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Loan Modifications

The purpose of this job aid is to provide additional information on data fields required in the Loan Delivery application for loans that have been modified prior to delivery.

Overview

A modified loan is a loan that was legally modified after loan closing in a way that changed any of the loan terms or attributes reflected in the original note. In general, loans with material modifications, such as changes to the original loan amount, interest rate, final maturity, or product structure, are not eligible for delivery to Fannie Mae.

Fannie Mae permits the delivery of certain other modified loans based primarily on whether the loan was owned or securitized by Fannie Mae prior to the modification, or the modification of the loan was done in accordance with a standard product or is common and customary in a certain area.

A loan that was modified to effect technical or typographical corrections is permitted for delivery, provided that all of the changes correct errors in the executed documents, which reflect the terms of the original loan transaction. None of the changes can be the result of a subsequent modification or amendment to the original loan amount, interest rate, or other material loan term. The correction may not result in a change to, or create any inconsistencies with, other legal documents.

The table below provides a comprehensive overview of Fannie Mae requirements applicable to the delivery of modified loans.

Delivery Eligibility for Modified Loans
Modification Type*	Owned or securitized by Fannie Mae prior to modification?	Eligible for delivery to Fannie Mae after modification?
ARM to fixed rate conversion	Yes	Yes
ARM to fixed rate conversion	No	No
Single-closing construction-to-permanent financing	No	Yes
Changes to borrowers due to death, marriage or allowable property transfer	Yes	N/A - see Servicing Guide
	No	No
Modifications that result in material changes to loan terms	No	Yes - see Selling Guide Section B2-1.5-5 Principal Curtailments and B2-1.5-02 Loan Eligibility-Modified Loans for loan eligibility.

*New York Consolidation, Extension and Modification is listed as an allowable modification category in the Fannie Mae Selling Guide. These loans should be delivered with Modification Indicator = False.

Permissible Data Changes for Modified Loans

Only certain data on the Note is permitted to be modified. The table below identifies the only data that may be modified, based on the Modification Type.

Permissible Data Changes for Modified Loans
Modification Type	Is Change Permitted?
Modification Type	Interest Rate	Loan Amount	P&I	Term	Amortization Type
ARM to fixed rate conversion	Yes	No	Yes	No	Only ARM to Fixed
Single-closing construction-to-permanent financing	Yes	Yes	Yes	Yes	Only ARM to Fixed

Delivering Modified Loans

Loan Delivery requires pre-modification, post-modification, and current loan data. On the Loan Details screen, selecting “Yes” for Modification in the Indicators section causes the Special Products section to display at the bottom of the screen. Pre-modification (as of closing date) data is populated in the Special Products section. Post-modification and current loan data are populated as it is for non-modified loans.

Loan Delivery Implementation
ULDD Sort ID	Loan Delivery Data Label	Loan Delivery Implementation Notes	Enumerations
259	Modification Date	Enter the date of the modification agreement (Form 3179 or Form 3172).
397	Modification	Select “Yes” to identify the loan was modified prior to delivery. Select “No” if the loan was modified only to correct typographical errors.	No Yes
344	1st Payment Date	Enter the date of the first payment per the original Note from the original closing.
337	Balloon	For single-closing construction-to-permanent financing, enter “Yes” if construction period financing was a balloon loan, otherwise, enter “No”.	No Yes
337.2	Interest Only	For single-closing construction-to-permanent financing, enter “Yes” if construction period financing was Interest Only, otherwise, enter “No”.	No Yes
333	Amortization Type	Enter the amortization type per the original Note from the original closing. For ARM to fixed rate conversion, enter “6 – ARM”.	1 - Fixed Rate 3 - GPM 4 - GEM 6 - ARM 7 - GPARM 9 - Step Rate
349	Original Loan Amount	Enter the loan amount per the original Note from the original closing. Both the original loan amount and modified loan amount must meet the conforming loan limit as of acquisition date. If a loan was originated prior to the current year, the loan limit that was in effect on the origination date is disregarded.
332.2 / First	1st Rate Adj. Frequency	If the loan was an ARM loan prior to modification, enter the number of months between the first and second interest rate adjustments per the original Note from the original closing. For CMT-indexed ARM loans this will be “12”. For SOFR-indexed ARM loans this will be “6”. In the ULDD XML file, the first adjustment is identified using Adjustment Rule Type [Sort ID 332.1] = First.
347	Mortgage Type	Enter the loan type per the per the original Note from the original closing. For most loans, this will be “3 – Conventional”. The modification may not change the mortgage type.	1 - FHA 2 - VA 3 - Conventional USDA Rural Housing
340	Maturity Date	Enter the maturity date per the original Note from the original closing.
342	Payment Frequency	Enter the payment frequency per the original Note from the original closing. This must be “Monthly” in order to be eligible for delivery. The modification may not change the payment frequency.	Monthly
351	Note Rate	Enter the interest rate per the original Note from the original closing.
332.2 / Subsequent	Subsequent Rate Adj. Frequency	If the loan was an ARM loan prior to modification, enter the number of months between the second and third (and all subsequent) interest rate adjustments per the original Note from the original closing. For CMT-indexed ARM loans this will be “12”. For SOFR-indexed ARM loans this will be “6”. In the ULDD XML file, subsequent adjustments are identified using Adjustment Rule Type [Sort ID 332.1] = Subsequent.
335	Interest Calculation Type	Enter the interest accrual method per the original Note from the original closing. This must be “Simple” in order to be eligible for delivery. The modification may not change the interest accrual method.	Simple
337.1	Initial Fixed Period	If the loan was an ARM loan prior to modification, enter the number of months before the first interest rate adjustment per the original Note from the original closing. For most 6mo/6mo ARMs this will be “6” For most 1yr/1yr ARMs this will be “12” For most 3yr/1yr or 3yr/6mo ARMs this will be “36” For most 5yr/1yr or 5yr/6mo ARMs this will be “60” For most 7yr/1yr or 7yr/6mo ARMs this will be “84” For most 10yr/1yr or 10yr/6mo ARMs this will be “120”

Importing the Note Date and Lien Type

There is only one Note Date (Date of Mortgage Note in Loan Delivery). It is the date on the original Note from the original closing. There is only one Lien Priority Type. It is the lien priority as of the original closing.

