Fannie Mae Servicing Guide F-1-03 — Establishing and Implementing Custodial Accounts

Fannie Mae Servicing Guide F-1-03 — Establishing and Implementing Custodial Accounts

F-1-03, Establishing and Implementing Custodial Accounts (05/13/2026) Introduction This Servicing Guide Procedure contains the following: Establishing P&I Custodial Accounts Drafting Schedule by Type of Draft Establishing T&I Custodial Accounts Managing T&I Custodial Accounts Implementing Custodial Accounts Subservicer-Specific Requirements for Custodial Accounts Establishing Bank Instructions for Drafting Drafting through CRS Implementing Bank Instructions in CRS Reconciling Custodial Bank Accounts Establishing P&I Custodial Accounts As described in P&I Custodial Accounts in A4-1-02, Establishing Custodial Bank Accounts, the funds in the P&I custodial account must relate to monthly P&I payments due Fannie Mae. The servicer must use one of the following methods to transfer P&I payments: deduct the servicing fees and late charges before the servicer transfers P&I payments from its clearing account to the custodial account, or transfer the entire P&I payment from its clearing account into the custodial account, as long as it removes its share of the funds no later than the next business day after they are deposited into the custodial account. The servicer of participation pool mortgage loans must deposit only Fannie Mae's percentage shares of the funds into the P&I custodial account. The following table describes the requirements for the collection and disposition of P&I funds. ✓ The servicer must... Establish a reasonable daily cut-off of its work to ensure that collections are promptly credited to the appropriate account. Published May 13, 2026 541 ✓ The servicer must... Deposit any monthly payments collected after the mortgage loan was submitted to Fannie Mae for purchase or securitization, including any payments due from an interest rate buydown plan account, into the P&I account no later than one business day after the servicer or its designee receives Fannie Mae’s purchase proceeds. For additional requirements regarding a lockbox agent, see C-1.1-01, Servicer Responsibilities for Processing Mortgage Loan Payments. Maintain records identifying each borrower, the amount of each borrower’s payment, and the custodial account into which each payment is deposited. Drafting Schedule by Type of Draft As described in P&I Custodial Accounts in A4-1-02, Establishing Custodial Bank Accounts, the required draft date will differ based on the type of draft. The following table describes the schedule for various types of drafts. Draft Type Drafting Schedule MBS LLPAs Fifth business day of the month following issuance of the related MBS pool • Guaranty fees • Guaranty fee buydown charges Seventh calendar day of each month, or on the preceding business day if the seventh is not a business day Other fees and charges, such as • Upfront commitment fees • Pair-off or extension fees • Pool contract fees Throughout the month The servicer is authorized to withdraw funds from the P&I custodial account only for the following purposes: remit the funds due Fannie Mae on the remittance date; reimburse itself for delinquency advances for scheduled/actual and scheduled/scheduled remittance types that are recovered from subsequent collections (to the extent that such collections are payments on the related mortgage loan or are not required to be included in the funds due to Fannie Mae on the next remittance date); remove amounts that have been deposited in error; remove fees, charges, funds due related to servicing transfers, and other amounts that are deposited into the account on a temporary basis; Published May 13, 2026 542 remove interest earned on an interest-bearing custodial account; and clear and terminate the account. Establishing T&I Custodial Accounts As described in T&I Custodial Accounts in A4-1-02, Establishing Custodial Bank Accounts, funds in the T&I custodial account may not be commingled with P&I funds, the servicer’s general corporate funds, or with funds held by the servicer for other investors. The following table describes requirements the servicer must adhere to when establishing custodial accounts for T&I funds. ✓ The servicer must... Establish a reasonable daily cut-off of its work to ensure that collections are promptly credited to the appropriate account. Deposit the borrower’s escrow account balance and any funds for an interest rate buydown plan account that are not scheduled for application toward the monthly payment into the T&I custodial account no later than one business day after the servicer or its designee receives Fannie Mae’s purchase proceeds for a mortgage loan. Fannie Mae may waive its next-day-deposit requirement when a servicer uses a computer service bureau or a third party as a collection agent if adequate controls exist. Maintain records if the servicer maintains separate T&I custodial accounts for different remittance types identifying • each borrower, • the amount of each borrower’s escrow or other deposits, and • the custodial account into which each payment is deposited. Managing T&I Custodial Accounts As described in T&I Custodial Accounts in A4-1-02, Establishing Custodial