selling guide - april 15, 2014 - fannie mae | home 15, 2014 printed copies may not be the most...
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Selling GuideFannie Mae Single Family
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April 15, 2014
Selling Guide: Fannie Mae Single FamilyPublished April 15, 2014
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April 15, 2014
Fannie Mae Copyright Notice
(1) 2014 Fannie Mae. No part of this publication may be reproduced in any form or by anymeans without Fannie Maes prior written permission, except as may be provided herein orunless otherwise permitted by law. Limited permission to reproduce this publication in print inwhole or in part and limited permission to distribute electronically parts of this publication aregranted to Fannie Mae-approved lenders, servicers, and other mortgage finance professionals, forinternal business purposes only and strictly for their own use in originating mortgages, sellingmortgages to Fannie Mae, or servicing mortgages for Fannie Mae. Fannie Mae may revoke theselimited permissions by written notice to any or all Fannie Mae-approved users.
Trademarks are the property of their respective owners.
A full version of this publication is also available on the AllRegs website of MortgageResource Center, Inc., (MRC), which posts this publication under license from and with theexpress permission of Fannie Mae. MRC is the exclusive third-party electronic publisher ofthis publication. Fannie Mae makes no representation or warranty regarding any of the features,functionality, or other contents of the AllRegs website. If there should ever be a differencebetween this publication as it appears on the AllRegs website and the version published byFannie Mae, the difference is an error. In such event, the Fannie Mae version of this publicationshall be deemed the correct authoritative version. Material discrepancies between the twoversions, identified by Fannie Mae or otherwise brought to our attention, may be addressed byAnnouncement.
You acknowledge and agree (individually and on behalf of the entity for which you are accessingthis publication,You) that You may not make any claim against Fannie Mae for any errorsand that Fannie Mae shall not be liable to You for any losses or damages whatsoever resultingdirectly or indirectly from any errors.
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April 15, 2014
Printed copies may not be the most current version. For the most current version, go to the online version athttps://www.fanniemae.com/singlefamily/originating-underwriting. i
Table of ContentsPreface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xixPart A, Doing Business with Fannie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subpart A1, Approval Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3A1-1, Application and Approval of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A1-1-01, Application and Approval of Lender (04/09/2013) . . . . . . . . . . . . . . . 4Subpart A2, Lender Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A2-1, Contractual Obligations for Fannie MaeApproved Lenders . . . . . . . . . . . . . . 9A2-1-01, Contractual Obligations for Lenders (04/09/2013) . . . . . . . . . . . . . . . 9A2-1-02, Nature of Mortgage Transaction (04/01/2009) . . . . . . . . . . . . . . . . . . 12A2-1-03, Indemnification for Losses (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . 13
A2-2, Contractual Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 16A2-2-01, Contractual Representations and Warranties (04/09/2013) . . . . . . . . . 16A2-2.1, Additional Selling Representations and Warranties . . . . . . . . . . . . . . . 19
A2-2.1-01, Selling Representations and Warranties Overview(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19A2-2.1-02, Delivery Information and Delivery-Option SpecificRepresentations and Warranties (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . 19A2-2.1-03, Document Warranties (08/20/2013) . . . . . . . . . . . . . . . . . . . . 22A2-2.1-04, Limited Waiver of Contractual Warranties for MortgagesSubmitted to DU (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26A2-2.1-05, Invalidation of Limited Waiver of Representation andWarranties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28A2-2.1-06, Life of Loan Representations and Warranties (08/20/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
A2-3, Lender Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39A2-3.1, Lender Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
A2-3.1-01, Lender Breach of Contract (04/09/2013) . . . . . . . . . . . . . . . . 40A2-3.1-02, Sanctions, Suspensions, and Terminations (04/09/2013) . . . . . 43
A2-3.2, Loan Repurchases and Make Whole Payments Requested by FannieMae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
A2-3.2-01, Loan Repurchases and Make Whole Payments Requested byFannie Mae (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46A2-3.2-02, Enforcement Relief for Breaches of Certain Representationsand Warranties Related to Underwriting and Eligibility (04/09/2013) . . . . 51A2-3.2-03, Additional Policies Related to Mortgage Loan Repurchases(04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
A2-3.3, Compensatory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59A2-3.3-01, Compensatory Fees (07/30/2013) . . . . . . . . . . . . . . . . . . . . . . 59
A2-4, Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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A2-4-01, Master Agreement Overview (04/09/2013) . . . . . . . . . . . . . . . . . . . . 62A2-4-02, Terms of a Master Agreement (04/01/2009) . . . . . . . . . . . . . . . . . . . 64A2-4-03, Variances and Special Provisions (04/09/2013) . . . . . . . . . . . . . . . . . 65A2-4-04, Breaches of a Master Agreement (04/09/2013) . . . . . . . . . . . . . . . . . 66
A2-5, Mortgage Files and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68A2-5.1, Establishment and Maintenance of Mortgage Files and Records . . . . . 69
A2-5.1-01, Overview of Mortgage Files and Records (04/09/2013) . . . . . 69A2-5.1-02, Individual Mortgage Loan Files (11/13/2012) . . . . . . . . . . . . . 70A2-5.1-03, Electronic Records, Signature, and Transactions(04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72A2-5.1-04, Lenders or Document Custodians Electronic TransactionsWith Third Parties (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
A2-5.2, Ownership, Retention, and Examination of Mortgage Files andRecords . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
A2-5.2-01, Ownership of Mortgage Loan Files and Records(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79A2-5.2-02, Access to Records (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . 80A2-5.2-03, Retention and Storage of Mortgage File Records(04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
A2-6, Fannie Mae Trade Name and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . 84A2-6-01, Fannie Mae Trade Name and Trademarks (04/01/2009) . . . . . . . . . . 84
Subpart A3, Getting Started With Fannie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88A3-1, Fannie Maes Technology Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
A3-1-01, Fannie Maes Technology Products (04/01/2009) . . . . . . . . . . . . . . . 89A3-2, Compliance With Requirements and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
A3-2-01, Compliance With Laws (08/20/2013) . . . . . . . . . . . . . . . . . . . . . . . . 91A3-2-02, Responsible Lending Practices (08/20/2013) . . . . . . . . . . . . . . . . . . . 93
A3-3, Third-Party Lending Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98A3-3-01, Outsourcing of Mortgage Processing and Third-Party Originations(07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99A3-3-02, Concurrent Servicing Transfers (09/27/2011) . . . . . . . . . . . . . . . . . 102A3-3-03, Subservicing (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106A3-3-04, Document Custodians (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . 107A3-3-05, Custody of Mortgage Documents (09/27/2011) . . . . . . . . . . . . . . . . 114A3-3-06, Fannie Mae's Designated Document Custodian (06/28/2011) . . . . . 117A3-3.1, Other Document Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
A3-3.1-01, Operational Requirements for all Document Custodians(08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119A3-3.1-02, Document Custodian Reporting Requirements: Active andInactive Status (10/02/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
A3-3.2, Document Custodian Electronic Transactions . . . . . . . . . . . . . . . . . . 126
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A3-3.2-01, Document Custodian Electronic Transactions (04/01/2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
