navigating the fannie mae lender approval process dire… · · 2015-03-12fannie mae has...
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© 2015 Fannie Mae. Trademarks of Fannie Mae. 1
Navigating the Fannie Mae Lender Approval Process
January 2015 | Navigating the Fannie Mae Lender Approval Process 2
An Important Note about this Content
While every effort has been made to ensure the reliability of the
session content, Fannie Mae’s Selling and Servicing Guides and
their updates, including Guide Announcements and Release
Notes, are the official statements of Fannie Mae’s policies and
procedures and control in the event of discrepancies between the
information in this seminar and the Guides.
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Presentation Objectives
Explore the benefits of a direct relationship with Fannie Mae
Describe Fannie Mae’s Approval Process
Review Eligibility Criteria
Note: While every effort has been made to ensure the reliability of the presentation
content, Fannie Mae’s Selling and Servicing Guides and their updates, including
Guide Announcements, are the official statements of Fannie Mae’s policies and
procedures, and should be adhered to in the event of discrepancies between the
information in this presentation and the Guides.
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Agenda
Benefits of a Direct Relationship
Approval Process
Application
Sponsorship
Approval
Eligibility
Counterparty Requirements
Quality Control
Servicing
Setup and Training
Additional Resources
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Why do business with Fannie Mae?
A direct relationship with Fannie Mae can increase your company’s profitability and liquidity while managing risk by leveraging our….
Range of Mortgage Product Offerings
Technology Solutions
Capital Markets Sales Desk
Industry Expertise and Standards
Training and Support Services
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The Approval Process – Application
The first step on the path to approval is to complete and submit Fannie Mae’s Seller/Servicer Application.
Fannie Mae has developed multiple tools to facilitate this process:
• Path to Approval Toolkit
• Online Self-Assessment Tutorial
Once you have fully reviewed our requirements and taken the self-assessment, complete the application and email it to [email protected]
Submit the Seller/Servicer
Application
Work with Sponsor to Determine Eligibility
Submit Documentation
and Pass Reviews
Complete the Setup Process and Training
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The Approval Process – Sponsorship
A Fannie Mae sponsor will be in contact within two business days of Fannie Mae’s receipt of the application.
The Fannie Mae sponsor will….
Complete an in-depth phone interview to review your application
Determine eligibility
Provide a document checklist
Facilitate submission of application fee and required documentation
Submit the Seller/Servicer
Application
Work with Sponsor to Determine Eligibility
Submit Documentation
and Pass Reviews
Complete the Setup Process and Training
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The Approval Process – Fannie Mae Review
Fannie Mae’s review will include:
Background checks on key management personnel
Review of company financial statements and funding
Review of insurance and licensing
Review of servicing documentation and capabilities
Review of written quality control procedures
Possible on-site operational review
Final decision
Submit the Seller/Servicer
Application
Work with Sponsor to Determine Eligibility
Submit Documentation
and Pass Reviews
Complete the Setup Process and Training
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Eligibility – Application
Completed Seller/Servicer Application
All questions need to be answered unless they are not applicable to your company or to the approval request.
A Statement of Certification must be signed by an officer of the company who is also listed on the Authorization for Verification of Credit and Business References (Form 1001).
Authorization for Verification of Credit and Business References (Form 1001)
Required for all institution types and stock structures
Senior management must be on this form regardless of ownership percentage
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Eligibility – Financial Requirements
Minimum Adjusted Net Worth of $2.5 million
Adjusted Net Worth is calculated as follows:
GAAP Net Worth minus (Goodwill, Affiliate accounts receivable, and pledged assets net of on-Balance Sheet Liabilities)
All financial requirements must be met based on Audited Financial Statements
Interim financials will be reviewed to ensure that the above requirements are still met at the time of application approval.
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Eligibility – Financial Requirements
Two year history of profitability
Minimum Capital ratio
Commercial Banks:
□ Total Risk-Based Capital Ratio >= 10%
□ Tier 1 Risk-Based Capital Ratio >= 6%
□ Tier 1 Leverage Capital Ratio >= 5%
Credit Unions and Non-Regulated Institutions
□ Adjusted Net Worth / Total Assets >= 6%
□ See Servicing Guide Part I, Section 302.03
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Eligibility – Management Readiness
Fidelity Bond and Errors and Omissions coverage
Declaration page from insurance carrier is sufficient documentation for verification
Minimum coverage amount = $300,000
Maximum deductible amount = higher of $100,000 or 5% of the coverage amount
See Servicing Guide Part I, Section 306.01 for further details
Approval Letters from other GSEs and other secondary market investors
Organizational Chart
Overall including senior management as well as by department
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Eligibility – Management ReadinessResumes for the following:
Each senior officer
Each owner if not an officer
Key management personnel
Managers in charge of the following areas:
□ Originations
□ Underwriting
□ Secondary Marketing
□ Quality Control
□ Shipping/Delivery
□ Loan Servicing
□ Escrow Administration
□ Investor Accounting
□ Default Management (including Loss Mitigation)
□ Internal Audit
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Eligibility – Business Readiness
State Licensing
Must be properly licensed (in good standing) and authorized to conduct business in the jurisdictions in which it originates, sells, and services residential mortgages
Funding Capability
Minimum of two warehouse line agreements with different lenders if not self-funding.
