Under certain circumstances, Fannie Mae may require a seller or servicer (the current servicer or prior servicer) or other party responsible for the selling representations and warranties or servicing duties or obligations that is responsible for the alleged defect identified in the demand (“lender”) to repurchase a mortgage loan or acquired property, remit a make whole payment (if the property has been liquidated) or to pay an indemnification demand as a result of a breach of the Lender Contract. The following briefly lists the options and processes that are in place to resolve all such demands:
- The lender complies with the demand and either remits the amount of the indemnification demand, repurchases the loan or property, or remits the make whole payment.
- Fannie Mae allows the lender to correct certain, breaches in the time and manner described in the Lender Contract.
- Fannie Mae may elect to enter into a repurchase alternative with the lender.
- The lender may appeal the demand.
- If the first appeal is denied and the lender has additional material information, the lender may submit a second appeal.
- If all appeals are denied, the lender may initiate the impasse process.
- If the impasse process does not resolve the demand, the lender may initiate the management escalation process.
- If the management escalation process does not resolve the demand, the lender may initiate the Independent Dispute Resolution process.
The purpose of this document is to describe the steps and legal requirements involved in the appeal, impasse, management escalation, and Independent Dispute Resolution processes. It is intended for use by any responsible party to thesedemands, be it a lender, servicer, or Fannie Mae. The document is incorporated by reference into both the Fannie Mae Selling Guide and Servicing Guide and, as a result, is part of the Lender Contract.
Refer to the Selling and Servicing Guides for additional information about the options or steps listed above that are not covered by this document.