A3-4, Lending Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128A3-4-01, Confidentiality of Information/Conflict of Interest Parameters(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128A3-4-02, Data Quality and Integrity (04/09/2013) . . . . . . . . . . . . . . . . . . . . . 129A3-4-03, Preventing, Detecting, and Reporting Mortgage Fraud (08/20/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
A3-5, Fidelity Bond and Errors and Omissions Coverage . . . . . . . . . . . . . . . . . . . 137A3-5-01, Fidelity Bond and Errors and Omissions Coverage Provisions(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137A3-5-02, Fidelity Bond Policy Requirements (04/01/2009) . . . . . . . . . . . . . . 139A3-5-03, Errors and Omissions Policy Requirements (03/02/2010) . . . . . . . . 140A3-5-04, Reporting Fidelity Bond and Errors and Omissions Events(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Subpart A4, Maintaining Lender Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143A4-1, Maintaining Lender Eligibility: Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 144
A4-1-01, Maintaining Lender Eligibility (09/24/2013) . . . . . . . . . . . . . . . . . . 144A4-2, Submission of Operational and Financial Information . . . . . . . . . . . . . . . . . 147
A4-2-01, Net Worth and Liquidity Requirements (01/27/2011) . . . . . . . . . . . 148A4-2-02, Financial Statements and Reports (04/01/2009) . . . . . . . . . . . . . . . . 151A4-2-03, Lender Record Information (Form 582) (04/15/2014) . . . . . . . . . . . 154
A4-3, Changes in the Lenders Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156A4-3-01, Report of Changes in the Lenders Organization (09/24/2013) . . . . 156
Part B, Origination Through Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158Subpart B1, Loan Application Package . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
B1-1, Application Package Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161B1-1-01, Contents of the Application Package (10/22/2013) . . . . . . . . . . . . . 161B1-1-02, Blanket Authorization Form (04/01/2009) . . . . . . . . . . . . . . . . . . . . 164B1-1-03, Allowable Age of Credit Documents and Federal Income TaxReturns (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Subpart B2, Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168B2-1, Mortgage Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
B2-1-01, Occupancy Types (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169B2-1.1, LTV, CLTV, HCLTV, and Subordinate Financing . . . . . . . . . . . . . . . 172
B2-1.1-01, Loan-to-Value (LTV) Ratios (09/24/2013) . . . . . . . . . . . . . . 172B2-1.1-02, Combined Loan-to-Value (CLTV) Ratios (03/31/2011) . . . . . 175B2-1.1-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios(10/02/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176B2-1.1-04, Subordinate Financing (08/20/2013) . . . . . . . . . . . . . . . . . . . 178
B2-1.2, Loan Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
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B2-1.2-01, Purchase Transactions (01/17/2013) . . . . . . . . . . . . . . . . . . . 183B2-1.2-02, Limited Cash-Out Refinance Transactions (05/28/2013) . . . . 186B2-1.2-03, Cash-Out Refinance Transactions (05/28/2013) . . . . . . . . . . 191B2-1.2-04, Continuity of Obligation (06/28/2011) . . . . . . . . . . . . . . . . . 195B2-1.2-05, Prohibited Refinancing Practices (11/13/2012) . . . . . . . . . . . 197B2-1.2-06, Payoff of Installment Land Contract Requirements(11/13/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
B2-1.3, Loan Amortization Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201B2-1.3-01, Fixed-Rate Mortgages (08/20/2013) . . . . . . . . . . . . . . . . . . . 201B2-1.3-02, Adjustable-Rate Mortgages (ARMs) (04/15/2014) . . . . . . . . 203B2-1.3-03, Convertible ARMs (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . 215B2-1.3-04, Refinanced Balloon Mortgages (04/09/2013) . . . . . . . . . . . . 220B2-1.3-05, Temporary Interest Rate Buydowns (08/21/2012) . . . . . . . . . 223
B2-1.4, Other Loan Attributes and Related Policies . . . . . . . . . . . . . . . . . . . . 228B2-1.4-01, Mortgage Loan Limits (03/31/2011) . . . . . . . . . . . . . . . . . . . 228B2-1.4-02, Mortgage Loan Eligibility (04/15/2014) . . . . . . . . . . . . . . . . 230B2-1.4-03, Legal Requirements (08/20/2013) . . . . . . . . . . . . . . . . . . . . . 243B2-1.4-04, Escrow Accounts (12/18/2012) . . . . . . . . . . . . . . . . . . . . . . . 244B2-1.4-05, Principal Curtailments (01/17/2013) . . . . . . . . . . . . . . . . . . . 246
B2-2, Borrower Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250B2-2-01, General Borrower Eligibility Requirements (01/17/2013) . . . . . . . . 250B2-2-02, NonU.S. Citizen Borrower Eligibility Requirements (03/02/2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253B2-2-03, Multiple Financed Properties for the Same Borrower (11/13/2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254B2-2-04, Guarantors, Co-Signers, or Non-Occupant Co-Borrowers(09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261B2-2-05, Inter Vivos Revocable Trusts (01/17/2013) . . . . . . . . . . . . . . . . . . . 263B2-2-06, Home-buyer Education and Counseling (04/09/2013) . . . . . . . . . . . 267
B2-3, Property Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271B2-3-01, General Property Eligibility (04/15/2014) . . . . . . . . . . . . . . . . . . . . 272B2-3-02, Special Property Eligibility and Underwriting Considerations:Factory-Built Housing (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275B2-3-03, Special Property Eligibility and Underwriting Considerations:Leasehold Estates (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280B2-3-04, Special Property Eligibility Considerations (04/15/2014) . . . . . . . . 284B2-3-05, Properties Affected by a Disaster (04/15/2014) . . . . . . . . . . . . . . . . 286
Subpart B3, Underwriting Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288B3-1, Manual Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
B3-1-01, Comprehensive Risk Assessment (08/20/2013) . . . . . . . . . . . . . . . . 290B3-2, Desktop Underwriter (DU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
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B3-2-01, General Information on DU (09/24/2013) . . . . . . . . . . . . . . . . . . . . 294B3-2-02, Risk Factors Evaluated by DU (08/20/2013) . . . . . . . . . . . . . . . . . . 300B3-2-03, DU Documentation Requirements (06/26/2012) . . . . . . . . . . . . . . . 305B3-2-04, Approve/Eligible, EA-I/Eligible, EA-II/Eligible, and EA-III/Eligible Recommendations (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307B3-2-05, Approve/Ineligible, EA-I/Ineligible, EA-II/Ineligible, and EA-III/Ineligible Recommendations (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . 308B3-2-06, Refer with Caution( 09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . 310B3-2-07, Out of Scope Recommendations (04/01/2009) . . . . . . . . . . . . . . . . . 312B3-2-08, Erroneous Credit Report Data (08/21/2012) . . . . . . . . . . . . . . . . . . 312B3-2-09, Accuracy of DU Data, DU Tolerances, and Errors in the CreditReport (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314B3-2-10, DU Underwriting Findings Report (09/24/2013) . . . . . . . . . . . . . . . 318
B3-3, Income Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320B3-3.1, Employment and Other Sources of Income . . . . . . . . . . . . . . . . . . . . 321
B3-3.1-01, General Income Information (08/20/2013) . . . . . . . . . . . . . . 321B3-3.1-02, Standards for Employment Documentation (05/28/2013) . . . 327B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income(05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330B3-3.1-04, Commission Income (05/15/2012) . . . . . . . . . . . . . . . . . . . . 332B3-3.1-05, Secondary Employment Income (Second Job and MultipleJobs) and Seasonal Income (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . 334B3-3.1-06, Requirements and Uses of IRS Form 4506-T (07/30/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336B3-3.1-07, Verbal Verification of Employment (08/20/2013) . . . . . . . . . 339B3-3.1-08, Rental Income (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . 342B3-3.1-09, Other Sources of Income (09/24/2013) . . . . . . . . . . . . . . . . . 349
B3-3.2, Self-Employment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369B3-3.2-02, Business Structures (03/02/2010) . . . . . . . . . . . . . . . . . . . . . 372B3-3.2-03, IRS Forms Quick Reference (04/01/2009) . . . . . . . . . . . . . . 377B3-3.2.1, Documentation Requirements for an Individual . . . . . . . . . . . 379B3-3.2.2, Documentation Requirements for a Business . . . . . . . . . . . . . 390
