BLOG

Question: 

Fannie Mae recently updated the seller/servicer reporting requirements related to the Office of Foreign Assets Control (OFAC) regulations. What does the update entail and when does it take effect?

Answer: 

Fannie Mae updated OFAC reporting requirement to align with current reporting requirements for anti-money laundering (AML) violations. Updated reporting requirements are mandatory as of May 1, 2023.  Below are the reporting requirements with new requirements in bold:

A seller/servicer:

• must establish and maintain an effective OFAC compliance program; 
• must report all instances of penalties (civil or criminal) or enforcement actions for compliance failures or violations related to OFAC requirements to Fannie Mae's Ethics division; 
• may not deliver a loan to Fannie Mae if any borrower is on one of the sanctions lists maintained by OFAC; and 
• must periodically screen the loans that it services for Fannie Mae against OFAC’s sanctions lists. If the servicer identifies a valid match, the servicer must 
  
• notify Fannie Mae Ethics via email within 24 hours of blocking or rejecting a mortgage transaction, including in the notice the borrower’s name, Fannie Mae loan number, and a point of contact at the servicer. Upon receipt of the notice, a representative from Fannie Mae will contact the servicer to discuss the match and any potential next steps. 
• take steps to ensure that any funds from the individual or entity on an OFAC sanctions list are blocked and segregated, including any escrow funds. 
• take steps to ensure that all servicing activities on the loan cease. This includes, but is not limited to,
• remittance of P&I payments to Fannie Mae, 
• payments to taxing authorities, 
• payments to property and flood insurers, 
• payments to mortgage insurers, 
• collection activities, including performing property inspections, 
• loss mitigation activities, and 
• foreclosure.