source:
  type: guide
  id: fnma-sel-c1-2-06
  authority: Fannie Mae Selling Guide C1-2-06 — Bailee Letters
  description: Fannie Mae Selling Guide C1-2-06 — Bailee Letters.
  coverage_tier: operative
obligations:
- id: fnma-sel-c1-2-06-full
  canonical_id: fnma-sel-c1-2-06-full
  section: Fannie Mae Selling Guide C1-2-06 — Bailee Letters
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide C1-2-06 — Bailee Letters
    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: 'C1-2-06, Bailee Letters (04/06/2022) Introduction This topic
      provides information on bailee letters, including: Bailee Letters Resolution
      of Mismatched Delivery Instructions Liability for Losses Incurred by a Mortgage
      Seller or any Other Party Published May 6, 2026 941 Bailee Letters Bailee letters
      typically state that: the notes identiﬁed in the letter are pledged to the named
      third party, the lien of the third party’s security interest will be released
      only if the proceeds from the transfer of the mortgages to Fannie Mae are delivered
      to the third party in accordance with the delivery instructions in the letter,
      and the recipient holds the notes as a “bailee” (or in trust) for the third
      party until the third party either receives the proceeds (cash or securities)
      or receives back the notes for any mortgages that were not purchased or securitized.
      The term “bailee letter” includes any communication that notiﬁes a document
      custodian of any of the following: the notes are pledged to a third party; the
      notes are subject to a security interest or lien held by a third party; the
      notes are owned by, or titled in the name of, a third party (for example, mortgages
      that are subject to a sale and repurchase arrangement); or the notes are subject
      to some other claim or interest held by a third party that would, if it were
      not released, result in Fannie Mae’s acquiring less than clear, unencumbered,
      and exclusive title to the mortgage notes. The requirements for processing bailee
      letters and other notiﬁcation of third-party interests in mortgage loans can
      be found in Fannie Mae’s RDC guide. Resolution of Mismatched Delivery Instructions
      Fannie Mae will undertake to identify mismatches and to achieve matches in delivery
      instructions promptly, in good faith, and in accordance with reasonable business
      practices. Liability for Losses Incurred by a Mortgage Seller or any Other Party
      Fannie Mae will not be liable for any losses that a mortgage seller or any other
      party incurs as the result of Fannie Mae’s actions or omissions related to these
      procedures, including Fannie Mae’s execution of (or failure to execute) speciﬁc
      steps, and any resulting delay. A mortgage seller is obligated to ensure that
      Fannie Mae takes free and clear title to the mortgages it delivers to Fannie
      Mae; therefore, it must make sure that its delivery instructions match those
      of its warehouse lender before it delivers the mortgage to Fannie Mae. Because
      of this obligation, the mortgage seller will be fully responsible for any trading
      or settlement delays (including those Fannie Mae experiences) that arise as
      the result of mismatches in delivery instructions. (See C3-7-06, Settling the
      Trade, for information on how to settle diﬀerent delivery instructions.) Further,
      the execution of these procedures will not constitute a waiver of any of the
      rights and remedies Fannie Mae has under the mortgage seller’s representation
      and warranty that the title Published May 6, 2026 942 to any mortgage note it
      delivers to Fannie Mae is free and clear of any security interest, lien, pledge,
      or other encumbrance. Recent Related Announcements The table below provides
      references to recently issued Announcements that are related to this topic.
      Announcements Issue Date Announcement SEL-2022-03 April 06, 2022 Chapter C1-3,
      Loan Remittance Types Overview Introduction When selling loans to Fannie Mae,
      lenders must decide if they will service the loans or release the servicing
      to another Fannie Mae-approved lender. They must also select a method for remitting
      borrower payments to Fannie Mae. This chapter provides an overview regarding
      remitting payments to Fannie Mae.'
  judgment: false
