Overview of Post-Delivery Servicing Transfers

Subsequent to the delivery of mortgage loans to Fannie Mae, the servicer must obtain Fannie Mae’s prior written consent for any transfer of servicing responsibilities involving Fannie Mae mortgage loans and/or acquired properties, including transfers

  • resulting from a change in the servicer’s corporate ownership or structure, and

  • involving a subservicer, including master servicer transfers from one subservicer to another, from the master servicer to a subservicer, or from the subservicer to the master servicer.

The servicer or subservicer must not transfer its responsibility for servicing or subservicing any mortgage loans and/or acquired properties unless Fannie Mae approves the transfer. See When Post-Delivery Transfers of Servicing Involve Subservicers in A2-1-06, Subservicing for additional information.

Any unauthorized transfer of servicing or subservicing will not be recognized by Fannie Mae. An unauthorized transfer of servicing or subservicing may occur when the servicer or subservicer fails to

  • give Fannie Mae adequate notice of a proposed transfer (as defined in Requesting Fannie Mae Approval),

  • obtain its written approval for a transfer, or

  • fulfill any conditions of Fannie Mae’s approval of a given transfer of servicing.

Any unauthorized transfers of servicing may be the basis for terminating the contractual relationships Fannie Mae has with the transferor, transferee servicers, and any involved subservicer. However, instead of terminating the contractual relationship(s), Fannie Mae may choose to

  • impose sanctions;

  • impose compensatory fees (see A1-4.2-01, Compensatory Fees Other Than Delays in the Liquidation Process) for calculation of the compensatory fee for an unauthorized transfer of servicing);

  • hold any transferor or transferee servicer or subservicer that enters into an unauthorized transfer of servicing jointly and severally liable for any losses incurred by Fannie Mae as the result of the unauthorized transfer; and/or

  • impose other available remedies.

The transferee servicer must indicate on the Request for Approval of Servicing or Subservicing Transfer (Form 629) if the transferee servicer will use a subservicer as a result of the servicing transfer.

As part of the transfer of servicing review, Fannie Mae will also evaluate the performance and capacity of any subservicer the transferee servicer intends to utilize.

Fannie Mae generally will consider requests for transfers of either all or a portion of the mortgage loans and/or acquired properties that a servicer services and/or manages for it. Transfers of servicing or subservicing of individual mortgage loans in an MBS pool are permitted unless the transfer involves regular servicing option MBS mortgage loans or shared-risk special servicing option MBS mortgage loans for which the servicer’s shared-risk liability is still in effect, in which case the servicing of all of the mortgage loans in the pool must be transferred.

Fannie Mae will consider the transfer of servicing, including servicing involving a subservicer, for government-guaranteed mortgage loans only if the proposed transferee servicer is a HUD-approved coinsurer that is willing to assume the coinsurance obligations for the mortgage loans.

Obligations of the Transferor and Transferee Servicers

The following table provides the requirements of the transferor servicer prior to requesting Fannie Mae’s approval.

The transferor servicer must...

Confirm that the transferee servicer is

  • approved to service all products included in the transfer, including those described in Special Seller/Servicer Approval and MSSC Addendum in A1-1-01, Application and Approval of Seller/Servicer,

  • aware of its duties and obligations, and

  • agrees to assume the additional responsibilities related to the servicing of those mortgage loans.

Provide special notification to the transferee servicer of the products being transferred.

The transferor servicer must identify the inclusion of eNotes in a transfer on the Request for Approval of Servicing or Subservicing Transfer (Form 629) and change the servicer designation in the MERS e-Registry to transferee servicer.

The transferee servicer must assume all of the responsibilities, duties, and selling warranties that were agreed to whether made when the mortgage loan was originally sold to Fannie Mae or subsequent to that date. This includes responsibility for the performance of obligations that predate the transfer, including special servicing obligations. However, the transferee servicer’s assumption of these responsibilities, duties, and warranties will in no way release the transferor servicer from its contractual obligations related to the transferred mortgage loans. The two servicers will be jointly and severally liable to Fannie Mae for all warranties and for repurchase, all special obligations under agreements previously made by the transferor servicer or any previous seller or servicer (including actions that arose prior to the transfer). When a servicer transfers its contractual right to service some or all of its Fannie Mae single-family servicing to another Fannie Mae-approved servicer, any variance or waiver granted to a transferor servicer does not automatically transfer to the transferee servicer. In addition, the transferor servicer and transferee servicer must ensure that all existing special servicing obligations associated with the transferred mortgage loan are disclosed.

