source:
  type: guide
  id: fnma-svc-f-1-09
  authority: Fannie Mae Servicing Guide F-1-09 — Processing Mortgage Loan Payments
    and Payoﬀs
  description: Fannie Mae Servicing Guide F-1-09 — Processing Mortgage Loan Payments
    and Payoﬀs.
  coverage_tier: operative
obligations:
- id: fnma-svc-f-1-09-full
  canonical_id: fnma-svc-f-1-09-full
  section: Fannie Mae Servicing Guide F-1-09 — Processing Mortgage Loan Payments and
    Payoﬀs
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide F-1-09 — Processing Mortgage Loan Payments
      and Payoﬀs
    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: 'F-1-09, Processing Mortgage Loan Payments and Payoﬀs (10/19/2016)
      Introduction This Servicing Guide Procedure contains the following: Applying
      a Mortgage Loan Payment Calculating the Interest Portion of a Mortgage Loan
      Payment Processing a Principal Curtailment Collecting an Advance Made on Behalf
      of the Borrower at Payoﬀ Calculating Interest on a Payoﬀ Collecting a Prepayment
      Premium Applying Funds Remaining After Payoﬀ in an Interest Rate Buydown Plan
      Account Satisfying the Mortgage Loan and Releasing the Lien Applying a Mortgage
      Loan Payment The servicer must apply monthly payments in the order described
      in the following table, in accordance with C-1.1-01, Servicer Responsibilities
      for Processing Mortgage Loan Payments. Date of mortgage loan instruments Monthly
      payments must be applied in the order listed Instruments dated March 1999 or
      later 1. Interest 2. Principal 3. Deposits for escrow items, as applicable.
      Such deposits may include: • taxes and assessments; • property or MIPs; • leasehold
      payments or ground rents; and • community association dues, fees, and charges.
      4. Late charges, if any Instruments dated before March 1999 1. Deposits for
      insurance and taxes, if applicable 2. FHA service charges, if applicable 3.
      Interest 4. Principal 5. Late charges, if any Calculating the Interest Portion
      of a Mortgage Loan Payment Published May 13, 2026 582 The servicer must calculate
      the mortgage interest portion of the monthly payment as follows, in accordance
      with C-1.1-01, Servicer Responsibilities for Processing Mortgage Loan Payments.
      If the mortgage loan is... Then the interest portion must be determined by calculating...
      a ﬁxed-rate ﬁrst lien mortgage loan 30 days’ interest on the UPB as of the LPI
      date and using the current accrual rate. a ﬁxed-rate ﬁrst lien biweekly mortgage
      loan 14 days’ interest on the UPB as of the LPI date and using the current interest
      accrual rate. a ﬁxed-rate second lien mortgage loan each monthly payment using
      the payment-to- payment calculation method, when this is required by the security
      instrument. Otherwise, interest must be determined as outlined above. an ARM
      loan each monthly payment based on its applicable eﬀective interest accrual
      date. Note: Multiple interest accrual rates may apply. Processing a Principal
      Curtailment If the borrower includes a principal curtailment with their monthly
      payment when the mortgage loan is current, the servicer must apply monthly payments
      in the order described in the following table, in accordance with Processing
      Additional Principal Payments for Current Mortgage Loans in C-1.2-01, Processing
      Additional Principal Payments. When the borrower submits a principal curtailment...
      The servicer must... with the scheduled monthly payment apply the scheduled
      monthly payment ﬁrst, then apply the principal curtailment. at any other time
      of the month, separately apply the principal curtailment ﬁrst, then apply the
      next scheduled monthly payment. After a substantial principal curtailment, the
      servicer may, in accordance with Processing Additional Principal Payments for
      Current Mortgage Loans in C-1.2-01, Processing Additional Principal Payments,
      agree to reduce the P&I payment only (based on a re-amortization of the current
      UPB and using the current interest rate and Published May 13, 2026 583 remaining
      loan term) for any current portfolio mortgage loan or for a current ﬁrst lien
      mortgage loan that is in an MBS pool. Collecting an Advance Made on Behalf of
      the Borrower at Payoﬀ When a mortgage loan is paid in full, the servicer is
      responsible for collecting any advances made on behalf of the borrower along
      with the mortgage loan payoﬀ, in accordance with C-1.2-03, Processing Payments
      in Full. The following table describes the servicer’s responsibilities related
      to collecting advances. ✓ The servicer must... Collect any funds advanced on
      behalf of the borrower. Remit the repayment as a special remittance to Fannie
      Mae, and within 30 days of the payoﬀ date, if Fannie Mae advanced the funds.
      Note: The repayment of advances must not be included as part of the payoﬀ proceeds.
