Achievement and Other Collateral Agreements: Release or Reduction

A borrower may have been required at mortgage loan closing to provide additional collateral (other than the property) under an achievement agreement or another form of collateral agreement. Examples include:

  • An achievement agreement that allows for a higher mortgage loan amount than the base loan amount calculated during underwriting.
  • A debt service escrow, operating reserve escrow, rental subsidy reserve, or another similar arrangement.

Usually, achievement/collateral agreements are secured by letters of credit (LOCs), but you may encounter agreements backed by cash or a guaranty. The agreement will specify the conditions under which the collateral may be released or reduced.

As the servicer, you must monitor earn out and expiration dates for achievement/collateral agreements. The table below lists the key points to consider in determining whether to recommend the release or reduction in the collateral securing an agreement.

Guide Reference

Multifamily Selling and Servicing Guide
Part V: Servicing and Asset Management, Chapter 3, Section 307

Delegation Criteria

  • If the borrower does not meet the requirements specified in the achievement/collateral agreement, you may decline a request for release or reduction in collateral. You do not need to notify Mae.

If you determine that the borrower has satisfied the requirements for release/reduction specified in the agreement, you should submit the request to Mae. You do not have delegated authority to release achievement/collateral agreements.

What to Submit

  • Submit the following to Mae with your request:
  • Copy of the borrower’s request
  • Copy of the achievement/collateral agreement and all amendments
  • Certified rent rolls covering the period specified in the achievement/collateral agreement
  • Audited operating statement(s) covering the period(s) specified in the achievement/collateral agreement
  • Multifamily Property Inspection (Form 4260), if required by the agreement
  • Copy of the most recent LOC, if applicable
  • A copy of the guaranty or similar agreement, if a guaranty is being held as additional collateral in connection with the achievement agreement
  • Copy of all other agreements related to the release, specified in the achievement/collateral agreement
  • Servicer’s narrative:
  • Property name and address
  • Mae loan number
  • Reason for the request
  • Analysis of the operating statement(s) – if the condition covers three or six consecutive months, provide an analysis for each month
  • The original underwriting analysis
  • The release of collateral analysis, as stated in the achievement/collateral agreement
  • Analysis of the rent roll – if the condition covers three or six consecutive months, provide an analysis for each month
  • Your recommendation
  • Be sure to keep a copy of all the documents in your servicing file.

How to Submit

Generally: [email protected].

Structured Facilities*
(Credit Facilities and Bulk Deliveries): [email protected]

Seniors Housing*: [email protected]

Hard Copy (if required by Fannie Mae)
Fannie Mae
Credit Services/Drawer AM
Mailstop 8H-607
3900 Wisconsin Ave. NW
Washington, DC 20016

  • *Please contact us at these e-mail addresses for requirements specific to these financing types.


Not applicable, unless stated in the achievement/collateral agreement


If we approve the request, Mae will notify you. We will return the LOC to the issuer. If we hold any other collateral in connection with an achievement/collateral agreement, we will return it to you. If you are holding cash as collateral, you may return it to the borrower.

Achievement Agreements
If we deny the request and the achievement agreement is expiring, follow the instructions in the achievement agreement for paying down the loan. Forward your payoff request to Drawer AM and Mae Operations teams at [email protected] and [email protected] for review and approval.

Other Collateral Agreements
If we deny the request, follow the instructions in the agreement and in the letter from Mae.

Always consult the loan documents, transaction documents, your servicing agreement, the Multifamily Guide and the relevant forms for complete instructions.