Servicing Guide

Published September 9, 2020

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What are the servicer responsibilities when processing a Fannie Mae Short Sale for a Mortgage Loan with Mortgage Insurance?

The servicer must see F-2-06, Mortgage Insurer Delegations for Workout Options for the list of mortgage insurers from which Fannie Mae has obtained delegation of authority on behalf of all servicers, which allows the servicer to process a Fannie Mae short sale in accordance with this Guide without obtaining separate mortgage insurer approval at the company or loan level.

For mortgage insurers from which Fannie Mae has not obtained delegation of authority, the servicer must, once it has obtained the property valuation, contact the mortgage insurer to discuss the possibility of pursuing a short sale and must not agree to a short sale unless the mortgage insurer agrees in writing to the following:

  • to waive its property acquisition rights before the claim is filed, and

  • to settle the claim by paying the lesser of the full percentage option under the terms of the master policy or the amount required to make Fannie Mae whole.

In discussing the possibility of a short sale with the mortgage insurer, the servicer must keep in mind the conditions under which Fannie Mae will accept a short sale. If the mortgage insurer refuses to consider a short sale or offers to settle the claim for an amount that is less than the percentage option or Fannie Mae’s “make whole” amount, the servicer must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts).

The servicer must file a primary MI claim on all conventional first lien mortgage loans on which Fannie Mae bears the risk of loss and is insured under a master primary MI policy with the exception of RMIC. The servicer must follow the procedures in F-1-06, Filing an MI Claim for a Liquidated Mortgage Loan or Acquired Propertyfor filing the MI claim.

For more information please see: D2-3.3-01, Fannie Mae Short Sale

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If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

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