Fannie Mae issued Servicing Guide Announcement SVC-2025-05 (Announcement), setting forth updates to the Servicing Guide. Per the Announcement, Fannie Mae:

• Updated policies for mortgage loans subject to temporary interest rate buydown plans, specifically, to:
  • Require servicers to apply interest rate buydown funds to reduce the arrearages to be capitalized in connection with a Fannie Mae Flex Modification, subject to the terms of the buydown agreement;
  • Instruct servicers that they must not apply interest rate buydown funds to reduce the delinquency amount in connection with a reinstatement, repayment plan, or payment deferral unless required by the terms of the buydown agreement;
  • Require servicers to ensure that the borrower waives reimbursement of any interest rate buydown funds in connection with a Mortgage Release; and
  • Clarify that, for mortgage loans subject to a temporary interest rate buydown plan, servicers must send notification to the borrower detailing a pending interest rate increase 90 days prior to the payment change.
• Revised the Loan Modification Agreement (Form 3179) instructions to:
  • Require the inclusion of an alternate provision to reflect the application of interest rate buydown funds to reduce the arrearages in connection with a Fannie Mae Flex Modification; and
  • Align FNMA’s language with the 2021 updates to the Uniform Security Instruments regarding the treatment of repayment of escrow shortages or deficiencies;
• Revised Form 3179 to update the definition of “Property”;
• Required the servicer of a 1^st lien mortgage loans to send a payment reminder notice to the borrower no later than the 20th day of the month if the payment has not been received (subject to the existing exceptions); and
• Clarified the allowable exemption for transfers of property into an inter vivos trust.

The revisions related to temporary interest rate buydown plans and revised Form 3179 instructions requiring the inclusion of an alternate provision to reflect the application of interest rate buydown funds to reduce the arrearages in connection with a Fannie Mae Flex Modification must be implemented no later than November 1, 2025 (servicers are, however, encouraged to begin implement the policy immediately). The revisions related to revised Form 3179 and revised Form 3179 instructions regarding the treatment of repayment of escrow shortages or deficiencies are effective for all Loan Modification Agreements sent to the borrower for signature on and after November 1, 2025 (servicers are, however, encouraged to begin implement the policy immediately). The revisions related to a payment reminder notice are effective December 1, 2025. The revisions related to clarification the exemption for transfers of property into an inter vivos trust are effective August 13, 2025.

Click to view the Fannie Mae Servicing Guide Announcement SVC-2025-05: https://www.tenaco.com/wp-content/uploads/2025/08/Fannie-Servicing-Guide-Announcement-SVC-2025-05-08-13-25.pdf