Requesting Fannie Mae Approval

Transfer of Mortgage Loans

As required in Requesting Fannie Mae Approval in A2-7-03, Post-Delivery Servicing Transfers, the servicer must submit the appropriate information to request Fannie Mae’s approval of the transfer of servicing, including servicing transfers involving a subservicer.

When requesting approval to transfer servicing, the transferor or transferee servicer or subservicer must submit a fully completed Request for Approval of Servicing or Subservicing Transfer (Form 629) in an electronic format to the Servicing Transfers group at servicing_transfers@fanniemae.com. The submission is required at least 60 days before the earlier of proposed sale or transfer date for servicing transfers, and at least 30 days before the earlier of proposed sale or transfer date for subservicing transfers.

The servicer must include the transfer and sale dates 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.

Special Notifications to the Transferee Servicer

As required in Obligations of the Transferor and Transferee Servicers and Special Notifications to the Transferee Servicer in A2-7-03, Post-Delivery Servicing Transfers, the transferor servicer must provide special notification to the transferee servicer when a transfer of servicing includes the following:

  • an eMortgage,

  • a mortgage loan modified under HAMP and/or 2MP, or

  • a mortgage loan subject to resale restrictions regardless of whether the restrictions survive foreclosure or acceptance of a Mortgage Release (deed-in-lieu of foreclosure).

When a Servicing Transfer Includes an eMortgage or a Mortgage Loan Modified Under HAMP/2MP

For an eMortgage or a mortgage loan modified under HAMP/2MP, the transferor servicer must take the actions described in the following table.

The transferor servicer must...

Advise the transferee servicer that an eMortgage or a mortgage loan modified under HAMP/2MP is part of the portfolio being transferred.

Confirm that the transferee servicer

  • is aware of the special requirements for these mortgage loans, and

  • agrees to assume the additional responsibilities associated with servicing these mortgage loans.

Special Requirements when the Servicing Transfer includes eMortgages

Subsequent to Fannie Mae’s approval of a servicing transfer, the following table describes additional actions that the transferor servicer must complete prior to the date of transfer, for a transfer of servicing that includes eMortgages.

The transferor servicer must...
Provide to the transferee servicer a copy of all eNotes included in the transfer via MSERS eDelivery or some other mutually agreed-upon means.
Update the “Servicing Agent” field in the MERS eRegistry to reflect the transferee servicer or transferee servicer’s agent, as applicable.
Provide to the transferee servicer all associated borrower attribution evidence and audit trail information detailing the eClosing event.

The transferee servicer must confirm that all actions in the table above have been completed prior to the date of the transfer.

When a Servicing Transfer Includes a Mortgage Loan Subject to Resale Restrictions

For a mortgage loan subject to resale restrictions, the transferor servicer must take the actions described in the following table.

The transferor servicer must...

Identify each mortgage loan subject to resale restrictions on Form 629.

Confirm that the transferee servicer is aware of its duties and obligations related to the servicing of a mortgage loan subject to resale restrictions.

Notifying Third Parties

As described in Notifying Third Parties in A2-7-03, Post-Delivery Servicing Transfers, the transferor and transferee servicers must take certain actions to ensure that all servicing functions that involve third parties will continue uninterrupted (or discontinued, if appropriate) after the transfer of servicing.

The following table describes the actions the transferor or transferee servicer must take to ensure that all servicing functions that involve third parties will continue uninterrupted (or discontinued, if appropriate) after the transfer of servicing.

The transferor or transferee servicer must...

Fulfill all requirements of each MI policy that insures any conventional mortgage loans included in the transfer—including, but not limited to, the requirements for providing timely notification or requesting prior approval—to ensure the continuation of the MI coverage.

If the current mortgage insurer will not provide continuing coverage following the servicing transfer, the transferee servicer must find another mortgage insurer to provide MI coverage that is equivalent to the previous coverage—at no increased cost to the borrower or Fannie Mae—and obtain that mortgage insurer’s written commitment to provide the required coverage.

Fulfill all requirements of FHA, VA, RD, or HUD—including, but not limited to, providing timely notification or requesting prior approval—to ensure the continuation of the MI or mortgage loan guaranty, if applicable.

Notify the hazard, flood, earthquake, other property insurance carriers, as applicable, to request a policy endorsement to substitute the transferee servicer’s name in the mortgagee clause and to change the premium billing address to that of the transferee servicer (unless the borrower pays the premium directly).

Notify any tax or flood service provider and any optional insurance provider (or other products that are providing coverage) that the transferor servicer used for any of the mortgage loans that are being transferred to indicate whether the transferee servicer will continue using its services.

