source:
  type: guide
  id: fnma-svc-a1-3-01
  authority: Fannie Mae Servicing Guide A1-3-01 — Requirements for Voluntary Repurchase
  description: Fannie Mae Servicing Guide A1-3-01 — Requirements for Voluntary Repurchase.
  coverage_tier: operative
obligations:
- id: fnma-svc-a1-3-01-full
  canonical_id: fnma-svc-a1-3-01-full
  section: Fannie Mae Servicing Guide A1-3-01 — Requirements for Voluntary Repurchase
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide A1-3-01 — Requirements for Voluntary Repurchase
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/servicing-guide
    snapshot_id: cf63a82bbb4adfba
    fetched_at: '2026-05-22T23:53:19Z'
    content_hash: sha256:89df66c43baad07f8a8dd9d224492fff7d15e8839edba02ad0e74c7e50fe5da3
    paragraph_quote: 'A1-3-01, Requirements for Voluntary Repurchase (11/12/2025)
      Introduction This topic contains the following: Overview Voluntary Repurchase
      of Portfolio Mortgage Loans Voluntary Repurchase of Certain MBS Mortgage Loans
      Requesting Repurchase of Portfolio or MBS Mortgage Loans Overview The servicer
      may initiate a request for Fannie Mae’s approval to repurchase a mortgage loan.
      Fannie Mae’s approval of the servicer’s request will depend, in part, on whether
      the mortgage loan is currently either an MBS mortgage loan or a portfolio mortgage
      loan. Note: Fannie Mae will only approve requests to repurchase an MBS mortgage
      loan under the circumstances in Voluntary Repurchase of Certain MBS Mortgage
      Loans below and subject to related exceptions outlined in E-2.1-11, Remitting
      P&I for MBS Mortgage Loans That Are Part of a Bankruptcy. Following the repurchase
      of any mortgage loan, losses are the responsibility and legal obligation of
      the responsible party. For modiﬁed mortgage loans, the responsible party must
      comply with all legal obligations in connection with the mortgage loan. Voluntary
      Repurchase of Portfolio Mortgage Loans When the servicer or responsible party
      wishes to repurchase a mortgage loan that Fannie Mae holds in its portfolio,
      it must submit a written oﬀer to the Non-Standard Repurchase Team (see F-4-02,
      List of Contacts). Fannie Mae will not approve requests to repurchase a portfolio
      mortgage loan in connection with a conditional tender of payment that is used
      as an alternative to reﬁnancing the mortgage loan. See Selling Guide B2-1.3-04,
      Prohibited Reﬁnancing Practices for additional information. Voluntary Repurchase
      of Certain MBS Mortgage Loans Under certain circumstances, an MBS mortgage loan
      (or Fannie Mae’s participation interest in it) must be repurchased from the
      pool (see Mandatory Repurchase of Certain MBS Mortgage Loans in A1-3-02, Fannie
      Mae- Initiated Repurchases, Indemniﬁcations, Make Whole Payment Requests and
      Deferred Payment Obligations). However, the following table describes the circumstances
      under which the servicer has the option to repurchase the mortgage loan from
      the MBS pool. Published May 13, 2026 13 Option Circumstance Optional repurchase
      of a delinquent regular servicing option MBS mortgage loan A mortgage loan that
      has four consecutive payments past due may be repurchased from the MBS pool
      by the servicer. Note: Fannie Mae/Freddie Mac uniform ﬁrst lien mortgage loan
      security instruments provide that a payment is past due if not paid by close
      of business on the stated due date, which is normally the ﬁrst day of the month.
      If the requesting party chooses not to repurchase the mortgage loan at this
      time, the servicer must continue to advance scheduled P&I payments for the mortgage
      loan until it is removed from the MBS pool. See C-3-01, Responsibilities Related
      to Remitting P&I Funds to Fannie Mae for additional information. Optional repurchase
      related to due-on sale enforcement The servicer is authorized to repurchase
      the mortgage loan as an alternative to enforcing the due-on-sale (or due-on-transfer)
      provision. The due-on-sale (or due-on-transfer) provision is enforceable when
      the servicer has knowledge that a mortgaged property has been or is about to
      be conveyed by the borrower in violation of the due-on-sale (or due-on-transfer)
      provision, requiring the servicer to call the mortgage loan due and payable.
      See D1-4.1-01, Determining Whether a Transfer of Ownership Is Permitted for
      additional information. After removing the mortgage loan from the MBS pool,
      the servicer may allow an assumption of the mortgage loan. If the new borrower
      is creditworthy and the mortgage loan meets all of Fannie Mae’s current eligibility
      requirements, the servicer is authorized to subsequently submit the assumed
      mortgage loan to Fannie Mae for purchase under any of Fannie Mae’s standard
      commitments for cash deliveries or as part of an MBS pool delivery. Optional
      repurchase after court conﬁrmation of a plan modifying the terms of an MBS mortgage
      loan The servicer is authorized to repurchase a mortgage loan in an MBS Pool
      issued on or after June 1, 2007, under the circumstances described in E-2.1-11,
      Remitting P&I for MBS Mortgage Loans That Are Part of a Bankruptcy. The servicer
      of a special servicing option MBS mortgage loan also may repurchase the mortgage
      loan from the pool as an alternative to enforcing the due-on-sale (or due-on-transfer)
      provision as described above, but that repurchase requires prior approval by
      Fannie Mae. Similarly, after removing the mortgage loan from the MBS pool, the
      servicer may allow an assumption of the mortgage loan. Regular servicing option
      MBS mortgage loans, and shared-risk special servicing option MBS mortgage loans
      for which the servicer''s shared risk liability has not expired, that have been
      removed from an MBS pool, and have been modiﬁed are not eligible for redelivery
      to Fannie Mae unless Fannie Mae agrees otherwise. Published May 13, 2026 14
      Requesting Repurchase of Portfolio or MBS Mortgage Loans The following table
      describes the requirements for the oﬀer to repurchase mortgage loans. ✓ To oﬀer
      to repurchase mortgage loans, the requesting party must... Identify the mortgage
      loans to be repurchased by coupon rate and participation certiﬁcate yield (if
      applicable). Explain the reason for the request. Set forth the speciﬁc terms
      and conditions of the repurchase. Specify the purchase price the requesting
      party is oﬀering. After evaluating the oﬀer, Fannie Mae will notify the requesting
      party of its acceptance or declination of any counteroﬀer the requesting party
      proposes. Recent Related Announcements The table below provides references to
      recently issued Announcements that are related to this topic. Announcements
      Issue Date Announcement SVC-2025-06 November 12, 2025 Announcement SVC-2023-05
      October 11, 2023 Announcement SVC-2021-07 October 13, 2021 A1-3-02, Fannie Mae-Initiated
      Repurchases, Indemniﬁcations, Make Whole Payment Requests and Deferred Payment
      Obligations (05/13/2026) Introduction This topic contains the following: Published
      May 13, 2026 15 Overview of Fannie Mae-Initiated Repurchases, Indemniﬁcations,
      and Make Whole Payment Requests Servicing Defect Remedies Framework Servicer
      Responses to a Demand Repurchase as a Result of Mortgage Insurance Coverage
      Violations Mandatory Repurchase of Certain MBS Mortgage Loans Calculating Repurchase
      Proceeds Alternatives to Repurchase Deferred Payment Obligations (DPO) Calculation
      of Indemniﬁcation Claim for Loss of Mortgage Insurance Beneﬁts Overview of Fannie
