source:
  type: guide
  id: fnma-svc-c-1.2-01
  authority: Fannie Mae Servicing Guide C-1.2-01 — Processing Additional Principal
    Payments
  description: Fannie Mae Servicing Guide C-1.2-01 — Processing Additional Principal
    Payments.
  coverage_tier: operative
obligations:
- id: fnma-svc-c-1.2-01-full
  canonical_id: fnma-svc-c-1.2-01-full
  section: Fannie Mae Servicing Guide C-1.2-01 — Processing Additional Principal Payments
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide C-1.2-01 — Processing Additional Principal
      Payments
    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: 'C-1.2-01, Processing Additional Principal Payments (11/13/2024)
      Introduction This topic contains the following: Published May 13, 2026 211 Processing
      Additional Principal Payments for Current Mortgage Loans Processing Additional
      Principal Payments for Delinquent Mortgage Loans Reapplying Principal Payments
      to Cure a Delinquency Processing Additional Principal Payments at Fannie Mae’s
      Request Processing a Re-Amortization After Application of Additional Principal
      Payments Processing Additional Principal Payments for Current Mortgage Loans
      The servicer must immediately accept and apply an additional principal payment
      (referred to as a principal curtailment) identiﬁed by the borrower as such for
      a current mortgage loan. The servicer must follow the procedures in Processing
      a Principal Curtailment in F-1-09, Processing Mortgage Loan Payments and Payoﬀs
      for detailed instructions related to applying a principal curtailment for a
      current mortgage loan. For additional contractual information as it pertains
      to principal curtailments, see Fannie Mae’s Selling Guide Topic B2–1.5–05: Principal
      Curtailments. Mortgage Loans Subject to a Payment Deferral or a Modiﬁcation:
      The following table outlines how the servicer must apply a principal curtailment
      on a mortgage loan subject to a payment deferral or a modiﬁcation. If the principal
      curtailment being applied... Then the servicer must apply such principal curtailment...
      is less than the interest-bearing UPB to the interest-bearing UPB. is greater
      than or equal to the interest-bearing UPB in the following order: 1. to the
      non-interest bearing balance, if any; and 2. to the interest-bearing UPB. Processing
      Additional Principal Payments for Delinquent Mortgage Loans In the case of a
      delinquent mortgage loan, any additional principal payments identiﬁed as such
      must ﬁrst be applied toward curing the delinquency. If there are any remaining
      funds, the servicer must then apply them in accordance with Processing Additional
      Principal Payments for Current Mortgage Loans. Reapplying Principal Payments
      to Cure a Delinquency Upon a borrower’s written or verbal request, the servicer
      is authorized to reapply principal prepayments to cure a delinquency if the
      request meets the conditions in the following table. ✓ Conditions that must
      be met to reapply principal prepayments to cure a delinquency Published May
      13, 2026 212 The mortgage loan is either • a portfolio mortgage loan; or • a
      participation pool mortgage loan (which is not a mortgage loan that has been
      pooled to back an MBS issue, including PFP mortgage loans). The reapplication
      of the principal prepayment does not result in the mortgage loan balance being
      higher than it would have been had the original amortization schedule for the
      mortgage loan been followed. The borrower has not previously received mortgage
      assistance funds from a mortgage assistance fund program provider. See D2-3.1-05,
      Interacting with Mortgage Assistance Fund Program Providers for additional information.
      The borrower agrees to submit any additional funds that are needed to supplement
      the prepayment so that the total delinquency can be cured. Note: If the borrower
      cannot raise the additional funds, the servicer is authorized to combine the
      reapplication of a principal prepayment with a workout option. See D2-3, Fannie
      Mae’s Home Retention and Liquidation Workout Options for additional information.
      Processing Additional Principal Payments at Fannie Mae’s Request Upon receipt
      of Fannie Mae’s request to reduce the UPB of a mortgage loan for a partial release
      of security, a condemnation award, or insurance proceeds sent to the servicer,
      the servicer must process the funds as an additional principal payment. Processing
      a Re-Amortization After Application of Additional Principal Payments The following
      table lists the servicer’s responsibilities when the borrower requests that
      the mortgage loan be re- amortized to reduce the contractual monthly mortgage
      loan payment after a substantial principal curtailment. ✓ The servicer must…
      complete an Agreement for Modiﬁcation, Re-Amortization, or Extension of a Mortgage
      (Form 181). In completing Form 181, the servicer must • only revise as authorized
      in its instructions; • provide the borrower and the document custodian the completed
      Form 181; • determine, in compliance with applicable law, if the borrower is
      required to execute Form 181 to ensure the mortgage loan maintains its ﬁrst
      lien position and is fully enforceable; and • send a copy of Form 181 to Fannie
      Mae''s eVault via MERS eDelivery for eMortgages. report the payment change as
      described in Reporting a Transaction Type 83 (Payment/Rate Change Record) in
      the Investor Reporting Manual. not consider a mortgage loan re-amortization
      to be a mortgage loan modiﬁcation for the purpose of determining eligibility
      for a subsequent mortgage loan modiﬁcation in accordance with this Guide. Published
      May 13, 2026 213 Recent Related Announcements The table below provides references
      to recently issued Announcements that are related to this topic. Announcements
      Issue Date Announcement SVC-2024-06 November 13, 2024 Announcement SVC-2023-05
      October 11, 2023 Announcement SVC-2021-04 July 14, 2021 Announcement SVC-2020-04
      September 9, 2020'
  judgment: false
