Fannie Mae Announces Updates to Allowable Interest Rate Spread and Maximum Servicing Fee for Fixed-Rate MBS Pools

In order to support the Single Security Initiative, we are updating the allowable interest (note) rate spread in fixed-rate MBS and the maximum servicing fee permitted for fixed-rate loans. This update is in response to Federal Housing Finance Agency's instruction and is in coordination with Freddie Mac.

Interest Rate Spread: For most fixed-rate loans the maximum allowable interest rate is 250 basis points above the pool's pass-through-rate. We are updating this policy to limit the interest rate for each fixed-rate loan in a pool to no more than 112.5 basis points above the pass-through rate of the pool.

Servicing fee: We are updating our servicing fee policies to limit the servicing fee to a maximum of 50 basis points for all fixed-rate loans delivered to us. In other words, the maximum servicing fee shall not be more than 25 basis points above the standard 25 basis point servicing fee. The 50-basis point maximum is inclusive of any lender-paid mortgage insurance (LPMI) premium.

This updated policy is effective for whole loans delivered, and loans delivered into pools with issue dates, on or after June 1, 2019.

To read more about the changes, please refer to the lender letter.