Would Lenders Sign Fannie Patent Agreement?

Lenders may not be able to sign a Fannie Mae licensing agreement due to the liability exposure and restrictions on third-party vendors, according to the Consumer Mortgage Coalition."Without changes, I suspect it will be extremely difficult for lenders to sign the agreement," CMC executive director Anne Canfield said. Fannie is seeking comment on an "open license agreement" that would allow lenders -- without paying fees or royalties -- to use its patented process for customizing mortgages. Under the agreement, lenders cannot share access to the patented process with third-party vendors, which lenders depend on for a variety of services. "While large lenders could potentially reorganize their businesses to bring third-party services in house, this option is not likely to be available to smaller banks and mortgage companies," the CMC says in a paper that outlines its concerns about the agreement. The CMC also notes that the agreement caps Fannie's liability at $50,000, but damages for licensees is unlimited. "[I]f an entity were to sue Fannie Mae for violating any law or infringing on any patent that this license covers, the licensees would have to indemnify Fannie Mae for the losses," the CMC paper says.