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By Fannie Mae
Selling whole loans can help credit unions improve member service and meet members’ mortgage needs. Whole loan sales are a simple and straightforward secondary market transaction. Selling servicing retained to Fannie Mae reduces the opportunity for other mortgage originators to cross-sell similar products and services to members. Whole loan sales also provide immediate liquidity as well as reduce risk.
Hedging mortgage pipeline risk in a fast-paced market can be challenging and costly, so Fannie Mae offers a best efforts whole loan committing option in addition to its mandatory execution option.
What Does Best Efforts Mean to Credit Union?
With a mandatory execution, if a credit union is not able to fulfill the terms of its commitment, Fannie Mae will require it to pair out of the contract, possibly subjecting the credit union to a pair-off fee. With the best effort option, the mortgage originator (whole loan seller) makes a “best effort” attempt to deliver the mortgage loan to the buyer (investor). The risk of a loan not closing with a borrower is effectively transferred from the originator to the investor. When a credit union chooses best efforts committing, the investor effectively handles the pipeline management and interest rate risk for the credit union.
Fannie Mae offers the best efforts committing option to any approved credit union partner on a loan-by-loan basis through its web-based application eCommitONE. With best efforts, credit unions can commit a loan for sale to Fannie Mae and if the loan does not close, Fannie Mae does not assess a pair-off fee.
Credit unions that commit through eCommitONE have a number of benefits at their disposal, including:
More information about Fannie Mae’s eCommitONE, including an FAQ and steps for registration, are available on efanniemae.com. Credit unions that are not an approved Fannie Mae seller/servicer, please visit efanniemae.com to access the Path to Approval Toolkit and Self-Assessment Tutorial. Contact a Single-Family Customer Account Manager at 888-Fannie8 (326-6438) or the Capital Markets Sales Desk at 800-752-0257 to get started today.
This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.
If you are interested in contributing an article on CreditUnions.com, please contact our Callahan Media team at firstname.lastname@example.org or 1-800-446-7453.
April 25, 2011
7/26/2012 04:08 PM
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