Guidelines for Third-Party Originated Loans

The purpose of this job aid is to help provide additional information on data fields required in Loan Delivery for delivery of Third-Party Originated Mortgages.

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 Loan Delivery and require it, please contact your Technology Manager administrator.  

Third-Party Originations

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A third-party origination is any loan that is completely or partially originated, processed, underwritten, packaged, funded, or closed by an entity other than the seller (or its parent company, controlled affiliate, or subsidiary) that sells the loan to Fannie Mae. This includes mortgage brokers or correspondents, which are known as third-party originators. If a seller enters into a contract with a third party known for the quality of its underwriting (such as a mortgage insurer) to help the seller in underwriting its mortgage originations, the loans will not be considered third-party originations. Refer to Chapter E-3, Glossary for the definition of correspondent and broker. (Retail is also an origination type but is not considered a third-party origination.)

Correspondent Origination

A loan that is originated by a party other than a mortgage loan seller (or its parent company, controlled affiliate, or subsidiary) and is then sold to a mortgage loan seller. A lender correspondent performs the loan processing functions (such as taking loan applications; ordering credit reports and title reports; requesting appraisals; and verifying a borrower’s income and employment) without the assistance of a broker. The lender correspondent typically underwrites the loan, but correspondent loans may also include loans where the correspondent has not received delegated underwriting authority from a mortgage loan seller and, accordingly, did not underwrite the loan. The lender correspondent funds the loan at settlement, and the loan is closed in the name of the lender correspondent, which may or may not service the loan.

Broker Origination

A loan that is originated under circumstances where a person or firm other than a mortgage loan seller (or its parent company, controlled affiliate, or subsidiary) or lender correspondent is acting as a “broker” and receives a commission for bringing together a borrower and a lender. The broker performs some of the loan processing functions (such as taking loan applications; ordering credit reports, and title reports; requesting appraisals; and verifying a borrower’s income and employment), but does not underwrite the loan, fund the loan at settlement, or service the loan. Typically, the loan is closed in the name of the mortgage loan seller or lender correspondent that commissioned the broker’s services, but may also include so-called “table-funded” loans where the loan is closed in the broker’s name but is funded by the mortgage loan seller or the lender correspondent.

Retail Origination

A loan for which the mortgage loan seller (or, as described in "Retail Origination" below, its parent company, controlled affiliate, or subsidiary) takes the loan application and then processes, underwrites, funds, and sells the loan to Fannie Mae.

"Retail Origination" includes a loan that is originated and funded by a parent company, controlled affiliate, or subsidiary of the mortgage loan seller, or is closed either in the name of the applicable parent company, controlled affiliate, or subsidiary and sold to the mortgage loan seller or is closed in the name of the mortgage loan seller. In any case, the loan is then sold by the mortgage loan seller to Fannie Mae.

Affiliate

An entity that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, a seller. For the purposes of this definition, "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity through ownership, by contract, or otherwise.

Parent Company

The parent company of a specified entity is an affiliate controlled such entity, directly or indirectly through one or more intermediaries. For the purposes of this definition "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity through ownership, by contract, or otherwise.

Subsidiary

A subsidiary of a specified entity is controlled by such entity, directly or indirectly through one or more intermediaries. For the purposes of this definition "control" means the possession direct or indirect, of the power to direct or cause the direction of the management and policies of an entity through ownership, by contract, or otherwise.