      Mae-Initiated Repurchases, Indemniﬁcations, and Make Whole Payment Requests
      The Lender Contract provides remedies to Fannie Mae for the seller/servicer’s
      nonperformance. Any remedies that are applied will, in Fannie Mae’s sole judgment,
      be commensurate with the associated level of risk; Fannie Mae will strive to
      apply the most appropriate remedy to compensate Fannie Mae for the harm caused
      by the violation. Fannie Mae may, in addition to any other remedy available
      at law or in equity, require a party responsible for a breach to repurchase
      Fannie Mae’s interest in a mortgage loan, remit a make whole payment, or indemnify
      or otherwise hold Fannie Mae harmless for any Fannie Mae losses. If Fannie Mae,
      in its discretion, determines that a breach of the seller/servicer’s obligations
      may be reasonably corrected, Fannie Mae will provide the seller/servicer an
      opportunity to correct such breach within a speciﬁed time frame and manner as
      speciﬁed in the Guides, if any. Fannie Mae may oﬀer or decline to oﬀer the seller/servicer
      certain servicing alternative remedies based on the seller/servicer counterparty
      status to the extent there are future obligations required as part of the servicing
      alternative remedy. Other factors to be considered by Fannie Mae may include,
      but are not limited to, the failure to maintain a quality servicing practice
      and the seller/servicer’s ability and willingness to comply with the other provisions
      of the Lender Contract. Subject to Servicing Defect Remedies Framework for servicing
      defects attributable to servicing violations, Fannie Mae may require the repurchase
      of a mortgage loan (or of an acquired property) or the remittance of a make
      whole payment for reasons including, but not limited to the breach of any contractual
      warranty (including instances of fraud or misrepresentation), under the terms
      of any applicable repurchase agreement or contract provisions, or because of
      an uncorrected servicing defect. For servicing defects attributable to servicing
      violations in connection with MBS mortgage loans, the mortgage loan must have
      been properly removed from an MBS pool on a separate basis consistent with the
      Servicing Guide before a demand for a servicing repurchase remedy is issued
      based on a servicing defect. A servicing defect, by itself, does not form a
      basis for removing a loan from an MBS Pool. Additionally, Fannie Mae requires
      some repurchases because the terms under which the mortgage loans were purchased
      or securitized call for a repurchase under certain conditions or circumstances.
      Repurchases that fall into this category generally include, but are not limited
      to, Charter violations, an ARM loan in an MBS pool that Published May 13, 2026
      16 has converted to a ﬁxed rate mortgage loan per the borrower’s exercise of
      its option in the mortgage loan documents, or an MBS mortgage loan that has
      24 payments past due. Following the repurchase of any mortgage loan, losses
      are the responsibility and legal obligation of the responsible party. For modiﬁed
      mortgage loans, the responsible party must comply with all legal obligations
      in connection with the mortgage loan. Servicing Defect Remedies Framework The
      servicing defect remedies framework relates speciﬁcally to the categorization
      of servicing defects, seller/servicer corrections of those defects, and available
      remedies when defects are identiﬁed, including alternatives to repurchase. If
      Fannie Mae identiﬁes a servicing violation, it may issue either a notice of
      servicing defect or a demand for a servicing remedy. The following table provides
      the deﬁnition of terms related to the servicing defect remedies framework. Term
      Deﬁnition servicing violation A breach of any servicer requirement or obligation
      contained in the Lender Contract related to servicing functions including, but
      not limited to • processing of payments, • collections, • communications, •
      loss mitigation, • property preservation, and • ensuring appropriate insurance
      is on the mortgage loan or property. servicing defect A loan-level deﬁciency
      based on a servicing violation resulting from a breach of a term contained in
      the Lender Contract in eﬀect at the time of the servicing violation. servicing
      correction An action taken by the seller/servicer that demonstrates that the
      identiﬁed servicing defect either (i) did not, in fact, exist, or (ii) has been
      corrected in the time frame speciﬁed by Fannie Mae, such that the servicing
      defect is no longer considered by Fannie Mae to be a servicing defect. Published
      May 13, 2026 17 Term Deﬁnition servicing remedy An action to resolve a servicing
      defect elected by Fannie Mae per the Lender Contract, which may be either a
      servicing alternative remedy or a repurchase. servicing alternative remedy Remedies
      other than repurchase of the identiﬁed mortgage loan including, after foreclosure,
      the acquired property, that compensates Fannie Mae for damages, expenses and
      losses resulting from the identiﬁed servicing defect. The costs associated with
      calculating any servicing alternative remedy could include, but are not limited
      to • a daily carrying cost that is not duplicative of any other cost or fee
      below; • property maintenance costs; • taxes; • insurance; • HOA/condo association
      fees; • appraisal/BPO fees; • legal fees and costs; • property inspection costs;
      • utility costs; • any documented property value decline, where appropriate;
      • costs to repair; and • outstanding fees/ﬁnes/liens. Published May 13, 2026
      18 Term Deﬁnition servicing repurchase defect A servicing defect attributable
      to a servicing violation for which a demand for a repurchase servicing remedy
      could be issued without ﬁrst issuing a notice of servicing defect or a demand
      for a servicing alternative remedy. Servicing repurchase defects shall be limited
      to servicing defects that • cause Fannie Mae’s lien, security interest or other
      property interest to be subordinated, extinguished or become inadequate for
      the realization against the related mortgaged premises for the beneﬁt of the
      security; • pose a signiﬁcant reputational risk to Fannie Mae; • result from
      the servicer modifying or applying a payment deferral to a mortgage loan that
      was sold to Fannie Mae with recourse or full indemniﬁcation in violation of
      Fannie Mae’s workout option eligibility requirements; • result in the mortgage
      loan to not be, or continue to be, supported by Fannie Mae’s servicing systems;
      • cause irreparable damage to the physical improvements to the property or render
      the property uninhabitable. The following table describes the servicing defect
      remedies framework. Published May 13, 2026 19 Step Action 1 Fannie Mae will
      determine whether to send a notice of servicing defect or a demand for a servicing
      remedy based on the requirements in the following table. If Fannie Mae determines
      that the servicing defect resulting from a servicing violation that... Then
      Fannie Mae will... can be reasonably corrected by the seller/servicer issue
      a notice of servicing defect. • is uncorrectable by the seller/servicer; • is
      not corrected by the seller/servicer during the servicing correction period,
      if applicable; or • caused or will cause Fannie Mae losses, expense or damages,
      notwithstanding any servicing correction issue a demand for a servicing remedy.
      In certain limited circumstances, a servicing defect resulting from a servicing
      violation may be deemed to be uncorrectable. A servicing violation may be deemed
      uncorrectable if it resulted from a servicing defect that • extinguishes the
      lien, security interest or other property interest, or the lien, security interest
      or other property interest becomes inadequate for the realization against the
      related mortgaged premises for the beneﬁt of the security; • causes irreparable
      damage to the physical improvements to the property or renders the property
      uninhabitable; • is a result of a foreclosure sale to a third-party purchaser,
      completed short sale, or completed Mortgage Release (deed-in-lieu of foreclosure)
      that was not compliant with the Lender Contract; • extinguishes Fannie Mae’s
      ability to either ﬁle an insurance claim or seek full recovery of an insurance
      claim amount, for all insurance or guarantee types; or • results in a property
      that was not preserved and maintained in accordance with the Lender Contact,
      and, following acquisition of the property, Fannie Mae needs to make any repairs
      to the property as a result of the seller/servicer’s failure to preserve and
      maintain the property in accordance with the Lender Contract. Note: Fannie Mae’s
      determination that a servicing defect is uncorrectable or is a servicing repurchase
      defect may be appealed by the seller/servicer as outlined in Servicer Responses
      to a Demand. In the event the appeal results in the determination that a servicing
      defect could be corrected, the initial demand for a servicing remedy will be
      considered withdrawn, Fannie Mae will issue a notice of servicing defect, and
      the seller/servicer may correct such servicing defect during the servicing correction
      period set forth in the notice of servicing defect. The notice of servicing
      defect or demand for a servicing remedy must include the information in the
      following table, as applicable. Published May 13, 2026 20 Step Action If the
      notice is a... Then the notice must contain... notice of a servicing defect
      • the speciﬁc servicing violation(s) and/or related servicing defect(s), and
      • the servicing correction period. demand for a servicing repurchase remedy
      • the speciﬁc servicing violation(s) and/or related servicing defect(s), • the
      time frame for completing the repurchase, • details regarding the calculation
      of the repurchase price as outlined in the Guides, and • information regarding
      the seller/servicer’s right to appeal and time frame for appeal. demand for
      a servicing alternative remedy • the speciﬁc servicing violation(s) and/or related
      servicing defect(s), • the time frame for completing the servicing alternative
      remedy, • the servicing alternative remedy amount, including a breakdown of
      the servicing alternative remedy amount, and • information regarding the seller/servicer’s
      right to appeal and time frame for appeal. A demand for a servicing alternative
      remedy will be issued for servicing defects not constituting servicing repurchase
      defects, including, if applicable, after a servicing correction period. Fannie
      Mae will issue any such demand within 60 days after the expiration of the servicing
      correction period, including any extensions and resolution of any appeals, unless
      it provides notice to the servicer that it is unable to provide the demand within
      such time frame. Any such notice will describe the anticipated time frame for
      issuing the related demand for a servicing alternative remedy. A demand for
      a repurchase servicing remedy will be issued for any servicing repurchase defect.
      Note: If there are multiple servicing defects caused by a servicing violation
      or violations, Fannie Mae may issue either • a demand for a repurchase servicing
      remedy if any servicing violation constitutes a servicing repurchase defect,
      or • a demand for a servicing alternative remedy for all servicing defects,
      in each case based on each speciﬁc servicing violation. If the seller/servicer
      fails to comply with any demand for a servicing remedy, Fannie Mae may pursue
      other available rights and remedies under the Lender Contract, including repurchase.
      Published May 13, 2026 21 Step Action 2 During the servicing correction period
      identiﬁed in the notice of servicing defect, the seller/servicer must correct
      the related servicing defect(s) in the speciﬁed time frame required in the notice
      of servicing defect and in the manner required by the Lender Contract, if any.
      Following the servicing correction period, Fannie Mae will assess any servicing
      correction made by the seller/servicer to determine whether a demand for a servicing
      remedy will be issued. If the seller/servicer provides an acceptable servicing
      correction, Fannie Mae will not pursue a repurchase; however, Fannie Mae may
      still issue a demand for a servicing alternative remedy for any damages, expenses
      or losses suﬀered as a result of the servicing violation. If Fannie Mae determines
      it will not issue a demand for a servicing remedy, Fannie Mae will notify the
      seller/servicer that the related notice of servicing defect has been closed.
