest rate change, and

• ensure prompt referral to the foreclosure prevention unit to evaluate workout options, if appropriate.

Insurance loss events

The servicer must have written policies and procedures to

• protect the interests of Fannie Mae and the borrower when an insurance loss event occurs, and

• apply any insurance loss proceeds in excess of the cost to repair.

In accordance with A4-1-02, Establishing Custodial Bank AccountsA4-1-02, Establishing Custodial Bank Accounts and F-1-03, Establishing and Implementing Custodial AccountsF-1-03, Establishing and Implementing Custodial Accounts, the servicer must have written policies and procedures in place to address actively identifying and monitoring all unapplied funds held in a T&I custodial account until resolution, including

• conducting research to ensure unapplied funds are identified and applied as appropriate;

• attempting to contact the borrower, when appropriate, to determine the correct action needed and expected date of resolution; and

• determining whether any funds should be returned to the borrower and doing so in a timely manner.

Automatic termination of conventional MI

The servicer must establish appropriate monitoring procedures to ensure borrower-purchased MI is automatically terminated when required by Fannie Mae.

Fees assessment for certain servicing activities

The servicer must have written policies that address the following points:

• the types or categories of fees and, if known, specific amounts of fees that may be assessed to borrowers for services that are above and beyond the ordinary and customary activities performed by the servicer covered by its servicing fee and related income;

• any fees charged to borrowers (or reimbursed by Fannie Mae) must be related to work actually done by the servicer, either directly or indirectly through third parties, including affiliates of the servicer;

• the assessment of any fees (other than foreclosure and bankruptcy-related fees that are incurred to enforce the mortgage loan obligation) are allowed pursuant to the provisions of Fannie Mae’s Guides, and are clearly disclosed to borrowers in advance of the rendering of the service (where practical) or subsequently (e.g., on monthly statements). (For any service requested by the borrower for which there are options or alternatives for free or reduced costs for similar services (e.g., mail versus fax charges), such services must be explained to the borrower before the service is provided.); and

• fees may be charged on a repetitive basis only when required or permitted by Fannie Mae’s Guides or otherwise clearly supported by the circumstances relating to a particular mortgage loan.

Eligible transfers of property ownership for exempt transactions

The servicer must implement policies and procedures to promptly communicate with a potential successor in interest of the borrower and to confirm successors in interest status in accordance with applicable law. Policies and procedures to manage exempt transactions must allow the transferee to

• continue making monthly payments, and

• pursue an assumption of the mortgage loan or a workout option, as applicable.

Post-delivery servicing transfers

The servicer must have adequate procedures relating to the boarding of new mortgage loans subsequent to acquisition of servicing pursuant to a servicing transfer to avoid any delayed application of borrower payments of principal, interest, taxes, or insurance, if applicable.

Call center operations

The servicer must have a written policy that addresses inbound call coverage for the customer service, collections, and foreclosure prevention departments and maintaining contact method standards and service levels. See Call Center Coverage Requirements in A4-2.1-04, Establishing Contact with the BorrowerA4-2.1-04, Establishing Contact with the Borrower for additional information.

Collection procedures

The servicer must have procedures in place to immediately address a one-payment delinquency to prevent it from becoming more serious. The servicer must have a policy in place for collection call campaigns.

Behavioral model tool

The servicer must have written policies and procedures to manage mortgage loans considered high risk by the model and that address the utilization of the model, if the servicer uses such a tool.

Borrower’s appeal of the denial of any mortgage loan modification for a principal residence

The servicer must have comprehensive processes and written policies and procedures to respond to a borrower’s appeal of the denial of any mortgage loan modification Trial Period Plan in connection with a borrower’s complete BRP as required by applicable law, that is received

• 90 days or more before a scheduled foreclosure sale or if the foreclosure sale date is unknown, and

• with respect to a mortgage loan secured by a principal residence.

Forbearance plan

The servicer must establish written policies and procedures that describe how to

• determine borrower’s hardship status,

• determine when a forbearance plan requires a payment and how the payment is determined, and

• document the decision-making process when applying discretion or business judgment.

Completing the preforeclosure sale review

The servicer must have written policies and procedures requiring a review of the mortgage loan servicing file at least 30 days prior to the scheduled foreclosure sale.

Foreclosure, conveyance, and claim oversight

The servicer must have appropriate policies, procedures, and controls to ensure foreclosures, conveyances, and claims are processed in accordance with the provisions of

• the requirements of the FHA, HUD, VA, RD or the mortgage insurer, and

• any special requirements of Fannie Mae.

Bankruptcy monitoring and management

The servicer must have written procedures to monitor and manage bankruptcy proceedings effectively.

Monitoring the effectiveness of collection and foreclosure prevention calls to borrowers.

Conducting periodic reviews of any Behavioral Model Tool to ensure its effectiveness and make details of the model and any analysis available to Fannie Mae upon request.

Note: Fannie Mae reserves the right to require the servicer to discontinue its use for Fannie Mae mortgage loans or implement additional measures for targeting its collection and default management practices.

Determining whether documentation of collection and foreclosure prevention activities is accurately maintained in the servicer’s mortgage loan servicing system.

Monitoring whether workout options are considered in the preferred order in accordance with D2-3.1-01, Determining the Appropriate Workout OptionD2-3.1-01, Determining the Appropriate Workout Option and F-2-10, Fannie Mae’s Workout HierarchyF-2-10, Fannie Mae’s Workout Hierarchy.

Determining all appropriate workout options were considered and documented prior to the decision to foreclose.

Determining the adequacy of internal controls and procedures in connection with pre-referral review activities to ensure compliance with these requirements and applicable law.

Determining whether accurate and timely delinquency status information is submitted to Fannie Mae.

Determining all communications with borrowers comply with the requirements of applicable laws, including debt collection laws such as the FDCPA, the provisions of the United States Bankruptcy Code, and any applicable state laws.