The placement of Note Date and Lien Priority Type in the XML import file is dependent upon whether the loan was modified prior to delivery.

Placement of Note Date and Lien Priority Type in ULDD XML Import File
ULDD Sort ID	ULDD Data Point Name	ULDD Implementation Notes
313	Lien Priority Type	If the loan has not been modified prior to delivery, use this data point to provide the Lien Priority Type. This must be “FirstLien” in the ULDD file (“First” in Loan Delivery) in order to be eligible.
320	Note Date	If the loan has not been modified prior to delivery, use this data point to provide the Note Date.
345	Lien Priority Type	If the loan has been modified prior to delivery, use this data point to provide the Lien Priority Type. This must be “FirstLien” in the ULDD file (“First” in Loan Delivery) in order to be eligible.
350	Note Date	If the loan has been modified prior to delivery, use this data point to provide the Note Date per the original Note from the original closing.

Common Loan Delivery Edits

Common Loan Delivery Edits
Edit ID	Message Text (subject to change)	Possible Resolution
449	The Modification Date must be before the First Payment Date. [SID: 259]	The 1st Payment Date in the Loan Terms section in Loan Delivery should be the first payment date of the modified loan.
1020	A Modified Loan Amount that is greater than the minimum Charter Loan Limit for a Conventional Mortgage is not allowed. [SID: 319]	Both the original loan amount and modified loan amount must meet the conforming loan limit as of acquisition date. If a loan was originated prior to the current year, the loan limit that was in effect on the origination date is disregarded.
1273	Appraisal Effective Date must be before the Note Date. [SID: 84]	Ensure the original appraisal effective date is delivered. Do not deliver the date of an appraisal update/Form 1004D.
2014	The provided loan modification date (\|Loan Modification Date\|) should be after the loan note date (\|Loan Note Date\|).	The Modification Date in the Special Products section in Loan Delivery should be after the Date of Mortgage Note in the General Loan Information section in Loan Delivery. (The loan cannot be modified before it closes.)
2367	SFC 149 requires a Modification Indicator of Yes. [SID: 397]	Verify SFC 149 (Modification in Lieu of Refinance from Lender Portfolio) has been correctly applied to the loan.
1894	The calculated P&I (\|Calculated Constant P And I Amount\|) for this Fixed Rate, Balloon, or ARM Mortgage is greater than $1 when compared to the entered P&I (\|Provided Constant P and I Amount\|).	Verify the modified loan data has been reported in the General Loan Information section in Loan Delivery. Data from the original loan closing should be reported in the Special Products section in Loan Delivery. See “Delivering Modified Loans” section in the Job Aid above.

Providing the Loan Role and State in the XML Import File Data

When a loan has been modified, Loan Delivery will require the same data as of different points in time. For example, when a loan’s interest rate is modified from adjustable to fixed, the Uniform Loan Delivery Dataset (ULDD) will contain two instances of “Loan Amortization Type”. The original loan amortization type is reported as “Adjustable Rate” and the modified loan amortization type is reported as “Fixed”. Because these two data points share a common name, the ULDD import file uses “Loan State” to distinguish which loan amortization type is associated to which time period. This construct minimizes the complexity of data mapping by allowing the most relevant data to be housed in the same XML data point for both modified and non-modified loans.

When building the loan delivery XML files for loans that have been modified prior to delivery, the following LoanStateType data containers must be sent:

At Closing: This is the original closing data.
At Modification: This is the loan data as of the date the modified loan terms become effective (post-modification).
Current: This is the loan data at the time the loan is being delivered.

Note: Loan State data is not displayed on the Loan Delivery user interface.

Loan Role Type and Loan State Date in ULDD XML Import File
Data State	ULDD Sort ID	ULDD Data Point Name	ULDD Implementation Notes
At Closing (if NOT Modified) At Modification (if Modified)	93	Enter Loan Role Type	For all loans, provide the Loan Role Type “SubjectLoan”.
	252	Loan State Date	If the loan has not been modified prior to delivery, provide the date on the original Note from the original closing. This should match ULDD NoteDate [SID 320]. If the loan has been modified prior to delivery, provide the modification effective date. This should match ULDD LoanModificationEffectiveDate [SID 259].
	253	Loan State Type	If the loan has not been modified prior to delivery, use “AtClosing” enumeration to provide data as of closing (pre-modification). If the loan has been modified prior to delivery, use “AtModification” enumeration to provide data as of the modification date.
At Closing (if Modified)	332	Loan Role Type	If the loan has been modified prior to delivery, provide the Loan Role Type “SubjectLoan” when providing data from the original closing in SIDs 332 through 351.
	338	Loan State Date	If the loan has been modified prior to delivery, provide the date on the original Note from the original closing. This should match ULDD NoteDate [SID 350].
	339	Loan State Type	If the loan has been modified prior to delivery, use “AtClosing” enumeration to provide data as of closing (pre-modification).
Current	352	Loan Role Type	For all loans, provide the Loan Role Type “SubjectLoan”.
	405	Loan State Date	For all loans, provide the date the data is retrieved from the Seller’s delivery system.
	406	Loan State Type	For all loans, use “Current” enumeration to provide data as of the delivery date.