source:
  type: guide
  id: fnma-svc-a2-1-08
  authority: Fannie Mae Servicing Guide A2-1-08 — First Lien Mortgage Loan Requirements
  description: Fannie Mae Servicing Guide A2-1-08 — First Lien Mortgage Loan Requirements.
  coverage_tier: operative
obligations:
- id: fnma-svc-a2-1-08-full
  canonical_id: fnma-svc-a2-1-08-full
  section: Fannie Mae Servicing Guide A2-1-08 — First Lien Mortgage Loan Requirements
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide A2-1-08 — First Lien Mortgage Loan Requirements
    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: 'A2-1-08, First Lien Mortgage Loan Requirements (11/12/2014)
      Introduction This topic contains the following: Coordination with First Lien
      Mortgage Loan Servicer Required Advances for Second Lien Mortgage Loans Subordination
      of Second Lien Mortgage Loan Coordination with First Lien Mortgage Loan Servicer
      The servicer of a second lien mortgage loan is responsible for coordinating
      with the servicer of the ﬁrst lien mortgage loan on any actions it takes to
      protect Fannie Mae’s or an MBS trust’s investment and, if necessary, advance
      funds to protect that investment. The servicer must send a written notice of
      Fannie Mae’s ownership interest to the servicer of the ﬁrst lien mortgage loan
      as soon as Fannie Mae purchases or securitizes the second lien mortgage loan.
      This notice must include a request for the ﬁrst lien mortgage loan servicer
      to provide immediate notice to the second lien mortgage loan servicer of any
      event or situation that might jeopardize Fannie Mae’s or an MBS trust’s investment
      in the second lien mortgage loan. This close coordination should continue through
      the disposition of an acquired property or satisfaction of the mortgage loan
      debts. The servicer of the second lien mortgage loan must work with the ﬁrst
      lien mortgage loan servicer to identify speciﬁc servicing responsibilities that
      might be more eﬀective if they were shared or handled by only one servicer instead
      of by the two servicers acting independently. Any agreement that is reached
      must concentrate on eliminating duplication of eﬀort and avoiding unnecessary
      expenses. Both servicers must have a clear understanding of their speciﬁc responsibilities.
      Required Advances for Second Lien Mortgage Loans The servicer of a second lien
      mortgage loan must advance reasonable amounts for expenditures that are required
      to protect Fannie Mae’s investment in the second lien mortgage loan regardless
      of whether the mortgage loan is current or delinquent. These advances usually
      relate to the second lien mortgage loan, but occasionally they may be required
      for the ﬁrst lien mortgage loan. The servicer must document the individual mortgage
      loan ﬁle to support fully the need for the advance. Among other things, the
      servicer may be required to advance funds for the payment of real estate taxes
      and/or property or ﬂood insurance premiums, property management expenses, maintenance,
      Published May 13, 2026 81 repairs, prevention of waste, and capital improvements
      to the property. The servicer must advance funds to reinstate or satisfy the
      ﬁrst lien mortgage loan with conventional MI if required by the mortgage insurer
      as a condition for claim ﬁling. Advances for Second Lien Mortgage Loans: Whenever
      the servicer advances funds for the protection of the security, appropriate
      arrangements should be made for the borrower to repay the advance. If the mortgage
      loan is current and the borrower cannot or will not repay the advance in a lump-sum
      payment or in installments, the servicer may make the advance, as described
      in the following table. If the second lien mortgage loan is a... And... Then
      the servicer... portfolio mortgage loan the mortgage loan instrument, local
      laws, and government regulations allow the capitalization of advances should
      capitalize its advance by: 1. increasing the UPB by the amount of its advance,
      and then 2. requesting that Fannie Mae reimburse it for Fannie Mae’s share of
      the advance, via request for expense reimbursement. the mortgage loan instrument,
      local laws, or government regulations do not allow the capitalization of advances
      should request that Fannie Mae reimburse it for Fannie Mae’s share of the advance,
      via request for expense reimbursement. MBS mortgage loan the mortgage loan instrument,
      local laws, and government regulations allow the capitalization of advances
      may apply subsequent mortgage loan payments against the advance. If the mortgage
      loan is delinquent, the servicer should arrange for the borrower to repay the
