source:
  type: guide
  id: fnma-svc-a1-4.1-02
  authority: Fannie Mae Servicing Guide A1-4.1-02 — Fannie Mae's Remedies
  description: Fannie Mae Servicing Guide A1-4.1-02 — Fannie Mae's Remedies.
  coverage_tier: operative
obligations:
- id: fnma-svc-a1-4.1-02-full
  canonical_id: fnma-svc-a1-4.1-02-full
  section: Fannie Mae Servicing Guide A1-4.1-02 — Fannie Mae's Remedies
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide A1-4.1-02 — Fannie Mae's Remedies
    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: 'A1-4.1-02, Fannie Mae’s Remedies (09/09/2020) Introduction This
      topic contains the following: Overview Overview of Remedies Imposition of Sanctions
      Suspension of New Servicing Fannie Mae’s Termination For Cause Alternatives
      to Contract Termination Overview Fannie Mae has remedies available in the event
      of the seller/servicer’s breach of contract and nonperformance. All rights and
      remedies under the Lender Contract are distinct, cumulative, and non-exclusive,
      not only as to each other but as to any rights or remedies aﬀorded by law or
      equity. They may be exercised together, separately or successively. Subject
      to the Servicing Defect Remedies Framework in A1-3-02, Fannie Mae- Initiated
      Repurchases, Indemniﬁcations, Make Whole Payment Requests and Deferred Payment
      Obligations and the origination defect remedies framework in the Selling Guide,
      Fannie Mae has no obligation to pursue any speciﬁc remedy, and its decision
      to pursue one or more remedies does not waive, limit, or aﬀect Fannie Mae’s
      right to pursue any other remedy, and any remedies that are applied will, in
      Fannie Mae’s sole judgment, be commensurate with the associated level of risk.
      Overview of Remedies Fannie Mae has remedies available in the event of the seller/servicer’s
      breach of contract or nonperformance. In lieu of exercising its right to terminate
      the Lender Contract or the servicer’s servicing arrangement, Fannie Published
      May 13, 2026 49 Mae may pursue a variety of other remedies, either to correct
      a speciﬁc problem or to improve the seller/servicer’s overall performance. Possible
      remedies include those identiﬁed in A1-3-02, Fannie Mae-Initiated Repurchases,
      Indemniﬁcations, Make Whole Payment Requests and Deferred Payment Obligations,
      among others. If Fannie Mae decides not to take action against the seller/servicer
      at any point in time, it does not mean that it condones any action or inaction
      by the seller/servicer that would be grounds for suspension or termination or
      that Fannie Mae is waiving its right to take action in the future. Imposition
      of Sanctions When Fannie Mae determines that the seller/servicer’s performance
      of its selling and/or servicing obligations does not meet the standards in its
      Lender Contract, Fannie Mae may impose a formal sanction to give the seller/servicer
      oﬃcial notice of its shortcomings and an opportunity to correct its deﬁciencies.
      Prior to imposing servicing sanctions, Fannie Mae generally gives the servicer
      notice of the contemplated action so the servicer can submit a written response
      or request a meeting with its Fannie Mae Servicing Representative (see F-4-02,
      List of Contacts). The servicer’s written response must include a description
      and explanation of any mitigating circumstances or speciﬁc proposals to satisfy
      Fannie Mae’s objections to the servicer’s performance of its servicing obligations
      under the Lender Contract. Fannie Mae reserves the right to omit these steps
      and take immediate action to terminate or suspend the Lender Contract at any
      time in accordance with the provisions thereof. If any act, omission, or failure
      of performance by the servicer constitutes a breach of the Lender Contract,
      Fannie Mae is not obligated to impose a sanction prior to exercising its contractual
      right to terminate or suspend the servicing arrangement or all of its Lender
      Contract. If Fannie Mae initially chooses to place the servicer under a formal
      sanction, Fannie Mae can subsequently decide that termination or suspension
      is the more appropriate action and take immediate steps to eﬀect the termination
      even if the terms of the sanction have not yet expired. Suspension of New Servicing
      Fannie Mae may suspend the servicer’s right to add new mortgage loans to its
      Fannie Mae servicing portfolio whether those mortgage loans represent new mortgage
      loans Fannie Mae would purchase or securitize or existing Fannie Mae-owned or
      securitized mortgage loans that would be transferred from another servicer.
      The suspension of new servicing applies to all types of mortgage loans or to
      speciﬁc products, depending on the nature of the servicer’s performance deﬁciencies.
      Fannie Mae will specify a time period for each suspension. The exact suspension
      period will relate to the seriousness of the deﬁciencies and the anticipated
      time it will take to correct them. In some cases, Fannie Mae may specify a deﬁnite
      date on which the suspension will end. In other cases, Fannie Mae may state
      that the suspension is for an indeﬁnite period. Fannie Mae usually speciﬁes
      an indeﬁnite period when it wants the servicer to satisfy certain conditions
      — such as the hiring of additional staﬀ or reducing a high delinquency ratio
      and maintaining it at an acceptable level for a certain number of months — before
      it removes the suspension. Fannie Mae will specify the performance areas that
      must be improved to avoid termination of the servicing arrangement. Fannie Mae
      may remove this sanction if the servicer accomplishes the expected improvement
      before the Published May 13, 2026 50 suspension period ends. If it appears that
      no improvement is forthcoming, Fannie Mae may decide, either at or before the
      end of the stated suspension period, that it is appropriate to terminate either
      with or without cause all or part of the servicing arrangement or the entire
      Lender Contract under the applicable provisions of the Lender Contract. Fannie
      Mae’s Termination For Cause Fannie Mae may terminate the seller/servicer’s Lender
      Contract, including its selling and/or servicing arrangement at any time with
      or without cause, in accordance with the Lender Contract. Fannie Mae will give
      the servicer a termination notice. Any responsibilities or liabilities related
      to speciﬁc portfolio or MBS mortgage loans that the servicer had before the
      termination will continue to exist after the termination unless Fannie Mae expressly
      agrees in writing to release the servicer from those responsibilities and liabilities.
