By Luana Slettedahl, Principal at BlackFin Group
In December, Fannie Mae announced significant changes to requirements of an Approved Seller/Servicer where in 2023 Sellers must sell 12 loans to Fannie Mae and Servicers must service 1 loan. (For further details please refer to Fannie Mae’s Website.)
This is one of the most important decisions your leadership team makes NOW – “The Clock is Ticking,” Many lenders have gone through the approval process and yet for a variety of reasons have a current business model that does not include selling directly to Fannie Mae and are in an Inactive Status; if you fall into this category you need to evaluate and adapt your business model in order to meet Fannie Mae’s requirements. Whether you are a Portfolio lender or are selling loans on a servicing released basis maintaining Fannie Mae approval is likely critical to your business model, impacts how you do business and is very relevant with external business partners. One of the guaranteed questions that business partners will ask is: “Is your firm Approved as a Seller/Servicer with Fannie Mae?” How will you answer this question if your firm has been terminated?
Business model ramifications can have a “trickle-down” effect that impacts technology, operational effectiveness, and capital market options. An example is a key point mentioned in the Selling Guide Announcement (SEL-2022) and the Guide that speaks to Fannie Mae’s position of allowing Approved Seller/Servicers to maintain access to technology.
Losing the Seller/Servicer Approval status impacts the access to technology such as DU and will result in drastic changes to business processes. Fannie Mae further outlines if your firm is no longer an approved Seller/Servicer access to all technology will be turned off within 60 days – the “CALL TO ACTION” is NOW.
The impact from this one example will result in important cycle times from loan application to close, market reputation for customer service, loan program determination, interfaces with Loan Origination System (LOS) systems, and other data bases that are dependent upon the LOS.
The outcome for not having an aggressive plan of action now and addressing where your firm fits in meeting Fannie Mae’s requirements and deadlines will result in termination of the very valued Fannie Mae Seller/Servicer Status. The BlackFin Group encourages your firm to evaluate the importance of having earned approval as a Seller/Servicer from Fannie Mae and ACT NOW.
Returning to an active Seller / Servicer status involves not only working direct sales to Fannie Mae into your business model it requires an immediate systematic review of what changes need to be put in place. Don’t fall short on your timeline to submit all documentation to meet Fannie Mae requirements. Your firm will need to demonstrate it can meet all of Fannie Mae requirements long before the end of this year. Remember that the loan sale and servicing requirements are for activity that occurs by the end of 2023. Your firm can expect that some basic Impact areas which are: policies, procedures, infrastructure, governance standards, financial capability, capital markets and loan servicing.
How can the team at BlackFin provide immediate support? At BlackFin we specialize in navigating business change and can react quickly. We highly recommend your team does not underestimate the attention this discussion needs NOW. It is already February, and this will take the better part of 2023 for applicable teams to work through, analyze, decide, shift, and adapt to these critical changes in order to meet Fannie Mae’s deadlines.
We have a diverse team of industry professionals who have walked in “your shoes” as lenders working directly with Fannie Mae – we “get it.” BlackFin can walk you through the questions of “should I maintain Fannie Mae approval”, "how do I incorporate direct sales into my business model” and finally “what do I need to do to become an active Seller / Servicer again”? BlackFin has provided consulting services for many different firms in the industry, whether your firm is an Independent Mortgage Banker, Community Bank, or Credit Union. Call us now, start the conversation.
Luana Slettedahl is a Principal Consultant with BlackFin Group in the Mortgage Strategy Practice. Luana brings forty years of diversified experience in Capital Markets, Mortgage Servicing Rights, GSE and Ginnie Mae relationship management and Seller / Servicer requirements. In conjunction with her understanding how to successfully do business with the GSE’s and Ginnie Mae, has made her a significant asset to her clients. For more information contact firstname.lastname@example.org