By beginning to service the mortgage loans the transferee servicer agrees to assume all obligations related to the servicing of MBS pools—including all duties and responsibilities under the regular servicing option or a shared-risk special servicing option, bearing all costs and risks previously borne by the transferor servicer or any earlier seller or servicer, as well as any additional costs and risks that arise subsequent to, or as the result of conditions imposed on, the transfer.

Fannie Mae’s consent to a transfer of servicing does not release either the transferor servicer or the transferee servicer from any obligation it would otherwise have to Fannie Mae. As of the sale date for an approved transfer of servicing or subservicing the transferor servicer and the transferee servicer acknowledge their joint and several liability with respect to the transferred mortgage loans (and for any special obligations outstanding as of the sale date, unless Fannie Mae has agreed to release one of the servicers from a specific responsibility). Fannie Mae may look to either the transferee servicer or transferor servicer for fulfilling any financial or other obligations related to the warranties, repurchase, and special obligations. In fact, all servicers also acknowledge their obligation to ensure that Fannie Mae is paid directly any proceeds of the servicing transfer that may be required to offset any claims Fannie Mae may have against the transferor servicer and agree to indemnify and hold Fannie Mae harmless against all Fannie Mae losses arising out of a failure to fully transfer all documents, records, and funds required by the servicing transfer agreement.

Requesting Fannie Mae Approval

When requesting approval to transfer servicing, the transferor or transferee servicer or subservicer must submit the information in the following table to Fannie Mae.

The transferor or transferee servicer or subservicer must submit to Fannie Mae...

A fully completed Request for Approval of Servicing or Subservicing Transfer (Form 629) in an electronic format to Fannie Mae’s SF CPM, Servicing Transfers group (see F-4-03, List of Contacts) at least 60 days prior to the earlier of proposed sale or transfer date for servicing transfers, and at least 30 days prior to the earlier of proposed sale of transfer date for subservicing transfers

The transfer and sale dates must be included on Form 629. The transfer date refers to the date on which the physical transfer of the servicing or subservicing responsibilities from the transferor servicer or subservicer, as the case may be, to the transferee servicer or subservicer occurs. It may not necessarily be the same date as the sale date identified in a servicing transfer agreement. The sale date is the date on which the ownership of the servicing rights and the legal liability for the servicing of the Fannie Mae mortgage loans transfer from one servicer to another.

Note: While Fannie Mae requires the transferring parties to identify the sale date associated with a servicing transfer, Fannie Mae’s approval will only be issued as to the transfer date.

The proposed transfer date must be the first business day of the month for which the transferee servicer will be responsible for reporting the loan-level detail activity to Fannie Mae. Forms not submitted within the above time frames must be resubmitted and received in time for the next scheduled transfer cycle.

The servicer must submit Form 629 for all active mortgage loans.

The transferor servicer must submit a separate Form 629 for

  • acquired properties,

  • REMIC, and

  • reverse mortgage loans.

The servicer must submit an eTransfer file for certain active mortgage loans.

The Form 629 submitted for a transfer of servicing must contain an applicable mortgage loan-level list in excel format containing all items mentioned in Form 629.

See F-1-11, Post-Delivery Servicing Transfers for additional information.

Bifurcated Mortgage Loans: Once the parties have agreed to a servicing transfer date for an active bifurcated mortgage loan, the transferor servicer is authorized to provide to the responsible party or its designee the information it needs to meet all time-critical deadlines that are scheduled to take place shortly after the transfer date, such as the dates of scheduled mediation or litigation hearing, tax sales, foreclosure sale dates.

Conditions for Approval

The following table describes the requirements of the proposed transferee servicer.

The proposed transferee servicer must...

Be an approved servicer that is in good standing with Fannie Mae.

Have in place appropriate controls and adequate procedures relating to transfers of servicing, including those addressing the boarding and reconciliation of mortgage loans to help avoid delays in actively servicing the mortgage loans or managing the acquired properties.

Fannie Mae will also evaluate the transferee and transferor servicers’ and the subservicer’s performance prior to approval in the following areas (although it may consider additional factors if it chooses to do so):

  • overall servicing or subservicing performance, including the servicing and subservicing of special mortgage loan products, accounting, and remitting;

  • capacity to service or subservice the mortgage loans and/or acquired properties that are to be included in the proposed transfer;

  • characteristics of the transferor servicer’s retained servicing portfolio;

  • overall performance of other contractual duties and obligations;

  • delinquency ratios;

  • foreclosure and acquired property activity;

  • status of unresolved issues related to demands for a repurchase servicing remedy, claim denials or curtailments, compensatory fees, indemnification claims, or other outstanding claims; and

  • financial condition.