      Calculating Interest on a Payoﬀ In accordance with C-1.1-01, Servicer Responsibilities
      for Processing Mortgage Loan Payments, the servicer must calculate the amount
      of interest charged to the borrower based on the UPB of the mortgage loan, as
      of the LPI date, and using the current interest accrual rate. A full month’s
      interest should be calculated on the basis of a 360–day year, while a partial
      month’s interest should be based on a 365–day year. The servicer of a second
      lien mortgage loan or an FHA Title I loan may not use the rule of 78s (or the
      sum of the digits) method for calculating the interest unless Fannie Mae has
      provided approval for this calculation method. The amount of interest that may
      be charged to the borrower is speciﬁed in the following table. This is not necessarily
      the amount of interest that will be remitted to Fannie Mae. Also see C-3-02,
      Remitting Payoﬀ Proceeds. The servicer must follow the procedures in F-1-20,
      Remitting and Accounting to Fannie Mae. Published May 13, 2026 584 Mortgage
      Loan Type The servicer must compute interest... • VA • RD • FHA Title I • Conventional
      ﬁrst lien and second lien mortgage loans • FHA loans that are being reﬁnanced
      as “new” up to, but not including, the day the payoﬀ funds were received. •
      All other FHA mortgage loans (regardless of the date they were endorsed for
      MI) • HUD-guaranteed Section 184 loans • up to the date of payoﬀ, for payoﬀ
      funds received on an installment due date; or • through the end of the month,
      for payoﬀ funds received after an installment due date. Note: When the installment
      due date falls on a non-business day, the receipt of the payoﬀ funds shall be
      considered received on the installment due date provided they are received on
      the next business day. Collecting a Prepayment Premium In accordance with C-1.2-03,
      Processing Payments in Full, the servicer cannot impose or collect a prepayment
      premium on most mortgage loans. However, the servicer may collect a prepayment
      premium if all of the conditions set forth in the following table are satisﬁed
      and the mortgage loan is not a Texas Section 50(a)(6) loan. ✓ To collect a prepayment
      premium, the servicer must... Have a negotiated contract that speciﬁcally provides
      for the enforcement of a prepayment premium. Meet the guidelines set out in
      the Selling Guide, B8–3–02, Special Note Provisions and Language Requirements.
      Advise Fannie Mae of the collection of the premium when it next reports a LAR,
      regardless of whether Fannie Mae permits the servicer to retain the prepayment
      premium or requires it to remit the premium to Fannie Mae. Applying Funds Remaining
      After Payoﬀ in an Interest Rate Buydown Plan Account Published May 13, 2026
      585 When determining the amount to be collected for payoﬀ of the mortgage loan,
      the servicer must consider any funds remaining in an interest rate buydown plan
      account. The following table provides additional guidance in accordance with
      Applying Funds Remaining in an Interest Rate Buydown Plan Account in C-1.2-03,
      Processing Payments in Full. ✓ The servicer must... Reduce the payoﬀ amount
      by the amount of any remaining buydown funds. Not subtract the buydown funds
      from the mortgage loan balance because an incorrect interest calculation would
      result. Satisfying the Mortgage Loan and Releasing the Lien After verifying
      the amount required to pay the mortgage loan in full has been received, the
      servicer must perform all of the tasks speciﬁed in the following table in accordance
      with C-1.2-04, Satisfying the Mortgage Loan and Releasing the Lien. Note: The
      servicer must not pass on to the borrower or to Fannie Mae any penalty fee it
      has to pay because it failed to process the release and satisfaction documents
      within the required time frame. ✓ The servicer must... Remove Fannie Mae’s interest
      (or that of the mortgagee of record) from all applicable property insurance
      policies. Notify the taxing authorities that future tax bills should be sent
      to the borrower (or to the servicer of the ﬁrst lien mortgage loan if only a
      second lien mortgage loan is paid oﬀ). Prepare and execute the appropriate release
      or satisfaction documents identiﬁed by the Fannie Mae loan number and, if applicable,
      the MERS MIN. Send the satisfaction or release documents, and a request for
      the assignment of the custody documents, to the following address: Fannie Mae
      Vendor Oversight Legal Document Execution 13150 Worldgate Drive Herndon, VA
      22070 Note: Fannie Mae will return the executed documents promptly to the servicer.
      Published May 13, 2026 586 ✓ The servicer must... Notify the mortgage insurer
      or guarantor of the payoﬀ. If the mortgage loan is an eMortgage, update the
      MERS eRegistry with information of the payoﬀ, charge-oﬀ, or assumption. Advise
      MERS to deactivate the MERS registration for the mortgage loan, if applicable.
      If the eMortgage is secured by property in a state that requires the return
      of a paper Note upon loan payoﬀ, provide the borrower of an eMortgage a paper
      copy of the eNote marked “Copy” and “Paid-In-Full” and include: • a letter to
      the borrower explaining that the borrower is receiving a paper copy of the eNote
      which was originally registered in the MERS eRegistry, and that the servicer
      has caused the eNote to be deactivated on the MERS eRegistry due to payment
      in full, and • other documents and information required by applicable law. Remit
      Fannie Mae’s share of the payoﬀ proceeds in accordance with the remittance schedule
      established for the remittance type under which the mortgage loan is reported.
      Code the payoﬀ as Action Code 60 when it next reports a LAR to Fannie Mae through
      Fannie Mae’s investor reporting system. Recent Related Announcements There are
      no recently issued Announcements related to this topic.'
  judgment: false
