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A2-1-01, Contractual Obligations for Sellers/Servicers (08/02/2023)

This topic describes some of the seller’s, servicer’s and seller/servicer’s contractual arrangements, including:

Role of MSSC

After Fannie Mae approves a seller or servicer or seller/servicer, both parties execute the Mortgage Selling and Servicing Contract (MSSC) and any other relevant agreements. The continuation of that relationship depends on both parties honoring the mutual promises in the Lender Contract.

The MSSC establishes the basic legal relationship between a seller, servicer or seller/servicer and Fannie Mae and

  • establishes the entity as an approved seller of mortgages and participation interests or an approved servicer of mortgages or both; and

  • incorporates by reference the Selling Guide, the Servicing Guide, the Requirements for Document Custodians, Software Subscription Agreement, Manuals, Announcements, Lender Letters, Release Notes, Notices, directives and other documents which may be incorporated by reference into the Guides, all as amended or supplemented from time to time.

Special Seller/Servicer Approval and MSSC Addendum

Certain loan types or processes require special approval. The following special approvals will be documented by an addendum to the Mortgage Selling and Servicing Contract (MSSC) between Fannie Mae and the seller/servicer:

  • co-op share loans,

  • HomeStyle Renovation mortgages,

  • electronic mortgages (eMortgages), and

  • bifurcation servicer in Servicing Marketplace (SMP).

Sellers/servicers may request approval to sell these loans or acquire servicing in SMP through their Fannie Mae customer account team. Sellers/servicers may not sell or service these loan types unless they obtain the applicable special approval and execute any additional agreements required by Fannie Mae. Sellers/servicers that apply for special approval to sell HomeStyle Renovation mortgages must also complete a Special Lender Approval Form (Form 1000A).

Fannie Mae reserves the right to cease approving sellers/servicers, or for purchasing any or all of the loan types listed above from any or all sellers/servicers, and to cease approving servicers for acquisition, or allowing the transfer of servicing in SMP. The decision to no longer purchase such loans or permit the acquisition of servicing in SMP may result in an amendment to, or the termination of, the special approval. Fannie Mae will provide the affected seller/servicer with reasonable notice of this decision. If the decision affects a seller/servicer's ability to fulfill any required mandatory delivery amount under its Lender Contract, Fannie Mae will consider alternatives through which the seller/servicer can fulfill its delivery obligation.


Lender Contract: Integration and Non-Divisibility

The MSSC and all of the documents referenced above, together with any other agreements with Fannie Mae that provide for additional obligations to Fannie Mae, such as commitments, variances, special requirements, technology agreements, and collateral agreements, are together referred to as the “Lender Contract” and form a single, integrated contract.

A servicer or seller/servicer’s benefits and obligations to service loans under the Lender Contract are integrated and cannot be separated from the seller’s or seller/servicer’s benefits and obligations to sell loans under the Lender Contract.

Fannie Mae relies on this integration and non-divisibility in entering into, and continuing to be bound by, the Lender Contract and in consenting to a servicing transfer.

Amendments to the Guides

All of Fannie Mae’s communications (Guides, Manuals, Announcements, Lender Letters, Release Notes, and Notices and directives) are incorporated into the Guides by reference, and are effective on the dates specified in such documents. Certain information and requirements posted on Fannie Mae's website are also incorporated by reference into the Guides.

Fannie Mae transmits communications to sellers, servicers and seller/servicers by posting them on Fannie Mae’s corporate website (or other websites as Fannie Mae may establish in the future). Fannie Mae also publishes some communications (for convenience) via AllRegs.

General Contract Terms

The following table describes some general contract terms.

Topic Description
Joint and Several Responsibility Unless Fannie Mae otherwise agrees in writing, upon the transfer of servicing loans:
  • the transferor and transferee are jointly and severally responsible for all selling representations, warranties, and obligations related to the transferred loans, including those that arise before delivery of the loans to Fannie Mae; and

  • the transferee is jointly and severally responsible for all servicing obligations and liabilities of the transferor, including those that arise before delivery of the loans to Fannie Mae.

Terminology and General Conventions
  • While the term “lender” is generally used throughout the Selling Guide to refer to the entity responsible for all aspects of the origination and delivery of loans to Fannie Mae and if applicable, the servicing of loans, the terms “seller”, “servicer”, “lender”, and “seller/servicer” are all used in the Guides in different contexts. The particular term used should not be viewed as an exclusion of an entity’s responsibilities in connection with a loan.

  • The “responsible party” means a seller, servicer, or other entity(ies) that is responsible for the selling representations and warranties or for the servicing responsibilities and liabilities on a loan.

Glossary of Defined Terms A glossary of defined terms is included in the Guides.
Independent Contractor The servicer services Fannie Mae loans as an independent contractor and not as an agent, assignee, or representative of Fannie Mae.
Assignment A seller, servicer or seller/servicer may not, without Fannie Mae’s prior written consent, assign:
  • the Lender Contract, or any component of the Lender Contract such as variances, special requirements, whole loan or MBS commitments or contracts, under any circumstances; or

  • its responsibility for servicing individual mortgages Fannie Mae owns or have a participation interest, except in accordance with the Guides.

Fannie Mae may assign its participation interest in any mortgage and all rights in the mortgages owned under the Lender Contract or any other instruments.

No Third Party Beneficiaries No borrower or other third party is a third party beneficiary of the Lender Contract or obtains any rights through the Lender Contract or any of our seller, servicer or seller/servicer communications.
  • The term “including” and similar words means “including, without limitation”.

  • Headings and captions are for convenience only.

  • If any provision of the Lender Contract is held invalid, the enforceability of all remaining provisions are not affected, and the Lender Contract will be interpreted as if the invalid provision were not contained in the Lender Contract.

Notice of Termination Any notice of termination of the Lender Contract or any component must be in writing and delivered by hand, electronic mail (with electronic confirmation of delivery), overnight express or similar service (fees prepaid), or first-class United States registered or certified mail with return receipt requested (postage prepaid), to the applicable party at its address specified in the MSSC (which may be changed by written notice).
Governing Law New York state law without regard to its conflict of law rules.

Recent Related Announcements

The table below provides references to recently issued Announcements that are related to this topic.

Announcement Issue Date
Announcement SEL-2023-07 August 02, 2023
Announcement SEL-2020-04 August 05, 2020
Announcement SEL-2019-01 February 06, 2019