Servicing Guide

Published June 12, 2019

A2-7-01: Concurrent Servicing Transfers (04/11/2018)

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

In a concurrent servicing transfer (also known as a transfer of servicing concurrent with delivery), the transferee servicer is under the same contractual obligations under the MSSC as the mortgage loan seller. The transferee servicer must meet Fannie Mae’s eligibility criteria that apply to a seller/servicer that becomes Fannie Mae’s servicer in a post-delivery transfer of servicing as set forth in A2-7-03, Post-Delivery Servicing Transfers .

If the mortgage loan seller is servicing the mortgage loans prior to delivery and will not be servicing the mortgage loans after delivery, the mortgage loan seller may automatically transfer servicing to a seller/servicer 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 mortgage loan seller must notify Fannie Mae at the time of mortgage loan delivery that servicing has been transferred.

Additionally, the mortgage loan seller may designate the seller/servicer as Fannie Mae’s servicer for the mortgage loans by notifying Fannie Mae at the time of delivery if

  • the mortgage loan seller is not servicing the mortgage loans prior to delivery because it has contracted with a transferee servicer to service the mortgage loans for the mortgage loan seller;

  • the mortgage loan seller will not be servicing the mortgage loans after delivery;

  • the transferee servicer is eligible to service the mortgage loans for Fannie Mae; and

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

If the servicer wants the contractual servicing relationship to be with the mortgage loan seller instead of with Fannie Mae, even after delivery of the mortgage loans to Fannie Mae, the mortgage loan seller must become Fannie Mae’s servicer (as “master servicer”), and the servicer must become a “subservicer.” (See A2-1-06, Subservicing for additional information).

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.

This topic contains the following:

Servicing Assignment Contract

The servicing transfer agreement between the seller/servicer 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 seller/servicer’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 seller/servicer 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 transferee 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 seller/servicer 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 seller/servicer as servicer of the mortgage loans on the applicable loan schedule, the seller/servicer 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 seller/servicer 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 seller/servicer 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 seller/servicer and the transferee 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 A1-1-02, Representation and Warranty Requirements.

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 A2-7-03, Post-Delivery Servicing Transfers for additional information.

Notification of Concurrent Servicing Transfers

The mortgage loan seller 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 mortgage loan seller must also include in its delivery package mortgage loan assignments prepared in accordance with the following guidance.

General Requirements: The seller/servicer must prepare an assignment of the mortgage to Fannie Mae for any mortgage loan that is not registered with MERS, although the assignment should not be recorded. If the mortgage loan seller is not going to service the mortgage loan, the unrecorded assignment to Fannie Mae must be executed by the servicer.

The seller/servicer may use the standard Fannie Mae form of assignment. When a seller/servicer chooses not to use Fannie Mae’s standard assignment forms, the mortgage assignments that it prepares must meet the requirements described in the following table.

The mortgage assignment must...

Show the assignee as Fannie Mae.

Be prepared in recordable form, but not be recorded.

Not include a recitation that the assignment of the mortgage loan or lien is “without recourse.”

Note: Recordable form usually is whatever form the local recorder’s office requires.

Information Required for Recordation: If state law does not specifically address the information required for recordation, the seller/servicer must include the following information in the assignments:

  • the date of execution;

  • the seller/servicer’s name;

  • the borrower’s name;

  • a legal description of the property;

  • the recording information related to the mortgage loan, such as the deed book and page number or the instrument number;

  • the original mortgage loan amount;

  • the date of the mortgage loan;

  • an authorized signature;

  • an appropriate notarization, if one is required by state law;

  • the Fannie Mae’s Washington, DC Address (see F-4-03, List of Contacts), if required by the jurisdiction.

Missing Information: Occasionally, the seller/servicer may not be able to meet Fannie Mae’s specific assignment requirements because the local recorder’s office has not returned the recorded mortgage loan documents. To avoid delays in funding, Fannie Mae will purchase or securitize the mortgage loan if the only reason for the incomplete assignment was that the mortgage loan recordation data necessary for a recordable form was unavailable at the time of delivery. Fannie Mae has the right to complete any missing information without the seller/servicer’s authorization should the assignment need to be recorded at a later date.

Special Provision for Puerto Rico: Assignments of mortgage loans generally are not recordable in Puerto Rico. Therefore, because the originating seller/servicer remains the mortgagee of record, the unrecorded assignment of the mortgage loan to Fannie Mae must run from the originator of the mortgage loan to Fannie Mae. If the seller/servicer selling the mortgage loan to Fannie Mae is not the mortgage loan originator, it must make every effort to get the originator to execute an assignment of the mortgage loan to Fannie Mae (or, at least, to execute a blanket assignment that covers the mortgage loan). If it is unable to obtain an assignment from the mortgage loan originator for any reason, it (or the servicer, if the seller is not servicing the mortgage loan) must execute an individual unrecorded assignment of the mortgage loan to Fannie Mae.

No intervening assignments need to be prepared, recorded, or retained in the individual mortgage loan file.

The recordation of deeds of assignment is permitted in connection with direct mortgage loans (which are mortgage loans that are documented by a single instrument that combines the terms of the note and the terms of the mortgage loan). If the mortgage loan is a direct mortgage loan, the servicer must execute an assignment of the mortgage loan to Fannie Mae (which must be in recordable form, but unrecorded). In this case, the individual mortgage loan file must include a complete, unbroken chain of public deeds of assignment for the mortgage loan that evidence the transfer of title beginning with the originating seller/servicer and ending with the servicer.

Notifying Borrowers

The transferor and transferee servicers must work together closely to ensure that borrowers whose mortgage loans are the subject of a servicing transfer receive the information described in the following table.

The transferor and transferee servicer must provide borrowers...
Prompt and accurate information of a pending transfer of servicing.
Prompt and courteous responses to their inquiries about the transfer.
Specific notices regarding the transfer of servicing.

All notices provided to borrowers must be made in accordance with applicable law, including the provisions of the RESPA and any state law requirements.

If the servicer determines that the RESPA notification of transfer letter is returned, the servicer must initiate skip trace activities to obtain an alternate mailing address.

Termination of Concurrent Servicing Transfers

If a concurrent servicing transfer does not meet Fannie Mae’s eligibility standards as stated in the Servicing Guide, Fannie Mae is entitled to terminate the transferee servicer’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 mortgage loan seller is obligated for all Fannie Mae losses resulting from the seller’s designation of an ineligible servicer.

Related Announcements

The following table provides references to Announcements that are related to this topic.

Announcements Issue Date
Announcement SVC-2018-03 April 11, 2018
Announcement SVC-2016–04 May 11, 2016