      3 All demands for a servicing remedy issued to the seller/servicer are subject
      to appeal by the seller/servicer. See Servicer Responses to a Demand for more
      information about the appeal process. Servicer Responses to a Demand Subject
      to the Servicing Defect Remedies Framework, Fannie Mae may issue a repurchase
      or make whole payment request or pursue another remedy with the entity that
      is responsible for the selling representations or warranties or for the servicing
      responsibilities or liabilities (the ”seller/servicer” or the ”responsible party”)
      and Fannie Mae may require the immediate repurchase of a mortgage loan or an
      acquired property or the remittance of make whole payments in accordance with
      the Guides. The seller/servicer must submit the requested documentation for
      an underwriting or servicing review so that Fannie Mae receives the ﬁle within
      30 days after Fannie Mae notiﬁes the seller/servicer that it has selected a
      mortgage loan for review, unless Fannie Mae advises that it needs the ﬁles in
      a diﬀerent time frame. Fannie Mae, in its sole discretion, may request the documentation
      in a shorter or longer period of time based upon circumstances at the time.
      The seller/servicer must pay Fannie Mae the funds that are due in connection
      with a request for repurchase, indemniﬁcation, or make whole payment within
      60 days after receipt of the request or within such other time frame as speciﬁed
      by Fannie Mae unless an appeal is made. For repurchase requests made on active
      mortgage loans (mortgage loans that have not been foreclosed upon or liquidated),
      the payment of the repurchase price may be made by the seller/servicer with
      its next scheduled remittance following the completion of the 60-day period.
      See A2-4-01, Quality Control Reviews for the requirements when Fannie Mae receives
      an oﬀer to purchase an acquired property prior to the completion of an underwriting
      or servicing review. Appeal Process The seller/servicer or other responsible
      party may submit a written appeal of a demand. The ”appeal process” includes
      both the ﬁrst and second appeals available to the seller/servicer under the
      conditions described in the following table. Note that the seller/servicer may
      provide a correction of an alleged servicing defect at any time during the appeal
      process. Also see Appeal and Independent Dispute Resolution Processes posted
      on Fannie Mae’s website for more detailed information about the requirements
      for each step in the appeal process. Published May 13, 2026 22 Appeal Process
      Seller/Servicer or Other Responsible Party Action Fannie Mae Action First appeal
      The seller/servicer or responsible party must submit an appeal in writing within
      60 days of receiving a demand. Note: Fannie Mae may identify a shorter or longer
      appeal period in the demand based on circumstances at the time. Fannie Mae must
      respond in writing to the seller/servicer or responsible party’s appeal within
      60 days of its receipt. Second appeal If the ﬁrst appeal is denied and the seller/servicer
      or responsible party has additional material information, the seller/servicer
      or responsible party may choose to submit a second appeal, which must be submitted
      within 15 days of receiving a denial of the ﬁrst appeal. Fannie Mae must respond
      in writing to the seller/servicer or responsible party’s second appeal within
      60 days of its receipt. If no written appeal is received within the applicable
      60–day time frame or the time frame identiﬁed by Fannie Mae in the demand for
      a servicing remedy, it will be assumed that the responsible party does not contest
      the demand and the repurchase, indemniﬁcation or make whole payment funds are
      due to Fannie Mae. Thereafter, the appeal process will be unavailable to the
      responsible party for that particular request. Impasse and Management Escalation
      Process for Repurchases and Other Remedies At the conclusion of the ﬁrst or
      second appeal, if the seller/servicer or other responsible party wishes to challenge
      the existence of a servicing defect identiﬁed in the demand, the seller/servicer
      or other responsible party may initiate the impasse process. If Fannie Mae reaﬃrms
      the demand during the impasse process, the seller/servicer or other responsible
      party may continue the challenge in the management escalation process. The steps
      in the impasse and management escalation processes are described in the following
      table. Also see Appeal and Independent Dispute Resolution Processes posted on
      Fannie Mae’s website for more detailed information about the requirements for
      each step. Published May 13, 2026 23 Impasse and Management Escalation Processes
      Seller/Servicer or Other Responsible Party Action Fannie Mae Action or Further
      Action by the Parties Impasse At the conclusion of the ﬁrst or second appeal,
      if the seller/servicer or responsible party wants to challenge the existence
      of the defect, it must initiate the impasse process in writing within 15 days
      of receiving Fannie Mae’s denial of the ﬁrst or second appeal. Fannie Mae and
      the seller/servicer or responsible party will have 30 days in which to attempt
      to resolve the dispute, unless both parties agree to a longer time period. Management
      Escalation Process At the conclusion of the impasse process, if Fannie Mae reaﬃrmed
      the demand and the seller/servicer or responsible party wants to continue to
      challenge the existence of the defect, it must initiate the management escalation
      process in writing within 15 days after conclusion of the impasse process by
      notifying its Fannie Mae oﬃcer contact it wants to initiate management escalation.
