Fannie Mae: Maintaining Seller/Servicer Approval in 2024
Written by: Heather Papows – Senior Consultant, Loan Servicing & Secondary Market
In December of 2022, Fannie Mae released SEL-2022-10 which slid in updated guidance for maintaining seller and servicer approval, and brought with it a rather drastic change from what was previously permitted. The change to policy becomes effective January 1, 2024, but is based on loan sale and loan servicing activity from 2023. It will undoubtedly catch many Seller/Servicers off guard in 2024.
In addition to complying with other minimum requirements as set forth in the guide (minimum net worth, capital and liquidity requirements, etc), in order to maintain an approved seller and/or servicer status:
Sellers must sell to Fannie Mae at least 12 loans per year (starting with the 2023 calendar year) to maintain seller status.
Servicers must service at least one loan for Fannie Mae as of 12/31 (starting with the 2023 calendar year) to maintain servicer status.
Seller/Servicers must adhere to both requirements to maintain both approvals.
If on January 1, 2024, your activity from 2023 failed to meet these thresholds, Fannie Mae states that your associated approval status will be terminated. Sellers and/or servicers who are terminated but wish to re-activate their status will no longer be able to pay a maintenance/reactivation fee, as was previously permitted.
Instead, sellers and/or servicers must reapply to become an approved seller/servicer again, following the approval requirements in place at the then-present time.
Maintaining servicer status for many will not be an issue, but losing the seller designation could certainly bring unexpected challenges for 2024, especially if it comes as a surprise to you. Obtaining approval again not only is extremely timely (plan on an estimated 12-20 weeks), and costly (requires a $5,000 non-refundable application review fee), but will also require a stringent review by Fannie Mae of your institution’s financial position, your staff’s level of experience/ knowledge, as well as the scrutiny of all written policies and procedures including but not limited to a comprehensive Pre-Funding, Post-Closing, and Servicing Quality Control Policy.
If you find yourself facing de-activation, don’t toss in the towel on the Fannie Mae relationship just yet. Instead, call on the experts at Spillane Consulting Associates to guide you through the process, from assessing your staff capabilities, to updating your policies and procedures, to developing your loan profitability and secondary market strategy plan. With the proper guidance, you can change the mentality of selling 12 loans a year from a chore to a profitability success statement.
For more information on ways SCA can help you maintain or re-establish your investor loan approval status, please contact our Director, Bill Dolan, at WDolan@scapartnering.com or by phone at (617) 694-2617.
