A lender may use other organizations to perform some or all of its servicing functions. Fannie Mae refers to these arrangements as “subservicing” arrangements, meaning that a servicer (the “subservicer”) other than the contractually responsible servicer (the “master” servicer) is performing the servicing functions.
The following are not considered to be subservicing arrangements:
when a computer service bureau is used to perform accounting and reporting functions;
when the originating lender sells and assigns servicing to another lender, unless the originating lender continues to be the contractually responsible servicer.
A servicer may use a subservicer only if it will not interfere with the servicer’s ability to meet Fannie Mae’s remitting and reporting requirements.
A master servicer may not enter into new subservicing arrangements—or extend existing arrangements to include newly originated mortgages—unless both the master servicer and the subservicer are Fannie Mae-approved servicers in good standing who are able to perform the duties associated with the master servicer/subservicer arrangement.
The master servicer must ensure that its written agreement with the subservicer acknowledges Fannie Mae’s right to rescind its recognition of the subservicing arrangement if Fannie Mae decides to transfer the master servicer’s portfolio for any reason.
The master servicer must confirm its existing subservicing arrangements when it submits the Lender Record Information (Form 582) each year.
For additional information concerning subservicer and master servicer duties, responsibilities, and other requirements, see the Servicing Guide on Fannie Mae’s website.
A lender may enter into one of the following transactions, provided that the purpose of the transaction is a purpose permitted by Fannie Mae and the lender obtains Fannie Mae’s prior written consent:
a pledge, or grant of a security interest in, the servicing rights to all or part of its Fannie Mae servicing portfolio, including mortgage loans in MBS pools (a “pledge of servicing”);
a sale, assignment, transfer, pledge, or hypothecation of all or any portion of its compensation in excess of the amount needed to service mortgage loans for Fannie Mae (“excess servicing compensation”); or
a sale, assignment, transfer, pledge or hypothecation of all or any portion of its right to receive reimbursement of servicing advances.
Note: A transaction in either of the last two bullets above is referred to as a “transfer of an interest in servicing income.”
A lender may enter into a pledge of servicing or a transfer of an interest in servicing income for the following purposes only:
to fund the acquisition and performance of required servicing activities for additional servicing and/or servicing portfolios;
to provide collateral for warehouse lines of credit; or
to effect the purchase of all or substantially all of the assets of a mortgage banking company, including a management buyout of its existing company, or a buyout of the controlling ownership interests of existing shareholders.
The lender must request Fannie Mae’s prior approval of a specific pledging transaction or transfer of an interest in servicing income at least 30 days prior to the proposed effective date.
A pledge of servicing transaction between the lender and the secured creditor must be documented by a security agreement agreed to by the lender and the secured creditor. The lender, the secured creditor, and Fannie Mae must also execute an acknowledgment agreement acceptable to Fannie Mae, which sets forth the rights and responsibilities of the lender, the secured creditor, and Fannie Mae.
A transfer of an interest in servicing income transaction between the lender and the purchaser or financier must be documented by a purchase and sale, security or financing agreement in a form agreed to by the lender and the purchaser or financier. The lender, the purchaser or financier, and Fannie Mae must also execute a subordination of interest agreement acceptable to Fannie Mae, which sets forth the rights and responsibilities of the lender, the purchaser or financier, and Fannie Mae.
For additional information about the terms and provisions of the security agreement and the acknowledgment agreement, see the Servicing Guide.
The table below provides references to the Announcements that have been issued that are related to this topic.