      If, at the end of the management escalation process, Fannie Mae has reaﬃrmed
      the demand, the seller/servicer or other responsible party may initiate the
      Independent Dispute Resolution process. Within 30 days of receipt of the seller/servicer
      or other responsible party’s initiation of the management escalation process,
      Fannie Mae must involve an oﬃcer outside of the servicing remedies group in
      a review of the dispute. Fannie Mae and the seller/servicer or responsible party
      have 30 days in which to attempt to resolve the dispute, unless both parties
      agree to a longer time period. Independent Dispute Resolution (IDR) Process
      The IDR process is available for disputes that are not resolved through the
      appeal, impasse, or management escalation processes. The IDR process is available,
      if the preconditions to each step have been followed and the parties have not
      ﬁled litigation to attempt to address the dispute. The IDR process is available
      to seller/servicers or other responsible parties that have not been suspended,
      disqualiﬁed, or terminated by Fannie Mae, and that have complied with any prior
      IDR award or demand (as applicable). The IDR process is governed by the Federal
      Arbitration Act, 9 U.S.C. §§1 et. Seq. The IDR process addresses loan-level
      demands and whether alleged breach(es) by the seller/servicer of its representations
      and warranties, or duties or responsibilities, as provided under the Lender
      Contract exist at the time the IDR process commences. The IDR process may be
      used for Published May 13, 2026 24 demands relating to a breach of a selling
      representation, warranty, duty or responsibility involving whole loans purchased
      and mortgage loans delivered into MBS with pool issue dates on or after January
      1, 2016; and demands for a servicing remedy that are issued on or after December
      1, 2016. The IDR process cannot be used to resolve suspension, disqualiﬁcation,
      or termination of a seller/servicer; if a seller/servicer receives a formal
      notice of default from Fannie Mae; or to resolve a breach of any servicer requirement
      or obligation related to the servicing of a mortgage loan that results in the
      assessment of a compensatory fee by Fannie Mae. A neutral third party, selected
      by the IDR program administrator, will determine whether the alleged breach(es)
      existed at the time the IDR process commenced based on case ﬁle packages and
      subject matter expert reports submitted in writing by both parties. The neutral
      party’s decision will be ﬁnal and binding upon the seller/servicer and Fannie
      Mae. Initiation of the IDR Process The following table describes the initiation
      of the IDR process. If Fannie Mae... Then... reaﬃrms the demand at the conclusion
      of the management escalation process the eligible seller/servicer or responsible
      party will have 15 days to initiate the IDR process by completing and submitting
      an executed Retainer Agreement in the form on Fannie Mae’s website (IDR Retainer
      Agreement) to the Fannie Mae oﬃcer involved in the management escalation process
      and to the program administrator as described in Appeal and Independent Dispute
      Resolution Processes. has not received the seller/servicer or responsible party’s
      fully completed and executed Retainer Agreement within 15 days of the conclusion
      of the management escalation period, and the seller/servicer or responsible
      party has not complied with the remedy demand. Fannie Mae shall have the option
      of either initiating the IDR process within 6 months of the end of the management
      escalation period or pursuing other remedies. Note: The seller/servicer or responsible
      party will have no further right to appeal the existence of the defect in the
      demand, including the commencement of the IDR process, and will be obligated
      to comply with the terms of the demand. The IDR process is designed to be a
      cost-eﬀective way to resolve disputes involving demands for a servicing remedy
      that remain after the appeal, impasse and management escalation processes have
      been exhausted. The costs and fees associated with the IDR process itself will
      vary depending on the circumstances and outcome of each case. For additional
      information about the details of the IDR process, see Appeal and Independent
      Published May 13, 2026 25 Dispute Resolution Processes on Fannie Mae’s website.
      Compliance with a Demand for a Repurchase Servicing Remedy A seller/servicer
      or other responsible party has 15 days in which to initiate the next stage of
      the ﬁrst or second appeal, impasse, management escalation, or IDR process, as
      applicable. If the seller/servicer or other responsible party fails to challenge
      the existence of the defect by letting the applicable 15–day initiation period
      expire, or if Fannie Mae reaﬃrms the demand for a repurchase servicing remedy
      at the conclusion of the appeal, impasse, management escalation, or IDR process,
      the seller/servicer or other responsible party must comply with the demand for
      a repurchase servicing remedy. For repurchases made on an active mortgage loan,
      the payment of the repurchase price may be made by the servicer with its next
      scheduled remittance following the completion of the 15–day initiation period.
      There are times when a repurchase of an active mortgage loan will involve the
      transfer of servicing to a new servicer. In such a situation, RESPA requires
      that the borrowers involved in the servicing transfer receive certain notices
      in advance of the servicing transfer. If the repurchase of a mortgage loan will
      involve a servicing transfer to a new servicer, Fannie Mae will provide the
      parties with additional time to process the repurchase so that all regulatory
      notices can be provided prior to the repurchase. However, Fannie Mae requires
      that the party responsible for such a repurchase notify Fannie Mae within the
      15–day initiation period that a servicing transfer will take place to the identiﬁed
      new servicer and the date of the servicing transfer. Once the transferring servicer
      has timely notiﬁed Fannie Mae that there will be a servicing transfer on an
      active mortgage loan, the repurchasing party must work with the current servicer
      to provide all necessary legal notices to the borrower. All repurchases of active
      mortgage loans involving a servicing transfer must occur at month end as quickly
      as reasonably possible following Fannie Mae’s repurchase request or reaﬃrmation.
      Should Fannie Mae have to take legal action to enforce its right to require
      repurchase of a mortgage loan (or property), the responsible party also will
      be liable to Fannie Mae for Fannie Mae’s attorney fees, costs, and related expenses,
      as well as for any applicable consequential damages. Repurchase as a Result
      of Mortgage Insurance Coverage Violations The responsible party and the mortgage
      loan may be eligible for an alternative to repurchase when the MI has been rescinded
      pursuant to the remedies framework in the Selling Guide for mortgage loans acquired
      after July 1, 2014 if the responsible party meets Fannie Mae’s eligibility criteria,
      and the only defect Fannie Mae identiﬁes in the mortgage loan is the rescission
      of MI or the responsible party corrects all defects identiﬁed, except the MI
      rescission defect, during the required correction period. The MI stand-in is
      deﬁned as the full MI beneﬁt that would have been payable under the original
      MI policy if the mortgage loan liquidates. If the responsible party and the
      mortgage loan are deemed eligible for an alternative to repurchase, then the
      responsible party will be oﬀered one of two agreements for an MI stand-in. A
      mortgage loan will not be eligible for the MI stand-in if Fannie Mae identiﬁes
      other defects during the full ﬁle QC review which the responsible party fails
      to correct during the required correction period, or the responsible party does
      not respond in a timely manner or submit all the required documents within the
      time frames required by Fannie Mae in A2-4-01, Quality Control Reviews. Published
      May 13, 2026 26 If the responsible party corrects the defects that made the
      mortgage loan ineligible for the MI stand-in, Fannie Mae will review the mortgage
      loan and responsible party for this alternative to repurchase. The following
      table describes the requirements the eligible responsible party must meet after
      Fannie Mae receives notiﬁcation that the MI has been rescinded. Step Responsible
      Party Action 1 Receives notiﬁcation from Fannie Mae that the mortgage loan has
      been selected for a QC review. 2 Within 30 days of receipt of the notiﬁcation
      from Fannie Mae, submits • a full mortgage loan servicing ﬁle, and • the supporting
      MI documentation. The supporting MI documentation includes, but is not limited
      to • a copy of the MI rescission letter, • all communication related to the
      rescission of the MI and rebuttal, and • the mortgage insurer’s investigation