Send appropriate notices of the transfer of servicing (providing the transferee servicer’s name and address) to taxing authorities, holders of leaseholds, HOAs, and other lien holders.

Note: Any public utilities that levy mandatory assessments for which funds are being escrowed also must be notified.

Notify any law firm involved in the management of foreclosure or other legal action in connection with the mortgage loans or acquired properties.

Notify the current document custodian of the pending transfer of servicing and make arrangements for the prompt and safe transfer of the custodial documents to the document custodian designated by the transferee servicer, in accordance with requirements in the Servicing Guide.

Transfer of Individual Mortgage Loan Files and Portfolio Information

As described in Transfer of Individual Mortgage Loan Files and Portfolio Information in A2-7-03, Post-Delivery Servicing Transfers, the transferor servicer must deliver specific information to the transferee servicer.

The following table describes the information that must be delivered to the transferee servicer.

The transferor servicer must deliver to the transferee servicer...

Documentation evidencing each mortgage insurer’s approval of the servicing transfer or its commitment to insure the transferred mortgage loans, or a copy of the mortgage insurer’s master policy evidencing that it is permissible to transfer servicing of insured mortgage loans without the mortgage insurer’s prior approval.

A list of any conventional mortgage loans that have borrower-paid or lender-purchased MI (identifying the applicable premium rates and the due date of the next premium payment) and an explanation of the premium payment obligations and claim payment procedures that apply to them.

A list of any eMortgages that are part of the portfolio being transferred.

Copies of any tax or flood service contracts that will remain in effect, or notification that the contracts will be transferred to the transferee servicer by a tape process.

A list of tax bills, assessments, property insurance premiums, MIPs, etc. that are due to be paid by the servicer, but that are still unpaid as of the transfer date.

A list of the expiration dates and premium payment frequencies for property insurance, and MI policies, as applicable, related to each mortgage loan being transferred, whether or not premiums for these policies are escrowed.

A list of mortgage loans that have optional insurance and other insurance products that will remain in effect.

A list of mortgage loans that are subject to automatic drafting of the monthly payments.

A list of ARM loans, showing the plan identification and parameters, the index used, the next interest rate change date, the next payment change date, the dates on which any fixed rate conversion option may be exercised, and the current status of any changes in process.

Transaction and payment histories for the life of the mortgage loans.

Trial balances, as of the close of business on the day immediately preceding the transfer date, showing

  • the remittance type for each mortgage loan (actual/actual, scheduled/actual, or scheduled/scheduled);

  • the remittance cycle for each MBS mortgage loan (standard, RPM, or MBS Express);

  • Fannie Mae’s applicable ownership interest if it holds only a participation percentage in the mortgage loan;

  • the applicable pool number for MBS mortgage loans;

  • delinquencies, foreclosure, bankruptcies, and acquired properties;

  • transfers of ownership, payoffs, and other exception transactions that are in process, including mortgage loan modification-related transactions;

  • escrow balances, escrow advances, curtailments, unapplied funds, and loss drafts; and

  • buydown account balances for mortgage loans subject to temporary interest rate buydown plans.

A copy of the custodial bank reconciliation for each custodial bank account maintained as of the cutoff date (if the transferor servicer is unable to complete this reconciliation by the transfer date, it should complete the reconciliation as promptly as possible and send it to the transferee servicer within five business days after the transfer date).

Copies of all investor accounting reports that were filed with Fannie Mae for the three months that immediately precede the cutoff date.

A reconciliation of any outstanding shortage/surplus balance, if applicable, related to the mortgage loans being transferred as of the last reporting period of Fannie Mae’s investor reporting system.

Definitions of codes used in ledger records, trial balances, or any other documents that are being forwarded to the transferee servicer.

Escrow analyses.

All information relating to delinquency management and default prevention.

Copies of all documents including items held by a document custodian, and all other documents pertinent to servicing the mortgage loans including mortgage loan modification agreements.

All customer correspondence and responses, including borrower complaints and escalated cases.

The title policies or alternative title products.

A list of each mortgage loan that is in the process of foreclosure or for which the borrower has filed bankruptcy, including the Fannie Mae loan number and the name and address of the law firm handling the foreclosure or bankruptcy.

Information and records for any mortgage loans that are in foreclosure, bankruptcy, or a workout status and for any properties that Fannie Mae acquired by foreclosure or acceptance of a Mortgage Release [(deed-in-lieu of foreclosure) (if Fannie Mae has not sold them by the transfer date)].

Note: If the original mortgage loan custodial documents are not part of the individual mortgage loan file that is being transferred, the transferor servicer must provide a list showing the name of the party that is in possession of the original mortgage loan note.

