A3-3-02, Concurrent Servicing Transfers (05/01/2024)

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

If the selling lender is servicing the loans prior to delivery and will not be servicing the loans after delivery, the selling lender may automatically transfer servicing to a lender that is eligible to service them for Fannie Mae, and has agreed to do so, effective concurrently with delivery of the loans to Fannie Mae. The lender must notify Fannie Mae at the time of loan delivery that servicing has been transferred.

Additionally, the selling lender may designate the servicing lender as Fannie Mae’s servicer for the loans by notifying Fannie Mae at the time of delivery if:

• the selling lender is not servicing the loans prior to delivery because it has contracted with another lender (the “servicing lender”) to service the loans for the selling lender;

• the selling lender will not be servicing the loans after delivery;

• the servicing lender is eligible to service the loans for Fannie Mae; and

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

If the servicing lender wants the contractual servicing relationship to be with the selling lender instead of with Fannie Mae, even after delivery of the loans to Fannie Mae, the selling lender must become Fannie Mae’s servicer (as “master servicer”), and the servicing lender must become a “subservicer.” (See A3-3-03, Other Servicing ArrangementsA3-3-03, Other Servicing Arrangements, and the Servicing Guide.)

A transfer of servicing that becomes effective concurrent with delivery of the loans to Fannie Mae must be implemented in accordance with the requirements in the Servicing Guide.

After Fannie Mae has purchased or securitized a loan, Fannie Mae must approve all subsequent assignments of servicing related to that loan before the servicing can be transferred. See the Servicing Guide for additional requirements.

The transferee servicer must meet Fannie Mae’s eligibility criteria that apply to a lender that becomes Fannie Mae’s servicer in a post-delivery transfer of servicing as described in the Servicing Guide.

The servicing transfer agreement between the lender and the transferee servicer must provide (among other requirements) that:

• the effective date for transfer of the servicing of the 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 loans in accordance with all Fannie Mae requirements;

  • assumes responsibility for all of the lender’s contractual obligations related to all servicing duties, obligations and responsibilities related to the loans that arose prior to the delivery of the 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 lender 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 servicer and any other party providing for servicing the 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 lender and the transferee servicer is such that no agreement to assign the servicing is legally necessary at the time the loans are delivered to Fannie Mae.

Further, by designating another lender as servicer of the loans on the applicable loan schedule, the lender represents and warrants that with respect to such 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 lender and any other party providing for servicing of the loans will not continue after the date on which Fannie Mae funds the whole loan delivery or issues the MBS.

However, the lender is not released from any liabilities to Fannie Mae with respect to the loans or the servicing of them prior to the delivery of the loans to Fannie Mae. The lender and the servicer will be jointly and severally liable to Fannie Mae for the obligations and liabilities related to the loans or the servicing of them that arise before delivery of the loans to Fannie Mae.

In addition to the requirements of this section, a transfer of servicing that becomes effective concurrent with delivery of the loans to Fannie Mae must be implemented in accordance with Fannie Mae’s requirements in the Servicing Guide.

After Fannie Mae has purchased or securitized a loan, Fannie Mae must approve all subsequent assignments of servicing related to that loan before the servicing can be transferred.

The lender 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 a concurrent servicing transfer does not meet Fannie Mae’s eligibility standards as stated in this Guide and in the Servicing Guide, Fannie Mae is entitled to terminate the transferee’s servicing with respect to the affected loans in order to transfer servicing of the loans to another servicer, pursuant to Fannie Mae's rights under the MSSC. The lender is obligated for all losses incurred by Fannie Mae resulting from the lender’s designation of an ineligible servicer.

For additional information about concurrent servicing transfers, see the Servicing Guide.

The Servicing Marketplace is a committing platform that provides a standardized process for sellers and servicers who engage in concurrent servicing transfer transactions. Seller and servicer obligations for loans sold and servicing acquired via the Servicing Marketplace will be bifurcated under the terms and conditions below.

The transferee servicer must:

• meet Fannie Mae’s eligibility criteria that apply to a lender that becomes Fannie Mae’s servicer in a post-delivery transfer of servicing as described in the Servicing Guide, and
• obtain Fannie Mae's approval to participate in Servicing Marketplace. 

See  A2-1-01, Contractual Obligations for Sellers/ServicersA2-1-01, Contractual Obligations for Sellers/Servicers  for additional information.

In order to be eligible as a seller for Servicing Marketplace, at a minimum, sellers must meet and maintain an Adjusted Net Worth, calculated in accordance with A4-1-01, Maintaining Seller/Servicer Eligibility, of at least $2.5 million, plus an amount equal to the greater of:

• the sum of the following:
  • 0.25% of the Residential First Lien Mortgage Servicing UPB serviced for Fannie Mae and Freddie Mac, plus
  • 0.35% of the Residential First Lien Mortgage Servicing UPB serviced for Ginnie Mae, plus
  • 0.25% of the Other Servicing UPB, or
• 0.25% of the UPB of whole loans purchased by Fannie Mae that were committed in the preceding 36 months via Servicing Marketplace.

The minimum Adjusted Net Worth does not include loans serviced under a subservicing arrangement - that is, for which the seller/servicer is contractually obligated to service for another servicer.

If these minimum requirements are met, Fannie Mae may, but is not required to, approve and activate the seller for Servicing Marketplace. A seller may view whether it has seller access to Servicing Marketplace by logging into the Fannie Mae whole loan committing application. Fannie Mae, in its discretion at any time, may terminate a seller’s participation in Servicing Marketplace, which will be effective immediately.