      reports. 3 Receives a letter from Fannie Mae that states that the mortgage loan
      is eligible for an MI stand-in as an alternative to repurchase, if Fannie Mae
      determines that the mortgage loan is eligible for an MI stand-in. 4 Within 60
      days of the date of the letter • notiﬁes Fannie Mae of its interest in the MI
      stand-in, • repurchases the mortgage loan, or • has the MI reinstated and provides
      proof of the reinstatement to Fannie Mae. 5 If the responsible party indicates
      its interest in the MI stand-in, Fannie Mae will oﬀer either • an Indemniﬁcation
      Agreement in which the responsible party agrees to immediately pay Fannie Mae
      the MI stand-in amount after liquidation, or • a Pledge and Security Agreement
      in which the responsible party agrees to immediately post liquid assets required
      by Fannie Mae. Note: Fannie Mae will evaluate the ﬁnancial condition of the
      eligible responsible party and determine which MI stand-in option to oﬀer the
      responsible party. 6 Executes and returns the relevant documents and post collateral,
      if required, within the time frame speciﬁed. Mandatory Repurchase of Certain
      MBS Mortgage Loans Fannie Mae is required to remove a mortgage loan, or cause
      the mortgage loan to be repurchased, from an MBS Published May 13, 2026 27 pool
      under the circumstances set forth below. The servicer must immediately notify
      Fannie Mae when it is aware of any of the following: when a court or governmental
      regulator determines that Fannie Mae was not authorized to acquire the mortgage
      loan or a court or agency requires that the mortgage loan be repurchased to
      comply with applicable law; upon notice that any of the following events will
      occur, or at least before the borrower exercises an option in the mortgage loan
      documents to convert from an ARM loan to a ﬁxed interest rate, the borrower
      exercises an option in the mortgage loan documents to change from one index
      to another, or if the maximum or minimum interest rate or the margin used in
      calculating the rate per the mortgage loan documents changes as a result of
      a mortgage loan assumption; as soon as practicable, if any governmental agency
      or court requires a transfer of the property securing a mortgage loan (other
      than to a co-borrower or in connection with a divorce or other transfer excepted
      from due-on-sale enforcement); if any mortgage insurer or the FHA or VA requires
      transfer of the mortgage loan or the property to it in order to obtain the beneﬁts
      of the insurance or the guaranty, or requires a longer period of time in addressing
      certain foreclosure prevention alternatives; as soon as practicable when the
      servicer ﬁrst discovers that the borrower has transferred title to the mortgaged
      property to the servicer or Fannie Mae, thereby eﬀecting a Mortgage Release
      (deed-in-lieu of foreclosure); or if the mortgage loan becomes 24 months past
      due with respect to payments of P&I measured from the last installment paid
      in full, unless an exception exists that permits the mortgage loan to remain
      in the MBS pool beyond the 24th month. 24–Month Rule: Under the MBS trust rules,
      subject to certain conditions, an MBS mortgage loan must be removed from its
      MBS pool no later than when the mortgage loan becomes 24 months past due, as
      measured from the LPI date. However, under various circumstances Fannie Mae
      will remove a special servicing option delinquent MBS mortgage loan from its
      MBS pool prior to the mortgage loan becoming 24 months delinquent, in accordance
      with A1-3-06, Automatic Reclassiﬁcation of MBS Mortgage Loans. Similarly, Fannie
      Mae generally will reclassify a delinquent regular servicing option MBS mortgage
      loan - those for which the servicer has the entire foreclosure loss risk and
      those for which Fannie Mae and the servicer share the foreclosure loss risk,
      with the servicer having the responsibility for marketing the acquired property
      - still in the MBS pool when the mortgage loan reaches six consecutive months
      of delinquency (see A1-3-06, Automatic Reclassiﬁcation of MBS Mortgage Loans
      ). For such mortgage loans, the servicer remains responsible for existing recourse
      obligations, including the responsibility to repurchase the mortgage loan no
      later than when it becomes 24 months past due. If the servicer has not already
      repurchased the mortgage loan, Fannie Mae will issue a demand for repurchase
      to the servicer when the mortgage loan becomes 22 months past due. The repurchase
      must be reported to Fannie Mae as activity occurring in the month that contains
      the due date of the 24th consecutive past due payment. Although most mortgage
      loans will be removed from the MBS pool by or before the time the mortgage loan
      becomes 24 months past due, an MBS mortgage loan serviced under the special
      servicing option - those for which Fannie Mae has the entire foreclosure loss
      risk and those for which Fannie Mae and the servicer share the foreclosure loss
      risk, with Fannie Mae having the responsibility for marketing the acquired property
      - may be allowed to remain in its MBS pool beyond 24 months past due if: the
      borrower has entered into and is complying with a repayment plan pursuant to
      which the arrearages Published May 13, 2026 28 on the mortgage loan are required
      to be paid in full and the mortgage loan brought current by or before the original
      maturity date of the mortgage loan; applicable law (including bankruptcy law,
      probate law, or the SCRA of 2004 or other relief act) requires that foreclosure
      on the related secured property or other legal remedy against the borrower or
      the related secured property be delayed and the period for delay or inaction
      has not elapsed; or the mortgage loan is in the process of being assigned to
      the insurer or guarantor that provided any related MI or guaranty. If repurchase
      by the servicer at 24 months due is not required because a mortgage loan meets
      one of these conditions, including the condition that the mortgage loan has
      become current, but the mortgage loan later becomes delinquent, Fannie Mae will
      review the individual circumstances to determine whether repurchase is warranted
      at that time. Note: Under the Fannie Mae/Freddie Mac uniform ﬁrst lien mortgage
      loan security instruments, a payment is past due if not paid by close of business
      on the stated due date, which is normally the ﬁrst day of the month. Calculating
      Repurchase Proceeds Generally, when Fannie Mae requests that the responsible
      party repurchase a mortgage loan, the repurchase price is the same as the price
      at which Fannie Mae originally purchased the mortgage loan. This is usually
      true when the responsible party repurchases a mortgage loan under a repurchase
      agreement or because of a breach of warranty or other obligation; however, some
      agreements may specify other terms. If Fannie Mae agrees to a repurchase request
      as an accommodation to the responsible party, Fannie Mae bases its repurchase
      price on current market prices. Note: The servicer must not deduct loan level
      price adjustments from the repurchase price or make whole payment. See the Selling
      Guide for additional information on loan level price adjustments. Repurchase
      of a Portfolio Mortgage Loan: The proceeds Fannie Mae will receive for the repurchase
      of a portfolio mortgage loan that Fannie Mae holds in its portfolio are usually
      determined by the steps represented in the following table. Published May 13,
      2026 29 Step Required Action 1 Determine the purchase price Fannie Mae originally
      paid for the mortgage loan. The following table describes the factors that determine
      the required repurchase proceeds for a mortgage loan other than a reverse mortgage
      loan. If Fannie Mae originally purchased the mortgage loan... Then Fannie Mae
      will... at par multiply the UPB at the time of repurchase by the purchase price
      that Fannie Mae originally paid for the mortgage loan. at a premium or discounted
      purchase price and the mortgage loan has undergone negative amortization multiply
      the UPB at the time of repurchase, limited to the amount of the original purchase
      price discount or premium. The purchase price used to calculate the repurchase
      amount is expressed as a percentage of par. The following table describes the
      purchase price based on Fannie Mae’s purchase price. If Fannie Mae originally
      purchased the mortgage loan... Then the percentage will be... at par 100%. at
      a premium greater than 100%. at a discount less than 100%. 2 Add appropriate
      adjustments for interest, attorney fees, legal expenses, court costs, and other
      expenses Fannie Mae may have incurred. 3 Make appropriate adjustments to reﬂect
      Fannie Mae’s percentage ownership in the mortgage loan. Published May 13, 2026
      30 Step Required Action 4 Interest must be calculated as follows: If the remittance
      type of the mortgage loan is... Then interest must be calculated through...
