source:
  type: guide
  id: fnma-sel-a2-3.2-03
  authority: Fannie Mae Selling Guide A2-3.2-03 — Remedies Framework
  description: Fannie Mae Selling Guide A2-3.2-03 — Remedies Framework.
  coverage_tier: operative
obligations:
- id: fnma-sel-a2-3.2-03-full
  canonical_id: fnma-sel-a2-3.2-03-full
  section: Fannie Mae Selling Guide A2-3.2-03 — Remedies Framework
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide A2-3.2-03 — Remedies Framework
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'A2-3.2-03, Remedies Framework (08/30/2016) Introduction This
      topic contains additional information pertaining to the remedies framework,
      including: The Remedies Framework Alternatives to Mortgage Loan Repurchases
      Conditions to Mortgage Loan Repurchase Alternatives Appeal Process Impasse and
      Management Escalation Processes Published May 6, 2026 53 Independent Dispute
      Resolution (IDR) Process The Remedies Framework The origination defect and remedies
      framework (“the remedies framework”) expands upon certain provisions related
      to the representation and warranties framework. The remedies framework relates
      speciﬁcally to the categorization of defects, lender corrections of those defects,
      and available remedies when defects are identiﬁed, including alternatives to
      repurchase. The remedies framework applies to whole loans purchased, and mortgage
      loans delivered into MBS with pool issue dates on or after January 1, 2016.
      See D2-1-03, Outcomes of Fannie Mae QC Reviews, and D2-1-04, Identifying and
      Remedying Origination Defects Under the Remedies Framework, for additional information
      about the remedies framework. Alternatives to Mortgage Loan Repurchases In certain
      circumstances, Fannie Mae may provide the lender with an alternative to the
      immediate repurchase of a mortgage loan that does not meet Fannie Mae''s requirements.
      For loans subject to the remedies framework, Fannie Mae may consider a loan
      with a signiﬁcant defect for a repurchase alternative depending on Fannie Mae’s
      commercially reasonable determination that the loan is retainable. Fannie Mae
      will determine whether the loan is retainable based on the lender’s counterparty
      status and whether the loan was an acceptable investment at the time of purchase.
      In this context, the lender’s counterparty status is Fannie Mae’s assessment
      of the lender’s ﬁnancial capacity, which could determine which remedy Fannie
      Mae will oﬀer to the lender. For any loan oﬀered a repurchase alternative, Fannie
      Mae will notify the lender in writing of the type and terms of the repurchase
      alternative. The alternatives may include, but are not limited to, any one or
      more of the following, as determined by Fannie Mae in its discretion. Published
      May 6, 2026 54 Repurchase Alternatives for Performing Loans Repurchase Alternatives
      for Non-performing Loans • Pricing adjustment—the assessment by Fannie Mae and
      payment by the lender of a guaranty fee adjustment, risk fee, or additional
      loan-level price adjustment with respect to the mortgage. • Recourse—an agreement
      by the lender to provide recourse for the life of the loan or for some other
      speciﬁed period of time. • Collateralized recourse—recourse as described above,
      with respect to which the lender''s obligation is secured by a speciﬁed collateral
      account. • Indemniﬁcation—an agreement by the lender to indemnify, defend, and
      hold Fannie Mae harmless from any losses incurred by Fannie Mae relating to
      the mortgage. • Collateralized indemniﬁcation—indemniﬁcation as described above,
      with respect to which the lender''s obligation is secured by a speciﬁed collateral
      account. • Collateralized or uncollateralized mortgage insurance stand-in agreement—for
      certain loans acquired by Fannie Mae on or after July 1, 2014, the payment by
      the lender to Fannie Mae for the full mortgage insurance beneﬁt amount that
      would have been payable under the original rescinded mortgage insurance policy
      if the loan liquidates. • Make-whole payment—the amount that a party responsible
      for a breach of a selling representation or warranty or a servicing breach must
      pay Fannie Mae so that Fannie Mae does not incur a loss on the mortgage or the
      property. • Split loss or loss share—an agreement between Fannie Mae and the
      lender to each pay a speciﬁed proportion of the losses that have arisen or may
      arise in the future relating to the mortgage. • Loss reimbursement—an agreement
      by the lender to reimburse Fannie Mae for speciﬁed losses relating to the mortgage.