B3-3.3, DU Requirements for Income Assessment . . . . . . . . . . . . . . . . . . . . . 396B3-3.3-01, Income and Employment Documentation for DU(05/28/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396B3-3.3-02, Income From Rental Property (05/15/2012) . . . . . . . . . . . . . 402
B3-4, Asset Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406B3-4.1, General Asset Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
B3-4.1-01, Minimum Reserve Requirements (09/24/2013) . . . . . . . . . . . 407
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B3-4.1-02, Interested Party Contributions (IPCs) (04/09/2013) . . . . . . . 412B3-4.1-03, Types of Interested Party Contributions (IPCs) (06/30/2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
B3-4.2, Verification of Depository Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420B3-4.2-01, Verification of Deposits and Assets (11/13/2012) . . . . . . . . . 420B3-4.2-02, Depository Accounts (11/13/2012) . . . . . . . . . . . . . . . . . . . . 422B3-4.2-03, Individual Development Accounts (12/01/2010) . . . . . . . . . . 423B3-4.2-04, Pooled Savings (Community Savings Funds) (04/01/2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426B3-4.2-05, Verification of Assets for Non-U.S. Citizen Borrowers(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
B3-4.3, Verification of Non-Depository Assets . . . . . . . . . . . . . . . . . . . . . . . . 428B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds(10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428B3-4.3-02, Trust Accounts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . 429B3-4.3-03, Retirement Accounts (11/13/2012) . . . . . . . . . . . . . . . . . . . . 430B3-4.3-04, Personal Gifts (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . 431B3-4.3-05, Gifts of Equity (11/13/2012) . . . . . . . . . . . . . . . . . . . . . . . . . 434B3-4.3-06, Donations From Entities (09/24/2013) . . . . . . . . . . . . . . . . . 435B3-4.3-07, Disaster Relief Grants or Loans (04/01/2009) . . . . . . . . . . . . 437B3-4.3-08, Employer Assistance (09/24/2013) . . . . . . . . . . . . . . . . . . . . 437B3-4.3-09, Earnest Money Deposit (08/21/2012) . . . . . . . . . . . . . . . . . . 440B3-4.3-10, Anticipated Sales Proceeds (04/01/2009) . . . . . . . . . . . . . . . 441B3-4.3-11, Trade Equity (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . 442B3-4.3-12, Rent Credit for Option to Purchase (04/01/2009) . . . . . . . . . 444B3-4.3-13, Sweat Equity (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . 445B3-4.3-14, Bridge/Swing Loans (04/01/2009) . . . . . . . . . . . . . . . . . . . . 445B3-4.3-15, Borrowed Funds Secured by an Asset (10/30/2009) . . . . . . . 446B3-4.3-16, Credit Card Financing (10/30/2009) . . . . . . . . . . . . . . . . . . . 447B3-4.3-17, Personal Unsecured Loans (09/20/2010) . . . . . . . . . . . . . . . . 448B3-4.3-18, Sale of Personal Assets (04/01/2009) . . . . . . . . . . . . . . . . . . 449B3-4.3-19, Cash Value of Life Insurance (04/01/2009) . . . . . . . . . . . . . . 450B3-4.3-20, Anticipated Savings and Cash-on-Hand (04/01/2009) . . . . . . 451
B3-4.4, DU Requirements for Asset Assessment . . . . . . . . . . . . . . . . . . . . . . 452B3-4.4-01, Asset Verification (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . 452B3-4.4-02, Documentation Requirements (09/24/2013) . . . . . . . . . . . . . 455
B3-5, Credit Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460B3-5.1, Credit Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461
B3-5.1-01, General Requirements for Credit Scores (08/20/2013) . . . . . 461B3-5.1-02, Determining the Representative Credit Score for a MortgageLoan (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465
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B3-5.2, Credit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468B3-5.2-01, Requirements for Credit Reports (10/30/2009) . . . . . . . . . . . 468B3-5.2-02, Types of Credit Reports (09/20/2010) . . . . . . . . . . . . . . . . . . 472B3-5.2-03, Accuracy of Credit Information in a Credit Report(10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475
B3-5.3, Traditional Credit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477B3-5.3-01, Number and Age of Accounts (04/01/2009) . . . . . . . . . . . . . 477B3-5.3-02, Payment History (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 477B3-5.3-03, Previous Mortgage Payment History (04/01/2009) . . . . . . . . 478B3-5.3-04, Inquiries: Recent Attempts to Obtain New Credit(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480B3-5.3-05, Credit Utilization (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 480B3-5.3-06, Authorized Users of Credit(10/30/2009) . . . . . . . . . . . . . . . . 481B3-5.3-07, Significant Derogatory Credit Events Waiting Periodsand Re-establishing Credit (05/28/2013) . . . . . . . . . . . . . . . . . . . . . . . . . 483B3-5.3-08, Extenuating Circumstances for Derogatory Credit(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489B3-5.3-09, DU Credit Report Analysis (04/15/2014) . . . . . . . . . . . . . . . 490
B3-5.4, Nontraditional Credit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500B3-5.4-01, Nontraditional Mortgage Credit Reports (08/21/2012) . . . . . 500B3-5.4-02, Types of Credit (Tiers I, II, and III) (10/30/2009) . . . . . . . . . 503B3-5.4-03, Verification and Documentation of Alternative Credit(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
B3-6, Liability Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508B3-6-01, General Information on Liabilities (09/20/2010) . . . . . . . . . . . . . . . 508B3-6-02, Debt-to-Income Ratios (10/02/2012) . . . . . . . . . . . . . . . . . . . . . . . . 510B3-6-03, Monthly Housing Expense (05/28/2013) . . . . . . . . . . . . . . . . . . . . . 514B3-6-04, Qualifying Payment Requirements (04/15/2014) . . . . . . . . . . . . . . . 516B3-6-05, Monthly Debt Obligations (05/24/2011) . . . . . . . . . . . . . . . . . . . . . 519B3-6-06, Qualifying Impact of Other Real Estate Owned (11/13/2012) . . . . . 524B3-6-07, Debts Paid Off At/Prior to Closing (04/15/2014) . . . . . . . . . . . . . . . 528B3-6-08, DU: Requirements of Liability Assessment (12/01/2010) . . . . . . . . 530
Subpart B4, Underwriting Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533B4-1, Appraisal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534
B4-1.1, General Appraisal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535B4-1.1-01, Definition of Market Value (04/15/2014) . . . . . . . . . . . . . . . 535B4-1.1-02, Lender Responsibilities (04/15/2014) . . . . . . . . . . . . . . . . . . 536B4-1.1-03, Appraiser Selection Criteria (04/15/2014) . . . . . . . . . . . . . . . 540B4-1.1-04, Unacceptable Appraisal Practices (04/15/2014) . . . . . . . . . . 543B4-1.1-05, Disclosure of Information to Appraisers (04/15/2014) . . . . . 545
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B4-1.1-06, Uniform Appraisal Dataset (UAD) and the UniformCollateral Data Portal (UCDP)(04/15/2014) . . . . . . . . . . . . . . . . . . . . . . 547
B4-1.2, Documentation Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550B4-1.2-01, Appraisal Report Forms and Exhibits (04/15/2014) . . . . . . . 550B4-1.2-02, Appraisal Age and Use Requirements (04/15/2014) . . . . . . . 555B4-1.2-03, Requirements for Postponed Improvements (04/15/2014) . . . 557
B4-1.3, Appraisal Report Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562B4-1.3-01, Review of the Appraisal Report (04/15/2014) . . . . . . . . . . . . 562B4-1.3-02, Subject and Contract Sections of the Appraisal Report(04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563B4-1.3-03, Neighborhood Section of the Appraisal Report (04/15/2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566B4-1.3-04, Site Section of the Appraisal Report (04/15/2014) . . . . . . . . 573B4-1.3-05, Improvements Section of the Appraisal Report (04/15/2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578B4-1.3-06, Property Condition and Quality of Construction of theImprovements (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585B4-1.3-07, Sales Comparison Approach Section of the Appraisal Report(04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593B4-1.3-08, Comparable Sales (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . 595B4-1.3-09, Adjustments to Comparable Sales (04/15/2014) . . . . . . . . . . 599B4-1.3-10, Cost and Income Approach to Value (04/15/2014) . . . . . . . . 603B4-1.3-11, Valuation Analysis and Reconciliation (04/15/2014) . . . . . . . 604B4-1.3-12, Quality Assurance (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . 606
