GSEs Adopt Notice of Transfer Statute

President Obama signed into law the ""Helping Families Save Their Homes Act"":http://www.whitehouse.gov/the_press_office/reforms-for-american-homeowners-and-consumers-president-obama-signs-the-helping-families-save-their-homes-act-and-the-fraud-enforcement-and-recovery-act/ on May 20, 2009. Among other things, the law amends the Truth in Lending Act (TILA), instituting a requirement that borrowers be notified when their mortgage debt has been sold, transferred, or assigned to a new creditor. The notice must be provided within 30 days of the sale, transfer, or assignment, and must include information about the new creditor, the date of transfer, how to reach a party having authority to act on behalf of the new creditor, and recordation of the debt.
Although ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com are not creditors under the Truth in Lending Act, the GSEs have elected to provide the notice to borrowers when they purchase or securitize a mortgage loan. Both will begin sending out notification letters of ownership transfer today, June 19, and the notices will be retroactive, applying to all mortgages acquired since the date the law was enacted.
The notices will identify Fannie Mae or Freddie Mac servicers as the party having authority to act on the GSE's behalf. Borrowers will be directed to contact their servicer’s call center with any questions regarding their mortgage loan. In addition, the notice will state that borrowers must continue to send all payments directly to their servicer. Lenders are not required to take any action and do not need to notify borrowers of the transfer in ownership when the mortgage is handed over to one of the GSEs.
In a letter to lenders, Fannie Mae explained that it is focused on ensuring the quality and accuracy of data with respect to the loans it acquires. The enterprise said its decision to provide homeowners with notice of the sale, transfer, or assignment of a mortgage loan is yet another reminder of the critical need for lenders to ensure that the required mortgage loan delivery data is true, correct, and complete. The GSEs' ability to render the notice is dependent upon having accurate information, which will be extracted from the mortgage loan delivery data provided , and lenders will be held responsible for any breach of representation or warranty regarding the information.