source:
  type: guide
  id: fnma-svc-f-1-03
  authority: Fannie Mae Servicing Guide F-1-03 — Establishing and Implementing Custodial
    Accounts
  description: Fannie Mae Servicing Guide F-1-03 — Establishing and Implementing Custodial
    Accounts.
  coverage_tier: operative
obligations:
- id: fnma-svc-f-1-03-full
  canonical_id: fnma-svc-f-1-03-full
  section: Fannie Mae Servicing Guide F-1-03 — Establishing and Implementing Custodial
    Accounts
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide F-1-03 — Establishing and Implementing Custodial
      Accounts
    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-1-03, Establishing and Implementing Custodial Accounts (05/13/2026)
      Introduction This Servicing Guide Procedure contains the following: Establishing
      P&I Custodial Accounts Drafting Schedule by Type of Draft Establishing T&I Custodial
      Accounts Managing T&I Custodial Accounts Implementing Custodial Accounts Subservicer-Speciﬁc
      Requirements for Custodial Accounts Establishing Bank Instructions for Drafting
      Drafting through CRS Implementing Bank Instructions in CRS Reconciling Custodial
      Bank Accounts Establishing P&I Custodial Accounts As described in P&I Custodial
      Accounts in A4-1-02, Establishing Custodial Bank Accounts, the funds in the
      P&I custodial account must relate to monthly P&I payments due Fannie Mae. The
      servicer must use one of the following methods to transfer P&I payments: deduct
      the servicing fees and late charges before the servicer transfers P&I payments
      from its clearing account to the custodial account, or transfer the entire P&I
      payment from its clearing account into the custodial account, as long as it
      removes its share of the funds no later than the next business day after they
      are deposited into the custodial account. The servicer of participation pool
      mortgage loans must deposit only Fannie Mae''s percentage shares of the funds
      into the P&I custodial account. The following table describes the requirements
      for the collection and disposition of P&I funds. ✓ The servicer must... Establish
      a reasonable daily cut-oﬀ of its work to ensure that collections are promptly
      credited to the appropriate account. Published May 13, 2026 541 ✓ The servicer
      must... Deposit any monthly payments collected after the mortgage loan was submitted
      to Fannie Mae for purchase or securitization, including any payments due from
      an interest rate buydown plan account, into the P&I account no later than one
      business day after the servicer or its designee receives Fannie Mae’s purchase
      proceeds. For additional requirements regarding a lockbox agent, see C-1.1-01,
      Servicer Responsibilities for Processing Mortgage Loan Payments. Maintain records
      identifying each borrower, the amount of each borrower’s payment, and the custodial
      account into which each payment is deposited. Drafting Schedule by Type of Draft
      As described in P&I Custodial Accounts in A4-1-02, Establishing Custodial Bank
      Accounts, the required draft date will diﬀer based on the type of draft. The
      following table describes the schedule for various types of drafts. Draft Type
      Drafting Schedule MBS LLPAs Fifth business day of the month following issuance
      of the related MBS pool • Guaranty fees • Guaranty fee buydown charges Seventh
      calendar day of each month, or on the preceding business day if the seventh
      is not a business day Other fees and charges, such as • Upfront commitment fees
      • Pair-oﬀ or extension fees • Pool contract fees Throughout the month The servicer
      is authorized to withdraw funds from the P&I custodial account only for the
      following purposes: remit the funds due Fannie Mae on the remittance date; reimburse
      itself for delinquency advances for scheduled/actual and scheduled/scheduled
      remittance types that are recovered from subsequent collections (to the extent
      that such collections are payments on the related mortgage loan or are not required
      to be included in the funds due to Fannie Mae on the next remittance date);
      remove amounts that have been deposited in error; remove fees, charges, funds
      due related to servicing transfers, and other amounts that are deposited into
      the account on a temporary basis; Published May 13, 2026 542 remove interest
      earned on an interest-bearing custodial account; and clear and terminate the
      account. Establishing T&I Custodial Accounts As described in T&I Custodial Accounts
      in A4-1-02, Establishing Custodial Bank Accounts, funds in the T&I custodial
      account may not be commingled with P&I funds, the servicer’s general corporate
      funds, or with funds held by the servicer for other investors. The following
      table describes requirements the servicer must adhere to when establishing custodial
      accounts for T&I funds. ✓ The servicer must... Establish a reasonable daily
      cut-oﬀ of its work to ensure that collections are promptly credited to the appropriate
      account. Deposit the borrower’s escrow account balance and any funds for an
      interest rate buydown plan account that are not scheduled for application toward
      the monthly payment into the T&I custodial account no later than one business
      day after the servicer or its designee receives Fannie Mae’s purchase proceeds
      for a mortgage loan. Fannie Mae may waive its next-day-deposit requirement when
      a servicer uses a computer service bureau or a third party as a collection agent
      if adequate controls exist. Maintain records if the servicer maintains separate
      T&I custodial accounts for diﬀerent remittance types identifying • each borrower,
      • the amount of each borrower’s escrow or other deposits, and • the custodial
      account into which each payment is deposited. Managing T&I Custodial Accounts
      As described in T&I Custodial Accounts in A4-1-02, Establishing Custodial Bank
      Accounts, a T&I custodial account must be used to make escrow-related disbursements,
      and hold unapplied funds pending ﬁnal disposition. The servicer is authorized
      to withdraw T&I funds from the T&I custodial account for these purposes: pay
      taxes, insurance premiums, etc., when they are due; apply buydown funds when
      due; refund escrow account surpluses to the borrower or pay interest to the
      borrower'' remove any amounts deposited in error; Published May 13, 2026 543
      remove funds due to the borrower, such as partial payments or loss draft funds;
      reimburse itself for T&I servicing advances from subsequent payments on the
      related mortgage loan once the mortgage loan becomes current; reduce arrearages
      to be capitalized in connection with completing a Fannie Mae Flex Modiﬁcation;
      and clear and terminate the account. See Establishing Written Policies or Procedures
      in A4-1-01, Staﬃng, Training, Procedures, and Quality Control Requirements for
      requirements for identifying and monitoring unapplied funds, including unapplied
      property or ﬂood insurance loss proceeds, held in the T&I custodial account.
      Implementing Custodial Accounts As described in A4-1-02, Establishing Custodial
      Bank Accounts, the servicer is responsible for the safekeeping of custodial
      funds at all times. For each custodial account the servicer establishes, the
      servicer and the depository institution must execute a Letter of Authorization
      for P&I Custodial Account (Form 1013), or a Letter of Authorization for T&I
      Custodial Account (Form 1014). When a servicer establishes (or changes) a custodial
      account for a mortgage loan, it must execute Form 1013 or Form 1014 electronically
      via the Custodial Bank Account Management application. The servicer is authorized
      to maintain multiple P&I custodial accounts for a single remittance type. The
      number of P&I custodial accounts established depends on the number of remittance
      types under which a servicer is reporting. The servicer is authorized to maintain
      multiple T&I custodial accounts for a single remittance type based on the number
      of remittance types under which a servicer is reporting. The servicer also has
      the option to commingle the T&I funds from various remittance types into one
      T&I custodial account. Custodial accounts established for the deposit of P&I
      funds must be titled as follows: ”(Name of servicer), as agent, trustee, and/or
      bailee for the beneﬁt of Fannie Mae and/or payments of various mortgagors and/or
      various owners of interests in mortgage-backed securities (Custodial Account).”
      Custodial accounts established for the deposit of T&I funds must be titled as
      follows: ”(Name of servicer), as agent and/or trustee for the beneﬁt of Fannie
      Mae and payments of various mortgagors, respectively (Custodial Account).” Subservicer-Speciﬁc
      Requirements for Custodial Accounts A servicer that uses subservicer(s) must
      have each subservicer execute a separate Letter of Authorization for each custodial
      account it establishes. The following table describes the steps the servicer
      and subservicer must take in order to properly implement custodial accounts.
      Published May 13, 2026 544 Step Servicer Action 1 A subservicer that is establishing
      (or changing) a custodial account must execute Form 1013 or Form 1014 via the
      Custodial Bank Account Management application. 2 The servicer, subservicer,
      and the custodial depository must each retain a copy of the executed Form 1013
      and/or Form 1014 in its ﬁles. Establishing Bank Instructions for Drafting The
      servicer must arrange for drafting of custodial funds in a manner consistent
      with the requirements of the Servicing Guide and Lender Contract. The servicer
      must designate bank instructions for a custodial account through the Cash Remittance
      System (CRS) from which Fannie Mae will draft funds. Drafting through CRS Under
      the CRS, a servicer is authorized to designate as a drafting account one P&I
      account for each remittance type it services. If the servicer maintains multiple
      P&I accounts for a single remittance type, the servicer must designate only
      one of these accounts as its drafting account for that remittance type. All
      monies due Fannie Mae for that remittance type must be moved to the designated
      drafting account prior to the date Fannie Mae drafts the account. A servicer
      with multiple P&I custodial accounts is authorized to use a consolidated drafting
      account in order to facilitate operational eﬃciencies. If the servicer uses
      a consolidated drafting account that includes scheduled/scheduled MBS mortgage
      loans, the servicer must designate a separate account as its drafting account
      for that remittance type only and all monies due must be moved from various
      MBS P&I custodial accounts (if the servicer has chosen to use multiple custodial
      accounts) to a single designated MBS pool consolidated drafting account prior
      to the date Fannie Mae drafts the account. A servicer is authorized to designate
      a separate consolidated drafting account for scheduled/scheduled portfolio,
      scheduled/actual, or actual/actual mortgage loans. The servicer is authorized
      to designate any of the portfolio mortgage loan P&I custodial accounts as the
      consolidated drafting account, or a special consolidated account that is used
      solely for drafting purposes. Implementing Bank Instructions in CRS The following
      table describes requirements for implementing bank instructions. Published May
      13, 2026 545 If the servicer designates… Then the servicer must… bank instructions
      for a consolidated drafting account fulﬁll all requirements under the CRS related
      to establishing bank instructions (see Fannie Mae''s CRS User Guide). The servicer
      must not deposit into the consolidated drafting accounts funds that are collected
      on behalf of other investors. an existing P&I custodial account as a special
      drafting account must advise Fannie Mae of the special drafting account by submitting
      Form 1013 electronically. Reconciling Custodial Bank Accounts The following
      table describes the requirements for reconciling custodial bank accounts. Step
      Servicer Action 1 Reconcile its cash book to the custodial account(s) every
      month using the applicable Custodial Account Reconciliation Form: ✓ The servicer
      must… Use the P&I Custodial Account Reconciliation (Form 496) to • reconcile
      each P&I custodial account, and • reﬂect the composition of the cash book balance
      of the account at the close of the reporting period. Use the T&I Custodial Account
      Reconciliation (Form 496A) to • reconcile each T&I custodial account, and •
      document unapplied funds that need resolution, and • reﬂect the composition
      of the cash book balance of the account at the close of the reporting period.
      2 Retain each month’s reconciliation in its records in the event that Fannie
      Mae requests the submission of a speciﬁc Form 496 or Form 496A to Fannie Mae.
      Recent Related Announcements Published May 13, 2026 546 The table below provides
      references to recently issued Announcements that are related to this topic.
      Announcements Issue Date Announcement SVC-2026-04 May 13, 2006 Announcement
      SVC-2026-01 February 18, 2026 Announcement SVC-2025-05 August 13, 2025 Announcement
      SVC-2023-04 July 12, 2023 Announcement SVC-2022-03 May 11, 2022 Announcement
      SVC-2020-07 December 9, 2020 F-1-04, Evaluating a Request for the Release, or
      Partial Release, of Property Securing a Mortgage Loan (07/12/2023) Introduction
      This Servicing Guide Procedure contains the following: Processing a Request
      for the Release, or Partial Release, of Property Securing a Mortgage Loan Protecting
      Fannie Mae’s Rights Regarding Taking of Property by Condemnation or Eminent
      Domain Processing a Request for the Release, or Partial Release, of Property
      Securing a Mortgage Loan The servicer must evaluate a request for the release
      of property securing a mortgage loan in accordance with D1-1-01, Evaluating
      a Request for the Release, or Partial Release, of Property Securing a Mortgage
      Loan. Upon receipt of the Application for Release of Security (Form 236), and
      any other documentation that may be necessary depending on the reason for the
      request for release of security, the servicer must follow the steps outlined
      in the following table. Published May 13, 2026 547 Step Servicer Action 1 Obtain
      any required approval from • the mortgage insurer or guarantor; and • the servicer
      of the ﬁrst lien mortgage loan, if Fannie Mae’s interest is in a second lien
      mortgage loan. 2 Determine whether Fannie Mae allows the servicer to approve
      the release of security on its behalf. If the request requires a non-delegated
      review, submit Form 236 and all documents as speciﬁed on Form 236, along with
      a recommendation, to Fannie Mae’s SF CPM division at partial_releases@fanniemae.com
      for approval. Note: The servicer must contact Fannie Mae’s SF CPM division (see
      F-4-02, List of Contacts) to determine whether Fannie Mae is willing to subordinate
      the mortgage lien to a burdensome easement if it determines that a burdensome
      easement • is not customary in the area, or • interferes with the property owner’s
      use or enjoyment of the property. If the request for release, or partial release,
      of security is approved, continue to Step #3. 3 If an escrow deposit account
      is maintained to pay property taxes, notify the tax collector or assessor under
      the following circumstances: • a release of any portion of a security property
      aﬀects the amount of taxes levied against the property, or • an authorized substitution
      of security property will aﬀect either the taxing jurisdiction or the tax assessment.
      Published May 13, 2026 548 Step Servicer Action 4 Execute any legal documentation
      needed for the release of security in accordance with the following table. If...
      Then the servicer... the servicer is the owner of record for the mortgage loan
      is authorized to execute any legal documentation needed for the release of security,
      regardless of whether the release was approved by the servicer or Fannie Mae.