B4-1.4, Special Appraisal Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609B4-1.4-01, Factory-Built Housing: Manufactured Housing (04/15/2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609B4-1.4-02, Factory-Built Housing: Modular, Prefabricated, Panelized,or Sectional Housing (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615B4-1.4-03, Condo Appraisal Requirements (04/15/2014) . . . . . . . . . . . . 616B4-1.4-04, Co-op Appraisal Requirements (04/15/2014) . . . . . . . . . . . . 617B4-1.4-05, Leasehold Interests Appraisal Requirements (04/15/2014) . . 621B4-1.4-06, Community Land Trust Appraisal Requirements(04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623B4-1.4-07, Mixed-Use Property Appraisal Requirements (04/15/2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626B4-1.4-08, Environmental Hazards Appraisal Requirements(04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627B4-1.4-09, Special Assessment or Community Facilities DistrictsAppraisal Requirements (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 630
B4-2, Project Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633
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B4-2.1, General Project Standards and Environmental Hazards . . . . . . . . . . 634B4-2.1-01, General Information on Project Standards (07/26/2011) . . . . 634B4-2.1-02, Ineligible Projects (05/28/2013) . . . . . . . . . . . . . . . . . . . . . . 637B4-2.1-03, Projects with Special Considerations and Project EligibilityWaivers (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641B4-2.1-04, Project Identification and Document Retention (06/26/2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642B4-2.1-05, Project Insurance Requirements (04/01/2009) . . . . . . . . . . . . 643B4-2.1-06, Priority of Common Expense Assessments (04/15/2014) . . . 644B4-2.1-07, Project Standards: Environmental Hazard Assessments(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646B4-2.1-08, Unacceptable Environmental Conditions (04/01/2009) . . . . . 649B4-2.1-09, Remedial Actions for Environmental Assessments BelowStandards (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651
B4-2.2, Condo Project Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653B4-2.2-01, Condo Project Eligibility (06/28/2011) . . . . . . . . . . . . . . . . . 653B4-2.2-02, Limited Review Process for Attached Condo Units(08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655B4-2.2-03, Limited Review Process for Detached Condo Units(06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657B4-2.2-04, Lender Full Review: General Eligibility Requirements forAll Condo Projects (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659B4-2.2-05, Lender Full Review: Additional Eligibility Requirements forNew Condo Projects and Newly Converted Attached Condo Projects(05/28/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662B4-2.2-06, Lender Full Review: Additional Eligibility Requirements forEstablished Condo Projects (05/28/2013) . . . . . . . . . . . . . . . . . . . . . . . . 666B4-2.2-07, Owner-Occupancy Ratio Requirements and FinancialInstitution-Owned REO Units (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . 669B4-2.2-08, Project Eligibility Review Service (PERS) (06/26/2012) . . . 670B4-2.2-09, Condo Project Manager (CPM) Expedited Review for Newand Established Condo Projects (05/28/2013) . . . . . . . . . . . . . . . . . . . . . 674B4-2.2-10, FHA-Approved Condo Review Eligibility (06/26/2012) . . . . 677B4-2.2-11, Fannie Mae Review of Condo Projects Comprised ofManufactured Homes (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679B4-2.2-12, Geographic-Specific Condo Project Considerations(09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680B4-2.2-13, Condo Project Review and Legal Document Requirements(08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682
B4-2.3, PUD Requirements and Cooperative Project Eligibility . . . . . . . . . . . 687B4-2.3-01, PUD: Lender Full Review Requirements (06/28/2011) . . . . . 687
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B4-2.3-02, Co-op Project Eligibility (06/28/2011) . . . . . . . . . . . . . . . . . 688B4-2.3-03, Legal Requirements for Co-op Projects (04/01/2009) . . . . . . 694B4-2.3-04, Loan Eligibility for Co-op Share Loans (08/20/2013) . . . . . . 699B4-2.3-05, Other Requirements for Co-op Share Loans (04/15/2014) . . 703
Subpart B5, Unique Eligibility and Underwriting Considerations . . . . . . . . . . . . . . . . . 709B5-1, High-Balance Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710
B5-1-01, High-Balance Mortgage Loan Eligibility and Underwriting(01/17/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710B5-1-02, High-Balance Pricing, Mortgage Insurance, Special Feature Codes,and Delivery Limitations (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713
B5-2, Manufactured Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715B5-2-01, Manufactured Housing (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . 715B5-2-02, Manufactured Housing Loan Eligibility (04/15/2014) . . . . . . . . . . . 717B5-2-03, Manufactured Housing Underwriting Requirements (07/26/2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 719B5-2-04, Manufactured Housing Pricing, Mortgage Insurance, and SpecialFeature Code Requirements (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725B5-2-05, Manufactured Housing Legal Considerations (07/30/2013) . . . . . . . 726
B5-3, Construction and Energy Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734B5-3.1, Conversion of Construction-to-Permanent Financing . . . . . . . . . . . . . 735
B5-3.1-01, Conversion of Construction-to-Permanent Financing:Overview (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735B5-3.1-02, Conversion of Construction-to-Permanent Financing:Single-Closing Transactions (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . 736B5-3.1-03, Conversion of Construction-to-Permanent Financing: Two-Closing Transactions (08/20/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741
B5-3.2, HomeStyle Renovation Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 743B5-3.2-01, HomeStyle Renovation Mortgage: Lender Eligibility(12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 743B5-3.2-02, HomeStyle Renovation Mortgages: Borrower Eligibility(08/20/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745B5-3.2-03, HomeStyle Renovation Mortgages: Underwriting andCollateral Considerations (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . 748B5-3.2-04, HomeStyle Renovation Mortgages: Costs and EscrowAccounts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751B5-3.2-05, HomeStyle Renovation Mortgages: Completion(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 753B5-3.2-06, HomeStyle Construction Contract, Construction LoanAgreement, and Lien Waiver (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . 754
B5-3.3, Mortgage Loans with Energy Improvement Features on ExistingProperties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758
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B5-3.3-01, Mortgage Loans with Energy Improvement Features onExisting Properties (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758
B5-3.4, Property Assessed Clean Energy Loans . . . . . . . . . . . . . . . . . . . . . . . 763B5-3.4-01, Property Assessed Clean Energy Loans (12/01/2010) . . . . . . 763
B5-4, Geographic-Specific Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 766B5-4-01, Texas Section 50(a)(6) Mortgages (03/29/2010) . . . . . . . . . . . . . . . 766B5-4-02, Texas Section 50(a)(6) Mortgage Eligibility (04/15/2014) . . . . . . . . 769B5-4-03, Texas Section 50(a)(6) Underwriting and Collateral Considerations(03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 772B5-4-04, Texas Section 50(a)(6) Mortgage Delivery Considerations(03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774B5-4-05, Texas Section 50(a)(6) Mortgage Legal Considerations(03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 776B5-4-06, Native American Conventional Lending Initiative (NACLI)(06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777B5-4-07, Disaster-Related Limited Cash-Out Refinance Flexibilities(06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 779
B5-5, Community Seconds, Community Land Trusts, DU Refi Plus and RefiPlus, and Loans with Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783
B5-5.1, Community Seconds and Community Land Trusts . . . . . . . . . . . . . . 784B5-5.1-01, Community Seconds Mortgages (04/09/2013) . . . . . . . . . . . 784B5-5.1-02, Community Seconds Loan Eligibility (09/24/2013) . . . . . . . 785B5-5.1-03, Community Seconds Delivery Considerations (04/09/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 793B5-5.1-04, Community Land Trusts (04/15/2014) . . . . . . . . . . . . . . . . . 794
B5-5.2, DU Refi Plus and Refi Plus Mortgage Loans . . . . . . . . . . . . . . . . . . . 800B5-5.2-01, DU Refi Plus and Refi Plus Eligibility (10/22/2013) . . . . . . . 800B5-5.2-02, DU Refi Plus and Refi Plus Underwriting Considerations(04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 818B5-5.2-03, DU Refi Plus and Refi Plus Property Valuation and ProjectStandards (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837B5-5.2-04, DU Refi Plus and Refi Plus Closing, Pricing, and Delivery(05/28/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843
B5-5.3, Loans with Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 847B5-5.3-01, Loans With Resale Restrictions: Lender Eligibility(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 847B5-5.3-02, Loans with Resale Restrictions: Loan and BorrowerEligibility (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 849B5-5.3-03, Loans with Resale Restrictions: Underwriting and CollateralConsiderations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 850
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B5-5.3-04, Loans with Resale Restrictions: Legal Considerations(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 853B5-5.3-05, Loans with Resale Restrictions: Delivery Considerations(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 854B5-5.3-06, Loans with Resale Restrictions: Pricing, Mortgage Insuranceand Special Feature Codes (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . 855B5-5.3-07, Massachusetts Resale Restriction Loan EligibilityRequirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 856
B5-6, MyCommunityMortgage (MCM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 858B5-6-01, MyCommunityMortgage (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . 858B5-6-02, MyCommunityMortgage Loan and Borrower Eligibility(08/20/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860B5-6-03, MyCommunityMortgage Underwriting Methods and Requirements(09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 865B5-6-04, MyCommunityMortgage: Additional Eligibility and UnderwritingRequirements for Community Solutions and Community HomeChoice(11/13/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871B5-6-05, MyCommunityMortgage Pricing, Mortgage Insurance, and SpecialFeature Codes (09/24/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877
Subpart B6, Government Programs Eligibility and Underwriting Requirements . . . . . . 879B6-1, Government Insured and Guaranteed Mortgages . . . . . . . . . . . . . . . . . . . . . 880
B6-1-01, General Government Mortgage Loan Requirements (01/17/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 881B6-1-02, Eligible FHA-Insured Mortgage Loans (06/28/2011) . . . . . . . . . . . . 884B6-1-03, Eligible VA-Guaranteed Mortgages (08/20/2013) . . . . . . . . . . . . . . 886B6-1-04, Eligible HUD-Guaranteed Section 184 Mortgages (06/26/2012) . . . 887B6-1-05, Eligible RD-Guaranteed Mortgages (06/26/2012) . . . . . . . . . . . . . . 889B6-1-06, Government Mortgage Loan Guaranty or Insurance (04/01/2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890
Subpart B7, Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891B7-1, Mortgage Insurance/Loan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 892
B7-1-01, Provision of Mortgage Insurance (04/09/2013) . . . . . . . . . . . . . . . . 893B7-1-02, Mortgage Insurance Coverage Requirements (09/24/2013) . . . . . . . 896B7-1-03, Lender-Purchased Mortgage Insurance (05/27/2010) . . . . . . . . . . . . 898B7-1-04, Financed Borrower-Purchased Mortgage Insurance (06/26/2012) . . 900B7-1-05, Government Mortgage Loan Guaranty or Insurance (04/09/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 903
B7-2, Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 907B7-2-01, Provision of Title Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . . . 907B7-2-02, Title Insurer Requirements (09/24/2013) . . . . . . . . . . . . . . . . . . . . . 908B7-2-03, General Title Insurance Coverage (08/20/2013) . . . . . . . . . . . . . . . . 910
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B7-2-04, Special Title Insurance Coverage Considerations (08/20/2013) . . . . 912B7-2-05, Title Exceptions and Impediments (04/09/2013) . . . . . . . . . . . . . . . 916
B7-3, Hazard and Flood Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920B7-3-01, Hazard Insurance Policy Requirements (10/22/2013) . . . . . . . . . . . 920B7-3-02, General Hazard Insurance Coverage (06/28/2011) . . . . . . . . . . . . . . 923B7-3-03, Determining the Amount of Required Hazard Insurance Coverage(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925B7-3-04, Hazard Coverage for Units in Project Developments (10/22/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 927B7-3-05, Additional Insurance Coverage (04/01/2009) . . . . . . . . . . . . . . . . . . 932B7-3-06, Evidence of Hazard Insurance (10/22/2013) . . . . . . . . . . . . . . . . . . 935B7-3-07, Flood Insurance Coverage Requirements (09/24/2013) . . . . . . . . . . 937B7-3-08, Mortgagee Clause for Hazard and Flood Insurance (05/24/2011) . . 943
B7-4, Additional Project Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 945B7-4-01, Liability Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 945B7-4-02, Fidelity Insurance (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946B7-4-03, Rent Loss Insurance for Co-op Projects (04/01/2009) . . . . . . . . . . . 948
Subpart B8, Closing: Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949B8-1, General Information on Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 950
B8-1-01, Publication of Legal Documents (06/28/2011) . . . . . . . . . . . . . . . . . 950B8-2, Security Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 953
B8-2-01, Security Instruments for Conventional Mortgages (04/30/2010) . . . 953B8-2-02, Special-Purpose Security Instruments (04/30/2010) . . . . . . . . . . . . . 956B8-2-03, Signature Requirements for Security Instruments (10/22/2013) . . . . 960
B8-3, Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 962B8-3-01, Notes for Conventional Mortgages (08/20/2013) . . . . . . . . . . . . . . . 962B8-3-02, Special Note Provisions and Language Requirements (08/20/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 964B8-3-03, Signature Requirements for Notes (10/22/2013) . . . . . . . . . . . . . . . 965B8-3-04, Note Endorsement (12/20/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 967
B8-4, Riders and Addenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970B8-4-01, Riders and Addenda (05/27/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . 970
B8-5, Special-Purpose Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 974B8-5-01, General Information on Special-Purpose Legal Documents(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 974B8-5-02, Inter Vivos Revocable Trust Mortgage Documentation andSignature Requirements (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975B8-5-03, Texas Section 50(a)(6) Mortgage Documentation (03/29/2010) . . . . 978B8-5-04, HomeStyle Mortgage Documentation Requirements (12/30/2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 980B8-5-05, Sample Legal Documents (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . 981
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B8-5-06, Requirements for Use of a Power of Attorney (10/22/2013) . . . . . . 983B8-6, Mortgage Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 986
B8-6-01, General Information (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . 986B8-6-02, Mortgage Assignment to Fannie Mae (04/09/2013) . . . . . . . . . . . . . 987B8-6-03, Authorized Use of Intervening and Blanket Assignments(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 989
B8-7, Mortgage Electronic Registration System (MERS) . . . . . . . . . . . . . . . . . . . . 992B8-7-01, Mortgage Electronic Registration Systems (MERS) (04/15/2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992
Part C, Selling, Securitizing, and Delivering Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 997Subpart C1, General Information on Execution Options and Loan Delivery . . . . . . . . . 999
C1-1, Execution Options Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1000C1-1-01, Execution Options (11/13/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1000
C1-2, Loan Delivery Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1006C1-2-01, General Information on Delivering Loan Data and Documents(10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1007C1-2-02, Loan Data and Documentation Delivery Requirements(06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1009C1-2-03, Ownership of Mortgage Loans Prior to Purchase or Securitizationand Third-Party Security Interests (11/13/2012) . . . . . . . . . . . . . . . . . . . . . . 1012C1-2-04, Bailee Letters (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1014