Bank Accounts, a T&I custodial account must be used to make escrow-related disbursements, and hold unapplied funds pending final disposition. The servicer is authorized to withdraw T&I funds from the T&I custodial account for these purposes: pay taxes, insurance premiums, etc., when they are due; apply buydown funds when due; refund escrow account surpluses to the borrower or pay interest to the borrower' remove any amounts deposited in error; Published May 13, 2026 543 remove funds due to the borrower, such as partial payments or loss draft funds; reimburse itself for T&I servicing advances from subsequent payments on the related mortgage loan once the mortgage loan becomes current; reduce arrearages to be capitalized in connection with completing a Fannie Mae Flex Modification; and clear and terminate the account. See Establishing Written Policies or Procedures in A4-1-01, Staffing, Training, Procedures, and Quality Control Requirements for requirements for identifying and monitoring unapplied funds, including unapplied property or flood insurance loss proceeds, held in the T&I custodial account. Implementing Custodial Accounts As described in A4-1-02, Establishing Custodial Bank Accounts, the servicer is responsible for the safekeeping of custodial funds at all times. For each custodial account the servicer establishes, the servicer and the depository institution must execute a Letter of Authorization for P&I Custodial Account (Form 1013), or a Letter of Authorization for T&I Custodial Account (Form 1014). When a servicer establishes (or changes) a custodial account for a mortgage loan, it must execute Form 1013 or Form 1014 electronically via the Custodial Bank Account Management application. The servicer is authorized to maintain multiple P&I custodial accounts for a single remittance type. The number of P&I custodial accounts established depends on the number of remittance types under which a servicer is reporting. The servicer is authorized to maintain multiple T&I custodial accounts for a single remittance type based on the number of remittance types under which a servicer is reporting. The servicer also has the option to commingle the T&I funds from various remittance types into one T&I custodial account. Custodial accounts established for the deposit of P&I funds must be titled as follows: ”(Name of servicer), as agent, trustee, and/or bailee for the benefit of Fannie Mae and/or payments of various mortgagors and/or various owners of interests in mortgage-backed securities (Custodial Account).” Custodial accounts established for the deposit of T&I funds must be titled as follows: ”(Name of servicer), as agent and/or trustee for the benefit of Fannie Mae and payments of various mortgagors, respectively (Custodial Account).” Subservicer-Specific Requirements for Custodial Accounts A servicer that uses subservicer(s) must have each subservicer execute a separate Letter of Authorization for each custodial account it establishes. The following table describes the steps the servicer and subservicer must take in order to properly implement custodial accounts. Published May 13, 2026 544 Step Servicer Action 1 A subservicer that is establishing (or changing) a custodial account must execute Form 1013 or Form 1014 via the Custodial Bank Account Management application. 2 The servicer, subservicer, and the custodial depository must each retain a copy of the executed Form 1013 and/or Form 1014 in its files. Establishing Bank Instructions for Drafting The servicer must arrange for drafting of custodial funds in a manner consistent with the requirements of the Servicing Guide and Lender Contract. The servicer must designate bank instructions for a custodial account through the Cash Remittance System (CRS) from which Fannie Mae will draft funds. Drafting through CRS Under the CRS, a servicer is authorized to designate as a drafting account one P&I account for each remittance type it services. If the servicer maintains multiple P&I accounts for a single remittance type, the servicer must designate only one of these accounts as its drafting account for that remittance type. All monies due Fannie Mae for that remittance type must be moved to the designated drafting account prior to the date Fannie Mae drafts the account. A servicer with multiple P&I custodial accounts is authorized to use a consolidated drafting account in order to facilitate operational efficiencies. If the servicer uses a consolidated drafting account that includes scheduled/scheduled MBS mortgage loans, the servicer must designate a separate account as its drafting account for that remittance type only and all monies due must be moved from various MBS P&I custodial accounts (if the servicer has chosen to use multiple custodial accounts) to a single designated MBS pool consolidated drafting account prior to the date Fannie Mae drafts the account. A servicer is authorized to designate a separate consolidated drafting account for scheduled/scheduled portfolio, scheduled/actual, or actual/actual mortgage loans. The servicer is authorized to designate any of the portfolio mortgage loan P&I custodial accounts as the consolidated drafting account, or a special consolidated account that is used solely for