      Actual/Actual the eﬀective repurchase date. Scheduled/Actual or Scheduled/Scheduled
      the end of the repurchase month. Repurchase of an MBS Mortgage Loan: The proceeds
      for the repurchase of an MBS mortgage loan represent the sum of Fannie Mae’s
      share of the outstanding security balance for the mortgage loan as of the repurchase
      month and one month’s interest on that balance. Interest must be calculated
      in accordance with the following table. If the amortization type of the mortgage
      loan is... Interest must be calculated at... ﬁxed-rate the PTR of the MBS pool.
      adjustable-rate either • the accrual rate for the mortgage loan (if the mortgage
      loan is in a weighted-average ARM MBS pool), or • the accrual rate for the MBS
      pool (if the mortgage loan is in a stated-structure ARM MBS pool). The proceeds
      for the repurchase of an MBS mortgage loan represent the sum of Fannie Mae’s
      share of the outstanding security balance for the mortgage loan as of the repurchase
      month and one month’s interest on that balance. Repurchase of an Acquired Property:
      Whenever the Guides permit or require repurchase of a mortgage loan without
      redelivery to Fannie Mae’s portfolio and, at the time of the purchase, title
      to the security property has passed to Fannie Mae, or is held for Fannie Mae
      but is in the name of the servicer pursuant to its duties as Fannie Mae’s servicer,
      the language of the Guides will be applied to require purchase of Fannie Mae’s
      interest in the property. The purchase price will be the same as if the responsible
      party was repurchasing the mortgage loan, with accrued interest Published May
      13, 2026 31 and other adjustments, including Fannie Mae’s property-related expenses
      such as maintenance and marketing expenses, through the date of purchase; and
      is not based on the market value of the property at the time of the purchase.
      Further, when the responsible party purchases the property or remits a make
      whole payment Fannie Mae also will convey all rights as owner of the mortgage
      loan (for example, deﬁciency rights), if any, that it may still have pursuant
      to applicable state law, but it has no obligation to the responsible party to
      have preserved such rights. The seller/servicer may be required to repurchase
      properties with tenants in place due to, among other things, violations of selling
      representations and warranties or improper servicing. Fannie Mae requires the
      servicer to promptly resolve any repurchase requests, regardless of the presence
      of a tenant in the related property. Make Whole Payment: A ”make whole payment”
      is the amount that a party responsible for a breach of a selling representation
      or warranty or a servicing breach must pay Fannie Mae so that Fannie Mae does
      not incur a loss on the mortgage loan or the property. In the event that a repurchase
      demand would have been issued but the mortgage loan has been liquidated, Fannie
      Mae will issue a reimbursement request for a make whole payment instead. Alternatives
      to Repurchase Fannie Mae may elect an alternate remedy to the immediate repurchase
      of a mortgage loan when Fannie Mae identiﬁes underwriting deﬁciencies during
      a post-purchase review. See the Selling Guide for more information regarding
      underwriting deﬁciencies and requirements for completing post-purchase date
      data corrections. Subject to the servicing defect remedies framework, in some
      instances in which the seller/servicer has breached its Lender Contract, Fannie
      Mae may allow the servicer to correct the servicing violation. Subject to Servicing
      Defect Remedies Framework, in certain circumstances, Fannie Mae may provide
      the seller/servicer with an alternative to the immediate repurchase of the identiﬁed
      mortgage loan. In each case, Fannie Mae will notify the seller/servicer of the
      type and terms of the servicing alternative remedy. The alternatives, as described
      in the following table, may include one or more of the following, as determined
      by Fannie Mae’s discretion. Repurchase Alternative Deﬁnition Recourse An agreement
      by the seller/servicer to provide recourse for the life of the mortgage loan
      or for some other speciﬁed time period. Collateralized Recourse Recourse as
      described above, with respect to which the seller/servicer’s obligation is secured
      by a speciﬁed collateral account. Published May 13, 2026 32 Repurchase Alternative
      Deﬁnition Indemniﬁcation Agreement An agreement by the seller/servicer to indemnify,
      defend, and hold Fannie Mae harmless from any Fannie Mae losses relating to
      the mortgage loan. Indemniﬁcation Payment The amount that a party responsible
      for the servicing breach must pay to Fannie Mae to compensate Fannie Mae for
      all Fannie Mae losses that are based on, or result from, the seller/servicer’s
      failure or alleged failure to satisfy its duties and responsibilities for mortgages
      or MBS pools it services for Fannie Mae under the provisions of the Lender Contract.