C1-3, Loan Remittance Types Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1019C1-3-01, General Information on Remittance Types (12/30/2009) . . . . . . . . 1019
Subpart C2, Whole Loan Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1022C2-1, Mandatory and Best Efforts Commitments to Sell Whole Loans . . . . . . . . 1023
C2-1.1, Mandatory Commitments to Sell Whole Loans . . . . . . . . . . . . . . . . 1024C2-1.1-01, Mandatory Commitment Process (10/30/2009) . . . . . . . . . . 1024C2-1.1-02, Pricing, Fees, and Pricing Adjustments (04/01/2009) . . . . . 1025C2-1.1-03, Mandatory Commitment Terms, Amounts, Periods andOther Requirements (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1028C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs(10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1031C2-1.1-05, Servicing Fees (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . 1033C2-1.1-06, Accrued Interest Payments for Regularly AmortizingMortgages (06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034C2-1.1-07, Standard ARM and Converted ARM Resale Commitments(04/09/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1035
C2-1.2, Best Efforts Commitments to Sell Whole Loans . . . . . . . . . . . . . . . 1038C2-1.2-01, Best Efforts Commitment Process (10/25/2011) . . . . . . . . . 1038C2-1.2-02, Best Efforts Commitment Pricing, Periods, and Fees(10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1039
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C2-1.2-03, Best Efforts Commitment Terms, Amounts, and OtherRequirements (10/22/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041C2-1.2-04, Servicing Execution Tool in eCommitONE (10/25/2011) . . 1044
C2-2, Whole Loan Deliveries to and Purchasing by Fannie Mae . . . . . . . . . . . . . 1047C2-2-01, General Requirements for Good Delivery of Whole Loans(10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1048C2-2-02, Documentation Requirements for Whole Loan Deliveries(10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1051C2-2-03, General Information on Whole Loan Purchasing Policies(11/13/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1053C2-2-04, Timing of Distribution of Whole Loan Purchase Proceeds(06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1055C2-2-05, Whole Loan Purchasing Process (11/13/2012) . . . . . . . . . . . . . . . . 1056C2-2-06, Authorization to Transfer Funds (09/24/2013) . . . . . . . . . . . . . . . . 1059C2-2-07, Purchase Payee Codes (07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . 1061C2-2-08, Triparty Wiring Instructions (04/01/2009) . . . . . . . . . . . . . . . . . . . 1063
Subpart C3, Mortgage-Backed Securities (MBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1066C3-1, MBS Program Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1067
C3-1-01, General Information About Fannie Maes MBS Program(06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1068C3-1-02, Preparing to Pool Loans into MBS (10/30/2009) . . . . . . . . . . . . . . 1072
C3-2, Entering Into an MBS Pool Purchase Contract . . . . . . . . . . . . . . . . . . . . . 1074C3-2-01, Determining Eligibility for Loans Pooled into MBS (10/25/2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1074C3-2-02, Establishing the Contract Amount (12/30/2009) . . . . . . . . . . . . . . 1078C3-2-03, Selecting a Servicing Option (04/01/2009) . . . . . . . . . . . . . . . . . . 1079C3-2-04, MBS Remittance Type and Selecting a Remittance Cycle(10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1080C3-2-05, Obtaining a Pool Purchase Contract (11/13/2012) . . . . . . . . . . . . . 1081
C3-3, MBS Guaranty Fees and Guaranty Fee Buyups and Buydowns . . . . . . . . . 1085C3-3-01, Determining and Remitting Guaranty Fees (10/25/2011) . . . . . . . . 1085C3-3-02, Accessing Buyup and Buydown Ratios and Calculating Paymentsor Charges (11/13/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1087C3-3-03, Buying Up and Buying Down the Guaranty Fee for MBS(10/02/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1090
C3-4, Pooling Loans into Fixed-Rate MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1092C3-4-01, Term-Related Fixed-Rate Mortgage Pooling Parameters(10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1092C3-4-02, Commingling Fixed-Rate Mortgages in MBS (03/02/2010) . . . . . 1095
C3-5, Pooling Loans into ARM MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1098C3-5-01, Creating Stated-Structure ARM MBS (08/30/2011) . . . . . . . . . . . . 1099
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C3-5-02, Stated-Structure ARM MBS Pooling Process (04/01/2009) . . . . . . 1101C3-5-03, Creating Weighted-Average ARM MBS (04/01/2009) . . . . . . . . . . 1106C3-5-04, Calculating the Weighted-Average Pool Accrual Rates for ARMFlex Pools Using a Fixed MBS Margin (04/01/2009) . . . . . . . . . . . . . . . . . . 1107C3-5-05, Calculating the Weighted-Average Pool Accrual Rates for ARMFlex Pools Using a Weighted-Average MBS Margin (04/01/2009) . . . . . . . . 1110C3-5-06, Pooling ARMs with a Conversion Option (04/01/2009) . . . . . . . . 1113C3-5-07, Uniform Hybrid ARM MBS (04/01/2009) . . . . . . . . . . . . . . . . . . . 1115C3-5-08, Commingling ARMs in MBS (04/01/2009) . . . . . . . . . . . . . . . . . . 1117
C3-6, Pooling Loans into Fannie Majors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1118C3-6-01, Parameters for Pooling Loans Into Fannie Majors (06/26/2012) . . 1118
C3-7, Delivering and Trading MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1122C3-7-01, Establishing an MBS Trading Account (04/15/2014) . . . . . . . . . . . 1123C3-7-02, Initiating an MBS Sale (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . 1131C3-7-03, Making Good Delivery (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . 1133C3-7-04, Delivering Data and Documents (11/13/2012) . . . . . . . . . . . . . . . . 1137C3-7-05, Confirming Presettlement Information (04/01/2009) . . . . . . . . . . . 1142C3-7-06, Settling the Trade (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1145C3-7-07, Sale of Fannie Mae Securities to Third Parties (04/01/2009) . . . . . 1148
Part D, Ensuring Quality Control (QC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1152Subpart D1, Lender QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1153
D1-1, Lender Quality Control Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1154D1-1-01, Lender Quality Control Programs, Plans, and Processes(07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1155D1-1-02, Lender Quality Control Staffing and Outsourcing of the QualityControl Process (07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1160
D1-2, Lender Prefunding QC Mortgage Review . . . . . . . . . . . . . . . . . . . . . . . . . . 1163D1-2-01, Lender Prefunding Quality Control Review Process (07/30/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1163
D1-3, Lender Post-Closing QC Mortgage Review . . . . . . . . . . . . . . . . . . . . . . . . 1167D1-3-01, Lender Post-Closing Quality Control Review Process (07/30/2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1168D1-3-02, Lender Post-Closing Quality Control Review of ApprovalConditions, Underwriting Decisions, and Documentation (07/30/2013) . . . . 1172D1-3-03, Lender Post-Closing Quality Control Review of Data Integrity(07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1176D1-3-04, Lender Post-Closing Quality Control Review of Appraisers andAppraisals (07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1179D1-3-05, Lender Post-Closing Quality Control Review of ClosingDocuments (07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1181
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D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention,and Audit (07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1183
Subpart D2, Fannie Mae QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1186D2-1, General Information on Fannie Mae QC Process . . . . . . . . . . . . . . . . . . . . 1187
D2-1-01, General Information on Fannie Mae QC Reviews (04/09/2013) . . 1187D2-1-02, Fannie Mae QC File Request and Submission Requirements(04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1188D2-1-03, Fannie Mae QC Report of Findings and Lender Rebuttal(04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1190
Part E, Quick Reference Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1192E-1, Selling Guide Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1193