All pertinent information related to the status of any mortgage loan for which a workout option is being pursued.

A list of any acquired properties for which it is performing administrative functions, such as paying taxes or performing property maintenance if the responsibilities for these functions will be transferred to the transferee servicer. The list must identify each property by the Fannie Mae loan number and include a history of the transferor servicer’s actions from the date the property was acquired (including information about expenditures, receipts, and management and marketing activities) and provide the appropriate documentation.

Information on any mortgage loan or acquired property being transferred that is the subject of litigation at the time of the transfer, including all records pertaining to such litigation (including court filings, disclosure requests and responses, and preliminary rulings).

Transfer of P&I and T&I Funds

As required in A4-1-02, Establishing Custodial Bank Accounts, the servicer is responsible for the safekeeping of custodial funds at all times. The transferor servicer must forward to the transferee servicer all P&I and T&I custodial account balances including, but not limited to, the following:

  • unremitted P&I collections;

  • escrow funds;

  • unapplied funds;

  • loss drafts;

  • accruals on deposit—for example, for the payment of future renewal premiums for lender-purchased MI; and

  • buydown funds.

If the transferor servicer has advanced delinquent interest or scheduled P&I to Fannie Mae, the transferee servicer must reimburse the transferor servicer once it receives a final accounting of all monies from the transferor servicer.

All new amounts owed must be paid to the appropriate party promptly, as agreed by the parties.

Submission of Final Accounting Reports/Remittances

As described in Submission of Final Accounting Reports/Remittances in A2-7-03, Post-Delivery Servicing Transfers, the transferor servicer must submit the monthly LAR for the month that includes the transfer date.

In the month of the transfer date, the transferor servicer will be contractually responsible for

  • reporting the monthly LAR for all mortgage loan activity processed on the mortgage loans, and

  • ensuring that sufficient funds to satisfy that month’s remittance obligation are available for drafting on the scheduled remittance date. However, the transferor and transferee servicers may agree that the transferee servicer will make the actual remittance to Fannie Mae.

In the month following the transfer date, the transferee servicer will be responsible for reporting the monthly LAR applicable to the transferred mortgage loans.

The transferor servicer must provide the transferee servicer with copies of its Fannie Mae investor reporting system shortage/surplus reconciliations for the final monthly accounting period for all mortgage loans included in the servicing transfer. The two servicers should agree on how to resolve any differences and reconcile items or funds that are owed Fannie Mae and security holders. (Any questions regarding these issues must be directed to the transferor servicer’s Fannie Mae Investor Reporting Representative.)

If, after reconciling the final shortage/surplus balance, the transferor servicer determines that Fannie Mae needs to process a shortage/surplus adjustment, the transferor servicer must send to its Fannie Mae Investor Reporting Representative (see F-4-03, List of Contacts) a copy of the final shortage/surplus reconciliation along with adequate documentation to support the requested adjustment. The adjustment must be requested within 30 days after the transfer date. The transferee servicer will be responsible for any Fannie Mae investor reporting system shortages related to mortgage loans included in the transfer that are not promptly resolved by the transferor servicer.

Preparing Mortgage Loan Assignments

Mortgage loan assignments must be prepared and recorded, if required, in accordance with Preparing Mortgage Loan Assignments in A2-7-03, Post-Delivery Servicing Transfers.

Any required assignment that is submitted to the document custodian(s) must be identified by the applicable Fannie Mae loan number and submitted under cover of a transmittal letter that includes the following information:

  • the name of the transferor servicer;

  • the name of the transferee servicer;

  • the number of mortgage loans included in the transfer, as well as the number of mortgage loans for which recordable (but unrecorded) assignments to Fannie Mae have been executed;

  • the transfer date; and

  • a trial balance of the transferred mortgage loans, which identifies the mortgage loans for which assignments to Fannie Mae are being provided (or, if only a few mortgage loans are being transferred, a list of the transferred mortgage loans for which assignments are being provided).

Fannie Mae is the Mortgagee of Record

A new mortgage loan assignment does not need to be prepared if the assignment to Fannie Mae has been recorded. A mortgage loan for which Fannie Mae is the mortgagee of record would be one of the following:

  • a mortgage loan that was delivered to Fannie Mae before it converted to the Fannie Mae investor reporting system in 1984 (regardless of the location of the security property);

  • a mortgage loan that is secured by a property located in Mississippi or Utah, if the mortgage loan was delivered to Fannie Mae during the period that Fannie Mae required recorded assignments for a Mississippi mortgage loan (after September 1, 1988, until June 7, 1989) or for a Utah mortgage loan (after September 1, 1988, until October 31, 1991); or

  • a mortgage loan for which Fannie Mae requested recordation of the assignment (for any reason) after it purchased or securitized the mortgage loan.

