Announcement 08-20 Amends these Guides: Servicing

August 11, 2008

Increase in Incentive Fees for Loss Mitigation Alternatives

Introduction
Fannie Mae is increasing the amount servicers will be compensated (incentive fees) for the successful completion of a repayment plan or loss mitigation alternative. Incentive fees are only applicable to mortgage loans serviced under the special servicing option, in which Fannie Mae assumes the risk of loss from borrower default. Incentive fees vary based on the type of loss mitigation alternative used by the servicer each is outlined below. The new incentive fee amounts are effective for repayment plans or loss mitigation alternatives completed on or after August 11, 2008 in accordance with our Servicing Guide requirements.

Repayment Plan
Servicing Guide, Part VII, Section 303: Repayment Plan The incentive fee for a repayment plan will be increased to $400 per case if the case meets the following criteria:

The mortgage loan must be 60 or more days delinquent when first reported with a Delinquency Status Code 12 - Repayment Plan - by the servicer. The mortgage must be brought current upon the successful completion of the repayment plan.

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Once a repayment plan incentive fee has been paid, a 12-month period must elapse from the date the related mortgage loan became current before another repayment plan incentive fee will be paid on that mortgage.

Fannie Mae will review eligibility for the repayment plan incentive fee and make the final determination based on information provided by the servicer; therefore, servicers need not submit requests for payment of repayment plan incentive fees. Repayment plan incentive fees on eligible mortgages will be sent to servicers on a monthly basis.

HomeSaver Advance
Announcement 08-14: Introduction to the HomeSaver Advance Fannie Mae will compensate servicers for the successful completion of a HomeSaver Advance (HSA) by paying incentive fees up to $700. The following criteria must be met: The HSA must meet all the eligibility criteria. Fannie Mae may review the information provided by the servicer to determine compliance with eligibility. The borrower must make the first three full monthly payments that are due on the first lien mortgage loan after the HSA is closed. Each of these three payments must be made within the month due.

The HSA incentive fee will be paid as follows: An initial $200 payment will be sent to the servicer upon successful execution and delivery of the HSA note. The remaining $500 payment will be sent to the servicer within 30 days after the borrower has made the required three monthly payments as reflected in Fannie Maes servicing system. Fannie Mae will review eligibility for the HSA incentive fee and make the final determination based on information provided by the servicer; therefore, servicers need not submit requests for payment of HSA incentive fees. HSA incentive fees on eligible mortgages will be sent to servicers on a monthly basis.

Modification
Servicing Guide, Part VII, Section 502.02: Modifying Conventional Mortgages Fannie Mae will pay an incentive fee of $700 for each successful modification completed. Effective immediately, servicers may no longer charge the borrower $500 to cover the administrative processing costs incurred in connection with a modification. The servicer may continue to charge the borrower for any actual out-of-pocket expenses for a credit report, any required title bringdown, or other allowable and documented expenses. The servicer should ensure that any costs charged to the borrower are permitted under the terms of the note, security instrument, and applicable law. Incentive fee payments on eligible mortgage loans will be sent to servicers upon receipt of a closed case entered into the Home Saver Solutions Network (HSSN). Fannie Mae Announcement 08-20 Page 2

will review eligibility for the modification incentive fee and make the final determination based on information provided by the servicer; therefore, servicers need not submit requests for payment of modification incentive fees. Modification incentive fees on eligible mortgages will be sent to servicers on a monthly basis.

Pre-Foreclosure Sale
Servicing Guide, Part VII, Section 504: Preforeclosure Sales Fannie Mae will pay servicers an incentive fee upon verification of each successful preforeclosure sale, as follows: $1,500 for (i) pre-foreclosure sales with Net Proceeds to Value (NPTV) equal to or greater than 92 percent or (ii) pre-foreclosure sales in situations in which the mortgage insurance claim is projected to make Fannie Mae whole for all losses; $1,250 for pre-foreclosure sales with NPTV equal to or greater than 90 percent but less than 92 percent; or $1,000 for pre-foreclosure sales with NPTV of less than 90 percent.

The applicable incentive fee amount should be identified in the pre-foreclosure sale case entered in HSSN. Servicers should continue to submit a Cash Disbursement Request (Form 571) for the payment of this incentive fee and for reimbursement of any attorneys fees or other expenses associated with the acceptance of a pre-foreclosure sale.

Deed-in-Lieu of Foreclosure
Servicing Guide, Part VII, Section 506: Deeds in Lieu of Foreclosure For each successful conventional mortgage deed-in-lieu of foreclosure completed in accordance with our Servicing Guide requirements, Fannie Mae will pay the servicer a $1,000 incentive fee. Fannie Mae will continue to reimburse the servicer for attorneys fees (up to $350) and for any of the costs for obtaining a title update that the borrower is unable to pay. Requests for the payment of this incentive fee or for reimbursement of any attorneys fees or other expenses associated with the acceptance of a deed-in-lieu of foreclosure should be submitted to Fannie Mae on a Cash Disbursement Request (Form 571).

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Note Fannie Mae reserves the right to request reimbursement of incentive fees from servicers and to pursue other remedies available to it, if applicable, if it is later determined that the mortgage loan was ineligible for the particular loss mitigation alternative. Servicers should contact their Servicing Consultant, Portfolio Manager, or the National Servicing Organization's Solution Center at 1-888-326-6438 if they have any questions about Announcement 08-20.

Michael A. Quinn Senior Vice President Single-Family Risk Officer

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