advances in their origination and servicing processes.
We currently have policies describing our requirements for delivering an eMortgage to Fannie Mae, where the promissory note and other documents, such as the security instrument, are created, transferred, and stored electronically rather than on traditional paper documentation with pen and ink signatures. We have similar requirements with respect to servicing-related documentation.
Many states are beginning to consider the use of electronic notarization (“eNotarization”) as a means for expediting or facilitating the closing process. This next step in the process of moving deeper into electronic origination requires greater specificity in our current policies; therefore, we are taking this opportunity to clarify our requirements for eNotarization. The practice of electronic notarizations (including remote notarizations) is not limited to eNote/eMortgage transactions.
Many state laws expressly permit in-person eNotarization. Only Virginia and Montana, however, have adopted laws and regulations expressly permitting remote notarization for mortgage loan documents; that is, the use of real-time, two-way audio/video communication to notarize documents. eNotarization is addressed in the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act and the Uniform Electronic Transactions Act (UETA). However, the lack of specific state recognition of remote notarization has hampered its widespread adoption, particularly when accomplished by out-of-state notaries.
We accept delivery and servicing of mortgage loans with electronic documents, including security instruments or mortgage loan modification agreements that have been electronically notarized, either in person or remotely using real-time, two-way audio/video communication, provided certain requirements are met. The Selling Guide has been updated to reflect these requirements. Additionally, the Servicing Guide will be updated in June to reflect these requirements.
These requirements are effective immediately.
Medium of Recorded Mortgages
Currently, we require the lender to maintain a mortgage loan file that contains “originals” of the recorded mortgage or
deed of trust, riders, and loan modification agreements. Documents that are electronically recorded often appear the
same as those recorded on paper, which has led to confusion as to which documents are “originals” under our policy and
which are electronic copies.
As a result, we have updated this policy to allow for copies of the recorded documents that contain the recording
information from the recorder’s office. In addition, we have clarified that we require originals of any applicable unrecorded
rider and any other unrecorded document that changes the mortgage loan terms (or otherwise affects our legal or
contractual rights under the mortgage).
These updates are effective immediately.
ARM Pass-through Rate after Adjustment
Lenders may take down whole loan commitments to deliver ARMs to Fannie Mae. Currently, ARMs are committed using
the required net margin. We are changing the committing and delivery of whole loan ARMs to instead use the gross
mortgage margin that is on the security instrument. The Selling Guide has been updated to remove references to multiple
Glossary Terms that no longer apply. The Glossary Term yield differential adjustment has also been updated.
Using the gross mortgage margin will also impact how the pass-through rate is calculated when the ARM adjusts. This
change will be communicated in a future Servicing Guide update.
These changes will further align whole loan ARM execution with the process for ARM MBS.
These changes are effective for whole loan ARMs committed (and subsequently delivered) on or after September 1, 2017.
Over Deliveries of Whole Loan Commitments
We limit the amount by which a lender can deliver loans over the whole loan commitment amount, known as the “over
delivery” amount. The current maximum over delivery amount is 25% of the original commitment amount, up to a
maximum of the one unit single family conforming loan limit (currently $424,100). We are simplifying the over delivery
limit to only require that it not exceed 25% of the original commitment amount.
This change will be effective on whole loan commitments taken on or after June 12, 2017.
Whole Loan Cash Back Pair-offs
As part of the June 10, 2017 update to the PE-Whole Loan application, we are giving more flexibility to lenders in pairingoff
whole loan commitments. We are removing the following requirements when determining if a commitment is eligible
for a cash back pair-off:
• pair-off quotes requested after the expiration date of the original commitment (defined as no later than 5:00 p.m.
Eastern time on the expiration date);
• the lender accepts Fannie Mae’s offer of an overdelivery.
NOTE: Commitments paired off through the automatic pair-off process will continue to be ineligible for cash
This change will be effective for lender-requested pair-offs performed on or after June 12, 2017.
Lenders who have questions about this Announcement should contact their Account Team.
Carlos T. Perez
Senior Vice President and
Chief Credit Officer for Single-Family
Section of the Announcement Updated Selling Guide Topics
Use of Electronic Notarization
including Remote Notarization
A2-5.1-03, Electronic Records, Signature, and Transactions
A3-2-01, Compliance With Laws
B7-2-04, Special Title Insurance Coverage Considerations
Medium of Recorded Mortgages A2-5.1-02, Individual Mortgage Loan Files
ARM Pass-through Rate after
C2-1.1-07, Standard ARM and Converted ARM Resale
E-3-05, Glossary of Fannie Mae Terms: E
E-3-13, Glossary of Fannie Mae Terms: M
E-3-18, Glossary of Fannie Mae Terms: R
E-3-25, Glossary of Fannie Mae Terms: Y
Over Deliveries of Whole Loan
C2-2-01, General Requirements for Good Delivery of Whole Loans
Whole Loan Cash Back Pair-Offs C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs