Selling Guide

Published October 2, 2019

Concurrent Servicing Transfers

A concurrent servicing transfer (also known as a transfer of servicing concurrent with delivery) occurs when a selling lender transfers the servicing rights for a mortgage loan to a Fannie Mae–approved servicer at the same time it sells the loan to Fannie Mae. This is an “automatic” transfer because Fannie Mae’s prior approval of the transaction is not required.

If the selling lender is servicing the mortgage loans prior to delivery and will not be servicing the mortgage loans after delivery, the selling lender may automatically transfer servicing to a lender that is eligible to service them for Fannie Mae, and has agreed to do so, effective concurrently with delivery of the mortgage loans to Fannie Mae. The lender must notify Fannie Mae at the time of loan delivery that servicing has been transferred.

Additionally, the selling lender may designate the servicing lender as Fannie Mae’s servicer for the mortgage loans by notifying Fannie Mae at the time of delivery if:

  • the selling lender is not servicing the mortgage loans prior to delivery because it has contracted with another lender (the “servicing lender”) to service the mortgage loans for the selling lender;

  • the selling lender will not be servicing the mortgage loans after delivery;

  • the servicing lender is eligible to service the mortgage loans for Fannie Mae; and

  • the servicing lender agrees to service the mortgage loans for Fannie Mae, which requires the contractual servicing relationship be with Fannie Mae instead of with the seller.

If the servicing lender wants the contractual servicing relationship to be with the selling lender instead of with Fannie Mae, even after delivery of the mortgage loans to Fannie Mae, the selling lender must become Fannie Mae’s servicer (as “master servicer”), and the servicing lender must become a “subservicer.” (See A3-3-03, Other Servicing Arrangements, and the Servicing Guide.)

A transfer of servicing that becomes effective concurrent with delivery of the mortgage loans to Fannie Mae must be implemented in accordance with the requirements in the Servicing Guide.

After Fannie Mae has purchased or securitized a mortgage loan, Fannie Mae must approve all subsequent assignments of servicing related to that mortgage loan before the servicing can be transferred. See the Servicing Guide for additional requirements.

Servicer Eligibility Criteria

The transferee servicer must meet Fannie Mae’s eligibility criteria that apply to a lender that becomes Fannie Mae’s servicer in a post-delivery transfer of servicing as described in the Servicing Guide.

Servicing Assignment Contract

The servicing transfer agreement between the lender and the transferee servicer must provide (among other requirements) that:

  • the effective date for transfer of the servicing of the mortgage loans will be no later than the date Fannie Mae funds the whole loan delivery or issues the MBS;

  • Fannie Mae may request and obtain (at any time) a copy of such agreement; and

  • the agreement must provide, for the stated benefit of Fannie Mae, that the transferee servicer, as of the effective date:

    • accepts the servicing portfolio and agrees to service the mortgage loans in accordance with all Fannie Mae requirements;

    • assumes responsibility for all of the lender’s contractual obligations related to the mortgage loans, including all selling warranties and any other liabilities that arise in connection with the mortgage loans or the servicing of them prior to the delivery of the mortgage loans to Fannie Mae;

    • has performed due diligence review(s) of the servicing portfolio to its satisfaction, which includes examination of the books, records, and custodial accounts of the lender with respect to the servicing portfolio;

    • assumes full responsibility to Fannie Mae for the correctness of such books and records; and

    • represents and warrants that the provisions of any agreement between the servicer and any other party providing for servicing the mortgage loans will not continue after the date on which Fannie Mae funds the whole loan delivery or issues the MBS.

By accepting a transfer of servicing, the transferee servicer agrees to the above matters and represents and warrants that they are correct (as applicable), even in those cases in which the contractual relationship between the lender and the transferee servicer is such that no agreement to assign the servicing is legally necessary at the time the mortgage loans are delivered to Fannie Mae.

Further, by designating another lender as servicer of the mortgage loans on the applicable loan schedule, the lender represents and warrants that with respect to such mortgage loans:

  • the servicer has agreed to the above matters and represents and warrants that they are correct (as applicable), and

  • the provisions of any agreement between the lender and any other party providing for servicing of the mortgage loans will not continue after the date on which Fannie Mae funds the whole loan delivery or issues the MBS.

However, the lender is not released from any liabilities to Fannie Mae with respect to the mortgage loans or the servicing of them prior to the delivery of the mortgage loans to Fannie Mae. The lender and the servicer will be jointly and severally liable to Fannie Mae for the obligations and liabilities related to the mortgage loans or the servicing of them that arise before delivery of the mortgage loans to Fannie Mae.

In addition to the requirements of this section, a transfer of servicing that becomes effective concurrent with delivery of the mortgage loans to Fannie Mae must be implemented in accordance with Fannie Mae’s requirements in the Servicing Guide.

After Fannie Mae has purchased or securitized a mortgage loan, Fannie Mae must approve all subsequent assignments of servicing related to that mortgage loan before the servicing can be transferred.

Notification of Concurrent Servicing Transfers

The lender must notify Fannie Mae of the transferee servicer by entering the transferee servicer's nine-digit Fannie Mae seller/servicer number into the Loan Delivery application.

If required, the lender must also include in its delivery package mortgage assignments prepared in accordance with B8-6-02, Mortgage Assignment to Fannie Mae.

