Selling GuideFannie Mae Single Family

August 21, 2012

Selling Guide: Fannie Mae Single FamilyPublished August 21, 2012

August 21, 2012

Fannie Mae Copyright Notice(1) 2012 Fannie Mae. No part of this Selling Guide may be reproduced in any form or by any means without Fannie Maes prior written permission, except as may be provided herein or unless otherwise permitted by law. Limited permission to download and/or print a copy of the PDF version of this Selling Guide from Fannie Mae-controlled websites is granted solely for internal business purposes, which permission Fannie Mae may revoke in its sole discretion. Limited permission to reproduce this Selling Guide in print in whole or in part and limited permission to distribute electronically parts of this Selling Guide are granted to Fannie Maeapproved lenders strictly for their own use in originating mortgages and selling mortgages to Fannie Mae. Fannie Mae may revoke these limited permissions by written notice to any or all Fannie Mae-approved lenders. Trademarks are the property of their respective owners. A full version of the Selling Guide is also available for viewing on the AllRegs website of Mortgage Resource Center, Inc., (MRC), which posts the Selling Guide under license from and with the express permission of Fannie Mae. If there should ever be a difference between the Selling Guide as it appears on the AllRegs website and this version, the difference is an error. In such event, this version shall be deemed the correct authoritative version. Material discrepancies between the two versions, identified by Fannie Mae or otherwise brought to our attention, may be addressed by Announcement. (2) Disclaimer: You acknowledge and agree (individually and on behalf of the entity for which you are accessing the Selling Guide) that you (and the entity for which you are accessing the Selling Guide) may not make any claim against Fannie Mae for any errors, and Fannie Mae shall not be liable to you (or the entity for which you accessing the Selling Guide) for any losses or damages whatsoever resulting directly or indirectly from any errors.

August 21, 2012

Table of ContentsPreface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx Part A, Doing Business with Fannie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Subpart A1, Approval Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A1-1, Application and Approval of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A1-1-01, Application and Approval of Lender (06/26/2012) . . . . . . . . . . . . . . . 4 Subpart A2, Lender Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 A2-1, Contractual Obligations for Fannie MaeApproved Lenders . . . . . . . . . . . . . 10 A2-1-01, Contractual Obligations for Lenders (04/01/2009) . . . . . . . . . . . . . . 10 A2-1-02, Nature of Mortgage Transaction (04/01/2009) . . . . . . . . . . . . . . . . . . 13 A2-1-03, Indemnification for Losses (09/27/2011) . . . . . . . . . . . . . . . . . . . . . . 14 A2-2, Contractual Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 16 A2-2-01, Contractual Representations and Warranties (04/01/2009) . . . . . . . . . 16 A2-2.1, Additional Selling Representations and Warranties . . . . . . . . . . . . . . . 18 A2-2.1-01, Selling Representations and Warranties Overview (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 A2-2.1-02, Delivery Information and Delivery-Option Specific Representations and Warranties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . 18 A2-2.1-03, Document Warranties (07/26/2011) . . . . . . . . . . . . . . . . . . . . . 20 A2-2.1-04, Limited Waiver of Contractual Warranties for Mortgages Submitted to DU (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 A2-2.1-05, Invalidation of Limited Waiver of Representation and Warranties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 A2-3, Lender Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 A2-3.1, Lender Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 A2-3.1-01, Lender Breach of Contract (04/01/2009) . . . . . . . . . . . . . . . . 30 A2-3.1-02, Sanctions, Suspensions, and Terminations (04/01/2009) . . . . . 32 A2-3.2, Loan Repurchases Requested by Fannie Mae . . . . . . . . . . . . . . . . . . . 35 A2-3.2-01, Loan Repurchases Requested by Fannie Mae (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 A2-3.2-02, Repurchases Resulting From Warranty Violations (08/12/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 A2-3.2-03, No Repurchase of Performing Mortgages for Breach of Contractual Selling Warranties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 41 A2-3.3, Compensatory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 A2-3.3-01, Compensatory Fees (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . 43 A2-4, Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 A2-4-01, Master Agreement Overview (06/28/2011) . . . . . . . . . . . . . . . . . . . . 46 A2-4-02, Terms of a Master Agreement (04/01/2009) . . . . . . . . . . . . . . . . . . . 48 A2-4-03, Variances and Special Provisions (06/26/2012) . . . . . . . . . . . . . . . . . 49Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. i