drafting purposes. Implementing Bank Instructions in CRS The following table describes requirements for implementing bank instructions. Published May 13, 2026 545 If the servicer designates… Then the servicer must… bank instructions for a consolidated drafting account fulfill all requirements under the CRS related to establishing bank instructions (see Fannie Mae's CRS User Guide). The servicer must not deposit into the consolidated drafting accounts funds that are collected on behalf of other investors. an existing P&I custodial account as a special drafting account must advise Fannie Mae of the special drafting account by submitting Form 1013 electronically. Reconciling Custodial Bank Accounts The following table describes the requirements for reconciling custodial bank accounts. Step Servicer Action 1 Reconcile its cash book to the custodial account(s) every month using the applicable Custodial Account Reconciliation Form: ✓ The servicer must… Use the P&I Custodial Account Reconciliation (Form 496) to • reconcile each P&I custodial account, and • reflect the composition of the cash book balance of the account at the close of the reporting period. Use the T&I Custodial Account Reconciliation (Form 496A) to • reconcile each T&I custodial account, and • document unapplied funds that need resolution, and • reflect the composition of the cash book balance of the account at the close of the reporting period. 2 Retain each month’s reconciliation in its records in the event that Fannie Mae requests the submission of a specific Form 496 or Form 496A to Fannie Mae. Recent Related Announcements Published May 13, 2026 546 The table below provides references to recently issued Announcements that are related to this topic. Announcements Issue Date Announcement SVC-2026-04 May 13, 2006 Announcement SVC-2026-01 February 18, 2026 Announcement SVC-2025-05 August 13, 2025 Announcement SVC-2023-04 July 12, 2023 Announcement SVC-2022-03 May 11, 2022 Announcement SVC-2020-07 December 9, 2020 F-1-04, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan (07/12/2023) Introduction This Servicing Guide Procedure contains the following: Processing a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan Protecting Fannie Mae’s Rights Regarding Taking of Property by Condemnation or Eminent Domain Processing a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan The servicer must evaluate a request for the release of property securing a mortgage loan in accordance with D1-1-01, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan. Upon receipt of the Application for Release of Security (Form 236), and any other documentation that may be necessary depending on the reason for the request for release of security, the servicer must follow the steps outlined in the following table. Published May 13, 2026 547 Step Servicer Action 1 Obtain any required approval from • the mortgage insurer or guarantor; and • the servicer of the first lien mortgage loan, if Fannie Mae’s interest is in a second lien mortgage loan. 2 Determine whether Fannie Mae allows the servicer to approve the release of security on its behalf. If the request requires a non-delegated review, submit Form 236 and all documents as specified on Form 236, along with a recommendation, to Fannie Mae’s SF CPM division at partial_releases@fanniemae.com for approval. Note: The servicer must contact Fannie Mae’s SF CPM division (see F-4-02, List of Contacts) to determine whether Fannie Mae is willing to subordinate the mortgage lien to a burdensome easement if it determines that a burdensome easement • is not customary in the area, or • interferes with the property owner’s use or enjoyment of the property. If the request for release, or partial release, of security is approved, continue to Step #3. 3 If an escrow deposit account is maintained to pay property taxes, notify the tax collector or assessor under the following circumstances: • a release of any portion of a security property affects the amount of taxes levied against the property, or • an authorized substitution of security property will affect either the taxing jurisdiction or the tax assessment. Published May 13, 2026 548 Step Servicer Action 4 Execute any legal documentation needed for the release of security in accordance with the following table. If... Then the servicer... the servicer is the owner of record for the mortgage loan is authorized to execute any legal documentation needed for the release of security, regardless of whether the release was approved by the servicer or Fannie Mae. Fannie Mae is the owner of record and the servicer has the required power of attorney to execute documents for release of security, including partial releases, on Fannie Mae’s behalf is authorized to execute the documents for releases, including partial releases of security, regardless of whether the release was approved by the servicer or Fannie Mae. Fannie Mae is the owner of record, the servicer does not have the required power of attorney to execute documents for release of security—including partial releases—on Fannie Mae’s behalf, and the release, or partial release, of security must be approved by Fannie Mae must send the documents to Fannie Mae’s SF CPM division (see F-4-02, List