      Fannie Mae is the owner of record and the servicer has the required power of
      attorney to execute documents for release of security, including partial releases,
      on Fannie Mae’s behalf is authorized to execute the documents for releases,
      including partial releases of security, regardless of whether the release was
      approved by the servicer or Fannie Mae. Fannie Mae is the owner of record, the
      servicer does not have the required power of attorney to execute documents for
      release of security—including partial releases—on Fannie Mae’s behalf, and the
      release, or partial release, of security must be approved by Fannie Mae must
      send the documents to Fannie Mae’s SF CPM division (see F-4-02, List of Contacts)
      at the same time it submits Form 236, so that if the release is approved, Fannie
      Mae can execute the documents at the same time. Fannie Mae is the owner of record,
      the servicer does not have the required power of attorney to execute documents
      for release of security—including partial releases—on Fannie Mae’s behalf, and
      the servicer is authorized to approve the release, or partial release, of security
      must send the following to Fannie Mae’s SF CPM division (see F-4-02, List of
      Contacts): • the documents to be executed (with the Fannie Mae loan number and,
      if applicable, the MERS MIN clearly identiﬁed); • a copy of the approved Form
      236; and • a letter that describes any special instructions related to the execution
      of the documents and indicates the address to which the executed documents should
      be returned. Published May 13, 2026 549 Step Servicer Action 5 Obtain a title
      insurance endorsement or similar title insurance product, and comply with any
      conditions (e.g. recording a release in public records) the title insurer requires
      for obtaining the endorsement. Note: Servicers remain responsible for ensuring
      that the title insurance coverage remains compliant with the requirements of
      Selling Guide B7-2-03, General Title Insurance Coverage and for taking whatever
      action necessary to protect the beneﬁcial interest of Fannie Mae and an MBS
      trust in the security property. See A2-1-01, General Servicer Duties and Responsibilities
      for additional details. 6 Determine whether any cash consideration paid for
      the release, or partial release, will be • applied to the outstanding debt.
      If so, continue to step 7; or • used for property improvements. Note: For substantial
      cash consideration, the servicer may collect the entire amount from the borrower
      and disburse the funds as speciﬁc improvements are completed. Published May
      13, 2026 550 Step Servicer Action 7 Apply and report any cash consideration
      received as part of the release, or partial release, of security as described
      in the following table. If... Then the servicer must... any consideration received
      is less than the total mortgage debt • apply it to pay any past due installments
      or to make an additional principal payment (curtailment), and • appropriately
      report the application in the next Fannie Mae investor reporting system reporting
      period. Note: If the application of the entire consideration to the UPB results
      in an LTV ratio that is less than the previous ratio, the servicer must require
      the borrower to apply only the portion of the consideration required to maintain
      the previous ratio and permit the borrower to retain the excess. However, if
      there is reason to require a reduced LTV ratio—such as the occupancy status
      of the property having changed from principal residence or second home to investment
      property—the servicer must require that the total consideration be applied to
      the mortgage loan debt. the proceeds are suﬃcient to satisfy the mortgage loan
      debt or if they do not fully satisfy the mortgage loan debt but Fannie Mae has
      agreed to charge oﬀ the diﬀerence (in connection with a condemnation or a full
      taking of the property by eminent domain) • remove the mortgage loan from Fannie
      Mae’s investor reporting system by Reporting an Action Code 71, and • remit
      the proceeds via the CRS as a “Special Remittance” (Remittance Type 370). Also
      see the Investor Reporting Manual and Fannie Mae’s CRS User Guide. Note: When
      a request to grant a burdensome easement or to release a beneﬁcial easement
      is approved, Fannie Mae does not require the borrower to apply any cash consideration
      they receive for the release toward the mortgage loan debt, although the servicer
      may require that the consideration be used to make any past due monthly payments.
      Protecting Fannie Mae’s Rights Regarding Taking of Property by Condemnation
      or Eminent Domain When there is a legal proceeding that may signiﬁcantly aﬀect
      Fannie Mae’s rights in the property, the servicer must evaluate a request for
      release in accordance with Evaluating a Request for the Partial or Total Taking
      of Published May 13, 2026 551 Property Securing a Mortgage Loan by Condemnation
      in D1-1-01, Evaluating a Request for the Release, or Partial Release, of Property
      Securing a Mortgage Loan. The servicer must take the actions outlined in the
      following table. ✓ The servicer must... Determine the method that the government
      instrumentality used to establish the property value on which the compensation
      is based. Determine the amount of the proposed award or compensation to be paid
      to the property owner. Pursue any legal remedies that are available if it does
      not appear that the borrower is being fairly compensated. If applicable, advise
      the law ﬁrm engaged in any foreclosure or bankruptcy proceedings about the proposed
      condemnation or taking by eminent domain so that the law ﬁrm can assume responsibility
      for any necessary legal action. Recent Related Announcements The table below
      provides references to recently issued Announcements that are related to this
      topic. Announcements Issue Date Announcement SVC-2023-04 July 12, 2023 Announcement
      SVC-2019-04 June 12, 2019'
  judgment: false