E-1-01, References to Fannie Mae's Website (04/15/2014) . . . . . . . . . . . . . . . . . . 1193E-1-02, Acronyms and Abbreviations (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . 1198E-1-03, List of Contacts (07/30/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1201E-1-04, List of Lender Contracts (04/15/2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1206
E-2, Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1209E-2-01, Borrowers Authorization for Counseling (04/01/2009) . . . . . . . . . . . . . . 1209E-2-02, Required Custodial Documents (10/22/2013) . . . . . . . . . . . . . . . . . . . . . 1210E-2-03, Suggested Format for Phase I Environmental Hazard Assessments(06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1213E-2-04, Master Agreement Terms and Conditions (09/24/2013) . . . . . . . . . . . . . . 1222E-2-05, Revocable Trust Rider (Sample Language) (01/17/2013) . . . . . . . . . . . . 1229E-2-06, Signature Requirements for Mortgages to Inter Vivos Revocable Trusts(01/17/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1230E-2-07, Post-Closing Mortgage Loan File Documentation (04/09/2013) . . . . . . . 1233
E-3, Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1237E-3-01, Glossary of Fannie Mae Terms: A (08/20/2013) . . . . . . . . . . . . . . . . . . . 1238E-3-02, Glossary of Fannie Mae Terms: B (08/20/2013) . . . . . . . . . . . . . . . . . . . 1241E-3-03, Glossary of Fannie Mae Terms: C (04/15/2014) . . . . . . . . . . . . . . . . . . . 1244E-3-04, Glossary of Fannie Mae Terms: D (04/15/2014) . . . . . . . . . . . . . . . . . . . 1250E-3-05, Glossary of Fannie Mae Terms: E (04/09/2013) . . . . . . . . . . . . . . . . . . . 1253E-3-06, Glossary of Fannie Mae Terms: F (08/20/2013) . . . . . . . . . . . . . . . . . . . 1256E-3-07, Glossary of Fannie Mae Terms: G (08/20/2013) . . . . . . . . . . . . . . . . . . . 1261E-3-08, Glossary of Fannie Mae Terms: H (04/15/2014) . . . . . . . . . . . . . . . . . . . 1263E-3-09, Glossary of Fannie Mae Terms: I (08/20/2013) . . . . . . . . . . . . . . . . . . . . 1264E-3-10, Glossary of Fannie Mae Terms: J (04/01/2009) . . . . . . . . . . . . . . . . . . . . 1268E-3-11, Glossary of Fannie Mae Terms: K (10/02/2012) . . . . . . . . . . . . . . . . . . . 1268E-3-12, Glossary of Fannie Mae Terms: L (07/30/2013) . . . . . . . . . . . . . . . . . . . 1268E-3-13, Glossary of Fannie Mae Terms: M (04/15/2014) . . . . . . . . . . . . . . . . . . . 1271E-3-14, Glossary of Fannie Mae Terms: N (08/20/2013) . . . . . . . . . . . . . . . . . . . 1279E-3-15, Glossary of Fannie Mae Terms: O (08/21/2012) . . . . . . . . . . . . . . . . . . . 1280
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E-3-16, Glossary of Fannie Mae Terms: P (08/20/2013) . . . . . . . . . . . . . . . . . . . 1281E-3-17, Glossary of Fannie Mae Terms: Q (04/01/2009) . . . . . . . . . . . . . . . . . . . 1285E-3-18, Glossary of Fannie Mae Terms: R (08/20/2013) . . . . . . . . . . . . . . . . . . . 1286E-3-19, Glossary of Fannie Mae Terms: S (05/28/2013) . . . . . . . . . . . . . . . . . . . 1290E-3-20, Glossary of Fannie Mae Terms: T (04/15/2014) . . . . . . . . . . . . . . . . . . . 1295E-3-21, Glossary of Fannie Mae Terms: U (07/30/2013) . . . . . . . . . . . . . . . . . . . 1297E-3-22, Glossary of Fannie Mae Terms: V (04/01/2009) . . . . . . . . . . . . . . . . . . . 1297E-3-23, Glossary of Fannie Mae Terms: W (12/20/2011) . . . . . . . . . . . . . . . . . . . 1298E-3-24, Glossary of Fannie Mae Terms: X (04/01/2009) . . . . . . . . . . . . . . . . . . . 1298E-3-25, Glossary of Fannie Mae Terms: Y (04/01/2009) . . . . . . . . . . . . . . . . . . . 1299E-3-26, Glossary of Fannie Mae Terms: Z (04/01/2009) . . . . . . . . . . . . . . . . . . . 1299
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PrefaceContent Organization
The Selling Guide is organized into parts that reflect how lenders generally categorize variousaspects of their business relationship with Fannie Mae:
Part A, Doing Business with Fannie Mae Subpart 1: Approval Qualification Subpart 2: Lender Contract Subpart 3: Getting Started With Fannie Mae Subpart 4: Maintaining Lender Eligibility
Part B, Originating through Closing Subpart 1: Loan Application Package Subpart 2: Eligibility Subpart 3: Underwriting Borrowers Subpart 4: Underwriting Property Subpart 5: Unique Eligibility and Underwriting Considerations Subpart 6: Government Programs Eligibility and Underwriting Requirements Subpart 7: Insurance Subpart 8: Closing: Legal Documents
Part C, Selling, Securitizing, and Delivering Loans Subpart 1: General Information on Execution Options and Loan Delivery Subpart 2: Whole Loan Transactions Subpart 3: Mortgage-Backed Securities (MBS)
Part D, Ensuring Quality Control (QC) Subpart 1: Lender QC Process Subpart 2: Fannie Mae QC Process
Part E, Quick Reference Materials Chapter 1: Selling Guide Resources Chapter 2: Exhibits
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Chapter 3: Glossary
Part A through Part D are structured hierarchicallyby subpart, chapter, section, and topicto present Fannie Mae requirements with increasing levels of detail, so that readers canquickly locate a subject of interest and find desired content. Part E includes a variety of supportcomponentsincluding Selling Guide Resources, Exhibits, and Glossary.
The Table of Contents provides additional details on the content. To learn more about the contentincluded in a particular part and how content in that part is organized, see the Introductionprovided at the beginning of the part.
Use of the Numbering System to Identify Levels of Content
The numbering system used to identify the levels of detail of the content contained within thisSelling Guide can help the reader to navigate the Guide more easily and to recognize where aparticular topic is contained within the content hierarchy.
Consider the numbering system identifier for the topic Requirements for Credit Reports:
B3-5.2-01 Requirements for Credit Reports
If you know that each:
Part has a corresponding Letter (uppercase beginning with A)Subpart has a corresponding Numeral (one-digit beginning with 1)Chapter has a corresponding Numeral (one-digit beginning with 1)Section has a corresponding Numeral (one-digit beginning with 1)
Topic has a corresponding Numeral (two-digit beginning with 01)
Then you can use the numbering system identifier (B3-5.2-01) to map the location and level ofcontent detail of this topic within the Selling Guide.
For example, here is how the numbering system identifier for topic B35.201 maps to thecontent levels:
Part BSubpart 3Chapter 5Section 2Topic 01
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As shown above, the part and subpart are combined as B3-. The chapter and section arecombined as 5.2- and the topic is added as 01.
Keep in mind that not all parts have subparts and not all chapters have sections. For example, thetopic Master Agreement Overview has the numbering system identifier A2-4-01 (which doesnot include a section):
Part ASubpart 2Chapter 4Topic 01
Note: As topics are added, updated and deleted with each publication of the SellingGuide, the chapters, sections and topic identifiers will change accordingly.
Use of Icons to Identify Types of Content
The online and PDF versions of this Selling Guide use various icons to help you quickly identifythe type of content:
Icon DescriptionOverview topics provide the logic behind the arrangement of a part, subpart, orchapter.
Policy topics instruct you about what must or must not be done (for example, lawsand rules).
Process and Procedure topics present actions that must be followed over time or thatmust be performed in a particular instance.
Supporting Information topics present concepts, facts, structures, or backgroundinformation that corroborate or expand upon a topic.
Glossary topics present key terms and their definitions.
Acronyms and Abbreviations topic provides a listing of the full terminology that isreferenced throughout the Guide.
Terms and General Conventions
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Lenders may contract to sell mortgages to Fannie Mae using either of the two following deliverymethods. (Fannie Mae acquires title to the mortgages in both types of transactions.)
As whole mortgage loans when the lender contracts to sell mortgages to Fannie Mae aswhole mortgages (to hold in our portfolio or to include later in MBS pools that we form). Weremit cash proceeds to the lender in payment of the purchase price for these mortgages.
As MBS mortgage loans when the lender contracts to sell mortgages to us that we conveyto an MBS trust under the terms of our MBS program, and we deliver to the lender (or itsdesignee) mortgage pass-through certificates representing interests in the mortgages. Thesepass-through certificates are in payment of the purchase price for the mortgages.