Copy of original warehouse agreement for each line must be submitted, including copies of any amendments to the agreement (if applicable).
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Eligibility – Originations and Underwriting
Delegated underwriting authority
Applicant must have at least one year of experience originating conventional mortgage loans
Copies of approval letters granting delegated underwriting authority from Secondary Market investors
Appraisals
Must have written procedures for approving and managing appraisers and/or appraisal management companies (AMCs)
Must meet Fannie Mae’s Appraiser Independence Requirements (AIR)
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Eligibility – Originations and Underwriting
Closing Agents
Must have written procedures for approving and managing closing agents
Third-Party Originations (TPOs)
Must have written procedures on the approval, monitoring (including a QC process), and suspension/termination of third-party originators, if applicable
Must submit copies of executed contracts with any vendor supplying the services listed above.
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Eligibility – Quality Control (QC)All seller/servicers are expected to design, implement, and administer quality control programs that work best for their own businesses. At a minimum, the QC program must:
Cover the full scope of the lender’s business.
Be designed to detect deficiencies in the loan origination process.
Be capable of evaluating and monitoring the overall quality of mortgage production.
Include regular monthly reporting of results.
Ensure senior management provides resolution oversight and remediation of gaps.
Have an audit process to ensure adherence to QC processes and procedures (required whether QC is performed internally or outsourced to a vendor)
See Selling Guide section D1-1-01: Lender Quality Control Programs,
Plans, and Processes (07/30/2013)
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Eligibility – Quality Control (cont’d)
The lender’s QC program must include a documented QC plan that includes:
QC Organizational Chart
The chart must reflect the manner in which the QC department reports to senior management
QC Prefunding
Written QC plan and procedures
Must be customized to the lender’s specific operations (purchased procedures are not sufficient)
Prefunding review checklist
Prefunding QC reports (sample selection, defect trending, QC findings)
Prefunding QC vendor’s written polices and procedures (if applicable)
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Eligibility – Quality Control (cont’d)QC plan components (cont’d) –
QC Post-Closing
Written quality control plan and procedures (See Selling Guide, Chapter D)
Must be customized to lender’s specific operations (purchased procedures are not sufficient)
Post-closing review checklist
Post-closing QC defect severity levels and rate
Post-closing QC sampling methodology,10% random or statistical
Post-closing QC vendor’s written polices and procedures (if applicable)
Post-closing QC reports (defect rates and types, trending information, corrective actions, summary of results)
Use Fannie Mae’s QC Self-Assessment worksheet to
evaluate your QC program
Find other resources on the Loan Quality website page
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Internal Audit Program
Documented risk-based audit program of all operational areas to evaluate and monitor the overall quality of loan production and servicing
Documented lender corrective actions to all internal audit findings
Reporting structure is independent of the areas it reviews
Eligibility – Internal Audit
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Eligibility – Servicing/Subservicing
To be approved as a Fannie Mae seller, a lender must either:
be approved to service loans (in-house or through a Fannie Mae approved subservicer); or
transfer servicing to a Fannie Mae approved servicer.
A Master Servicer remains full liable to Fannie Mae for the performance of all servicing obligations. A fully executed contract and adequate subservicer oversight controls must be in place.
Subservicer Oversight Control Plan
Understanding of Master Servicer responsibilities; compliance to selling and servicing guides
Monitoring of all functions; servicing quality control
Vendor management(Selling Guide Section A3-3-03: Subservicing) (Servicing Guide Part I, Section 206.01 Subservicing)
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Eligibility – Servicing/SubservicingKnowledge in the following areas is required for servicing Fannie Mae loans:
Escrow Management
Tax disbursement
Mortgage insurance
Hazard and flood insurance
General Servicing
Loan onboarding/setup
Maintaining mortgage documents
Payment processing
Ownership transfer and assumption
Servicing transfer
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Eligibility – Servicing/Subservicing
Investor Reporting
Reporting requirements
Remittance requirements
Reconciliation requirements
Custodial Funds
Internal process
Monitoring
Default Management
Collections
Delinquency oversight
Roll rates
Loss mitigation
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Eligibility – Servicing/Subservicing
Default Management (continued)
Foreclosure process
Bankruptcy management
Servicing Quality Control
Process management
Audit function
Reporting
Cure of findings
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Eligibility – Servicing/Subservicing
Resources Located on Business Portal Website
Servicing tab includes information regarding technical applications; Servicing Guide/announcements; delinquency management and prevention; STAR program; FAQs.
https://www.fanniemae.com/singlefamily/servicing
Training tab provides one-stop access to a wide range of training opportunities and educational materials on doing business with Fannie Mae. Includes recorded tutorials, web seminars, virtual classrooms, job aids, and quick steps.
https://www.fanniemae.com/singlefamily/training
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The Approval Process – Setup and Training
Once approved, the lender will need to complete additional steps in order to begin transacting business
Complete registration process for Fannie Mae technology applications
Set up bank accounts and authorization forms
Complete committing and delivery training
Establish relationship with assigned Account Manager
Submit the Seller/Servicer
Application
Work with Sponsor to Determine Eligibility
Submit Documentation
and Pass Reviews
Complete the Setup Process and Training
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Questions?
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Thank you for your attendance