Selling Guide

Published December 16, 2020

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A3-5-02, Fidelity Bond Policy Requirements (07/25/2017)

Introduction

This topic contains information on fidelity bond policy requirements, including:

 

Fidelity Bond Coverage Requirements

The fidelity bond must insure against losses resulting from dishonest or fraudulent acts committed by:

  • the seller/servicer’s principal owner,

  • the seller/servicer’s personnel,

  • any employees of outside firms that provide legal services to the seller/servicer or data processing services for the seller/servicer or other accounting records for the seller/servicer, and

  • persons assigned to the seller/servicer through an intervening employer or agency to perform the usual duties of an employee of the seller/servicer on a contingent or temporary basis and interns.

For corporate seller/servicers, Fannie Mae will accept coverage under the following types of fidelity bonds:

  • Mortgage Bankers Blanket Bond Policy,

  • Savings and Loan Blanket Bond Policy, or

  • Bankers Blanket Bond Policy.

 

Fidelity Bond Coverage and Deductible Amounts

As described in the table below, the fidelity bond coverage must be equal to a percentage of, the greater of the seller/servicer’s annual

  • total UPB of single-family and multifamily annual mortgage loan originations; or

  • highest monthly total UPB of single-family and multifamily servicing of mortgage loans that the seller/servicer owns, including mortgage loans owned by the seller/servicer and serviced by others.

 

Note: If the seller/servicer uses a subservicing arrangement, the master servicer must maintain fidelity bond coverage at all times for the servicing of mortgage loans that it owns but that the subservicer services for that master servicer. A subservicer must only maintain coverage for mortgage loans that it owns. (See Servicing Guide A2-1-06, Subservicing for additional information about subservicing arrangements).

 

The fidelity bond coverage amount and maximum deductible limit is determined in accordance with the requirements in the following table. The maximum amount of fidelity bond coverage required is $150 million.

Total UPB Coverage Required Maximum Deductible Clause Based on Face Value of Policy
$100 million or less $300,000 higher of 10% or $100,000
Over $100 million up to $1 billion + 0.150% of the next $400 million

+ 0.125% of the next $500 million

Over $1 billion + 0.100% of any amount over $1 billion 15%

 

Note: A deductible above 15% will be considered based on adequate seller/servicer financial strength. (See A4-1-01, Maintaining Seller/Servicer Eligibility. The seller/servicer must obtain Fannie Mae’s prior written content. The deductible cannot exceed 1% of the seller/servicer’s total net worth.

 

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