The term delivery is used in this Selling Guide to refer to whole mortgage loans and to MBSpools. In cases where specific requirements apply to one type of transaction, we specify thedelivery method.
Also, for the sake of brevity, the term loan is used to mean mortgage loan unless specifiedotherwise.
The glossary provides definitions of all terms used in connection with Fannie Mae requirements.
Amendments to the Guide
Fannie Mae may at any time alter or waive any of the requirements of this Selling Guide, imposeother additional requirements, or rescind or amend any and all material set forth in this SellingGuide. The lender must make sure that its staff is thoroughly familiar with the content andrequirements of this Selling Guide, as it now exists and as it may be changed from time to time.
Notification of Changes and Updates
Fannie Mae notifies lenders of changes and updates to our Selling Guide policies and proceduresas communicated in Announcements, Notices and Lender Lettersin two ways:
By posting the documents on Fannie Mae's website and the AllRegs website.
By email notification of these postings to lenders that subscribe to Fannie Maes emailsubscription service and select the option Selling News.
Fannie Mae does not mail printed copies of Selling Guide updates, announcements, noticesor lender letters. Lenders that want printed copies may download and print PDF files of thedocuments posted on Fannie Mae's website.
Contents of the Selling Guide
https://www.fanniemae.com/singlefamily/index
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The Selling Guide contains the current policies and procedures and all announcements issued todate have been incorporated.
Forms, Exhibits, and Content Incorporated by Reference
Information about the specific forms that lenders must use in fulfilling the requirementscontained in the Selling Guide is given in context within the Guide. Lenders can access the actualforms in several ways:
On Fannie Mae's website via the Guide Forms page, which provides a complete list of forms.
On the AllRegs website via embedded links in the free electronic version of the Guide (andthrough a searchable database with a full subscription to AllRegs Online).
Some exhibits that relate to our requirements are only referenced in the Guides and are posted intheir entirety on Fannie Mae's website. In addition, from time to time we issue product-specificguides or directives, which are incorporated into this Selling Guide by reference. Such product-specific informationwhether it currently exists or is subsequently createdand the exhibitsreferenced in the Guide now or later are legally a part of this Selling Guide (and the ServicingGuide).
Technical Issues
In the event of technical difficulties or system failures with Fannie Mae's website, with deliveryof the Selling News option of Fannie Maes email subscription service, or with the AllRegswebsite, users may contact the following resources:
For Fannie Mae's website and Fannie Maes email subscription service, use the Contact Uslink on the website to ask questions or obtain more information.
For the AllRegs website, submit an email support request from the website or contact AllRegsCustomer Service at (800) 848-4904.
When Questions Arise
This Selling Guide explains how to become an approved Fannie Mae lender and the proceduresfor normal and routine selling matters. If a lender feels that a situation is not covered or aprocedure may not apply because of certain circumstances, the lenders principal contact shouldbe its lead Fannie Mae regional office unless specifically instructed otherwise within this Guide.
We specify when a lender may need to contact other groups within Fannie Mae, such as theCapital Markets Sales Desk and others. For contact information on the regional offices and otherkey contacts, refer to E-1-03, List of Contacts.
https://www.fanniemae.com/singlefamily/selling-servicing-guide-forms
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Part A, Doing Business with Fannie Mae
Doing Business with Fannie Mae
Introduction
This part describes the requirements a lender must satisfy to become a Fannie Mae-approvedseller and servicer of residential home mortgage loans. This part also includes information on anapproved lenders contractual obligations, procedures for obtaining technology applications, andrequirements for maintaining lender eligibility.
Subpart A1, Approval Qualification
This subpart describes the requirements for becoming an approved Fannie Mae lender and thelender approval process.
Subpart A2, Lender Contract
This subpart describes some of the contractual obligations a lender takes on when it becomesan approved Fannie Mae lender. It includes information on Fannie Maes Charter Act,representations and warranties a lender makes when delivering mortgages to Fannie Mae, thelimited waiver of representations and warranties for mortgages underwritten with DesktopUnderwriter (DU), and the policies and procedures associated with obtaining a MasterAgreement. It articulates some of the circumstances under which the Lender Contract canbe terminated and the consequences of any breach of lender obligations. It lists the types ofmortgage loan reviews conducted by Fannie Mae and describes scenarios that may result inloan repurchase or make whole payment requests. It also describes the parameters within whichFannie Mae may elect its remedies such as imposing compensatory fees or formal sanctions andrequiring loan repurchases or substitutions. This subpart also includes Fannie Maes policies onthe establishment, maintenance, retention, and examination of mortgage files and records, andthe use of Fannie Maes name and trademark.
Subpart A3, Getting Started With Fannie Mae
This subpart describes the requirements a lender must meet in order to transact businesswith Fannie Mae, which includes the procedures for obtaining technology applications and
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completing the compliance certifications. It describes policies on concurrent servicing transfersand working with third parties such as mortgage brokers, loan correspondents, quality controlfirms, document custodians, and subservicers. It addresses Fannie Maes requirements for itslender customers in the areas of data integrity, fraud prevention, and fidelity bond and errors andomissions coverage.
Subpart A4, Maintaining Lender Eligibility
This subpart contains the reporting requirements to which lenders must adhere in order tomaintain their eligibility to transact business with Fannie Mae.
In This Part
This part contains the following subparts:
Subpart A1, Approval Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Subpart A2, Lender Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Subpart A3, Getting Started With Fannie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88Subpart A4, Maintaining Lender Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
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Subpart A1, Approval Qualification
Approval Qualification
Introduction
This subpart contains the requirements for becoming an approved Fannie Mae lender, anoverview of the lender approval process, and a list of loan types that require special lenderapproval.
In This Subpart
This subpart contains the following chapter:
A1-1, Application and Approval of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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Chapter A1-1, Application and Approval ofLender
Application and Approval of Lender
Introduction
This chapter includes information on the eligibility and application requirements for lendersseeking Fannie Mae approval. It also describes loan types that require special lender approval.
In This Chapter
This chapter contains the following topics:
A1-1-01, Application and Approval of Lender (04/09/2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A1-1-01, Application and Approval of Lender (04/09/2013)
Introduction
This topic contains general information on Fannie Maes lender approval requirements,including:
General Information
Eligibility
Application Requirements
Application Review Fee
Special Lender Approval and MSSC Addendum
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General Information
Lenders must be approved to do business with Fannie Mae. Fannie Mae determines a lendersqualifications by reviewing the lenders financial condition, organization, staffing, servicingexperience, and other relevant factors.
Fannie Maes standard approval is for the sale and/or servicing of single-family loans (excludingthose loans delivered under a negotiated contract). Lenders must obtain special approval to selland service certain mortgages with unique requirements, such as loans secured by co-op sharesor HomeStyle renovation mortgages.
Eligibility
Approval or rejection of a lenders application is at Fannie Maes sole discretion and is based onFannie Maes business judgment with respect to the totality of the lenders circumstances. At aminimum, to be considered for approval to sell and service residential first mortgages, a lendermust:
have as its principal business purpose, the origination, selling, and/or servicing of residentialmortgages;
have demonstrated the ability to originate, sell, and/or service the types of mortgages forwhich approval is being requested;
have adequate facilities and staff experienced in originating, selling, and/or servicing the typesof mortgages for which approval is being requested;
be duly organized, validly existing, properly licensed (in good standing) or otherwiseauthorized to conduct its business in each of the jurisdictions in which it originates, sells, andservices residential mortgages;
have a net worth of at least $2.5 million, plus a dollar amount that represents 0.25% of theunpaid principal balance of any Fannie Mae portfolio it is servicing. A lenders Fannie Maeportfolio includes mortgages or participation interests in MBS pools, first and second wholemortgages held in Fannie Maes portfolio, Fannie Maes participation interests in first orsecond mortgages in participation pools held in its portfolio, and multifamily mortgages.Lender net worth, as defined and calculated by