      As guarantor, Fannie Mae must be able to direct servicing to entities best suited
      to perform servicing functions to the extent the servicer is not able to meet
      its contractual obligations. When Fannie Mae terminates the Lender Contract,
      the servicer must comply with instructions provided by Fannie Mae regarding
      requirements reasonably necessary to eﬀectuate the transfer of servicing in
      connection with a termination. Fannie Mae may retain the servicing or hire a
      new servicer or subservicer to service the mortgage loans. Fannie Mae will negotiate
      a new servicing or subservicing fee with the entity that Fannie Mae hires to
      service the mortgage loans following termination of the servicer’s rights to
      service the mortgage loans. The servicer shall be responsible for all reasonable
      and customary costs and expenses related to the transfer of servicing in connection
      with a termination. When Fannie Mae terminates a servicer’s servicing arrangement
      for cause based on the servicer’s breach of its Lender Contract related to its
      servicing arrangement or in connection with the termination of the entire Lender
      Contract, the servicer will have no further rights in the servicing of the mortgage
      loans it had been servicing for Fannie Mae. Fannie Mae will not pay a termination
      fee in such cases and it may make the termination eﬀective immediately. Alternatives
      to Contract Termination The Lender Contract provides remedies to Fannie Mae
      for the seller/servicer’s breach of contract and nonperformance. Subject to
      the Servicing Defect Remedies Framework in A1-3-02, Fannie Mae-Initiated Repurchases,
      Indemniﬁcations, Make Whole Payment Requests and Deferred Payment Obligations,
      any remedies that are applied will, in Fannie Mae’s sole judgment, be commensurate
      with the associated level of risk. In addition to termination, there are less
      stringent sanctions and/or additional requirements that Fannie Mae may impose
      as a condition for not terminating the Lender Contract. Some possible requirements
      are set forth in the Guides, including the following conditions that apply to
      sellers, servicers, and responsible parties that assume the selling representations
      and warranties or servicing responsibilities or liabilities: requiring the responsible
      party to indemnify Fannie Mae for actual and prospective Fannie Mae losses;
      requiring the responsible party to repurchase a mortgage loan or an acquired
      property; requiring the responsible party to remit a make whole payment; imposing
      a compensatory fee; Published May 13, 2026 51 imposing a suspension or some
      other formal sanction against the responsible party; requiring additional and
      more frequent ﬁnancial and operational reporting; accelerating the processing
      and rebuttal time periods and payment of outstanding repurchases and repurchase/indemniﬁcation
      obligations; requiring the servicer to take steps to sell and transfer all of
      its Fannie Mae servicing, or portions thereof as designated by Fannie Mae, to
      an unrelated entity upon 90 days’ written notice from Fannie Mae; limiting the
      responsible party from acquiring additional Fannie Mae servicing (over and above
      its existing servicing) in either its servicing or its subservicing portfolio;
      denying transfer of servicing requests or denying pledged servicing requests;
      modifying or suspending any contract or agreement with the responsible party,
      such as a variance or special requirement, including termination, suspension,
      or rescission of any variance approved under the terms thereof; requiring the
      responsible party to post collateral in the form of cash or cash equivalents
      reasonably acceptable to Fannie Mae in an amount determined by Fannie Mae based
      on the particular circumstances; imposing limits on trading desk transactions;
      and imposing some other formal sanction on the responsible party. Fannie Mae
      may oﬀset any obligations that it may owe the responsible party against any
      obligations the responsible party may owe Fannie Mae under any existing agreement,
      whether or not Fannie Mae has made any demand under such agreement and even
      though such obligations may not yet be immediately due. Fannie Mae may pursue
      these alternative remedies for a variety of reasons, including when it believes
      the servicer should have an opportunity to correct the breach of the Lender
      Contract and their imposition will lead to a correction. Fannie Mae has no obligation
      to pursue any of these alternative remedies and its decision to pursue one or
      more of the remedies does not waive, limit or aﬀect its ability to terminate
      the Lender Contract or one or more of the individual arrangements at any time
      that Fannie Mae deems it appropriate to do so under the provisions of the Lender
      Contract. 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. Fannie Mae is willing to work with the servicer
      and responsible party and consider other solutions that can correct or adequately
      address its concerns. Fannie Mae’s decision not to take action against the servicer
      does not mean that Fannie Mae condones any action or inaction by the servicer,
      or that Fannie Mae is waiving its right to take action in the future. Recent
      Related Announcements The table below provides references to recently issued
      Announcements that are related to this topic. Announcements Issue Date Announcement
      SVC-2020-04 September 9, 2020 Published May 13, 2026 52 Section A1-4.2, Imposition
      of Compensatory Fees'
  judgment: false
