C3-7-07, Sale of Fannie Mae Securities to Third Parties (05/05/2021)

The lender must provide each purchaser of a security a copy of the most recent Fannie Mae MBS Prospectus when it enters into a contract to sell the security.

If the security purchaser requests an original printed version of the Prospectus, Prospectus Supplement, or Supplement to Prospectus Supplement, the lender must honor the request in a timely manner. Electronic versions of these documents are available at Mortgage-Backed Securities.

Copies of the prospectus and the related prospectus supplement may be obtained by writing to Trust Agreement and Prospectus Requests or by calling the Fannie Mae Delivery and Custody Helpline (see E-1-02, List of ContactsE-1-02, List of Contacts). Typically, the prospectus supplement is available no later than two business days before settlement of the related issuance of certificates.

If a newly issued pool has already been sold to a third party for future settlement, the lender is responsible for ensuring they abide by all rules related to the trade. This includes providing all necessary disclosure documents as defined by the relevant trade agreement with the counterparty.

The lender must provide the required disclosure documentation (described below) to a purchaser or prospective purchaser, as applicable. The lender will have two options to provide this disclosure: the lender must follow either the Standard Delivery option or the Alternative Website Delivery option, each as described below. The lender’s sale of securities—including any that Fannie Mae delivers based on the lender’s instructions on the Delivery Schedule (Form 2014) — also must comply with applicable securities disclosure and settlement requirements, including those set forth below under either the Standard Delivery option or the Alternative Website Delivery option.

For any trade, TBA or otherwise, the required disclosure consists of both the Single-Family Prospectus and the Prospectus Supplement applicable to the MBS program.

The lender must provide the required disclosure materials to each purchaser (that is, a party that enters into an agreement to purchase the security) at the time the lender enters into a contract for the purchase and sale of that security or to an offeree (that is, prospective purchaser) that requests the offering documentation.

The required disclosure materials are to be provided in a manner agreed to by the lender and the purchaser of a security. This may include electronic delivery or mailing of a hard copy. The materials are available on Fannie Mae's website. The lender also may obtain them by contacting the Fixed-Income Investor Helpline (see E-1-02, List of ContactsE-1-02, List of Contacts). On request, Fannie Mae will provide these documents to the lender as electronic read-only files by transmitting the files to the lender’s email address or by other electronic means.

Another option to provide the required disclosure documentation is via Fannie Mae’s website. Under this option, the lender informs the purchaser or offeree of a security, as applicable, that the required disclosure materials are available on Fannie Mae’s website. If the lender selects this Alternative Website Delivery option, the lender must first deliver or cause to be delivered the following:

• a Notice of Offering to each offeree of a security that requests the offering documentation (that is, the MBS Prospectus and the Prospectus Supplement for that security); and

• a Notice of Sale to each purchaser of a security at the time the purchaser enters into a contract with the lender for the purchase of the security.

The Notice of Offering means a notice (including an electronic notice) prepared by the lender to offerees of securities. The Notice of Offering must:

• state that the offering documentation is or will be available at Mortgage-Backed Securities  on Fannie Mae’s website,

• state that the information about Fannie Mae incorporated by reference into the offering documentation is available at Mortgage-Backed Securities,

• explain how to access the offering documentation and the documents incorporated by reference from the website,

• state that the offeree has the right to request a printed copy of the offering documentation, and

• explain the procedure for requesting a printed copy of the offering documentation.

The Notice of Sale means a notice (including an electronic notice) prepared by the lender to purchasers of securities. The Notice of Sale must:

• state that the sale was made pursuant to the offering documentation,

• state that the offering documentation is or will be available at Mortgage-Backed Securities,

• state that the information about Fannie Mae incorporated by reference into the offering documentation is available at Mortgage-Backed Securities,

• explain how to access the offering documentation and the documents incorporated by reference from Mortgage-Backed Securities,

• state that the offeree has the right to request a printed copy of the offering documentation, and

• explain the procedure for requesting a printed copy of the offering documentation.

Notwithstanding the Standard Delivery and Alternative Website Delivery options, if the purchaser or offeree of a security requests a hardcopy version of the MBS Prospectus, Prospectus Supplement, or Supplement to the Prospectus Supplement, the lender must honor the request in a timely manner.

The information in the MBS Prospectus and the Prospectus Supplement for that security is the only information about a pool (or the mortgage loans included in a pool) that a lender may disclose to the public.

Lenders are subject to all indemnification obligations as described in A2-1-03, Indemnification for LossesA2-1-03, Indemnification for Losses.