Using SMP in Fannie Mae’s whole loan committing application, lenders may arrange for a concurrent sale of servicing to an approved Fannie Mae servicer. See C2-1.3-01, Servicing MarketplaceC2-1.3-01, Servicing Marketplace, for additional information.

A lender approved as a seller for SMP transactions is directly liable to Fannie Mae for the obligations and liabilities related to the SMP loans, including all selling representations and warranties required to be made by a seller, and for obligations and liabilities related to servicing of the SMP loans that arise before delivery of the loans to Fannie Mae. The servicer retained by the lender concurrent with Fannie Mae’s acquisition of the loan (and any transferee servicer to whom servicing rights and obligations with respect to an SMP loan have been transferred by the servicer with approval from Fannie Mae) is responsible for the servicing duties, obligations and responsibilities related to the loan that arise both prior to Fannie Mae’s acquisition of the loan and thereafter, but otherwise the servicer (and any transferee servicer as previously described in this paragraph) has no liability and is not responsible for breaches of any of the selling lender’s selling representations, warranties, obligations or liabilities related to the SMP loans. 

The lender’s sale of SMP loans to Fannie Mae is subject to the following requirements:

• Upon the sale of a SMP loan to Fannie Mae, the lender makes all representations and warranties required to be made by a seller under this Selling Guide.

• The lender acknowledges and agrees that:

  • Fannie Mae is entitled to enforce directly against the lender, and the lender is liable for, any and all remedies (including, without limitation, repurchase) for a breach of the lender’s obligations and liabilities related to the SMP loans. Fannie Mae is under no obligation to enforce or attempt to enforce any such remedies against the servicer.

  • Without limiting the provisions of the Guides, the lender must resolve repurchase requests with respect to SMP loans within the time and manner required by the Servicing Guide. Failure to do so may result in termination of the lender’s approval to participate in SMP, as well as any other remedies Fannie Mae may elect to pursue.

• Notwithstanding anything to the contrary in the Lender Contract or any other agreement between the lender and Fannie Mae, by its sale of SMP loans to Fannie Mae, the lender:

  • authorizes Fannie Mae to disclose from time to time to the applicable servicer any information (and any related assessments and analyses developed by Fannie Mae) that Fannie Mae may have concerning the lender (including, for example, information related to the lender’s financial condition and relationship with Fannie Mae), the SMP loans, the servicing of SMP loans and related quality control reports, and waives any requirement that Fannie Mae maintain the confidentiality of such information to the extent such requirement would otherwise prohibit such disclosure; and

  • shall have no rights or claims against Fannie Mae in connection with such disclosure or transfer of information, and waives any and all claims arising out of or based upon the confidential nature of such information.

• The lender acknowledges that Fannie Mae may, at its sole discretion:

  • from time to time, amend or supplement Fannie Mae’s procedures and requirements for the purchase of SMP loans, by publishing such amendments or supplementary material in the Selling Guide or in other written communications; and

  • terminate the lender’s approval to participate in SMP by delivering notice to the lender at any time.

The servicer of SMP loans sold to Fannie Mae is subject to the following requirements:

• The servicer must service all SMP loans in accordance with the requirements of the Servicing Guide.
• The servicer waives all rights of recourse against Fannie Mae regarding any sale, transfer or acceptance of SMP loan servicing.
• If the servicer desires to transfer servicing of any SMP loan, it must comply with the terms of the Servicing Guide and clearly identify all such loans in its request for Fannie Mae's approval of a transfer of servicing.
• Fannie Mae is authorized to disclose from time to time to the applicable seller any information provided by the servicer concerning SMP loans, including any SMP loan servicing and quality control reports. The servicer waives any requirement that Fannie Mae maintain the confidentiality of such information to the extent such requirement would otherwise prohibit such disclosure. In addition, the servicer agrees that it has no rights or claims against Fannie Mae in connection with such disclosure or transfer of information and waives all claims arising out of or based upon the confidential nature of any such information.
• The servicer may be asked to provide to the applicable seller certain performance data relating to SMP loans which have experienced delinquency and for which there is an increased risk that Fannie Mae or a third party may seek repurchase or other remedies (At Risk loans).
• The servicer agrees that, in connection with any disclosure of performance data for At Risk loans it elects to provide to a seller:
  • The servicer is solely responsible for performing (and has performed) its own analysis of, and determination that any disclosures of performance data are in compliance with the Gramm-Leach-Bliley Act privacy rules and other applicable legal requirements.
  • In making disclosures of performance data, the servicer has not relied upon any representations or legal advice of Fannie Mae, whether oral or written, regarding compliance with privacy laws.
  • The servicer may limit the seller's use of such data to improve its origination processes to prevent future fraud, risk control/estimation of potential repurchase, make whole or indemnification obligations in connection with such At Risk loans or such other purpose as the servicer deems appropriate.
• Fannie Mae, at its sole discretion, may:
  • from time to time, amend or supplement Fannie Mae's procedures and requirements for the purchase of SMP loans, by publishing such amendments or supplementary material in this Guide or in other written communications; and
  • terminate the servicer's approval to participate in SMP by delivering notice to the servicer at any time. The provisions of the Guides relating to SMP loans (including that the servicer has no liability and is not responsible for breaches of any of the selling lender's selling representations, warranties, obligations or liabilities related to the SMP loans) will survive termination of the servicer's participation in SMP but only as to SMP loans for which the servicer acquired the related loan servicing prior to the termination of its participation in SMP.