FAQs: Pricing & Execution – Whole Loan

No. These product grids are options that sellers can utilize to commit if a loan qualifies. For example, an $80k, 30yr loan from New York can be committed under the standard 30yr, 85k max loan amount, or the New York only product grid on PE-WL. It is up to the seller to determine the best execution.

No. These loans cannot be delivered under any different grid.

PEWL Hours of Operation – All Eastern Standard Time

The combined daily limit is a $200 million. However, as we do not wish to limit liquidity, any lender seeking to exceed this limit should contact the Capital Markets Pricing and Sales Desk at 1-800-752-0257. 

Please review our documentation on annual loan limits. 

A best efforts commitment allows you to enter into an agreement to sell a loan to Fannie Mae, but if the loan does not close, you typically will not be charged a pair-off fee for nondelivery. Through our best efforts execution, loans are sold to Fannie Mae under loan-level commitments. Bulk commitments and loan substitutions are not allowed. See the Best Efforts section below for additional information.

Either execution is available to our customers. It is up to you to determine how to best manage the loans in your pipeline and to choose between the two options. At any time, either one program or the other may support your business goals. Please note that although you have the option to execute under either program, you may not commit and then deliver the same loan under both programs without pricing implications. 

When committing a loan with a nonstandard amortization term, a lender must select the next highest amortization schedule available, regardless of the pricing option. For example, a 12-year FRM must be committed as a 15-year FRM, an 18-year FRM must be committed as a 20-year FRM, and a 25-year FRM must be committed as a 30-year FRM.

(Minimum Term in months)

Commingling reduces the management of numerous commitments. In PE – Whole Loan, loans can be commingled only on mandatory commitments. On mandatory commitments, multiple loans of the same product can be commingled on the same commitment as long as there is sufficient UPB and all of the pass-through rates fit within the range on the commitment.

Lender-paid mortgage insurance (LPMI) is mortgage insurance coverage for a conventional mortgage that the lender pays. The lender funds the coverage (via the servicing cash-flow stream) rather than requiring the borrower to include periodic accruals for the coverage as part of his or her mortgage payment.  

 When committing a loan on PE – Whole Loan that has LPMI that is paid for out of the gross note rate, the LPMI percentage will need to be factored in to the total servicing fee. For example, a 5.0 percent gross note rate that is sold with 25 basis points (bps) of servicing and 50bps of LPMI will result in a 4.25 percent pass-through rate (5.0 percent – .25 percent servicing – .50 percent LPMI = 4.25 percent PTR). 

The enhanced whole loan committing grids in in PE – Whole Loan provide greater certainty of execution, enabling you to embed the enhanced pricing into your rate sheets and best execution analysis. The enhanced committing grids mimic the most commonly traded specified pool stories trading in the MBS market. More information on these committing grids can be found on this fact sheet.

Lenders can view prices for any eligible products within PE – Whole Loan after the close of business – currently Monday through Friday between 5:00 p.m. – 8:00 p.m. ET. The prices represent the final levels available at the market close. These close-of-business prices may not be used to execute any commitments.  

The purchase status definitions have now been aligned between PE-Whole Loan, Loan Delivery and the Selling Guide. Additional detail can be found here.

Yes. You may make a change to the product, note rate, and/or loan amount. In the instance of product or note rate changes, PE – Whole Loan will re-price the commitment for you.  Tolerances to the commitment amount do not occur for a best efforts commitment, so you may update the commitment or loan amount without paying a fee.  

• When a change is made to the product, and/or note rate, the new commitment pass-through rate and prices are recalculated using the market prices in effect at the time of the original commitment date. This type of change is not subject to a duplicate price adjustment. 
• However, when the product group changes, (e.g., from a fixed rate to an adjustable rate mortgage) PE - Whole Loan will either return a duplicate price adjustment for the new product or the lower of the new product’s price at the time of the original commitment and its current live price.  

View the Modifying a Best Efforts Commitment section in the PE – Whole Loan Job Aid for more details.