      Note: If Fannie Mae oﬀers a repurchase alternative after a demand has been issued,
      the lender has the option to immediately repurchase the loan instead of accepting
      the repurchase alternative. Conditions to Mortgage Loan Repurchase Alternatives
      Certain repurchase alternatives may be available only to a lender that is in
      good standing with Fannie Mae, is in a strong ﬁnancial condition acceptable
      to Fannie Mae, and otherwise satisﬁes Fannie Mae''s eligibility criteria. (If
      the servicing of a mortgage has been transferred to a lender other than the
      one that sold the mortgage loan to Fannie Mae, eligibility for this beneﬁt will
      be based on an evaluation of the servicer.) For loans subject to the remedies
      framework, Fannie Mae may oﬀer or decline to oﬀer certain repurchase alternatives
      based on the lender’s counterparty status, to the extent there are future obligations
      required as part of the repurchase alternative. Published May 6, 2026 55 Other
      factors to be considered by Fannie Mae may include, but are not limited to,
      the failure to maintain a quality loan origination process and the lender’s
      ability and willingness to comply with other provisions of the Lender Contract.
      In determining a lender''s (or servicer''s) eligibility for this repurchase
      alternative, Fannie Mae will evaluate the following: the quality of the mortgages
      the lender sells to (or services for) Fannie Mae, as measured by comparing the
      delinquency rates for comparable portfolios; the quality of the servicing performance,
      as measured by the lender''s loss mitigation activities; and the overall ﬁnancial
      strength of the lender, as reﬂected in the lender''s annual ﬁnancial statements
      and any other periodic ﬁnancial reports the lender submits to Fannie Mae. Fannie
      Mae also will periodically assess the lender''s ongoing underwriting performance
      and contingent repurchase exposure (the lender''s repurchase risk exposure in
      relation to its ﬁnancial ability). When appropriate, Fannie Mae may change the
      lender''s eligibility status for a repurchase alternative. Note: The MI stand-in
      repurchase alternative may be available, provided the lender and the mortgage
      loan meet certain eligibility criteria. Fannie Mae will provide lenders with
      information on how to initiate a discussion about this repurchase alternative
      upon notiﬁcation that mortgage insurance has been rescinded and is the only
      defect identiﬁed. Appeal Process A lender may submit a written appeal of a “demand,”
      which is deﬁned as any request issued by Fannie Mae to a responsible party to
      provide a speciﬁc remedy as provided in the Lender Contract. (See A2-3.2-01,
      Loan Repurchases and Make Whole Payments Requested by Fannie Mae, for additional
      information on loan repurchase and make whole payment demands.) The “appeal
      process” includes both the ﬁrst and second appeals available to the responsible
      party under the conditions described in the following table. The responsible
      party’s ability to participate in the appeal, impasse, management escalation
      and Independent Dispute Resolution processes cannot be assigned to another party,
      such as an insurance company. Note that the responsible party may provide a
      correction of an alleged signiﬁcant defect at any time during the appeal process.
      Detailed information about the requirements for each step in the appeal process
      may be found in Appeal and Independent Dispute Resolution Processes posted on
      Fannie Mae’s website, which is incorporated by reference. Published May 6, 2026
      56 Appeal Process Lender Action Fannie Mae Action First Appeal: A lender may
      submit a written appeal of a demand. The lender must submit an appeal in writing
      within 60 days of receiving a demand. Note: Fannie Mae, in its discretion, may
      identify a shorter or longer appeal period in the demand based on circumstances
      at the time. Fannie Mae must respond in writing to the lender’s appeal within
      60 days of its receipt. Second Appeal: If the ﬁrst appeal is denied and the
      lender has additional material information, the lender may choose to submit
      a second appeal. The lender must submit a second appeal in writing within 15
      days of receiving a denial of the ﬁrst appeal. Fannie Mae must respond in writing
      to the lender’s second appeal within 60 days of its receipt. Impasse and Management
      Escalation Processes At the conclusion of the ﬁrst or second appeal, if the
      lender wishes to challenge the existence of the defect identiﬁed in the demand,
      the lender may initiate the impasse process. If Fannie Mae reaﬃrms the demand
      during the impasse process, the lender may continue the challenge as provided
      by the management escalation process. The steps in the impasse and management
      escalation processes are described in the following table. Detailed information
