Mortgage Servicing FAQ: Can a Borrower Make a Large Payment and Then Re-Amortize the Loan?

The Servion servicing department fields hundreds of questions every day from partners and borrowers. In this article, we wanted to tackle one of the questions that has been coming up regularly in recent weeks.

If a borrower makes a substantial principal curtailment, he or she may request that the mortgage balance be re-amortized over the remaining term of the loan to reduce the mortgage payment. (Note: FHA/VA loans cannot be re-amortized).

There is a fee of $250 for a re-amortization and the minimum principal payment accepted for a re-amortization is $20,000.00. The funds must be in the form of a cashier’s check or certified funds and must be accompanied by a written request.

• New loans: There are no payment history requirements for portfolio loans. Fannie requires the borrower to make at least three payments. 
• Existing loans: The borrower may be delinquent at the time of the request; however, the funds must be used to first bring the loan current and any remaining monies are to be applied towards the principal. 

Borrowers may remit the $250 fee, principal reduction, and written request to:

Servion Inc.
Attn: Loan Servicing
500 Main Street
New Brighton, MN  55112

Upon receipt of the request, Servion, Inc. will draft a modification/re-amortization agreement to be executed by the borrower(s). The new principal and interest payment will become effective with the borrower’s next monthly payment.