Any additional commitment(s) for the same borrower and property address that’s committed prior to or within 30 days of the original fallout or expiration date (the earlier of the two) qualifies as a duplicate commitment. If a best efforts loan is recommitted on another best efforts or mandatory commitment within 30 days of being moved to fallout, it will receive a duplicate price adjustment.  Loans committed after 30 days will receive current market pricing.

When recommitting a duplicate commitment, the original DU Casefile number cannot be reused for the purposes of committing.  When recommitting you must select the “Other” underwriting method when inputting the commitment or rerun the DU to obtain a new Casefile.

If a best efforts loan is recommitted on another best efforts or mandatory commitment within 30 days of original loan fall-out, it will receive a duplicate price adjustment (DPA).

A DPA is assessed after Fannie Mae funds a duplicate commitment for the same loan. Your custodial account will be drafted within five to 10 business days, post-funding.  

• A DPA is effectively a retroactive pair-off fee based on the original loan commitment. A DPA will be charged if the pair-off price at the time of original loan fall-out is higher than the price at the time of recommitment.

  • DPA = Max Loan Amount * (commitment price – pair-off price)

• If the recommitment comes through the Best Efforts channel, the pair-off price for the original loan commitment will be calculated based on the market price as of the time of loan fall-out, including the bid/offer spread.

• If the recommitment comes through the Mandatory channel, the pair-off price for the original loan commitment will be calculated based on the market price as of the time of loan fall-out, including the bid/offer spread and the hedge factor of the original Best Efforts commitment.
  NOTE: If a Best Efforts commitment goes into “Closed” status, subsequently paired off and then recommitted as a Mandatory commitment within 30-days, it will still be charged the hedge factor.

• Any pair-offs that occur after 5pm may be subject to an after-hours adjustment.

• A DPA may be assessed on any duplicate loan commitment, regardless of the difference in price between the two commitments. 

A loan recommitted or delivered against a best efforts or mandatory commitment with a commitment effective date prior to or within 30 days of the original best efforts commitment’s fallout or expiration date is considered a duplicate commitment and may require duplicate price adjustment. Loans committed after 30 days will receive current market pricing. 

The PE – Whole Loan system will recognize the loan as a duplicate, and it will not allow a committed loan with the same DU Casefile ID. 

Yes. Customers can deliver odd terms or shorter-term loans in PE – Whole Loan as long as the original term of the loan is more than the minimum term for the committed product. For example, customers with odd term loans can underwrite a 25-year loan in Desktop Underwriter®, and then commit it as best efforts in PE – Whole Loan under a 30-year mortgage product. Be sure to choose the appropriate pricing grid (standard or specified) and the minimum terms above to avoid a possible delivery edit. 

If the property on a loan changes, place the first commitment into fallout and take down a new commitment subject to current market pricing. This is not considered a duplicate commitment. A duplicate commitment is for the same borrower(s) and same property address. 

No. A commitment requires both a specific borrower(s) and a specific property address in order to a commit a loan for sale to Fannie Mae.

***Any inadvertent best efforts commitment with a to-be-determined (TBD) or address deemed to be incomplete that is moved to fallout or expires will automatically be subject to the duplicate price adjustment (DPA).

The borrower(s) and property address must be known and entered at the time of a best efforts commitment. Entering “To Be Determined/TBD” for the address will be remedied and the commitment may result in pair-off fees.

Information does not flow between DU and PE – Whole loan so there are no auto-updates between systems after a commitment is created.  
Items that will update only after modify/save/accept actions are executed in PE – Whole Loan on best efforts commitments:

• Appraisal amount/ Loan-To-Value (LTVs)
• Interest rate
• Loan purpose
• Occupancy
• Principal and Interest (PI)
• FICO
• Property type

1. Ensure DU is up to date
2. Go to PE – Whole Loan and click on modify, then save
3. A pop-up window will appear, highlighting the difference between data in DU and the same data in PE – Whole Loan
4. Click accept and the PE – Whole Loan data will be overwritten with the DU data

• Loan/commitment balance
• Product type (you must begin typing in the product window to activate the drop-down product menu)
• Seller unique loan number
• Number of units
• Gross Note Rate
• Loan Status

*Added flexibility to make modifications on manual or “other” underwriting method commitments.