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A2-4-04, Breaches of a Master Agreement (04/01/2009) . . . . . . . . . . . . . . . . . 50 A2-5, Mortgage Files and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 A2-5.1, Establishment and Maintenance of Mortgage Files and Records . . . . . 52 A2-5.1-01, Overview of Mortgage Files and Records (04/01/2009) . . . . . 52 A2-5.1-02, Individual Mortgage Loan Files (05/24/2011) . . . . . . . . . . . . . 53 A2-5.1-03, Electronic Records, Signature, and Transactions (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 A2-5.1-04, Lenders or Document Custodians Electronic Transactions With Third Parties (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 A2-5.2, Ownership, Retention, and Examination of Mortgage Files and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 A2-5.2-01, Ownership of Mortgage Loan Files and Records (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 A2-5.2-02, Access to Records (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 63 A2-5.2-03, Retention and Storage of Mortgage File Records (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 A2-6, Fannie Mae Trade Name and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 A2-6-01, Fannie Mae Trade Name and Trademarks (04/01/2009) . . . . . . . . . . 67 Subpart A3, Getting Started With Fannie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 A3-1, Fannie Maes Technology Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 A3-1-01, Fannie Maes Technology Products (04/01/2009) . . . . . . . . . . . . . . . 72 A3-2, Compliance With Requirements and Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 A3-2-01, Compliance With Laws (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . 74 A3-2-02, Responsible Lending Practices (05/15/2012) . . . . . . . . . . . . . . . . . . . 76 A3-3, Third-Party Lending Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 A3-3-01, Outsourcing of Mortgage Processing and Third-Party Originations (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 A3-3-02, Concurrent Servicing Transfers (09/27/2011) . . . . . . . . . . . . . . . . . . 86 A3-3-03, Subservicing (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 A3-3-04, Document Custodians (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . 91 A3-3-05, Custody of Mortgage Documents (09/27/2011) . . . . . . . . . . . . . . . . . 98 A3-3-06, Fannie Mae's Designated Document Custodian (06/28/2011) . . . . . 101 A3-3.1, Other Document Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 A3-3.1-01, Operational Requirements for all Document Custodians (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 A3-3.1-02, Document Custodian Reporting Requirements: Active and Inactive Status (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 A3-3.2, Document Custodian Electronic Transactions . . . . . . . . . . . . . . . . . . 109 A3-3.2-01, Document Custodian Electronic Transactions (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 A3-4, Lending Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. ii

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A3-4-01, Confidentiality of Information/Conflict of Interest Parameters (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A3-4-02, Data Quality and Integrity (06/26/2012) . . . . . . . . . . . . . . . . . . . . . A3-4-03, Preventing, Detecting, and Reporting Mortgage Fraud (04/01/2009) .............................................................. A3-5, Fidelity Bond and Errors and Omissions Coverage . . . . . . . . . . . . . . . . . . . A3-5-01, Fidelity Bond and Errors and Omissions Coverage Provisions (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A3-5-02, Fidelity Bond Policy Requirements (04/01/2009) . . . . . . . . . . . . . . A3-5-03, Errors and Omissions Policy Requirements (03/02/2010) . . . . . . . . A3-5-04, Reporting Fidelity Bond and Errors and Omissions Events (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subpart A4, Maintaining Lender Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A4-1, Maintaining Lender Eligibility: Overview . . . . . . . . . . . . . . . . . . . . . . . . . . A4-1-01, Maintaining Lender Eligibility (12/20/2011) . . . . . . . . . . . . . . . . . . A4-2, Submission of Operational and Financial Information . . . . . . . . . . . . . . . . . A4-2-01, Net Worth and Liquidity Requirements (01/27/2011) . . . . . . . . . . . A4-2-02, Financial Statements and Reports (04/01/2009) . . . . . . . . . . . . . . . . A4-2-03, Lender Record Information (Form 582) (04/01/2009) . . . . . . . . . . . A4-3, Changes in the Lenders Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A4-3-01, Report of Changes in the Lenders Organization (04/01/2009) . . . . Part B, Origination Through Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subpart B1, Loan Application Package . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B1-1, Application Package Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B1-1-01, Contents of the Application Package (09/20/2010) . . . . . . . . . . . . . B1-1-02, Blanket Authorization Form (04/01/2009) . . . . . . . . . . . . . . . . . . . . B1-1-03, Allowable Age of Credit Documents (10/30/2009) . . . . . . . . . . . . . Subpart B2, Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1, Mortgage Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.1, LTV, CLTV, HCLTV, and Subordinate Financing . . . . . . . . . . . . . . . B2-1.1-01, Loan-to-Value (LTV) Ratios (03/31/2011) . . . . . . . . . . . . . . B2-1.1-02, Combined Loan-to-Value (CLTV) Ratios (03/31/2011) . . . . . B2-1.1-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.1-04, Subordinate Financing (08/21/2012) . . . . . . . . . . . . . . . . . . . B2-1.2, Loan Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.2-01, Purchase Transactions (12/20/2011) . . . . . . . . . . . . . . . . . . . B2-1.2-02, Limited Cash-Out Refinance Transactions (05/15/2012) . . . . B2-1.2-03, Cash-Out Refinance Transactions (01/31/2012) . . . . . . . . . . B2-1.2-04, Continuity of Obligation (06/28/2011) . . . . . . . . . . . . . . . . . B2-1.2-05, Prohibited Refinancing Practices (02/28/2012) . . . . . . . . . . .