      about the requirements for each step may be found in Appeal and Independent
      Dispute Resolution Processes posted on Fannie Mae’s website, which is incorporated
      by reference. Impasse and Management Escalation Processes Lender Action Fannie
      Mae Action Impasse: If, at the conclusion of the ﬁrst or second appeal, the
      lender wishes to challenge the existence of the defect, it must initiate the
      impasse process. The lender must initiate the impasse process in writing within
      15 days of receiving Fannie Mae’s denial of the ﬁrst or second appeal. Fannie
      Mae and the lender will have 30 days in which to attempt to resolve the dispute,
      unless both parties agree to a longer time period. Published May 6, 2026 57
      Impasse and Management Escalation Processes Lender Action Fannie Mae Action
      Management Escalation: At the end of the impasse process, if Fannie Mae reaﬃrmed
      the demand and the lender wishes to continue to dispute the existence of the
      defect, the lender must initiate the management escalation process. The lender
      must initiate the management escalation process in writing within 15 days of
      conclusion of the impasse process by notifying its Fannie Mae oﬃcer contact
      of its intention to initiate management escalation. If, at the end of the management
      escalation process, Fannie Mae reaﬃrmed the demand, the lender may initiate
      the Independent Dispute Resolution Process . Within 30 days of receipt of the
      lender’s initiation of the management escalation process, Fannie Mae must involve
      an oﬃcer outside of the quality control group in a review of the dispute. Fannie
      Mae and the lender will have 30 days in which to attempt to resolve the dispute,
      unless both parties agree to a longer time period. Independent Dispute Resolution
      (IDR) Process The IDR process is available for disputes that are not resolved
      through the appeal, impasse, or management escalation processes. The IDR process
      is available provided the preconditions to each step have been followed and
      the parties have not ﬁled litigation to attempt to address the dispute. IDR
      is available to lenders that have not been suspended, disqualiﬁed, or terminated
      by Fannie Mae, and that have complied with any prior IDR award or demand made
      by Fannie Mae (as applicable). The IDR process shall be governed by the Federal
      Arbitration Act, 9 U.S.C. §§ 1 et. Seq. The IDR process addresses loan-level
      demands and whether alleged breach(es) by the responsible party of its representations
      and warranties, or duties or responsibilities as provided under the Lender Contract
      exist at the time IDR commences. The IDR process may be used for demands relating
      to a breach of a selling representation, warranty, duty or responsibility, involving
      whole loans purchased, and mortgage loans delivered into MBS with pool issue
      dates on and after January 1, 2016; and demands relating to servicing remedies
      issued on and after December 1, 2016. The IDR process cannot be used to resolve
      the suspension, disqualiﬁcation, or termination of a lender. Nor may the IDR
      process be used if a lender receives a formal notice of default from Fannie
      Mae. A neutral third party, selected by the IDR program administrator, will
      determine whether the alleged breach(es) existed at the time IDR commenced based
      on case ﬁle packages and subject matter expert reports submitted in writing
      by both parties. The neutral party’s decision will be ﬁnal and binding upon
      the lender and Fannie Mae. Lender Initiation of IDR. If Fannie Mae reaﬃrms the
      demand at the end of the management escalation Published May 6, 2026 58 process,
      the lender will have 15 days to initiate the IDR by completing and submitting
      an executed Retainer Agreement located on Fannie Mae’s website to the Fannie
      Mae oﬃcer involved in the management escalation process and to the program administrator,
      as described in the Appeal and Independent Dispute Resolution Processes. If
      Fannie Mae has not received the lender’s fully completed and executed Retainer
      Agreement within 15 days of the end of the management escalation period, the
      lender will have no further right to appeal the existence of the defect in the
      demand, including the commencement of IDR, and will be obligated to comply with
      the terms of the demand. If the lender has not initiated the IDR process by
      the 15-day deadline or complied with the demand, Fannie Mae shall have the option
      of either initiating the IDR process within 6 months of the end of the management
      escalation period or pursuing other remedies. For additional information about
      the details of the IDR process, see Appeal and Independent Dispute Resolution
      Processes posted on Fannie Mae’s website. Recent Related Announcements There
      are no recently issued Announcements related to this topic. Section A2-3.3,
      Compensatory Fees'
  judgment: false