      Collateralized Indemniﬁcation Indemniﬁcation as described above, with respect
      to which the seller/servicer’s obligation is secured by a speciﬁed collateral
      account. Loss Share An agreement between Fannie Mae and the seller/servicer
      to each pay a speciﬁed proportion of the losses that have arisen or may arise
      in the future relating to the mortgage loan. Loss Reimbursement An agreement
      by the seller/servicer to reimburse Fannie Mae for speciﬁed losses relating
      to the mortgage loan. Subject to the servicing defect remedies framework, Fannie
      Mae will strive to apply the most appropriate remedy that is commensurate with
      the associated level of risk to compensate Fannie Mae for the harm caused by
      the violation. Deferred Payment Obligations (DPO) A DPO is deﬁned as the unpaid
      portion of the MI claim where the failure to pay the full amount due is solely
      attributable to the mortgage insurer’s ﬁnancial inability to pay or its insolvency.
      Such a mortgage insurer shall be referred to as a ”DPO mortgage insurer.” Fannie
      Mae bears the risk of loss that a DPO related claim ﬁled with a mortgage insurer
      for a properly delivered and serviced mortgage loan that meets all of Fannie
      Mae’s eligibility requirements is not ultimately collectible. A mortgage insurer''s
      ﬁnancial inability to pay a claim or its insolvency is not considered to be
      a failure by the servicer to keep MI coverage in force, as otherwise required
      by A1-3-03, Repurchase Obligations Related to Bifurcated Mortgage Loans. For
      a mortgage loan where there is a demand for repurchase or make whole payment
      amount due to Fannie Published May 13, 2026 33 Mae because of a breach of the
      selling representations and warranties for a non-bifurcated loan, the servicer
      must remit the full amount of the repurchase price or make whole payment. For
      a mortgage loan where there is a demand for repurchase or make whole payment
      amount due to Fannie Mae because of a breach of the selling representations
      and warranties for a bifurcated mortgage loan, the responsible party must remit
      the full amount of the bifurcated repurchase price or make whole payment to
      the servicer to remit to Fannie Mae. The repurchase price, make whole payment
      or bifurcated repurchase price must not be reduced by the DPO and must only
      include a credit for the MI payment actually paid by the MI company. Fannie
      Mae will at all times retain the right to be indemniﬁed according to Selling
      Guide A2-1-03, Indemniﬁcation for Losses. The following table describes the
      Fannie Mae actions and servicer requirements once the responsible party completely
      satisﬁes its payment obligations to Fannie Mae with respect to the repurchase
      or make whole demand for a selling breach of a representation or warranty. ✓
      Once the responsible party completely satisﬁes all of its payment obligations
      to Fannie Mae with respect to the repurchase or make whole demand for a selling
      breach of a representation or warranty Fannie Mae agrees to execute such documents
      as are necessary to convey all its rights to the DPO to the responsible party.
      The responsible party will succeed to all of Fannie Mae’s rights, title and
      interest in any remaining DPO on the subject mortgage loan. Fannie Mae will
      no longer have any claim to the remaining DPO, if any, pending on the subject
      mortgage loan. • For a non-bifurcated loan the servicer must then notify the
      DPO mortgage insurer that any future DPO payments must be remitted to the responsible
      party (or through the servicer to the responsible party) and not to Fannie Mae.
      • For a bifurcated loan the servicer and responsible party must work together
      to notify the DPO mortgage insurer that any future DPO payments or investor
      premium refunds must be remitted to the responsible party and not to the servicer
      or to Fannie Mae. The responsible party becomes the owner of the mortgage loan
      or acquired property if a repurchase or bifurcated repurchase price has been
      paid in full. In the event the servicer receives a DPO payment or investor premium
      refund from a mortgage insurer after Fannie Mae has been made whole on a mortgage
      loan by a responsible party, the servicer must promptly remit those payments
      to the responsible party. It is the responsibility of the responsible party
      to pursue the collection from the DPO mortgage insurer of any DPO or investor
      premium refunds, if applicable, that are outstanding following Fannie Mae’s
      receipt of the repurchase price, bifurcated repurchase price or make whole funds.
      Published May 13, 2026 34 Calculation of Indemniﬁcation Claim for Loss of Mortgage
      Insurance Beneﬁts As a result of an indemniﬁcation claim for the loss of the
      MI beneﬁt due to a servicing breach, Fannie Mae may demand that the servicer
      indemnify Fannie Mae with respect to the insurance beneﬁt that would have been
      paid by the mortgage insurer if the claim had been allowed. If the indemniﬁcation
      claim for the loss of the MI beneﬁt due to a servicing breach involves a DPO
      mortgage insurer, Fannie Mae will calculate the indemniﬁcation claim as the
      amount it would have received in MI beneﬁts from the DPO mortgage insurer if
      the claim had been allowed and if the servicer had not committed a servicing
      breach. As the DPO mortgage insurer’s regulator approves additional payments
      on the claims outstanding, Fannie Mae will bill the servicer for any increases
      in the amount payable on such claims after the initial indemniﬁcation claim
      is ﬁled. For example, if the DPO mortgage insurer is paying allowed claims at
      a rate of 60%, and a $30,000 claim is denied in full or coverage is cancelled
      due to a servicing breach, Fannie Mae’s current indemniﬁcation claim to the
      servicer for the loss of the MI beneﬁt would be for 60% of the $30,000 claim,
      or $18,000 ($30,000 x 60%). If the DPO mortgage insurer is later permitted to
      increase the cash payment (and as a result, decrease the DPO) on such allowed
      claims from 60% to 70%, Fannie Mae will bill the servicer for an additional
      10% of the amount Fannie Mae estimated would have constituted the MI beneﬁt
      if the claim had been allowed, or $3,000 ($30,000 x 10%). The servicer is reminded
      that Fannie Mae is not limited to indemniﬁcation as a remedy when the servicer
      breaches the Lender Contract. The servicer must contact MI_Ops@fanniemae.com
      with questions regarding the DPO billings. Recent Related Announcements The
      table below provides references to recently issued Announcements that are related
      to this topic. Announcements Issue Date Announcement SVC-2026-04 May 13, 2026
      Announcement SVC-2023-05 October 11, 2023 Announcement SVC-2021-07 October 13,
      2021 Announcement SVC-2021-01 January 20, 2021 Announcement SVC-2020-04 September
      9, 2020 Published May 13, 2026 35'
  judgment: false