111 112 115 119 119 121 122 124 125 126 126 128 128 132 135 137 137 139 141 142 142 144 145 146 147 148 148 150 152 153 159 159 162 166 169 171

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. iii

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B2-1.2-06, Payoff of Installment Land Contract Requirements (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.3, Loan Amortization Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.3-01, Fully Amortizing Fixed-Rate Mortgages (12/30/2009) . . . . . B2-1.3-02, Adjustable-Rate Mortgages (ARMs) (08/21/2012) . . . . . . . . B2-1.3-03, Convertible ARMs (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . B2-1.3-04, Refinanced Balloon Mortgages (06/26/2012) . . . . . . . . . . . . B2-1.3-05, Growing-Equity Mortgage (GEM) Loans (04/01/2009) . . . . B2-1.3-06, Temporary Interest Rate Buydowns (08/21/2012) . . . . . . . . . B2-1.4, Other Loan Attributes and Related Policies . . . . . . . . . . . . . . . . . . . . B2-1.4-01, Mortgage Loan Limits (03/31/2011) . . . . . . . . . . . . . . . . . . . B2-1.4-02, Mortgage Loan Eligibility (06/26/2012) . . . . . . . . . . . . . . . . B2-1.4-03, Legal Requirements (07/26/2011) . . . . . . . . . . . . . . . . . . . . . B2-1.4-04, Escrow Accounts (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . B2-2, Borrower Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-2-01, General Borrower Eligibility Requirements (06/26/2012) . . . . . . . . B2-2-02, NonU.S. Citizen Borrower Eligibility Requirements (03/02/2010) .............................................................. B2-2-03, Multiple Financed Properties for the Same Borrower (08/21/2012) .............................................................. B2-2-04, Guarantors, Co-Signers, or Non-Occupant Co-Borrowers (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-2-05, Inter Vivos Revocable Trusts (04/01/2009) . . . . . . . . . . . . . . . . . . . B2-2-06, Home-buyer Education and Counseling (03/31/2011) . . . . . . . . . . . B2-3, Occupancy and Property Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-3-01, Occupancy Type Requirements (08/30/2011) . . . . . . . . . . . . . . . . . . B2-3-02, One- to Four-Unit Properties (10/30/2009) . . . . . . . . . . . . . . . . . . . B2-3-03, Co-op Properties (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-3-04, Leasehold Estates (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-3-05, Factory-Built Housing (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . Subpart B3, Underwriting Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-1, Manual Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-1-01, Comprehensive Risk Assessment (08/21/2012) . . . . . . . . . . . . . . . . B3-2, Desktop Underwriter (DU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-2-01, General Information on DU (08/21/2012) . . . . . . . . . . . . . . . . . . . . B3-2-02, Risk Factors Evaluated by DU (08/21/2012) . . . . . . . . . . . . . . . . . . B3-2-03, DU Documentation Requirements (06/26/2012) . . . . . . . . . . . . . . . B3-2-04, Approve/Eligible, EA-I/Eligible, EA-II/Eligible, and EA-III/ Eligible Recommendations (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-2-05, Approve/Ineligible, EA-I/Ineligible, EA-II/Ineligible, and EA-III/ Ineligible Recommendations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . .

173 175 175 177 190 195 198 199 204 204 206 217 220 223 223 226 227 234 236 239 243 243 246 249 254 258 260 262 262 265 266 271 276 277 279

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. iv

August 21, 2012

B3-2-06, Refer with Caution and Refer with Caution/IV Recommendations (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-2-07, Out of Scope Recommendations (04/01/2009) . . . . . . . . . . . . . . . . . B3-2-08, Erroneous Credit Report Data (08/21/2012) . . . . . . . . . . . . . . . . . . B3-2-09, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-2-10, DU Underwriting Findings Report (08/21/2012) . . . . . . . . . . . . . . . B3-3, Income Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.1, Employment and Other Sources of Income . . . . . . . . . . . . . . . . . . . . B3-3.1-01, General Income Information (06/26/2012) . . . . . . . . . . . . . . B3-3.1-02, Standards for Employment Documentation (05/15/2012) . . . B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.1-04, Commission Income (05/15/2012) . . . . . . . . . . . . . . . . . . . . B3-3.1-05, Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . B3-3.1-06, Requirements and Uses of IRS Form 4506-T (05/15/2012) .......................................................... B3-3.1-07, Verbal Verification of Employment (05/15/2012) . . . . . . . . . B3-3.1-08, Rental Income (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.1-09, Other Sources of Income (08/21/2012) . . . . . . . . . . . . . . . . . B3-3.2, Self-Employment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.2-01, Underwriting Factors and Documentation for a SelfEmployed Borrower (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.2-02, Business Structures (03/02/2010) . . . . . . . . . . . . . . . . . . . . . B3-3.2-03, IRS Forms Quick Reference (04/01/2009) . . . . . . . . . . . . . . B3-3.2.1, Documentation Requirements for an Individual . . . . . . . . . . . B3-3.2.2, Documentation Requirements for a Business . . . . . . . . . . . . . B3-3.3, DU Requirements for Income Assessment . . . . . . . . . . . . . . . . . . . . . B3-3.3-01, Documents Used for DU Income Assessment (08/21/2012) .......................................................... B3-3.3-02, Income and Employment Documentation for DU (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.3-03, Income From Rental Property (05/15/2012) . . . . . . . . . . . . . B3-4, Asset Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.1, General Asset Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.1-01, Minimum Reserve Requirements (08/21/2012) . . . . . . . . . . . B3-4.1-02, Interested Party Contributions (IPCs) (04/30/2010) . . . . . . . B3-4.1-03, Types of Interested Party Contributions (IPCs) (06/30/2010) .......................................................... B3-4.2, Verification of Depository Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

280 282 282 284 288 291 292 292 298 300 303 305 307 309 313 320 337 337 340 345 347 358 364 364 366 371 376 377 377 382 384 388

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. v

August 21, 2012

B3-4.2-01, Verification of Deposits and Assets (05/24/2011) . . . . . . . . . B3-4.2-02, Checking and Savings Accounts (04/01/2009) . . . . . . . . . . . B3-4.2-03, Individual Development Accounts (12/01/2010) . . . . . . . . . . B3-4.2-04, Pooled Savings (Community Savings Funds) (04/01/2009) .......................................................... B3-4.2-05, Verification of Assets for Non-U.S. Citizen Borrowers (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3, Verification of Non-Depository Assets . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-02, Trust Accounts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-03, Retirement Accounts (05/24/2011) . . . . . . . . . . . . . . . . . . . . B3-4.3-04, Personal Gifts (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-05, Gifts of Equity (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-06, Donations From Entities (09/20/2010) . . . . . . . . . . . . . . . . . B3-4.3-07, Disaster Relief Grants or Loans (04/01/2009) . . . . . . . . . . . . B3-4.3-08, Employer Assistance (09/20/2010) . . . . . . . . . . . . . . . . . . . . B3-4.3-09, Earnest Money Deposit (08/21/2012) . . . . . . . . . . . . . . . . . . B3-4.3-10, Anticipated Sales Proceeds (04/01/2009) . . . . . . . . . . . . . . . B3-4.3-11, Trade Equity (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-12, Rent Credit for Option to Purchase (04/01/2009) . . . . . . . . . B3-4.3-13, Sweat Equity (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-14, Bridge/Swing Loans (04/01/2009) . . . . . . . . . . . . . . . . . . . . B3-4.3-15, Borrowed Funds Secured by an Asset (10/30/2009) . . . . . . . B3-4.3-16, Credit Card Financing (10/30/2009) . . . . . . . . . . . . . . . . . . . B3-4.3-17, Personal Unsecured Loans (09/20/2010) . . . . . . . . . . . . . . . . B3-4.3-18, Sale of Personal Assets (04/01/2009) . . . . . . . . . . . . . . . . . . B3-4.3-19, Cash Value of Life Insurance (04/01/2009) . . . . . . . . . . . . . . B3-4.3-20, Anticipated Savings and Cash-on-Hand (04/01/2009) . . . . . . B3-4.4, DU Requirements for Asset Assessment . . . . . . . . . . . . . . . . . . . . . . B3-4.4-01, Asset Verification (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . B3-4.4-02, Documentation Requirements (09/20/2010) . . . . . . . . . . . . . B3-5, Credit Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.1, Credit Scores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.1-01, General Requirements for Credit Scores (08/21/2012) . . . . . B3-5.1-02, Determining the Representative Credit Score for a Mortgage Loan (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.2, Credit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.2-01, Requirements for Credit Reports (10/30/2009) . . . . . . . . . . . B3-5.2-02, Types of Credit Reports (09/20/2010) . . . . . . . . . . . . . . . . . .