The transferor and/or transferee servicer(s) must provide additional information upon Fannie Mae’s request during the review process.

Fannie Mae’s contractual requirements related to transfers of servicing and the servicers’ obligations to perform under them apply in all cases (unless Fannie Mae expressly waives them in writing). Fannie Mae encourages a servicer that is contemplating the purchase of another servicer’s portfolio to contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts) early in the negotiation process. This will ensure that the servicer

  • is aware of any objections Fannie Mae might have to its becoming a transferee servicer or subservicer for the servicing portfolio it is considering purchasing,

  • can determine whether the proposed transfer involves unusual circumstances or conditions that might require additional time for Fannie Mae to review, and

  • ascertain whether the proposed transfer has terms that might not be readily acceptable to Fannie Mae.

Fannie Mae will make no representations or warranties about the value, condition, or any other aspects of the mortgage loans, servicing rights, and/or acquired properties for which servicing is to be transferred. Because the transferee servicer will be liable to Fannie Mae for all obligations of the transferor servicer, Fannie Mae expects that the transferee servicer will perform a due diligence review of the servicing portfolio that it is acquiring. However, the transferee servicer’s obligations to Fannie Mae are not contingent on the performance of such a due diligence review. To assist the servicer in processing and reconciling the transfer of servicing, Fannie Mae has designed a series of reports that should significantly reduce the likelihood of errors or delays in the transfer process. The information in these reports can be used to reconcile and correct loan-level information related to the mortgage loans for which servicing is to be transferred. Any information in the reports Fannie Mae provides will be compiled from data in its records (including information it received from third parties, but did not independently verify). However, Fannie Mae does not attest to the accuracy, completeness, or suitability of the information for the servicers’ use for any particular purpose(s). For any given transfer of servicing, Fannie Mae uses appropriate business practices to permit the transferor servicer and the transferee servicer and subservicer (but no other parties) to have access to the data on which the reports are based. Fannie Mae does not represent or warrant that any unauthorized party will not be able to gain access to the data (particularly when it is transmitted electronically), nor will Fannie Mae be responsible for any damages arising out of, or related to, such parties gaining access to the data and using the information it provides.

Providing Consent to the Servicing Transfer

If Fannie Mae consents to a proposed transfer of servicing, it will deliver its consent notice to the transferor and transferee servicers by email to the contacts designated on Form 629. By implementing the related transfer of servicing, both the transferor and transferee servicers agree to the provisions of the MSSC, Lender Contract, and any amendments made to such agreements. The transferor and transferee servicers must comply with any other provisions set forth in the consent notice. As a condition of approving the transfer of servicing, Fannie Mae reserves its right to request and obtain (at any time) a copy of the servicing transfer agreement between the transferor servicer and the transferee servicer.

Fannie Mae’s conditions for approval of a servicing transfer are discussed in F-1-11, Post-Delivery Servicing Transfers. Fannie Mae may also impose additional terms and conditions on its consent to a servicing transfer as deemed appropriate under the particular circumstances, as described in its communication to the transferor servicer.

Servicing Transfer as a Result of the Servicer’s Termination of the Servicing Relationship

If a servicer decides to terminate its servicing relationship with Fannie Mae, the transfer of the servicer’s entire servicing portfolio must include all mortgage loans that are being serviced even if they no longer generate any servicing fee income. Therefore, acquired properties that have been removed from an active accounting status must be transferred, unless Fannie Mae has notified the servicer that Fannie Mae’s records have been closed or the servicer is only waiting for a request of reimbursement claims payment from Fannie Mae.

Special Notifications to the Transferee Servicer

The transferor servicer must provide special notification to the transferee servicer when a transfer of servicing includes, but is not limited to the following types of mortgage loans:

  • mortgage loans modified under HAMP and/or 2MP,

  • eMortgages, and/or

  • mortgage loans subject to resale restrictions.

See Form 629 for information about the other types of mortgage loans that must be disclosed and F-1-11, Post-Delivery Servicing Transfers for additional information.

When a Servicing Transfer Includes Mortgage Loans Modified Under HAMP, 2MP or an eMortgage

For mortgage loans modified under HAMP/2MP or an eMortgage, the transferee servicer must assume all of the responsibilities and duties of HAMP/2MP or eMortgages. However, the transferee servicer’s assumption of these responsibilities, duties, and warranties will in no way release the transferor servicer from its contractual obligations related to the transferred mortgage loans. The two servicers will be jointly and severally liable to Fannie Mae for

  • all warranties and for repurchase,

  • all special obligations under agreements previously made by the transferor servicer or any previous servicer or servicer (including actions that arose prior to the transfer), and

  • all reporting, compliance, and audit oversight related duties regarding the transferred mortgage loans.