• Borrower/co-borrower names and last 4 digits of social security numbers (minor changes only)
• Property address (minor changes only)
• Property city
• Property state
• Property zip code (minor changes only)
• DU case file ID
• Borrower/co-borrower position on commitment
• Add/remove 1 or more borrowers

You may email Fannie Mae at [email protected] to make updates to the commitment’s address, borrower(s) name(s), social security number(s), remittance type, and/or DU Casefile ID.  

Remember that loan substitutions are not allowed; therefore, most updates should be minor, or you may be requested to provide a sufficient explanation for your request. 

Three potential fees or pricing adjustments may occur in best efforts execution. Please see related questions for more information on each.  

• Extension fees  

• Pair-off fees  

• Duplicate price adjustment  

For a break-down of your committing extension and pair-off fees, please see the fees report within the PE – Whole Loan application.  

View the Monitoring Commitment-Related Fees section in the PE – Whole Loan Job Aid for more details.

Calculate the extension fee by taking the maximum commitment loan amount and multiplying it by the maximum pass-through rate (PTR) throughout the life of the commitment and dividing that amount by 360 days to determine the per-diem extension cost. Commitments may be extended up to 30 days with a loan status of “committed” and up to 60 days with a “closed” loan status. Commitments with a “closed” loan status will automatically extend for five calendar days until the commitment reaches its maximum allowed extension period or until the loan is purchased (the earlier of the two). After a commitment reaches its maximum allowed extension period of 60 days, and it remains in a “closed” loan status, PE – Whole Loan will automatically pair-off the commitment and assess a fee.  

Example:  

($100,000 loan amount x 4.125% PTR)/360 days = $11.46 per day (rounded) x three days needed to deliver = $34.38 extension fee 

See Step 4 in Executing an Extension for a Best Efforts Commitment in the PE – Whole Loan Job Aid for more details.

Closed loans are considered a mandatory obligation to be delivered to Fannie Mae. Once you have changed the loan status to “closed,” you have the option to “pair-off” in the event you cannot deliver the loan to Fannie Mae. Depending on market conditions, the loan may assess a pair-off fee based upon the maximum commitment amount throughout the life of the commitment and the difference between the commitment price and the current market price. Please note that commitments with a “closed” loan status will automatically extend for a minimum of five calendar days, if the purchase of the loan does not occur by the expiration date. 

View the Executing a Pair-Off for Best Efforts Commitments section in the PE – Whole Loan Job Aid for more details.

Fallout occurs when the lender cancels a commitment due to borrower withdrawal, or when the commitment auto-expires resulting in a “fallout” commitment status. Best efforts pricing is a function of both market conditions and individual lender pull-through performance relative to all participants within the program and is subject to change. Fallout rates are closely monitored by Fannie Mae and may affect lender’s best efforts pricing over time. 

View the Moving a Best Efforts Commitment to Fallout section in the PE – Whole Loan Job Aid for more details.

You have two options: 

1. Submit the loan again through Desktop Underwriter® (DU®) as a new loan with a new DU Casefile ID.  

2. Re-enter the loan in PE – Whole Loan using the underwriting method “Other.” (Please note that pricing may vary for the “Other” underwriting method as compared with DU.)  

If the loan is recommitted within 30 days of fallout or expiration, the loan will be considered a duplicate commitment and may be subject to duplicate price adjustment. 

View the Moving a Best Efforts Commitment to Fallout section in the PE – Whole Loan Job Aid for more details.

• Complete borrower changes (removing all current borrowers and replacing with entirely new borrowers)
• Complete borrower name changes
• Complete property address changes
• Change in underwriting type from DU to other

In general, you can access the loan within 15 to 20 minutes. 

