SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 6, 2013
Federal National Mortgage Association
(Exact name of registrant as specified in its charter)
Registrants telephone number, including area code: 202-752-7000
(Former Name or Former Address, if Changed Since Last Report):
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Item 8.01 Other Events.
Repurchase Request Resolution Agreement
On January 6, 2013, Fannie Mae (formally, the Federal National Mortgage Association) entered into an agreement (the resolution agreement) with Bank of America, N.A., Countrywide Home Loans, Inc., and other parties, each of which is an affiliate of Bank of America Corporation, to resolve certain repurchase requests arising from breaches of selling representations and warranties. Bank of America Corporation acquired Countrywide Financial Corporation and its subsidiaries (collectively, Countrywide) in 2008. In this report, Bank of America Corporation and its affiliates are referred to individually and collectively as Bank of America.
Our mortgage seller/servicers are obligated to either repurchase loans or foreclosed properties, or reimburse us for our losses, if we determine that the mortgage loans did not meet our underwriting, eligibility or other requirements in place at the time we acquired the loans. We refer to our requests to seller/servicers to honor these obligations collectively as repurchase requests.
The resolution agreement resolves Fannie Maes currently outstanding and expected future repurchase requests arising from breaches of selling representations and warranties on specified single-family loans delivered to Fannie Mae by Bank of America and Countrywide that were originated between January 1, 2000 and December 31, 2008. These loans had an outstanding unpaid principal balance of $297 billion as of November 30, 2012. Fannie Mae entered into the resolution agreement to compensate us for actual and projected losses resulting from the loans covered by the agreement that did not meet our underwriting requirements.
Bank of America will pay Fannie Mae approximately $10.3 billion pursuant to the resolution agreement, as follows:
The resolution agreement also provides that:
The resolution agreement addresses substantially all of our outstanding repurchase requests made to Bank of America. As of September 30, 2012, $10.8 billion, or 67%, of our $16.2 billion in outstanding repurchase requests to all our mortgage seller/servicers, as measured by unpaid principal balance, had been made to Bank of America. Accordingly, the amount of our outstanding repurchase requests will decrease substantially in the first quarter of 2013 as a result of the resolution agreement. The dollar amounts of our outstanding repurchase requests provided in this paragraph are based on the unpaid principal balance of the loans underlying the repurchase request issued, not the actual amount we have requested from the lenders. In some cases, we allow lenders to remit payment equal to our loss, including imputed interest, on the loan after we have disposed of the underlying property, which is less than the unpaid principal balance of the loan. As a result, we expect our actual cash receipts relating to these outstanding repurchase requests to be significantly lower than the unpaid principal balance of the loan. These amounts do not include amounts relating to repurchase requests originating from missing documentation or loan files.
Approval of Servicing Transfer and Compensatory Fee Resolution Agreement
On January 6, 2013, we approved Bank of Americas request for our consent to transfer the servicing of approximately 941,000 loans from Bank of America to two specialty servicers. In connection with Fannie Maes approval of this servicing transfer, on January 6, 2013, Fannie Mae and Bank of America entered into an agreement (the compensatory fee agreement) to resolve outstanding and certain expected compensatory fees owed by Bank of America due to delays in delinquent borrower resolution timelines. Pursuant to the compensatory fee agreement, Bank of America will make an initial payment to Fannie Mae of $1.3 billion, which amount represents a portion of the compensatory fees expected to be owed based on the parties initial estimates. Fannie Mae and Bank of America will follow a schedule and process identified in the compensatory fee agreement to mutually determine the final amount of compensatory fees owed.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Date: January 7, 2013