388 389 390 393 393 395 395 396 397 398 401 402 404 405 408 409 410 412 412 413 414 415 416 417 418 419 420 420 423 428 429 429 433 436 436 440

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. vi

August 21, 2012

B3-5.2-03, Accuracy of Credit Information in a Credit Report (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443 B3-5.3, Traditional Credit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 B3-5.3-01, Number and Age of Accounts (04/01/2009) . . . . . . . . . . . . . 445 B3-5.3-02, Payment History (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 445 B3-5.3-03, Previous Mortgage Payment History (04/01/2009) . . . . . . . . 446 B3-5.3-04, Inquiries: Recent Attempts to Obtain New Credit (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 B3-5.3-05, Credit Utilization (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 448 B3-5.3-06, Authorized Users of Credit(10/30/2009) . . . . . . . . . . . . . . . . 449 B3-5.3-07, Significant Derogatory Credit Events Waiting Periods and Re-establishing Credit (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . 451 B3-5.3-08, Extenuating Circumstances for Derogatory Credit (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 B3-5.3-09, DU Credit Report Analysis (08/21/2012) . . . . . . . . . . . . . . . 457 B3-5.4, Nontraditional Credit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465 B3-5.4-01, Nontraditional Mortgage Credit Reports (08/21/2012) . . . . . 465 B3-5.4-02, Types of Credit (Tiers I, II, and III) (10/30/2009) . . . . . . . . . 468 B3-5.4-03, Verification and Documentation of Alternative Credit (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 B3-6, Liability Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 B3-6-01, General Information on Liabilities (09/20/2010) . . . . . . . . . . . . . . . 473 B3-6-02, Debt-to-Income Ratios (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . 475 B3-6-03, Monthly Housing Expense (08/21/2012) . . . . . . . . . . . . . . . . . . . . . 479 B3-6-04, Qualifying Payment Requirements (08/21/2012) . . . . . . . . . . . . . . . 480 B3-6-05, Monthly Debt Obligations (05/24/2011) . . . . . . . . . . . . . . . . . . . . . 483 B3-6-06, Qualifying Impact of Other Real Estate Owned (08/21/2012) . . . . . 488 B3-6-07, Debts Paid Off At/Prior to Closing (08/21/2012) . . . . . . . . . . . . . . . 492 B3-6-08, DU: Requirements of Liability Assessment (12/01/2010) . . . . . . . . 494 Subpart B4, Underwriting Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 B4-1, Appraisal Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 B4-1.1, General Appraisal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 B4-1.1-01, General Information on Appraisal Requirements (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 B4-1.1-02, Lender Disclosure of Information to Appraisers (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503 B4-1.1-03, Appraiser Selection (12/01/2010) . . . . . . . . . . . . . . . . . . . . . 505 B4-1.1-04, Use of Supervisory or Review Appraisers (10/30/2009) . . . . 508 B4-1.1-05, Field Reviews (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . 510 B4-1.2, Appraisal Document Standards, Report, and Property Inspections. . . 512Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. vii