Servicing Fee

As described in the following table, the transferee servicer will generally receive the same servicing compensation the transferor servicer was receiving.

For... The transferee servicer will generally receive...

actual/actual and scheduled/actual remittance type portfolio mortgage loans

the same servicing fee—the base servicing fee plus any excess yield—that the transferor servicer had been receiving.

MBS mortgage loans and scheduled/scheduled remittance type mortgage loans held in Fannie Mae’s portfolio

compensation at the same rate the transferor servicer had been receiving, which is the difference between the mortgage interest rate (less any applicable premium for lender-purchased MI) and the sum of Fannie Mae’s required PTR, the guaranty fee rate, and, if applicable, any portion of the servicing fee that has been securitized.

Assumption of Warranties and Other Obligations

The transferee servicer must assume all of the duties, selling representations and warranties, servicing responsibilities and liabilities, and recourse and repurchase obligations of the transferor servicer unless explicitly agreed to otherwise in writing by Fannie Mae with respect to the mortgage loans and acquired properties. This includes responsibility for the performance of special servicing obligations that were agreed to, whether those obligations were made when the mortgage loans were originally sold to Fannie Mae or subsequent to that date. However, the transferee servicer’s assumption of these responsibilities, duties, liabilities, and warranties will not release the transferor servicer from its contractual obligations related to the transferred mortgage loans or acquired properties.

As of the earlier of the sale date or the transfer date for an approved transfer of servicing, the transferor servicer and the transferee servicer have joint and several liability with respect to all duties, selling representations and warranties, recourse and repurchase obligations, all obligations under agreements previously made by the transferor servicer or any previous seller or servicer with Fannie Mae, and servicing responsibilities and liabilities relating to the transferred mortgage loans and acquired properties.

Fannie Mae does not release the transferor servicer of its obligations with respect to the transferred mortgage loans or acquired properties. Fannie Mae reserves the right to require payment of any proceeds of the servicing transfer to offset any claims Fannie Mae may have against the transferor servicer or transferee servicer. Both the transferor servicer and the transferee servicer agree to indemnify and hold Fannie Mae harmless against all Fannie Mae losses arising out of a failure to fully transfer all documents, records, and funds.

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.

Notifying Third Parties

The transferor or transferee servicer must take certain actions to ensure that all servicing functions that involve third parties will continue uninterrupted (or will be discontinued if that is appropriate) after the transfer of servicing. For specific information on the required actions, see F-1-11, Post-Delivery Servicing Transfers.

Both the transferor and transferee servicers must take the notification actions described in the following table when working with the document custodian.

The transferor and transferee servicers must...

Advise the document custodian maintaining possession of the custodial documents related to the transfer of servicing of the pending transfer.

Make arrangements for the prompt and safe transfer of the custodial documents to a new document custodian designated by the transferee servicer.

The transferor and transferee servicers must comply with the requirements outlined in Selling Guide A-3-3-05, Custody of Mortgage Documents . Also see Fannie Mae’s Requirements for Document Custodians for additional information.

If the transferor servicer had been acting as the document custodian, the transferee servicer may elect to use the transferor servicer as the document custodian, unless Fannie Mae has indicated that it will not agree to such an arrangement. In such cases, the transferor servicer must continue to meet the eligibility criteria and operational requirements Fannie Mae has in place for document custodians as described in the Servicing Guide, Selling Guide, and the RDC Guide.

The document custodian designated by the transferee servicer is required to recertify the custodial documents related to the transfer of servicing regardless of whether the documents themselves are moved and in accordance with Fannie Mae’s Requirement for Document Custodians. If the documents are not moved, the document custodian must change the servicer associated with the mortgage loan custodial files in its tracking system. The document custodian is required to track the custodial documents it holds on behalf of Fannie Mae by servicer. In addition, the transferee servicer must have a valid Master Custodial Agreement (Form 2003) in place with the document custodian.

Transfer of Individual Mortgage Loan Files and Portfolio Information

The storage format of the individual mortgage loan files must be in accordance with Selling Guide A2-5.1-03, Electronic Records, Signatures, and Transactions. For specific information that must be delivered by the transferor servicer to the transferee servicer, see also F-1-11, Post-Delivery Servicing Transfers.

In general, the transferee servicer must incorporate flexibility into its default and other servicing procedures to take into consideration problems that may be attributable to the logistics of servicing transfers. The following table describes the requirements of the transferor servicer with regard to transferring individual mortgage loan files and portfolio information.