      advance, either in installments, or as part of the full amount required to reinstate
      the mortgage loan. If the mortgage loan is subsequently foreclosed and the borrower
      had not repaid the advance, Fannie Mae will reimburse the servicer for Fannie
      Mae’s share of the advance when the acquired property is sold, unless the mortgage
      loan is an MBS mortgage loan serviced under the regular servicing option, or
      the insurance claim is settled if the mortgage loan is insured by a conventional
      mortgage insurer. Advances for the First Lien Mortgage Loan: Whether the servicer
      of the second lien mortgage loan is required to advance funds for the protection
      of the secured property depends on the conditions described in the Published
      May 13, 2026 82 following table. If Fannie Mae… Then the servicer of the second
      lien mortgage loan… holds both the ﬁrst and second lien mortgage loans does
      not need to advance funds for the protection of the security, although it may
      have to advance funds to reinstate or pay oﬀ the ﬁrst lien mortgage loan in
      connection with the second lien mortgage loan foreclosure. does not hold the
      ﬁrst lien mortgage loan must advance funds to pay delinquent payments, taxes,
      property or ﬂood insurance premiums, and any other charges related to the ﬁrst
      lien mortgage loan if that is required to protect Fannie Mae’s investment. The
      servicer must obtain approval from its Fannie Mae Servicing Representative (see
      F-4-02, List of Contacts), even when Fannie Mae holds the ﬁrst lien mortgage
      loan, before it advances funds to pay more than three monthly installments,
      to pay oﬀ the ﬁrst lien mortgage loan, or to pay any expense if its advances
      for the ﬁrst lien mortgage loan have reached $7,500. To request reimbursement
      for Fannie Mae’s share of any advances made on the ﬁrst lien mortgage loan,
      the servicer of a portfolio mortgage loan or MBS mortgage loan serviced under
      the special servicing option must submit a request for expense reimbursement
      to Fannie Mae. Subordination of Second Lien Mortgage Loan When a ﬁrst lien mortgage
      loan is being reﬁnanced, the second lien mortgage loan holder may be asked to
      execute a subordination agreement, which keeps the second lien mortgage loan
      in its original lien position even though it will predate the new ﬁrst lien
      mortgage loan. The servicer should restrict the degree of subordination as much
      as possible. The servicer may consider the following guidelines when evaluating
      a subordination oﬀer. Published May 13, 2026 83 If Fannie Mae... Then the servicer...
      is not providing the funds to reﬁnance the ﬁrst lien mortgage loan should agree
      to subordinate Fannie Mae’s interest only if the combined unpaid balances of
      the second lien mortgage loan and the new ﬁrst lien mortgage loan represent
      80% or less of the current appraised value of the property. The servicer may
      require that a portion of the proceeds from the reﬁnancing be applied to reduce
      the unpaid balance of Fannie Mae’s second lien mortgage loan. is providing the
      funds to reﬁnance the ﬁrst lien mortgage loan should consolidate the ﬁrst and
      second lien mortgage loans or work to ensure the second lien is paid in full.
      Otherwise, the servicer may agree to subordinate Fannie Mae’s interest as long
      as the combined unpaid balances of the second lien mortgage loan and the new
      ﬁrst lien mortgage loan do not exceed Fannie Mae’s underwriting guidelines for
      single-family ﬁrst lien mortgage loans and represent 80% or less of the current
      appraised value of the property. To meet these requirements, it may be necessary
      to apply funds toward the reduction of the second lien mortgage loan debt, reduce
      the amount of the new ﬁrst lien mortgage loan, or both. When a borrower who
      has an FHA Title I home improvement loan reﬁnances their existing ﬁrst lien
      mortgage loan to obtain a lower interest rate or a longer term, the servicer
      may agree to subordinate the Title I loan to the new reﬁnance mortgage loan
      (without obtaining Fannie Mae’s or FHA’s prior written consent) as long as the
      amount of the new reﬁnanced mortgage loan is not greater than the sum of the
      existing ﬁrst lien mortgage loan and reasonable ﬁnancing or closing costs. If
      the borrower is reﬁnancing for any other reason, the servicer must obtain FHA’s
      written authorization to subordinate the Title I loan to the new ﬁrst lien mortgage
      loan in order to ensure that the security value of the Title I loan is not impaired
      or reduced.'
  judgment: false