August 21, 2012

B4-1.2-01, Age of Appraisal or Age of Property Inspection (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 B4-1.2-02, Objective and Unbiased Appraisals (04/01/2009) . . . . . . . . . 514 B4-1.2-03, Definition of Market Value (04/01/2009) . . . . . . . . . . . . . . . 515 B4-1.2-04, Requirements for Postponed Improvements (07/26/2011). . . 516 B4-1.2-05, Requirements for the Appraisal Report (10/25/2011) . . . . . . 520 B4-1.2-06, Appraisal Forms and Report Exhibits (06/26/2012) . . . . . . . 523 B4-1.2-07, Certifications and Statements of Assumptions and Limiting Conditions (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 B4-1.3, Special Appraisal Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531 B4-1.3-01, Special Appraisal Considerations for Properties Affected by Environmental Hazards (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 531 B4-1.3-02, Special Appraisal Considerations for Factory-Built Housing (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533 B4-1.3-03, Special Appraisal Considerations for Modular, Prefabricated, Panelized, or Sectional Housing (04/01/2009) . . . . . . . . . 534 B4-1.3-04, Special Appraisal Considerations for Mixed-Use Properties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535 B4-1.3-05, Special Appraisal Considerations for Properties in Special Assessment Districts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536 B4-1.3-06, Special Appraisal Considerations for Properties Subject to Leasehold Interests (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 B4-1.3-07, Special Appraisal Considerations for Units in Co-op Projects (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 B4-1.3-08, Special DU Property Fieldwork Requirements for Foreclosure and REO Properties (10/30/2009) . . . . . . . . . . . . . . . . . . . . 543 B4-1.4, Appraisal Report Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 B4-1.4-01, Reviewing the Appraisal Report (04/01/2009) . . . . . . . . . . . 545 B4-1.4-02, Appraisal Report Review: Urban Properties (04/01/2009). . 546 B4-1.4-03, Appraisal Report Review: Property Location (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547 B4-1.4-04, Appraisal Report Review: Trend of Neighborhood Property Values, Demand/Supply, and Marketing Time (10/30/2009) . . . . . . . . . . 549 B4-1.4-05, Appraisal Report Review: Site Analysis Parameters (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 B4-1.4-06, Appraisal Report Review: Subject Property Zoning (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 B4-1.4-07, Appraisal Report Review: Site Utilities (04/01/2009) . . . . . . 554 B4-1.4-08, Appraisal Report Review: Off-Site Improvements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. viii

August 21, 2012

B4-1.4-09, Appraisal Report Review: Special Flood Hazard Area (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-10, Appraisal Report Review: Improvements Analysis Overview (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-11, Appraisal Report Review: Conformity of Improvements to Neighborhood (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-12, Appraisal Report Review: Actual and Effective Ages of the Improvements (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-13, Appraisal Report Review: Insulation and Energy Efficiency of the Improvements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-14, Appraisal Report Review: Layout, Floor Plans, and Gross Building and Living Areas (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-15, Appraisal Report Review: Property Condition and Quality of Construction (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-16, Appraisal Report Review: Sales Comparison Approach (06/30/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-17, Appraisal Report Review: Adjustments to Comparable Sales (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-18, Appraisal Report Review: Lender Review of the Adjustment Grid (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-19, Appraisal Report Review: Cost Approach to Value (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-20, Appraisal Report Review: Income Approach to Value (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-1.4-21, Appraisal Report Review: Valuation Analysis and Final Reconciliation (06/30/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2, Project Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.1, General Project Standards and Environmental Hazards . . . . . . . . . . B4-2.1-01, General Information on Project Standards (07/26/2011) . . . . B4-2.1-02, Ineligible Projects (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . B4-2.1-03, Projects with Special Considerations and Project Eligibility Waivers (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.1-04, Project Identification and Document Retention (06/26/2012) .......................................................... B4-2.1-05, Project Insurance Requirements (04/01/2009) . . . . . . . . . . . . B4-2.1-06, Priority of Common Expense Assessments (08/21/2012) . . . B4-2.1-07, Project Standards: Environmental Hazard Assessments (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.1-08, Unacceptable Environmental Conditions (04/01/2009) . . . . . B4-2.1-09, Remedial Actions for Environmental Assessments Below Standards (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

556 557 558 558 559 560 562 570 575 576 579 580 581 584 585 585 588 592 593 594 595 596 599 601

