MPF Announcement 2024-29

MPF Xtra Payoff Calculation and Reporting Reminders 

Effective Date: Immediately (unless otherwise noted)

Calculating Payoffs or Liquidations

When calculating interest on a payoff, Servicers must meet the requirements in Section 2.12.2 Payoff and Liquidation Remittances of the MPF Xtra Servicing Guide and must also follow the actual/actual remittance calculation requirements in Fannie Mae Servicing Guide Chapter F-1-09: Processing Mortgage Loan Payments and Payoffs.

 Servicers are encouraged to access the Calculating and Reporting Loan Payoffs on-demand tutorial for additional guidance.

 The Servicer must calculate the payoff as follows:

• calculate the amount of interest charged to the borrower based on:
  • the UPB of the mortgage loan,
  • as of the last paid installment date for the last reporting cycle not including the date of payoff,
  • using the current interest accrual rate.
• compute interest to the up to the date the payoff is made but not including the day the payoff funds were received,
• A full month’s interest due from the Borrower should be calculated on a 360–day year (30 / 360 day basis),
• A partial month’s interest due up to, but not including, the date of payoff should be based on a 365–day year (actual days / 365 day basis).
• For Mortgage Loans required to be repurchased under various provisions in the Guides: The book value of the Mortgage Loan plus interest at the “Pass-through Rate” (i.e. the Note Rate minus the Servicing Fee percentage) through the remittance date.
• The interest calculations must align with the Borrowers mortgage loan history.

MPF Xtra Payoff Reminders

• Payoffs/Liquidations with Principal curtailments: When calculating the Borrower’s payoff after the receipt of a principal curtailment, the Servicer must calculate the Borrower’s payoff interest using the outstanding principal balance after the principal curtailment has been applied. However, when remitting the payoff funds to the MPF Provider, the Servicer is required to include in their remittance the difference in interest owed from the Borrowers unpaid principal balance as of the Borrowers last monthly payment due date to the payoff date (prior to any curtailments being applied).

 

• Late Reporting: Servicers must report liquidation/removal transactions in accordance to the Guides. Servicers who fail to report the liquidation/removal transaction in a timely manner, will be responsible for remitting interest from the liquidation date to the date the mortgage loan liquidation is reported correctly with the Investor.

Servicers must address any discrepancy with a payoff amount, including but not limited to interest shortfalls, by remitting sufficient funds to cover the discrepancy by the next business day.

 Servicers are also encouraged to reach out to their Servicing System providers to ensure their servicing system is not causing incorrect interest calculations due to rounding, payment effective dates, or curtailments, etc. Please work your Servicing System providers directly to identify any root cause and work on system enhancements if needed to correct any issues.

Reporting Reminders for Payoffs or Liquidations

• Curtailments – Servicers must deposit all curtailments received into the P&I Custodial Account with the MPF Provider by 2:00pm Central Time the next business day following the Servicer’s receipt of the funds.

   

• Liquidation Proceeds – Servicers must deposit all payoff funds or Liquidation Proceeds, including the funds from a short sale and the disposition of an REO property (sale and primary mortgage insurance proceeds), into the P&I Custodial Account with the MPF Provider by 2:00pm Central Time the next Business Day following the Servicer’s receipt of the funds.

   

• Reporting Removal Transactions – All removal transactions (payoffs, foreclosures, short sales, deeds-in-lieu of Foreclosure, and third party sales) must be included on the daily investor report and reported to the Master Servicer by 12:00pm (Noon) the next Business Day after the activity has occurred.

   

• Late Reporting Fees – Each occurrence of a late or incomplete Monthly Accounting Report will be subject to a late reporting fee in accordance to the MPF Xtra Servicing Guide.

For additional information refer to MPF Xtra Servicing Guide Chapter 2.10 – Prepayments and Chapter 2.14 –Reporting Requirements.

Please contact the MPF Service Center with any questions or assistance regarding reporting (877-FHLB-MPF).