of Contacts) at the same time it submits Form 236, so that if the release is approved, Fannie Mae can execute the documents at the same time. Fannie Mae is the owner of record, the servicer does not have the required power of attorney to execute documents for release of security—including partial releases—on Fannie Mae’s behalf, and the servicer is authorized to approve the release, or partial release, of security must send the following to Fannie Mae’s SF CPM division (see F-4-02, List of Contacts): • the documents to be executed (with the Fannie Mae loan number and, if applicable, the MERS MIN clearly identified); • a copy of the approved Form 236; and • a letter that describes any special instructions related to the execution of the documents and indicates the address to which the executed documents should be returned. Published May 13, 2026 549 Step Servicer Action 5 Obtain a title insurance endorsement or similar title insurance product, and comply with any conditions (e.g. recording a release in public records) the title insurer requires for obtaining the endorsement. Note: Servicers remain responsible for ensuring that the title insurance coverage remains compliant with the requirements of Selling Guide B7-2-03, General Title Insurance Coverage and for taking whatever action necessary to protect the beneficial interest of Fannie Mae and an MBS trust in the security property. See A2-1-01, General Servicer Duties and Responsibilities for additional details. 6 Determine whether any cash consideration paid for the release, or partial release, will be • applied to the outstanding debt. If so, continue to step 7; or • used for property improvements. Note: For substantial cash consideration, the servicer may collect the entire amount from the borrower and disburse the funds as specific improvements are completed. Published May 13, 2026 550 Step Servicer Action 7 Apply and report any cash consideration received as part of the release, or partial release, of security as described in the following table. If... Then the servicer must... any consideration received is less than the total mortgage debt • apply it to pay any past due installments or to make an additional principal payment (curtailment), and • appropriately report the application in the next Fannie Mae investor reporting system reporting period. Note: If the application of the entire consideration to the UPB results in an LTV ratio that is less than the previous ratio, the servicer must require the borrower to apply only the portion of the consideration required to maintain the previous ratio and permit the borrower to retain the excess. However, if there is reason to require a reduced LTV ratio—such as the occupancy status of the property having changed from principal residence or second home to investment property—the servicer must require that the total consideration be applied to the mortgage loan debt. the proceeds are sufficient to satisfy the mortgage loan debt or if they do not fully satisfy the mortgage loan debt but Fannie Mae has agreed to charge off the difference (in connection with a condemnation or a full taking of the property by eminent domain) • remove the mortgage loan from Fannie Mae’s investor reporting system by Reporting an Action Code 71, and • remit the proceeds via the CRS as a “Special Remittance” (Remittance Type 370). Also see the Investor Reporting Manual and Fannie Mae’s CRS User Guide. Note: When a request to grant a burdensome easement or to release a beneficial easement is approved, Fannie Mae does not require the borrower to apply any cash consideration they receive for the release toward the mortgage loan debt, although the servicer may require that the consideration be used to make any past due monthly payments. Protecting Fannie Mae’s Rights Regarding Taking of Property by Condemnation or Eminent Domain When there is a legal proceeding that may significantly affect Fannie Mae’s rights in the property, the servicer must evaluate a request for release in accordance with Evaluating a Request for the Partial or Total Taking of Published May 13, 2026 551 Property Securing a Mortgage Loan by Condemnation in D1-1-01, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan. The servicer must take the actions outlined in the following table. ✓ The servicer must... Determine the method that the government instrumentality used to establish the property value on which the compensation is based. Determine the amount of the proposed award or compensation to be paid to the property owner. Pursue any legal remedies that are available if it does not appear that the borrower is being fairly compensated. If applicable, advise the law firm engaged in any foreclosure or bankruptcy proceedings about the proposed condemnation or taking by eminent domain so that the law firm can assume responsibility for any necessary legal action. Recent Related Announcements The table below provides references to recently issued Announcements that are related to this topic. Announcements Issue Date Announcement SVC-2023-04 July 12, 2023 Announcement SVC-2019-04 June 12, 2019

Source: Fannie Mae Servicing Guide F-1-03 — Establishing and Implementing Custodial Accounts · source URL · snapshot cf63a82bbb4adfba