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. ix

August 21, 2012

B4-2.2, Condo Project Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-01, Condo Project Eligibility (06/28/2011) . . . . . . . . . . . . . . . . . B4-2.2-02, Limited Review Process for Attached Condo Units (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-03, Limited Review Process for Detached Condo Units (06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-04, Lender Full Review: General Eligibility Requirements for All Condo Projects (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-05, Lender Full Review: Additional Eligibility Requirements for New Condo Projects and Newly Converted Attached Condo Projects(10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-06, Lender Full Review: Additional Eligibility Requirements for Established Condo Projects(10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-07, Owner-Occupancy Ratio Requirements and Financial Institution-Owned REO Units (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . B4-2.2-08, Project Eligibility Review Service (PERS) (06/26/2012) . . . B4-2.2-09, Condo Project Manager (CPM) Expedited Review for New and Established Condo Projects(06/26/2012) . . . . . . . . . . . . . . . . . . . . . B4-2.2-10, FHA-Approved Condo Review Eligibility (06/26/2012) . . . . B4-2.2-11, Fannie Mae Review of Condo Projects Comprised of Manufactured Homes (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-12, Geographic-Specific Condo Project Considerations (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-13, Condo Project Review and Legal Document Requirements (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.3, PUD Requirements and Cooperative Project Eligibility . . . . . . . . . . . B4-2.3-01, PUD: Lender Full Review Requirements (06/28/2011) . . . . . B4-2.3-02, Cooperative Project Eligibility (06/28/2011) . . . . . . . . . . . . . B4-2.3-03, Legal Requirements for Co-op Projects (04/01/2009) . . . . . . B4-2.3-04, Loan Eligibility for Co-op Share Loans (03/31/2011) . . . . . . Subpart B5, Unique Eligibility and Underwriting Considerations . . . . . . . . . . . . . . . . . B5-1, High-Balance Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-1.1, High-Balance Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-1.1-01, High-Balance Mortgage Loan Eligibility and Underwriting (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-1.1-02, High-Balance Pricing, Mortgage Insurance, Special Feature Codes, and Delivery Limitations (06/26/2012) . . . . . . . . . . . . . . . . . . . . B5-2, DU-Only Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.1, Interest-Only Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.1-01, Mortgages with an Interest-Only Feature (08/21/2012) . . . . .

603 603 605 607 609 612 616 619 620 624 627 628 630 632 636 636 637 643 648 652 653 654 654 656 659 660 660

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. x

August 21, 2012

B5-2.1-02, Interest-Only Pricing, Mortgage Insurance and Special Feature Codes (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.2, Manufactured Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.2-01, Manufactured Housing (04/01/2009) . . . . . . . . . . . . . . . . . . . B5-2.2-02, Manufactured Housing Loan Eligibility (07/26/2011) . . . . . . B5-2.2-03, Manufactured Housing Underwriting Requirements (07/26/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.2-04, Manufactured Housing Appraisal Requirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.2-05, Manufactured Housing Pricing, Mortgage Insurance, and Special Feature Code Requirements (12/30/2009) . . . . . . . . . . . . . . . . . B5-2.2-06, Manufactured Housing Legal Considerations (04/01/2009) .......................................................... B5-3, Construction and Energy Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.1, Conversion of Construction-to-Permanent Financing . . . . . . . . . . . . . B5-3.1-01, Conversion of Construction-to-Permanent Financing: Overview (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . B5-3.1-03, Conversion of Construction-to-Permanent Financing: TwoClosing Transactions (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2, Homestyle Renovation Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2-01, HomeStyle Renovation Mortgage: Lender Eligibility (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2-02, HomeStyle Renovation Mortgages: Borrower Eligibility (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2-03, HomeStyle Renovation Mortgages: Underwriting and Collateral Considerations (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2-04, HomeStyle Renovation Mortgages: Costs and Escrow Accounts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2-05, HomeStyle Renovation Mortgages: Completion (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2-06, HomeStyle Construction Contract, Construction Loan Agreement, and Lien Waiver (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . B5-3.3, Mortgage Loans with Energy Improvement Features on Existing Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.3-01, Mortgage Loans with Energy Improvement Features on Existing Properties (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.4, Property Assessed Clean Energy Loans . . . . . . . . . . . . . . . . . . . . . . . B5-3.4-01, Property Assessed Clean Energy Loans (12/01/2010) . . . . . . B5-4, Geographic-Specific Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

663 665 665 667 671 677 682 684 692 693 693 694 698 700 700 702 705 708 710 711 715 715 720 720 723

