source:
  type: guide
  id: fnma-svc-e-2.3-03
  authority: Fannie Mae Servicing Guide E-2.3-03 — Handling Cramdowns of the Mortgage
    Debt
  description: Fannie Mae Servicing Guide E-2.3-03 — Handling Cramdowns of the Mortgage
    Debt.
  coverage_tier: operative
obligations:
- id: fnma-svc-e-2.3-03-full
  canonical_id: fnma-svc-e-2.3-03-full
  section: Fannie Mae Servicing Guide E-2.3-03 — Handling Cramdowns of the Mortgage
    Debt
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide E-2.3-03 — Handling Cramdowns of the Mortgage
      Debt
    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: 'E-2.3-03, Handling Cramdowns of the Mortgage Debt (11/12/2025)
      Introduction This topic contains the following: Overview General Servicer Responsibilities
      Applying Payments Received During the Conﬁrmation Process Applying Payments
      After Conﬁrmation of a Cramdown Overview A cramdown is an attempt to involuntarily
      modify any terms of the security deed, mortgage, or note by court order. A borrower’s
      request for a cramdown is non-routine litigation and must immediately be reported
      to Fannie Mae’s Legal department by submitting a Non-Routine Litigation Form
      (Form 20). Fannie Mae must be consulted with respect to all strategy involving
      cramdowns. Fannie Mae will make the determination of how to respond to cramdowns.
      See also E-2.2-02, Managing Chapter 11 Bankruptcies. In the event the mortgage
      loan is subject to a recourse or indemniﬁcation arrangement under which Fannie
      Mae purchased or securitized the mortgage loan, or that was imposed by Fannie
      Mae after the mortgage loan was purchased or securitized, the terms of the cramdown
      generally cannot be implemented while in Fannie Mae''s MBS or portfolio. To
      comply with a cramdown, the loan must be voluntarily repurchased. See E-2.1-11,
      Remitting P&I for MBS Mortgage Loans That Are Part of a Bankruptcy. General
      Servicer Responsibilities The following table lists additional requirements
      for the servicer when it learns that a bankruptcy case has been ﬁled that includes
      a cramdown proposal. ✓ The servicer must… Immediately refer the case to a law
      ﬁrm and mark the referral package as “cramdown” or “involuntary loan modiﬁcation.”
      Ensure the law ﬁrm reviews the borrower’s proposed valuation of the security
      property and compares it to the estimated value that the servicer obtains for
      the property. Published May 13, 2026 433 ✓ The servicer must… Work closely with
      the law ﬁrm in selecting an appraiser that is suﬃciently familiar with the issues
      involved in complex bankruptcy matters and has experience testifying about these
      issues in court, if an appraisal is required to oppose a cramdown request. Analyze
      the case and consult with both the law ﬁrm and with Fannie Mae to determine
      whether an appeal might be appropriate, if the valuation or conﬁrmation hearing
      results in a ruling adverse to Fannie Mae’s interests. Report the terms of the
      conﬁrmed cramdown to Fannie Mae for all Chapter 11, 12, and 13 cases. In order
      to report cramdown terms for Chapter 12 and Chapter 13 cases, the servicer must
      follow the instructions set forth in Servicing the Mortgage Loan After Conﬁrmation
      of a Chapter 11 Plan in E-2.2-02, Managing Chapter 11 Bankruptcies. Applying
      Payments Received During the Conﬁrmation Process The servicer must be able to
      account for any scheduled interest (and principal, if applicable) that must
      be remitted to Fannie Mae. See Processing Pre-Petition and Post-Petition Payments
      in E-2.2-04, Managing Chapter 13 Bankruptcies for additional information. The
      servicer’s remittance to Fannie Mae must satisfy Fannie Mae’s standard remittance
      requirements based on the remittance type of the mortgage loan. The servicer
      may not deduct its expenses from any payments the trustee forwards to it. For
      additional information regarding reclassifying or removing loans from a MBS
      pool, see Removing Regular Servicing Option MBS Mortgage Loans Upon Conﬁrmation
      of a Bankruptcy Plan and Reclassifying Special Servicing Option MBS Mortgage
      Loans Upon Conﬁrmation of a Bankruptcy Plan in E-2.1-11, Remitting P&I for MBS
      Mortgage Loans That Are Part of a Bankruptcy. In addition, the servicer must
      comply with the policies and procedures in Fannie Mae’s Investor Reporting Manual.
      Applying Payments After Conﬁrmation of a Cramdown Once the bankruptcy court
      conﬁrms a reorganization plan that provides for a cramdown of the mortgage debt,
      the servicer must separately account for payments to the secured and unsecured
      portions of the debt made under the repayment plan. The servicer must not make
      any permanent changes to the mortgage terms by actually modifying the mortgage
      loan documents. For additional information on reporting the terms of a conﬁrmed
      cramdown to Fannie Mae, see Servicing the Mortgage Loan After Conﬁrmation of
      a Chapter 11 Plan in E-2.2-02, Managing Chapter 11 Bankruptcies. The following
      table lists payment details the servicer must maintain record of in its accounting
      system for funds applied under the terms of a conﬁrmed cramdown. Published May
      13, 2026 434 ✓ Payment details required for a conﬁrmed cramdown Interest rate,
      monthly payment, and due date for the secured portion of the debt. Interest
      rate, monthly payment, and due date for the unsecured portion of the debt. The
      original terms of the mortgage note and the application of payments under those
      terms. If the court rules upon conﬁrmation of the plan that any payments made
      during the conﬁrmation process be credited against the secured claim, the servicer
      may need to adjust both its and Fannie Mae’s records to reallocate the payments
      between the secured and unsecured portions of the debt. The servicer must track
      the payment of ongoing taxes and applicable property insurance for non-escrowed
      mortgage loans and must notify the law ﬁrm and request that a Motion for Relief
      from Stay or a Motion to Dismiss be ﬁled if the borrower fails to maintain current
      tax or property insurance obligations. The servicer must work with Fannie Mae
      to make appropriate changes to Fannie Mae’s investor reporting system records.
      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-2023-03 May 10,
      2023'
  judgment: false
