FAQs: Pricing & Execution – MBS
The following information provides answers to questions frequently asked about the Pricing & Execution – MBS® (PE – MBS) application.
FAQs updated May 5, 2017
Are mortgage-backed securities (MBS) commitments mandatory or optional?
All MBS commitments are mandatory. Minimum and maximum delivery amounts will be included in the commitment terms, and lenders will be able to view these amounts before accepting a commitment.
How far in advance can a lender view pricing and make a commitment?
In general, lenders will be able to view pricing for all available issue months based on the lender’s committing behavior. Lenders should contact their Fannie Mae Account team or the Pricing Strategies team if they would like pricing beyond what is currently available within the application.
Can a lender have different guaranty fees for a given issue month for the same product?
Yes, a lender can make multiple MBS commitments for the same issue month and for the same products, and each commitment may have different guaranty fees. Additionally, a product may have differing guaranty fees by coupon within a single commitment.
How frequently and for what reasons will MBS guaranty fees change?
Market conditions, direction from our regulator, and credit risk analysis of a lender’s deliveries are among the factors that may have an impact on pricing.
Why would Fannie Mae vary the guaranty fee by coupon?
Fannie Mae is building flexibility to price more granularly as we prepare for the future state of the housing finance industry.
Are guaranty fees available for viewing in PE – MBS outside of market hours (9:00 a.m. – 5:00 p.m. Eastern Time)?
Lenders can view guaranty fee pricing for any eligible products within PE – MBS anytime. The guaranty fees available outside of market hours represent the guaranty fees available at the previous market close.
What happens if a lender does not fulfill a commitment?
If a lender is unable to fulfill a commitment by not meeting the minimum delivery amount, they will have the ability to roll all or a portion of unfulfilled volume into a new commitment for the next issue month or pair off all or a portion of unfulfilled volume. Both options may result in a fee that the lender pays (See Q8 below).
The lender can roll volume into the next issue month only and cannot roll that volume again. Any volume rolled must be delivered at the guaranty fee associated with the original commitment, or such volume will be paired off and subject to payment of a pair-off fee.
Are fees associated with rolls and pair-offs, and how are they calculated?
Roll and pair-off fees may apply to MBS commitments made in PE – MBS. The roll and pair-off fee factors are commitment terms that lenders will be able to view before accepting a commitment. The calculations for the roll and pair-off fees are as follows:
Roll fee = Roll fee factor from the commitment x roll amount in UPB
Pair-off fee = Pair-off factor from the commitment x pair-off amount in UPB
What time can pair-offs and rolls be executed in PE – MBS?
Lenders can execute pair-offs and rolls within PE – MBS anytime the application is available. PE – MBS is available 24/7 with limited exceptions for maintenance.
What happens if the lender “over-delivers” their commitment?
A lender will not be able to deliver volume beyond the maximum delivery amount in the commitment. Over-delivery will cause a fatal edit during the acquisitions process, and lenders will need to assign the loan(s) to an unfulfilled existing commitment or a new commitment.