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A2-1-03, Indemnification for Losses (10/06/2021)
Introduction
This topic contains information on indemnification for losses, including:
General Requirements
The responsible party must indemnify and hold Fannie Mae (including its successors and assigns and its employees, officers, and directors individually when they are acting in their corporate capacity) harmless against all losses, damages, penalties, settlements, liabilities, judgments, claims, counterclaims, defenses, actions, costs, expenses, attorneys’ fees, and other legal fees (collectively, “Fannie Mae losses” or “losses incurred by Fannie Mae”), that are based on, or result or arise from, the events described below.
| If the responsible party is responsible for selling representations, warranties and other obligations: | If the responsible party is responsible for servicing obligations and liabilities: |
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| If the responsible party is a licensee of any Fannie Mae technology pursuant to the Software Subscription Agreement: | |
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Fannie Mae losses include losses related to the loans and the servicing of them prior to their delivery to Fannie Mae.
The requirements described above
| ✔ | The indemnities set forth above... |
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Apply regardless of whether
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| Are not limited to Fannie Mae Losses related to claims by or against third parties and include Fannie Mae Losses related to claims between Fannie Mae and the indemnifying party (sometimes known as indemnification of first-party or intra-party claims or losses), with the following exception: the indemnities set forth above that are related to Fannie Mae technology are limited to Fannie Mae Losses related to claims by or against third parties. | |
| Do not include Fannie Mae Losses resulting solely from the indemnifying party following the written instructions of Fannie Mae relating to a claim, suit, or proceeding. | |
Do not modify or otherwise affect Fannie Mae’s right to manage its defense for any claim, suit, or proceeding in accordance with its own judgment.
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Application After Enforcement Relief
If the loan with the breach or alleged breach has achieved enforcement relief, then the obligation to indemnify Fannie Mae is limited to Fannie Mae Losses that are based on or related to:
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claims by or against third parties;
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life-of-loan representations and warranties as described in ; and
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representations, warranties and obligations outside Subparts B1 through B5 of the Selling Guide.
Indemnification Process
The table below describes the process applicable to a responsible party’s indemnification obligations, whether incurred under this topic or pursuant to an indemnification obligation included in any other portion of the Lender Contract.
Unless otherwise expressly provided in the Lender Contract
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Fannie Mae will determine without regard to “materiality” or similar limitations if there are any Fannie Mae Losses and the amount of all Fannie Mae Losses; and
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The responsible party may not dispute the selling price Fannie Mae receives for any foreclosed property.
All payments for indemnification are due within 60 days after written demand or if appealed, within 15 days after an appeal is denied. Fannie Mae may offset the amount of any unpaid indemnification payment due from an indemnifying party against amounts Fannie Mae owes to the indemnifying party. The responsible party must pay for all Fannie Mae Losses for which Fannie Mae bills the responsible party (without regard to any mortgage insurance claim or payment).
Unless otherwise provided in the separate agreement, the responsible party’s obligations under any indemnification provisions contained in a separate agreement signed by responsible party
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are effective as of the date on which the responsible party and Fannie Mae sign the separate agreement;
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if with respect to a loan, continue in full force and effect until such loan covered by the indemnification provisions has been paid in full or otherwise satisfied and the indemnification obligations have been performed in full; and
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if with respect to a product, service or technology, survive the termination of such separate agreement.
| General Terms and Conditions Applicable to Indemnification Agreements | |
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| Topic | Unless otherwise provided in the separate agreement, by entering into a separate indemnification agreement in lieu of immediate repurchase |
| No Waiver of right and remedies |
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| Copy must be maintained in loan file | The responsible part will include a copy of the indemnification agreement in the individual loan file (and at its option, the responsible party may redact any loan-level information that does not apply to a covered loan). |
| Immediate repurchase if a default occurs | If a default occurs under the Lender Contract, Fannie Mae may immediately demand repurchase of the loan and the responsible party will have no right of appeal. |
| Voluntary resolution |
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| Choice of law | The indemnification agreement is subject to the choice of law provisions in the Lender Contract. |
| Responsible Party Representations and Warranties | The responsible party represents and warrants that:
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Recent Related Announcements
The table below provides references to recently issued Announcements that are related to this topic.
| Announcement | Issue Date |
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| Announcement SEL-2021-09 | October 06, 2021 |