Fannie Mae is Not the Mortgagee of Record and the Mortgage Loan is Not Registered with MERS

An assignment from the transferor servicer to the transferee servicer must be prepared and recorded if an assignment to Fannie Mae has not been recorded for a mortgage loan that is not registered with the MERS. The transferor servicer is responsible for recording the assignment from itself to the transferee servicer. (Blanket assignments may be used for the assignment, as long as the coverage for each blanket assignment is restricted to a single recording jurisdiction.) If the transferee servicer is a master servicer utilizing a subservicer and the subservicer will be the mortgagee of record, the required assignment must be from the transferor servicer to the subservicer unless the subservicer is already the mortgagee of record. If the transferor servicer will be the subservicer of the transferee servicer and will remain the mortgagee of record, an assignment to the transferee servicer will not be required.

An assignment from the transferee servicer (or the subservicer if the subservicer will be the mortgagee of record) to Fannie Mae must be prepared (in recordable form, but unrecorded) to replace the one Fannie Mae had originally received from the transferor servicer. This unrecorded assignment from the transferee servicer to Fannie Mae must be an individual assignment. The transferee servicer is responsible for preparing the unrecorded assignment to Fannie Mae and delivering to the applicable document custodian within six months of the transfer date. If the transferor servicer will be the subservicer of the transferee servicer, will remain the mortgagee of record and has previously delivered an unrecorded assignment to the document custodian; a new unrecorded assignment to Fannie Mae will not be required.

Note: Generally, when a transferred mortgage loan is secured by a property located in Puerto Rico, neither an assignment of the mortgage loan from the transferor servicer to the transferee servicer nor an unrecorded assignment from the transferee servicer to Fannie Mae will need to be prepared and recorded.

Fannie Mae is Not the Mortgagee of Record and the Mortgage Loan is Registered with MERS

Generally, when the servicing of a MERS-registered mortgage loan is transferred to a servicer that is not a MERS member (or to a servicer that elects not to continue the MERS registration for the mortgage loan), Fannie Mae requires

  • the transferor servicer to prepare an assignment of the mortgage loan from MERS to the transferee servicer (or the subservicer if the subservicer will be the mortgagee of record) and have it executed and recorded,

  • the transferor servicer to “deactivate” the Mortgage Identification Number (MIN) in the MERS system for reason: “Transfer to Non-MERS Status,” and

  • the transferee servicer (or the subservicer if the subservicer will be the mortgagee of record) to prepare a recordable (but unrecorded) assignment of the mortgage loan from itself to Fannie Mae and to deliver it to the applicable document custodian.

Transfer of Custodial Documents

If the transferee servicer continues to store the custodial documents with the existing document custodian, it must execute the Master Custodial Agreement, in accordance with Fannie Mae’s Requirements for Document Custodians. If the transferee servicer already has a master custodial agreement on file with that document custodian, the transferee servicer must obtain an MBS Custodian Recertification (Form 2002) in connection with the servicing transfer within six months of the transfer date.

The transferee servicer and the transferor servicer must work out appropriate arrangements for paying the costs of transferring the documents and obtaining the required pool recertification in an expeditious manner. MBS pool documents that will be held by a new document custodian or by the transferee servicer must be recertified, and Form 2002 must be completed and submitted to the transferee servicer’s Fannie Mae office within six months of the transfer date. In the event the transferee servicer cannot complete recertification of the transferred mortgage loans and cannot cure an exception to recertification within six months of the transfer date, the transferee servicer must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts) for further discussion and resolution.

Custodial Documents for Participation Pool Mortgage Loans

For participation pool mortgage loans that Fannie Mae holds in its portfolio, any original mortgage notes that the transferor servicer has in its possession must be transferred to Fannie Mae’s DDC for permanent retention no later than 30 days after the transfer date. To ensure that the transferred documents are appropriately identified, a label showing the Fannie Mae loan number must be affixed to the notes. The documents that are being turned over to Fannie Mae for custody also must be annotated on the trial balance that is submitted to Fannie Mae in connection with the servicing transfer.

Related Announcements

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

Announcements Issue Date
Announcement SVC-2018-06 September 18, 2018
Announcement SVC-2017-05 June 21, 2017
Announcement SVC-2017-04 May 10, 2017
Announcement SVC-2017–01 January 18, 2017
Announcement SVC–2016–09 October 19, 2016