Selling Guide

Published September 4, 2018

E-2-03: Master Agreement Terms and Conditions (08/29/2017)

This exhibit contains information on Master Agreement terms and conditions. The Master Agreement is an “umbrella” document that supplements the general guidelines and requirements of Fannie Mae’s Selling Guide and Servicing Guide and sets out the additional terms under which Fannie Mae will do business with a lender.

PART I. GENERAL PROVISIONS

The Master Agreement supplements the Fannie Mae Selling Guide and Servicing Guide, as amended from time to time (the “Guides”). The lender must enter into a Master Agreement with Fannie Mae in order to sell (1) any Mortgage under Fannie Mae’s MBS program or (2) any Mortgages containing variances to Fannie Mae’s guidelines, including any special products, whether such Mortgages are sold under Fannie Mae’s Negotiated Transactions for cash or under Fannie Mae’s MBS program.

For purposes of the Master Agreement and these Master Agreement Terms and Conditions, the terms “sell,” “sale,” or “sold” include both the sale of Mortgages in cash transactions and delivery of Mortgages in MBS transactions. References in these Master Agreement Terms and Conditions to the “Master Agreement” refer to the then-current Master Agreement between Fannie Mae and the lender.

A. Eligibility Requirements

The lender and Fannie Mae agree that, except as provided in the Master Agreement, all Mortgages shall meet the applicable requirements of the Guides, including but not limited to the loan eligibility and underwriting requirements.

B. Representations and Warranties

The lender represents and warrants that all Mortgages sold to Fannie Mae conform to the requirements of the Mortgage Selling and Servicing Contract between Fannie Mae and the lender (the “MSSC”) and the Guides, as applicable, except as modified by the (1) Master Agreement, and (2) terms of any Contracts entered into pursuant to the Master Agreement.Any MBS pool purchase contract (the “MBS Contract”), including all applicable MBS pricing confirmation(s) in the case of MBS transactions under conversion Master Agreements (as described in Part III.A below), and cash commitments in the case of cash transactions that are entered into pursuant to the Master Agreement, are referred to in these Master Agreement Terms and Conditions and in the Master Agreement as “Contract(s).” A breach of any underwriting or eligibility requirements as set forth in the Guides, Master Agreement, or any related Contract shall be deemed to be a breach of warranty by the lender, as provided in this Guide.

C. Lender’s Authority

If the lender is a federally insured institution or an affiliate or subsidiary of a federally insured institution, the lender represents and warrants that the sale to, and if applicable, servicing for, Fannie Mae of the Mortgages sold to Fannie Mae pursuant to any Master Agreement has either been (1) specifically approved by the board of directors of the lender and such approval is reflected in the minutes of the meetings of such board of directors, or (2) approved by an officer of the lender who was duly authorized by the lender’s board of directors to enter into such types of transactions and such authorization is reflected in the minutes of such board of directors’ meetings. In addition, such lender represents and warrants that any (1) Master Agreement, (2) related Master Conversions (as described in Part III.A below), (3) Contracts, and (4) related amendments, together with the Guides and MSSC, constitute the “written agreement” governing the lender’s sale to, and servicing for, Fannie Mae of the Mortgages sold pursuant to the Master Agreement, and that the lender (or any successor thereto) shall continuously maintain all components of such “written agreement” as an official record.

D. Amendments

The Master Agreement and all related Contracts may only be amended by written agreement executed by both Fannie Mae and the lender.

E. Breach and Termination

The lender’s right to sell, and Fannie Mae’s obligation to purchase, Mortgages under any related Contract may be terminated by Fannie Mae prior to the expiration date of the Master Agreement or, in the case of any Master Conversion, the expiration date of the Master Conversion, if the lender has breached the (1) MSSC, (2) Guides, or (3) any of the provisions of the Master Agreement or any related Contract. If any mandatory delivery amount, as adjusted by any delivery tolerance, is not sold to Fannie Mae prior to the expiration date of the applicable Master Conversion, in the case of a conversion Master Agreement, and the expiration date of the entire Master Agreement, in the case of a non-conversion Master Agreement, the lender shall be in breach of the Master Agreement.

F. Confidentiality

The form, terms, and provisions of the Master Agreement, and related Contracts, as well as all information regarding the negotiation of the form, terms, and provisions of the Master Agreement, are confidential. The lender shall not disclose or disseminate, directly or indirectly, the form, terms, or provisions of the Master Agreement or related Contracts, or such other information regarding the negotiation of the Master Agreement or related Contract, to any party other than the lender’s employees or agents who need to know the same in order to perform their duties for the lender and who are legally obligated not to further disclose or disseminate such form, terms, provisions and information upon receipt of such. Notwithstanding the prior sentence, the lender may disclose or disseminate such form, terms, provisions, and information if it is required to do so by law (including a subpoena or judicial or governmental requirement or order) and will give Fannie Mae prior written notice of such requirement and of the information required to be disseminated or disclosed. The obligations of the lender regarding confidentiality shall survive termination of the Master Agreement and any related Contracts.

If the lender requests that an affiliate be permitted to sell Mortgages under the lender’s Master Agreement, the lender will be deemed to have consented to Fannie Mae’s disclosure to such affiliate of the Master Agreement and related Contracts and commitment terms affecting any Mortgages sold under the Master Agreement, unless the lender specifically instructs Fannie Mae otherwise in writing.

PART II. VARIANCES AND SPECIAL PRODUCTS, SPECIAL REQUIREMENTS, AND SPECIAL FEATURE CODES

This Part II describes the provisions of the “Variances” and “Special Requirements” Sections of the Master Agreement, as applicable. These Sections contain variances, special products, and special requirements negotiated between Fannie Mae and the lender. All terms and conditions set forth in the “Variances” and “Special Requirements” Sections apply to the related Master Agreement, and to any related Contracts, and may not be applied to any other commitment, agreement, or contract without Fannie Mae’s express written approval. If any Mortgage contains more than one of the variances, requirements, or features described in the “Variances” and “Special Requirements” sections, the variance, special requirement, or special product feature requiring the most conservative credit criteria (for example, the lowest maximum LTV or the highest credit score) shall control and apply to such Mortgage. In addition, if such variances, special requirements or special products are subject to delivery limitations, either as a maximum dollar or a percentage amount, then (1) the unpaid principal balance of such Mortgages shall apply toward fulfillment of the delivery limitation applicable to each variance, special requirement, or special product, and (2) the lender’s compliance with such delivery limitations will be determined at the end of the applicable Delivery Term, unless otherwise specified in the variance. Furthermore, unless otherwise provided, any stated percentage limitation applicable to Mortgages is an amount calculated based on the aggregate unpaid principal balance at the time of Fannie Mae’s purchase of the Mortgages, not on the number of Mortgages.

The lender must, at the time of sale of the Mortgages to Fannie Mae, identify on the Loan Schedule or Schedule of Mortgages, as applicable, all Mortgages with all special feature codes that are required by the Guides, and Master Agreement.

PART III. DELIVERY OF MORTGAGES

A. Conversion Versus Non-Conversion Master Agreements

Conversion Master Agreements Fannie Mae, in its discretion, may require the lender to sell Mortgages under a Master Agreement that requires periodic conversions (”Master Conversion”) to provide for a mandatory delivery amount during a specified period of time (the “Conversion Period”). Contemporaneously with the execution of a conversion Master Agreement, and as a condition to the sale of any Mortgages under the conversion Master Agreement, the lender and Fannie Mae shall agree on the terms of a Master Conversion, including pricing terms for each applicable MBS Contract under the Master Agreement (“MBS Pricing Confirmation”). Each Master Conversion entered into under the Master Agreement constitutes an agreement by (1) the lender to sell Mortgages to, and service such Mortgages for, Fannie Mae (or assign such servicing concurrently with such sale in accordance with Fannie Mae’s guidelines), and(2) Fannie Mae to purchase the Mortgages and, in the case of MBS transactions, to issue its Guaranteed Mortgage Pass-Through Securities (the “Securities”) backed by such Mortgages to the lender or its designee(s). The volume under each Master Conversion must be sold to Fannie Mae on a mandatory basis only, and may be satisfied by any combination of cash or MBS transactions.

In order for the Master Conversion to be effective for the sale of Mortgages under any MBS Contract, an MBS Pricing Confirmation for each such related MBS Contract must provide for the lender’s sale during the Conversion Period of a specified volume of Mortgages in accordance with the terms, including guaranty fee, set forth in such MBS Pricing Confirmation. The first Master Conversion and the first MBS Pricing Confirmation(s) for all applicable MBS Contract(s) will be effective as of the execution and return by the lender of the Master Agreement.

