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Mortgage Loans: GSE, HUD, VA Record Retention Requirements

Posted By USFN, Tuesday, November 25, 2014
Updated: Tuesday, October 13, 2015

November 25, 2014


by Terry Ross, Director Regulatory Compliance
Barrett Daffin Frappier Turner & Engel, LLP– USFN Member (Texas)

We have all experienced the file from Hades. This is the file that never seems to go away, and then just as quickly as you inherited the file, it finalizes. Now you have to file your claim for reimbursement and, again, you retain the file — but for how long?

Retaining documentation related to the loan servicing, bankruptcy, foreclosure, eviction, and claims is an important aspect of mortgage banking. Audit teams usually request documentation weeks in advance of an audit to determine the authenticity of the claims for reimbursement. The Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, and the government agencies (HUD and VA), have published guidelines outlining the documents to retain and the duration for the retention. The Consumer Financial Protection Bureau (CFPB) record retention policy mimics the retention policies.

Here is a convenient chart about the GSE and agency requirements for current and delinquent loans. This is only a quick reference tool; be sure to review the GSE and agency policies in full before making a decision on record retention.

 Holder Status Years Remarks
 Fannie Mae  Current  5   Date loan or pool is paid in full
 Fannie Mae  Delinquent  4  Date loan paid in full or claim proceeds rec'd
 Freddie Mac  Current  7  Date Freddie's interest is satisfied
 Freddie Mac  Delinquent  7  Date of the foreclosure sale
 HUD  Current  7  After the life of the mortgage loan
 HUD  Delinquent  7  Date of all claim proceeds received
 VA  Current  3  After the VA ceases to be liable
 VA  Delinquent  3  Date of all claim proceeds received

Excerpted below are snippets of bulletins, regulations, and letters. Remember to review all of the related documentation prior to deciding on record retention.

Fannie Mae — Bulletin SVC 2014-04 (February 26, 2014)


• Fannie Mae is clarifying its requirements for retaining mortgage loan servicing records. The servicer must retain, in the mortgage loan servicing file, all supporting documentation for all expense reimbursement claims, in addition to other servicing and liquidation information such as: property inspection reports; copies of delinquency repayment plans; copies of disclosures of ARM interest rate and payment changes; documents related to insurance loss settlements; and foreclosure records, as stated in the Servicing Guide (Part I, Section 405.01: Individual Mortgage Loan Files).

• Servicers are reminded that after a mortgage loan is liquidated, the servicer must keep the mortgage loan servicing file for at least four years (measured from the date of payoff or the date that any applicable claim proceeds are received), unless the local jurisdiction requires longer retention or Fannie Mae specifies that the records must be retained for a longer period.

• For loans that are not delinquent, you should review Requirements for Document Custodians Version 10.0, Section 7, Paragraph 7.3: Electronic Document Retention.

• Document custodians are required to retain electronic documents for five years after a loan and/or pool has been paid in full.

Freddie Mac — Single-Family Seller/Servicer Guide, Volume 2, Chapter 52, Mortgage File Retention, Paragraph 52.3 Maintenance stipulates that: 


• Regardless of the form in which mortgage files and records are kept, the servicer must have control and identification features in place to:


o Permit ready identification of the Freddie Mac loan number assigned to each mortgage serviced for Freddie Mac and Freddie Mac’s percentage of participation in each such mortgage

o Permit ready identification of which mortgages are MERS-registered and of those that are closed with MERS as original mortgagee of record

o Prevent the pledge or sale to a third party of any mortgage in which Freddie Mac has a percentage of participation

o Permit prompt retrieval and, if applicable, delivery to Freddie Mac of a file or individual components of a file by Freddie Mac loan number

o Permit prompt preparation and delivery to Freddie Mac of scheduled and unscheduled reports that Freddie Mac may require by Freddie Mac loan number and/or percentage of participation

• If, for any reason, Freddie Mac changes a loan number and had so advised the servicer, the servicer must promptly make the necessary changes to the applicable mortgage file and records to reflect the new Freddie Mac loan number and instruct its document custodian, if applicable, to take similar action.

• The servicer must maintain the mortgage file while Freddie Mac retains an interest in the applicable mortgage and for at least seven years from the date Freddie Mac’s interest in the mortgage is satisfied.

• If the mortgage was paid in full, the file must contain a copy of the canceled note. If the mortgage was repurchased by the servicer to allow a transfer of ownership that is not allowed by Freddie Mac or does not meet Freddie Mac’s requirements, the file must contain a copy of the executed transfer of ownership or assumption/release of liability instrument.

Freddie Mac — Single-Family Seller/Servicer Guide, Volume 2, Chapter 66, Foreclosure, Paragraph 66.55 File Retention (1/14/11) further stipulates that:

• The servicer must maintain accurate and complete records of the foreclosure proceedings for mortgages in the mortgage file. The servicer must maintain the mortgage file for at least seven years from the date of the foreclosure sale.

