Introduction to BU/BD and User Scenarios

Lenders may buy up or buy down the guaranty fee rate on loans in a Fannie Mae Mortgage-Backed Security (MBS) in exchange for a one-time payment from or to Fannie Mae. This job aid provides an overview of Buyup/Buydown (BU/BD) options and functionality available for lenders delivering MBS loans in the Loan Delivery application.

NOTE: Assign the contract number and guaranty fee information within your ULDD XML import file or manually before any BU/BD options are available within Loan Delivery.

For detailed instructions on how to perform other tasks, see the Loan Delivery User Guide,  eLearning tutorials, or other job aids. If you do not have access to the Loan Delivery application and require it, contact your Fannie Mae Technology Manager.

Scenarios for Using the BU/BD Features in Loan Delivery

1. Scenario 1 – All guaranty fee data imported – no changes needed in Loan Delivery:
   All note rate, contract, guaranty fee, and guaranty fee after BU/BD information is imported directly into Loan Delivery via an imported XML file and you do not wish to change any of the imported information.
   
   Assigning Contract and Guaranty Fee Information
   The following options are available to assign contract and guaranty fee information when not provided in an imported XML file.

2. Scenario 2a – Update all loans with the same contract (same guaranty fee per contract):
   The "Update All" feature allows you to assign the same contract number and guaranty fee information for all the loans within the pool.

   NOTE: If all loans have the same guaranty fee after BU/BD, you can also assign during this step.

3. Scenario 2b – Commingling loans with the same contract, (different guaranty fees per contract):
   To commingle guaranty fees within the same contract, you first need to use “Update All” to assign the contract number to all loans within the pool. Then using the “Update Loan” feature you can select loan(s) and assign the guaranty fee. This process will be repeated until all loans have been assigned a guaranty fee.

4. Scenario 2c – Commingling loans with different contracts (same guaranty fee per contract):
   To commingle contracts (with same guaranty fee per contract) use the “Update Loan” feature to select loan(s) and assign contract and guaranty fee. This process will be repeated until all loans have been assigned for both contract and guaranty fee.
   
   Assigning Guaranty Fee after BU/BD Options
   The following options are available after contract and guaranty fee per contract have been assigned to loans either through an imported XML file or through Update All/Update Loan features in Loan Delivery.

5. Scenario 3a – Update all loans with same guaranty fee after BU/BD:
   Contract and guaranty fee information has been assigned and now you want to assign the same guaranty fee after BU/BD to all loans within the pool.

6. Scenario 3b – Automatic fit – fixed rate amortization pool only:
   Contract and guaranty fee information has been assigned for a fixed-rate amortization pool only and you now want the system to automatically calculate the amount of BU/BD to fit the servicing fee.

7. Scenario 3c – Customized fit – any type amortization pool:
   Contract and guaranty fee information has been assigned for a pool with any type of amortization and now you want to specify the guaranty fee after BU/BD by specific note rate.