FAQ - FNMA – OFAC Compliance Program
April 26, 2023 BY MQMR Blogger
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?
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:
- 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