Department of Housing and Urban Development (HUD) — Mortgagee Letter 2014-16 (July 23, 2014)

• Purpose: The purpose of this mortgagee letter is to provide guidance on the retention of foreclosure-related documents in servicing files (stored electronically), and to extend the record retention period to at least seven years after the life of the FHA-insured mortgage.

• Effective Date: This mortgagee letter is effective for all foreclosures, associated with FHA-insured mortgages, occurring on or after October 1, 2014. The affected policy is located in HUD Handbook 4330.1, sections 1-4 and 7-12. [4330.1. Rev 5 Chapter 1 paragraph 1-4 E. Retention of Record. All servicing files must be retained for a minimum of the life of the mortgage, plus three years. (See Paragraphs 10-17 and 10-34 for Section 235 mortgages, and see Paragraph 9-16 for cases resulting in a claim filed with HUD.) This is changed with this mortgagee letter.]

• Electronic retention of foreclosure documents in servicing files: In addition to any requirements for retaining hard copies or originals of foreclosure-related documents, documents related to loss mitigation review must also be retained in electronic format. These documents include, but are not limited to: (1) evidence of the servicer’s foreclosure committee recommendation; (2) the servicer’s referral notice to a foreclosure attorney, if applicable; and (3) a copy of the document evidencing the first legal action necessary to initiate foreclosure and all supporting documentation, if applicable (See Mortgagee Letter 2013-38). Mortgagees have the option of using electronic storage methods for all other serving-related documents required in accordance with HUD regulations, handbooks, mortgagee letters, and notices where retention of a hard copy or original document is not required.

• Electronic retention of the mortgage note: A copy of the mortgage, mortgage note, or deed of trust, must be also retained in electronic format.

o The electronic copy of the mortgage, mortgage note, or deed of trust must be marked “copy.”

o The original mortgage, mortgage note, or deed of trust must be preserved in accordance with requirements for retaining hard copies.

o If the note has been lost, a lost note affidavit, acceptable under state law, must be retained in both hard copy and electronic format.

• Length of Retention: All servicing files must be retained for a minimum of the life of the mortgage loan, plus seven years. Pursuant to 24 CFR 203.365 for mortgages, where FHA insurance has been terminated and a claim has been filed, the claim file must be retained for at least seven years after:

o The final settlement date, which is the date of the last acknowledgement or check received by the mortgagee in response to submission of a claim or

o The final settlement date, which is the date of the last acknowledgement or check received by the mortgagee in response to submission of a claim or

o The latest supplemental settlement date, which is the date of the final payment or acknowledgement of such supplemental claim.

• Requests for Individual Account/Loan Information: Pursuant to 24 CFR 203.508, mortgagees are required to respond to HUD requests for information concerning an individual account. Within 24 hours of an oral or written request, mortgagees must make legible documents available to HUD staff in the specific electronic or hard copy format that is requested. This requirement includes all servicing information and related data, as well as the entire loan origination file.

Department of Veterans Affairs (VA) — Regulation 36.4333, Maintenance of Records

• (a)(1) The holder shall maintain a record of the amounts of payments received on the obligation and disbursements chargeable thereto and the dates thereof, including copies of bills and receipts for such disbursements. These records shall be maintained until the VA Secretary ceases to be liable as guarantor or insurer of the loan, or, if the VA Secretary has paid a claim on the guaranty, until three years after such claim was paid. For the purpose of any accounting with the VA Secretary or computation of a claim, any holder who fails to maintain such record and, upon request, make it available to the VA Secretary for review shall be presumed to have received on the dates due all sums which by the terms of the contract are payable prior to date of claim for default, or to have not made the disbursement for which reimbursement is claimed, and the burden of going forward with evidence and of ultimate proof of the contrary shall be on such holder.

o (2) The holder shall maintain records supporting their decision to approve any loss mitigation option for which an incentive is paid in accordance with § 36.4819(a). Such records shall be retained a minimum of three years from the date of such incentive payment and shall include, but not be limited to, credit reports, verifications of income, employment, assets, liabilities, and other factors affecting the obligor’s credit worthiness, work sheets, and other documents supporting the holder’s decision.

o (3) For any loan where the claim on the guaranty was paid on or after February 1, 2008, or action described in paragraph (a)(2) of this section was taken after February 1, 2008, holders shall submit any documents described in paragraph (a)(1) or (a)(2) of this section to the VA Secretary in electronic form; i.e., an image of the original document in .jpg, .gif, .pdf, or a similar widely accepted format.

• (b) The lender shall retain copies of all loan origination records on a VA-guaranteed loan for at least two years from the date of loan closing. Loan origination records include the loan application, including any preliminary application, verifications of employment and deposit, all credit reports, including preliminary credit reports, copies of each sales contract and addenda, letters of explanation for adverse credit items, discrepancies and the like, direct references from creditors, correspondence with employers, appraisal and compliance inspection reports, reports on termite and other inspections of the property, builder change orders, and all closing papers and documents. [Authority: 38 U.S.C. 501, 3703 (c)(1)]

• (c) The VA Secretary has the right to inspect, examine, or audit, at a reasonable time and place, the records or accounts of a lender or holder pertaining to loans guaranteed or insured by the VA Secretary.

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