Selling Guide

Published June 3, 2020

The Selling Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Selling Guide in PDF format.

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A2-3.3-01, Compensatory Fees (07/30/2013)


This topic contains information on the following subjects:

Imposition of Compensatory Fees

If a lender fails to comply with a specific requirement for origination, delivery, or servicing of loans, or if Fannie Mae determines that the lender’s overall performance is unsatisfactory, Fannie Mae may impose a fee to compensate Fannie Mae for damages and to emphasize the importance Fannie Mae places on a particular aspect of a lender’s performance. The compensatory fee may relate to the action the lender took, or failed to take, for a specific mortgage, or the impact that the lender’s deficiencies may have on Fannie Mae. Charging a compensatory fee does not limit Fannie Mae’s right to exercise any other remedy.

See the Servicing Guide for additional information about compensatory fees.

Compensatory Fees for the Late Payment of Commitment, Pair-Off, or Extension Fees

Fannie Mae may impose a compensatory fee for late payment of commitment, pair-off, or extension fees. Such fee may be charged when a draft is returned unpaid by Fannie Mae’s ACH agent, or when Fannie Mae receives wire-transferred funds more than five business days after the date of the commitment or request for the pair-off or extension.

The compensatory fee is the greater of $50 or a daily interest charge equal to the prime rate plus 3% of the fee that is due. The prime rate will be as published in The Wall Street Journal’s prime rate index (or an equivalent source) in effect on the date the commitment was issued, or the pair-off or extension took place. Fannie Mae will draft the appropriate compensatory fee—along with the past due commitment, pair-off, or extension fee—directly from the lender’s designated bank account. (See C2-1.1-02, Pricing, Fees, and Pricing Adjustments.)

Compensatory Fees for Failure to Comply with Commitment Provisions

Fannie Mae’s whole loan commitment terms are flexible so that lenders can comply with them under normal circumstances without difficulty. For example, to make good delivery on a mandatory commitment, lenders must deliver loans for which the total unpaid principal balance falls within specific tolerance parameters (for details, see C2-2-01, General Requirements for Good Delivery of Whole Loans).

These flexibilities are provided to account for unusual circumstances beyond the lender’s control that prevent the lender from honoring its contractual obligations. However, Fannie Mae may impose compensatory fees when it has reason to believe that the lender had control over the situation or failed to comply with Fannie Mae requirements in an effort to take advantage of changing market conditions.

Many factors are considered before imposing these compensatory fees; therefore, the exact fee to be charged depends on

  • the lender’s overall performance,

  • the lender’s explanation for its noncompliance,

  • whether the lender has a history of noncompliance, and

  • the amount of any previous compensatory fee that Fannie Mae imposed.

Compensatory Fees for Failure to Identify Mortgage Loans Subject to Loan-Level Price Adjustments

If a lender consistently fails to identify or incorrectly identifies mortgage loans that are subject to loan-level price adjustments, Fannie Mae may impose a compensatory fee.

Fannie Mae will take the following factors into consideration:

  • the lender’s overall performance,

  • the lender’s explanation for its noncompliance,

  • previous instances of noncompliance, and

  • the amount of any previous compensatory fee that Fannie Mae imposed.

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