You should place a loan into “closed” status within one business day of the borrower(s) receiving loan funding, which for a purchase will be the business day after closing and for a refinance the business day after the expiration of the three-day, right-of-rescission period. 

See #4 in Moving a Best Efforts Commitment to Fallout in the PE – Whole Loan Job Aid for more details.

Detailed explanations of pair-offs, over-deliveries, and extensions can be found in the Pricing & Execution – Whole Loan Mandatory Process Overview document. 

The pass-through rate of a loan is calculated by taking the loan’s gross note rate and subtracting out the amount of servicing.

All mandatory commitments on PE – Whole Loan contain a “flex-range” of pass-through rates for added delivery flexibility. The flex range will be a maximum of 50bps up from the minimum pass-through that you select. For example, if you selected 4.5 percent as the minimum pass-through, assuming PE – Whole Loan was pricing to 5.0 percent, you would be able to deliver anywhere from a 4.5 percent to 5.0 percent pass through rate. 

View the Browse Prices – Mandatory section in the PE – Whole Loan Job Aid for more details.

While these loans cannot be sold on PE – Whole Loan, they may be sold on a negotiated basis. Please call the Capital Markets Pricing and Sales Desk at 1-800-752-0257. 

If you have a loan with a high pass through that slots into one of the Loan Balance committing grids, please trying using other Loan Balance grids where the loan fits prior to calling the Pricing and Sales Desk.

Example:  If you have a high pass-through 30yr 85k max loan amount, please check the 110k max, 125k max, etc. to see if you can commit prior to calling in.

• Lenders can execute pair-offs and over-deliveries within PE – Whole Loan for mandatory commitments when live market prices are available, which is currently Monday through Friday between 8:15 a.m.–5:00 p.m. ET.  

• Lenders can exercise extensions within PE – Whole Loan seven days a week from 8:00 a.m.–10:00 p.m. ET.  

To help ensure that there are no issues with the sale and delivery of ARM loans to Fannie Mae using Pricing & Execution - Whole Loan® (PE - Whole Loan®), please ensure the following when pricing and committing these loans:

• The weighted average loan age (WALA) for any given ARM loan should be 4 months or less. The ARM loan’s age is measured from the first payment date.
• The gross margin on each ARM loan should be between 2.75 - 3.0%. 
• The average UPB of the ARMs sold through PE - Whole Loan for any given month should not exceed $550,000.

If the above stipulations cannot be adhered to, your ARM loans may still be purchased by Fannie Mae, but the pricing may differ from the prices listed in PE - Whole Loan. If your ARM loans do not satisfy all the requirements above, please contact the Capital Markets Pricing & Sales Desk prior to commitment to determine the ARM loan pricing on a negotiated basis.

Please consult the Selling Guide and the Standard ARM Plan Matrix for more information. 

The gross margin is the margin listed on the mortgage note. The maximum gross margin for an ARM loan may be no more than 300bps; and a gross margin of 275-300 bps is assumed in PE – Whole Loan pricing for ARM loans. A lender who wishes to deliver an ARM loan with a gross margin below 275 bps should call the Pricing and Sales Desk (800-752-0257) to take out a negotiated commitment, as the pricing may be different. 
 
Additionally, all loans delivered against an ARM commitment must have the same gross margin. For example, if a lender has two ARM loans - one with 300bps gross margin and one with 275bps gross margin - two separate PE – Whole Loan commitments must be taken out.

A servicing strip of 25 bps is required on all commitments for ARM products. As this may effect loans with lender-paid mortgage insurance (LPMI), be sure to check all servicing values before committing. 

Following rate reset for ARM loans, the new pass-through rate to be remitted will be the ARM index at reset + the loan’s net margin. The loan’s net margin is equal to the gross margin minus total servicing. 

Only ARM loans that are less than 4 months seasoned are eligible to be committed and sold directly through PE - Whole Loan. For ARM loans seasoned greater than 4 months, committing will need to be done on a negotiated basis directly with the Capital Markets Pricing & Sales Desk. Please contact the desk at 800-752-0257 for assistance.