1.Would we meet a small servicer exemption if we currently own or originate loans and sell these to Freddie Mac/ or Fannie Mae, but retain the servicing and have less than 5,000 loans?
2. On the other hand, if we have broker agreements with other banks in which the loan closes in that bank’s name and we then purchase the loan and retain the servicing, wouldn’t we lose our small servicer exemption? If we would lose our small servicer exemption due to this, could we then sell these loans as servicing released to meet the definition of a small servicer or could these loans be grandfathered in?
A servicer can be a small servicer if it owns mortgage servicing rights for mortgage loans that are either owned by the servicer or an affiliate, or for which the servicer or an affiliate was the entity to whom the obligation was initially payable.
We are in question on whether or not we fall under the small servicer exemption. We have far fewer than 5,000 mortgage loans, but we take payments for a “scholarship loan fund” started by a local attorney. We receive payments, but we do not take the action of a creditor or do any IRS reporting. We do not fund the loans, however some of them are secured by the borrower’s principal residence. Thoughts?