Path to Approval Toolkit
Thank you for your interest in becoming an approved Fannie Mae seller and/or servicer. This toolkit provides an overview of the approval and onboarding process and is a companion to the Fannie Mae Selling Guide and Servicing Guide. In the event of any conflict, the Guides will govern.
Fannie Mae’s standard approval is for the sale and/or servicing of single-family loans, excluding loans delivered under a negotiated contract. Seller/servicers must obtain special approval to sell and/or service certain loans with unique requirements.
At a glance
Using this toolkit to prepare your seller/servicer application, you’ll find the following sections:
Eligibility qualifications
Fannie Mae will determine the qualifications and operational readiness of an applicant by reviewing their financial conditions, organization, staffing, selling and servicing experience, and other relevant factors. Eligibility requirements are outlined in the Maintaining Seller/Servicer Eligibility section of the Fannie Mae Selling Guide (A4-1-01)
| Category | Description |
|---|---|
| Minimum financial requirements | Meet minimum financial requirements for net worth, liquidity, and capital requirements. Net worth
Liquidity
Capital requirements
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| Principal business purpose | Be duly organized, in good standing, and licensed (or authorized) to originate, sell, and/or service residential mortgage loans in all applicable jurisdictions as its principal business purpose. |
| Operational experience and capacity (minimum 24 months) | Demonstrate the experience and capacity necessary to originate, sell, and/or service residential mortgage loans for which approval is sought. |
| Adequate staffing and facilities | Maintain experienced personnel and adequate infrastructure to support the proposed business activities. |
| Control processes | Have management controls and independent internal audit processes to evaluate and monitor the overall quality of loan origination and servicing activities. |
| Operational procedures | Have written procedures for the approval, management, and oversight of vendors/third-party service providers. |
| Business continuity plan and information security | Maintain a business continuity plan, including business continuity procedures, disaster recovery procedures, and an Information Security and Business Resiliency Supplement. |
| Quality control program | Have a written quality control program covering all origination and servicing activities, including both prefunding and post-closing reviews. |
| Fidelity bond and errors and omissions coverage | Maintain fidelity bond and errors and omissions insurance that meet Fannie Mae’s coverage requirements. |
| Minimum servicing requirements | Demonstrate the staffing, systems, written procedures, and contractual standards necessary for the servicing arrangement for which approval is sought (in-house, subservicing, or servicing-released). |
| Compliance program | Have policies to comply with applicable laws and monitor legal developments. |
| Fraud controls | Have procedures to prevent, detect, and report mortgage fraud. |
| Ongoing reporting | Submit quarterly financial statements and annual audited financial statements (GAAP-compliant or comparative), organizational change reports, Form 582 updates, and Annual Compliance Certification. |
| Additional eligibility criteria | Satisfy any additional eligibility criteria Fannie Mae may impose.1 |
1Fannie Mae approves or declines a seller/ servicer based on an assessment of its total circumstances; therefore, a seller/servicer that satisfies Fannie Mae’s general eligibility criteria or any special criteria does not have an absolute right to be approved and should not expect automatic approval. Approval or rejection of a seller/servicer’s application is at Fannie Mae’s sole discretion and is based on Fannie Mae’s business judgment with respect to the totality of the seller/servicer’s circumstances and Fannie Mae’s interests.
Net worth
Maintain an adjusted net worth of ≥ $2.5 million, plus a percentage of unpaid principal balance (UPB) serviced.
Liquidity
Maintain allowable liquidity based on counterparty type.
Capital requirements
Depository seller/servicers must maintain the minimum regulatory capital requirements of their primary regulator.
Non-depository seller/servicers must maintain an adjusted net worth/total assets ratio of ≥ 6%.
In accordance with Additional Financial Requirements in Selling Guide A4-1-01, Maintaining Seller/Servicer Eligibility, we may, at any time based on our view of a seller/servicer’s financial strength or our assessment of market conditions or other relevant factors, impose additional financial requirements, including enhanced net worth, capital, or liquidity requirements. Any additional requirements we impose may apply to a particular seller/servicer, a defined group or type of seller/servicer, or all sellers/servicers. A seller/servicer’s failure to comply with any additional requirements may result in us declaring a breach of the Lender Contract.
In the event of a conflict between this toolkit and the Selling Guide or Servicing Guide, the Guides will govern.
Quality control requirements
Each seller/servicer must establish a quality control (QC) program, including a written QC Plan, that meets the requirements of Part D of the Selling Guide. We expect seller/servicers to design, implement, and administer Prefunding and Post-Closing QC programs that work best for them.
| Requirement | Description |
|---|---|
| Scope of QC program | Must cover the full scope of the seller/servicer’s activities, including:
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| QC program capability | Must be capable of evaluating and monitoring the overall quality of loan production, and detecting deficiencies by:
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| QC outsourcing | If a seller/servicer decides to outsource all or some aspects of the QC process, the seller/servicer remains responsible to establish a written QC oversight plan and procedures to monitor the quality of the outsourced work. |
Minimum servicing requirements
Approved sellers must meet minimum servicing requirements for all loans sold to Fannie Mae according to their approval status for servicing in-house, using a subservicer, or selling servicing-released. For each servicing arrangement, sellers must meet the required experience, staffing, written procedures, procedural controls, systems, and contractual standards, including reporting obligations.
| Servicing model | Approval status and servicing arrangement | Key requirements |
|---|---|---|
| In-house servicing |
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| Master servicer using a subservicer |
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| Servicing released |
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Servicing-released options
A seller that does not retain servicing may transfer the servicing rights to a Fannie Mae-approved servicer concurrently with sale of the loan to Fannie Mae. The servicing-release option you choose determines how you transfer servicing rights when you sell loans to Fannie Mae.
Use Servicing Marketplace® (SMP)
A standardized platform for efficiently executing servicing transfers concurrently with the sale of the loan to Fannie Mae. The seller and servicer must either sign a purchase and sale agreement or be subject to the Mortgage Loan Servicing Purchase and Sale Agreement found at Selling Guide E-2-05.
Loans are sold bifurcated — selling representations and warranties remain with the seller, while the transferee servicer assumes servicing responsibilities as set forth in the purchase and sale agreement.
The purchase and sale agreement must state the servicer acquires the servicing asset at loan sale.
Concurrent transfer of servicing
This option allows servicing rights to transfer at time of loan sale to Fannie Mae, eliminating the need for a separate post-sale servicing transfer. See Servicing Guide A2-7-01.
Execution process
Use the SMP – Pricing & Execution – Whole Loan® (PEWL) application to complete the transaction and ensure accurate pricing.