Termination of Concurrent Servicing Transfers

If a concurrent servicing transfer does not meet Fannie Mae’s eligibility standards as stated in this Guide and in the Servicing Guide, Fannie Mae is entitled to terminate the transferee’s servicing with respect to the affected mortgage loans in order to transfer servicing of the mortgage loans to another servicer, pursuant to Fannie Mae's rights under the MSSC. The lender is obligated for all losses incurred by Fannie Mae resulting from the lender’s designation of an ineligible servicer.

For additional information about concurrent servicing transfers, see the Servicing Guide.

Servicing Execution Tool (SET) Bifurcation Terms and Conditions

Using SET in Fannie Mae’s whole loan committing application, lenders may arrange on a loan-by-loan basis for a concurrent sale of servicing to an approved Fannie Mae servicer. See C2-1.3-01, Servicing Execution Tool and Servicing Marketplace, for additional information.

A lender approved as a seller for SET transactions is directly liable to Fannie Mae for the obligations and liabilities related to the SET mortgage loans, including all selling representations and warranties required to be made by a seller, and for obligations and liabilities related to servicing of the SET mortgage loans that arise before delivery of the mortgage loans to Fannie Mae. The servicer retained by the lender concurrent with Fannie Mae’s acquisition of the mortgage loan is responsible for the servicing duties, obligations and responsibilities related to the mortgage loan that arise both prior to Fannie Mae’s acquisition of the loan and thereafter, but otherwise the servicer is not responsible for breaches of any of the selling lender’s selling representations, warranties, obligations or liabilities related to the SET mortgage loans. 

The lender’s sale of SET mortgage loans to Fannie Mae is subject to the following:

  • Upon the sale of a SET mortgage loan to Fannie Mae, the lender makes all representations and warranties required to be made by a seller under this Selling Guide.

  • The lender acknowledges and agrees that:

    • Fannie Mae is entitled to enforce directly against the lender, and the lender is liable for, any and all remedies (including, without limitation, repurchase) for a breach of the lender’s obligations and liabilities related to the SET mortgage loans. Fannie Mae is under no obligation to enforce or attempt to enforce any such remedies against the servicer.

    • Without limiting the provisions of the Guides, the lender must resolve repurchase requests with respect to SET mortgage loans within the time and manner required by the Servicing Guide. Failure to do so may result in termination of the lender’s approval to participate in SET, as well as any other remedies Fannie Mae may elect to pursue.

  • Notwithstanding anything to the contrary in the Lender Contract or any other agreement between the lender and Fannie Mae, by its sale of SET mortgage loans to Fannie Mae, the lender:

    • authorizes Fannie Mae to disclose from time to time to the applicable servicer any information (and any related assessments and analyses developed by Fannie Mae) that Fannie Mae may have concerning the lender (including, for example, information related to the lender’s financial condition and relationship with Fannie Mae), the SET mortgages, the servicing of SET mortgages and related quality control reports, and waives any requirement that Fannie Mae maintain the confidentiality of such information to the extent such requirement would otherwise prohibit such disclosure; and

    • shall have no rights or claims against Fannie Mae in connection with such disclosure or transfer of information, and waives any and all claims arising out of or based upon the confidential nature of such information.

  • The lender acknowledges that Fannie Mae may, at its sole discretion:

    • from time to time, amend or supplement Fannie Mae’s procedures and requirements for the purchase of SET mortgage loans, by publishing such amendments or supplementary material in the Selling Guide or in other written communications; and

    • terminate the lender’s approval to participate in SET by delivering notice to the lender at any time.

Servicing Marketplace

The Servicing Marketplace is a committing platform in Pricing & Execution - Whole Loan (PE-Whole Loan) that provides a standardized process for sellers and servicers who engage in concurrent servicing transfer transactions. Seller and servicer obligations with respect to loans sold and servicing acquired via the Servicing Marketplace will be bifurcated under the same terms and conditions that apply to SET transactions and SET mortgage loans as referenced above.

Servicer Eligibility Criteria for SET and Servicing Marketplace

The transferee servicer must meet Fannie Mae’s eligibility criteria that apply to a lender that becomes Fannie Mae’s servicer in a post-delivery transfer of servicing as described in the Servicing Guide. The transferee servicer must also be approved to participate in SET or Servicing Marketplace, as applicable.

Seller Eligibility Criteria for SET and Servicing Marketplace

In order to be approved as a seller for SET or Servicing Marketplace, sellers must meet and maintain a minimum Lender Adjusted Net Worth, calculated in accordance with A4-1-01, Maintaining Seller/Servicer Eligibility, of at least $2.5 million, plus the greater of:

  • 0.25% of the unpaid principal balance (UPB) of the seller/servicer’s total portfolio of one- to four-unit residential mortgage loans for which the seller/servicer is contractually obligated to service for the owner of the loan; or

  • 0.25% of the UPB of whole loans purchased by Fannie Mae that were committed in the preceding 36 months via SET or Servicing Marketplace.

The minimum Lender Adjusted Net Worth does not include mortgage loans serviced under a subservicing arrangement - that is, for which the seller/servicer is contractually obligated to service for another servicer.

Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2017-09 October 31, 2017
Announcement SEL-2017-04 April 25, 2017
Announcement SEL-2016–02 February 23, 2016
Announcement SEL-2015–03 March 31, 2015
Announcement SEL-2015–01 January 27, 2015
Announcement SEL-2011–10 September 27, 2011
Announcement SEL-2011–05 June 28, 2011