Mortgage Servicing and Loan Modifications: 11.4.2.3.3 The Merrill doctrine as a limitation on liability of government agency loan owners
Special issues arise when a servicer acts on behalf of a loan owner that is a federal governmental entity. Most often, this occurs when one of the government-sponsored enterprises (GSEs), such as Fannie Mae or Freddie Mac, owns the borrower’s mortgage loan. In these situations, a court-created rule known as the Merrill doctrine may limit application of otherwise controlling agency principles.