The transferor servicer must...

Deliver to the transferee servicer the complete individual mortgage loan file, as defined in Selling Guide A2-5.1-01, Establishing Loan Files, for each mortgage loan included in the transfer.

Identify to the transferee servicer any mortgage loans that are in foreclosure, bankruptcy, or subject to a workout option and for any acquired properties (if Fannie Mae has not sold them by the transfer dater), as required in F-1-11, Post-Delivery Servicing Transfers.

Turn over the complete books and records to the transferee servicer of each mortgage loan or acquired property.

Maintain adequate records of the mortgage loans and acquired properties included in the portfolio transfer in their corporate records so that it can easily identify the documents and information turned over to the transferee servicer.

The following table describes the requirements of the transferee servicer with regard to transferring individual mortgage loan files.

The transferee servicer must...

Receive a complete copy of the individual mortgage loan files so that it is able to service the transferred mortgage loans without interruption as of the transfer date.

Understand borrower account histories (including the amount and nature of all servicing advances and fees assessed to the borrower) as of the transfer date.

Review its subsequent collection of funds from borrowers to ensure accurate accounting for recovery of advances charged to the borrower.

Honor any forbearance agreements or other arrangements made with borrowers by the previous servicer (or provides reasonable notice of any change in these arrangements—if contractually permitted).

The following table describes the requirements of both the transferor and transferee servicers with regard to transferring individual mortgage loan files and portfolio information.

Both the transferor and transferee servicer must...

Ensure that fees and charges improperly assessed to a borrower are promptly refunded or credited to the borrower’s account.

Establish procedures for the delivery and receipt of information after the transfer date in the event that the transferor servicer obtains any other information related to the transferred mortgage loans that must be sent to the transferee servicer.

Maintain adequate records of the mortgage loans and acquired properties included in the portfolio transfer in their corporate records so that they can easily identify

  • the mortgage loans and acquired properties included in the transfer,

  • the transfer date,

  • the parties involved in the transfer, and

  • the documents an information turned over to the transferee servicer.

Submission of Final Accounting Reports/Remittances

The transferor servicer must submit the monthly LARs for Fannie Mae’s investor reporting system for the month of the transfer date. The transferor servicer is contractually responsible for all remittances due Fannie Mae for the final monthly accounting period.

For additional information regarding the final accounting reports and remittance requirements related to mortgage loans included in a transfer of servicing, see F-1-11, Post-Delivery Servicing Transfers.

Preparing Mortgage Assignments

An assignment from the transferor servicer to the transferee servicer must be prepared and recorded. The transferee servicer must deliver the recorded mortgage assignment to the applicable document custodian for all mortgage loans subject to a transfer of servicing within six months of the transfer date. For additional information regarding the mortgage assignment requirements, see F-1-11, Post-Delivery Servicing Transfers.

Transfer of Custodial Documents

In the case of a transfer of servicing, the transferee servicer is authorized to elect to keep the custodial documents for the transferred portfolio mortgage loans and MBS mortgage loans at any Fannie Mae document custodian with which the transferee servicer has a custodial agreement on file with Fannie Mae. The document custodian must meet all of the requirements outlined in Fannie Mae’s Requirement for Document CustodiansA2-6, Custodial Documents.

The servicer must follow the procedures in Transfer of Custodial Documents in F-1-11, Post-Delivery Servicing Transfers.

Transitional Responsibilities

The following table describes the transitional responsibilities of both the transferor and transferee servicers.

Both the transferor and transferee servicers must...

Ensure that their staffs and facilities are adequately prepared to process servicing and accounting transactions and to respond to borrower inquiries during the transfer transition period.

Assume responsibility for responding to borrower inquiries that are received after the transfer date.

The following table describes the transitional responsibilities of the transferee servicer.

The transferee servicer must...

Give special consideration to the borrower’s needs.

Make every effort to resolve disputes to the borrower’s satisfaction when the dispute arises from a legitimate misunderstanding of the instructions that were included in the notices of transfer that were sent to the borrower.

Waive late notices.

Make appropriate adjustments to payment and credit records to reflect misapplied or unapplied payments that were owed to the transferee servicer, but which were sent to the transferor servicer, if necessary.

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-2017-05 June 21, 2017
Announcement SVC-2017-04 May 10, 2017
Announcement SVC-2017–01 January 18, 2017
Announcement SVC–2016–10 November 9, 2016
Announcement SVC–2016–09 October 19, 2016
Announcement SVC–2016–07 August 17, 2016
Announcement SVC–2016–04 May 11, 2016
Announcement SVC–2016–01 February 10, 2016