The servicer may initiate a request for Fannie Mae’s approval to repurchase a mortgage loan. Fannie Mae’s approval of the servicer’s request will depend, in part, on whether the mortgage loan is currently either an MBS mortgage loan or a portfolio mortgage loan.
Following the repurchase of any mortgage loan, losses are the responsibility and legal obligation of the responsible party. For modified mortgage loans, the responsible party must comply with all legal obligations in connection with the mortgage loan, including any legal obligation to pay a borrower any earned “pay for performance” incentives.
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When the servicer or responsible party wishes to repurchase a mortgage loan that Fannie Mae holds in its portfolio, it must submit a written offer to the Non-Standard Repurchase Team (see F-4-03, List of Contacts). Fannie Mae will not approve requests to repurchase a portfolio mortgage loan in connection with a conditional tender of payment that is used as an alternative to refinancing the mortgage loan. See Selling Guide B2-1.3-04, Prohibited Refinancing Practices for additional information.
Under certain circumstances, an MBS mortgage loan (or Fannie Mae’s participation interest in it) must be repurchased from the pool (see Mandatory Repurchase of Certain MBS Mortgage Loans in A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations). However, the following table describes the circumstances under which the servicer has the option to repurchase the mortgage loan from the MBS pool.
Optional repurchase of a delinquent regular servicing option MBS mortgage loan
A mortgage loan that has four consecutive payments past due may be repurchased from the MBS pool.
If the requesting party chooses not to repurchase the mortgage loan at this time, the servicer must continue to advance scheduled P&I payments for the mortgage loan until it is removed from the MBS pool. See C-3-01, Responsibilities Related to Remitting P&I Funds to Fannie Mae for additional information.
Optional repurchase related to due-on sale enforcement
The servicer may repurchase the mortgage loan as an alternative to enforcing the due-on-sale (or due-on-transfer) provision. The due-on-sale (or due-on-transfer) provision is enforceable when the servicer has knowledge that a mortgaged property has been or is about to be conveyed by the borrower in violation of the due-on-sale (or due-on-transfer) provision, requiring the servicer to call the mortgage loan due and payable. See D1-4.1-01, Determining Whether a Transfer of Ownership Is Permitted for additional information.
After removing the mortgage loan from the MBS pool, the servicer may allow an assumption of the mortgage loan. If the new borrower is creditworthy and the mortgage loan meets all of Fannie Mae’s current eligibility requirements, the servicer is authorized to subsequently submit the assumed mortgage loan to Fannie Mae for purchase under any of Fannie Mae’s standard commitments for cash deliveries or as part of an MBS pool delivery.
The servicer of a special servicing option MBS mortgage loan also may repurchase the mortgage loan from the pool as an alternative to enforcing the due-on-sale (or due-on-transfer) provision as described above, but that repurchase requires prior approval by Fannie Mae. Similarly, after removing the mortgage loan from the MBS pool, the servicer may allow an assumption of the mortgage loan.
Regular servicing option MBS mortgage loans, and shared-risk special servicing option MBS mortgage loans for which the servicer's shared risk liability has not expired, that have been removed from an MBS pool, and have been modified are not eligible for redelivery to Fannie Mae unless Fannie Mae agrees otherwise.
The following table describes the requirements for the offer to repurchase mortgage loans.
|✓||To offer to repurchase mortgage loans, the requesting party must...|
|Identify the mortgage loans to be repurchased by coupon rate and participation certificate yield (if applicable).|
|Explain the reason for the request.|
|Set forth the specific terms and conditions of the repurchase.|
|Specify the purchase price the requesting party is offering.|
After evaluating the offer, Fannie Mae will notify the requesting party of its acceptance or declination of any counteroffer the requesting party proposes.