The fidelity bond must insure against losses resulting from dishonest or fraudulent acts committed by:
the seller/servicer’s principal owner,
the seller/servicer’s personnel,
any employees of outside firms that provide legal services to the seller/servicer or data processing services for the seller/servicer or other accounting records for the seller/servicer, and
persons assigned to the seller/servicer through an intervening employer or agency to perform the usual duties of an employee of the seller/servicer on a contingent or temporary basis and interns.
For corporate seller/servicers, Fannie Mae will accept coverage under the following types of fidelity bonds:
Mortgage Bankers Blanket Bond Policy,
Savings and Loan Blanket Bond Policy, or
Bankers Blanket Bond Policy.
As described in the table below, the fidelity bond coverage must be equal to a percentage of, the greater of the seller/servicer’s annual
total UPB of single-family and multifamily annual mortgage loan originations; or
highest monthly total UPB of single-family and multifamily servicing of mortgage loans that the seller/servicer owns, including mortgage loans owned by the seller/servicer and serviced by others.
Note: If the
seller/servicer uses a subservicing arrangement, the master
servicer must maintain fidelity bond coverage at all times for the
servicing of mortgage loans that it owns but that the subservicer
services for that master servicer. A subservicer must only maintain
coverage for mortgage loans that it owns. (See
The fidelity bond coverage amount and maximum deductible limit is determined in accordance with the requirements in the following table. The maximum amount of fidelity bond coverage required is $150 million.
|Total UPB||Coverage Required||Maximum Deductible Clause Based on Face Value of Policy|
|$100 million or less||$300,000||higher of 10% or $100,000|
|Over $100 million up to $1 billion||+ 0.150% of the next $400
+ 0.125% of the next $500 million
|Over $1 billion||+ 0.100% of any amount over $1 billion||15%
Note: A deductible above 15% will be considered based on adequate seller/servicer financial strength. (See A4-1-01, Maintaining Seller/Servicer Eligibility. The seller/servicer must obtain Fannie Mae’s prior written content. The deductible cannot exceed 1% of the seller/servicer’s total net worth.
The table below provides references to the Announcements that have been issued that are related to this topic.