MBS Pricing Confirmations Each MBS Pricing Confirmation provides all pricing information (including guaranty fee, buyup/buydown provisions and other provisions related to price), effective until the pricing changes. At the beginning of each Conversion Period, Fannie Mae and the lender may agree to change the pricing for MBS Contracts by a new MBS Pricing Confirmation.
Conversion Procedures Prior to the expiration of the Conversion Period for each Master Conversion, in order for the lender to sell any additional Mortgages during the next Conversion Period, the lender and Fannie Mae must agree on the terms of a new Master Conversion and MBS Pricing Confirmation for the applicable MBS Contract (if any terms relating to pricing under such Contract have changed from the previous MBS Pricing Confirmation). The final Conversion Period of the applicable Delivery Term (as described in Part B below) will expire on the expiration date of the Delivery Term as set forth in Exhibit 1 of the Master Agreement.
Non-conversion Master Agreements Unless otherwise agreed to by the lender and Fannie Mae, in the case of non-conversion Master Agreements, the volume may be sold either on a mandatory basis, on a partially mandatory and partially optional basis, or as otherwise specified in the Master Agreement. A non-conversion Master Agreement includes, among other things, pricing terms for each applicable MBS Contract under the Master Agreement. Execution of a non-conversion Master Agreement constitutes an agreement by (1) the lender to sell eligible Mortgages to, and service such Mortgages for, Fannie Mae (or assign such servicing concurrently with such sale in accordance with Fannie Mae’s guidelines), and (2) Fannie Mae to purchase the Mortgages and, in the case of MBS transactions, to issue its Guaranteed Mortgage Pass-Through Securities (the “Securities”) backed by such Mortgages to the lender or its designee(s). Mandatory and optional deliveries under a Master Agreement may be satisfied by any combination of cash or MBS transactions.

B. Delivery Term

The Master Agreement incorporates the concept of a “Delivery Term.” A “Delivery Term” is the period of time between the stated effective date and the stated expiration date of the Master Agreement. At the end of a Delivery Term, the parties may negotiate new terms, including a new “Estimated Dollar Amount for Delivery Term” for a conversion Master Agreement, or new “Agreed Amount” for a non-conversion Master Agreement, for a new Delivery Term and that the Master Agreement will be amended to reflect these new terms. Each successive Delivery Term will be numbered chronologically, beginning with “First.”

In a conversion Master Agreement, any reference to a “Master Conversion” or an “MBS Pricing Confirmation” shall generally apply to any such documents entered into between the parties during the applicable Delivery Term and, specifically, to the document currently in effect, if the context requires.

C. Back-End Buyout

If an applicable mandatory delivery amount is not sold to Fannie Mae by the expiration of the applicable Delivery Term, then the lender may be subject to payment of a back-end buyout fee. In the case of a conversion Master Agreement, the applicable mandatory delivery amount for purposes of the back-end buyout fee will be the sum of all Mandatory Delivery Amounts as stated in the applicable Master Conversions. The unsold and uncommitted portion of the mandatory delivery amount shall be the difference between (1) the mandatory delivery amount (without taking into account any delivery tolerance) and (2) a sum equal to the aggregate outstanding principal balance of Mortgages (for each Mortgage, as of the time of sale of the Mortgage) that the lender has sold to Fannie Mae during the applicable Delivery Term under all of the applicable Master Conversions, in the case of a conversion Master Agreement, and under the entire Master Agreement, in the case of a non-conversion Master Agreement, plus the principal balance of Mortgages that the lender is still obligated to sell (and subsequently sells) under any existing and unexpired mandatory delivery commitments.

At Fannie Mae’s option, Fannie Mae may draft the fee from the lender’s designated account immediately following the expiration date for the applicable Delivery Term of the Master Agreement. If, however, Fannie Mae postpones or declines to enforce payment of this fee, such action will not imply a waiver of its right to collect this or a similar fee at a subsequent time. Furthermore, Fannie Mae expressly reserves all of its other rights and remedies (1) provided by law, (2) under any agreement(s) between the parties, and (3) under the applicable delivery program, and the receipt of any back-end buyout fee shall not affect or impair any such rights and remedies.

PART IV. MORTGAGES SUBMITTED TO DESKTOP UNDERWRITER

For loan casefiles underwritten through DU, when DU returns a recommendation of Approve/Ineligible, Refer with Caution, or Out of Scope, but such Mortgage would otherwise be eligible for sale pursuant to the terms of one or more of the specific variances, special requirements, or special products set forth in the Master Agreement, the lender may sell such Mortgage, subject to all applicable requirements, restrictions, stipulations, and limitations specified in the Master Agreement and the Selling Guide, which may include the purchase price or guaranty fee and any applicable loan-level price adjustment or similar charge specified in the Master Agreement or posted in the LLPA Matrix on Fannie Mae's website.