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xi

August 21, 2012

B5-4-01, Texas Section 50(a)(6) Mortgages (03/29/2010) . . . . . . . . . . . . . . . B5-4-02, Texas Section 50(a)(6) Mortgage Eligibility (03/29/2010) . . . . . . . . B5-4-03, Texas Section 50(a)(6) Underwriting and Collateral Considerations (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-4-04, Texas Section 50(a)(6) Mortgage Delivery Considerations (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-4-05, Texas Section 50(a)(6) Mortgage Legal Considerations (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-4-06, Native American Conventional Lending Initiative (NACLI) (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-4-07, Disaster-Related Limited Cash-Out Refinance Flexibilities (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5, Community Seconds, Community Land Trusts, DU Refi Plus and Refi Plus, and Loans with Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.1, Community Seconds and Community Land Trusts . . . . . . . . . . . . . . B5-5.1-01, Community Seconds Mortgages (10/30/2009) . . . . . . . . . . . B5-5.1-02, Community Seconds Loan Eligibility (08/21/2012) . . . . . . . B5-5.1-03, Community Seconds Delivery Considerations (06/26/2012) .......................................................... B5-5.1-04, Community Land Trusts (06/26/2012) . . . . . . . . . . . . . . . . . B5-5.2, DU Refi Plus and Refi Plus Mortgage Loans . . . . . . . . . . . . . . . . . . . B5-5.2-01, DU Refi Plus and Refi Plus Eligibility (08/21/2012) . . . . . . . B5-5.2-02, DU Refi Plus and Refi Plus Underwriting Considerations (05/15/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-03, DU Refi Plus and Refi Plus Property Valuation and Project Standards (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-04, DU Refi Plus and Refi Plus Closing, Pricing, and Delivery (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.3, Loans with Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.3-01, Loans With Resale Restrictions: Lender Eligibility (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.3-02, Loans with Resale Restrictions: Loan and Borrower Eligibility (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.3-03, Loans with Resale Restrictions: Underwriting and Collateral Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.3-04, Loans with Resale Restrictions: Legal Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.3-05, Loans with Resale Restrictions: Delivery Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.3-06, Loans with Resale Restrictions: Pricing, Mortgage Insurance and Special Feature Codes (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . .

723 726 730 732 733 735 736 740 741 741 743 750 752 760 760 777 790 796 799 799 801 802 805 806 807

Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xii

August 21, 2012

B5-5.3-07, Massachusetts Resale Restriction Loan Eligibility Requirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 808 B5-6, MyCommunityMortgage (MCM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 810 B5-6-01, MyCommunityMortgage (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . 810 B5-6-02, MyCommunityMortgage Loan and Borrower Eligibility (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812 B5-6-03, MyCommunityMortgage Underwriting Methods and Requirements (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 817 B5-6-04, MyCommunityMortgage: Additional Eligibility and Underwriting Requirements for Community Solutions and Community HomeChoice (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 823 B5-6-05, MyCommunityMortgage Pricing, Mortgage Insurance, and Special Feature Codes (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 Subpart B6, Government Programs Eligibility and Underwriting Requirements . . . . . . 831 B6-1, Government Insured and Guaranteed Mortgages . . . . . . . . . . . . . . . . . . . . . 832 B6-1-01, General Government Mortgage Requirements (06/26/2012) . . . . . . 833 B6-1-02, Eligible FHA-Insured Mortgage Loans (06/28/2011) . . . . . . . . . . . . 836 B6-1-03, Eligible VA-Guaranteed Mortgages (10/30/2009) . . . . . . . . . . . . . . 838 B6-1-04, Eligible HUD-Guaranteed Section 184 Mortgages (06/26/2012). . . 839 B6-1-05, Eligible RD-Guaranteed Mortgages (06/26/2012) . . . . . . . . . . . . . . 841 B6-1-06, Government Mortgage Loan Guaranty or Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 842 Subpart B7, Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843 B7-1, Mortgage Insurance/Loan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844 B7-1-01, Provision of Mortgage Insurance (06/26/2012) . . . . . . . . . . . . . . . . 844 B7-1-02, Mortgage Insurance Coverage Requirements (06/26/2012) . . . . . . . 848 B7-1-03, Lender-Purchased Mortgage Insurance (05/27/2010) . . . . . . . . . . . . 850 B7-1-04, Financed Borrower-Purchased Mortgage Insurance (06/26/2012). . 851 B7-1-05, Government Mortgage Loan Guaranty or Insurance (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 855 B7-2, Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 858 B7-2-01, Provision of Title Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . . . 858 B7-2-02, Title Insurer Requirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . 859 B7-2-03, General Title Insurance Coverage (05/24/2011) . . . . . . . . . . . . . . . . 860 B7-2-04, Special Title Insurance Coverage Considerations (06/26/2012) . . . . 862 B7-2-05, Title Exceptions and Impediments(08/12/2010) . . . . . . . . . . . . . . . . 867 B7-3, Hazard and Flood Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871 B7-3-01, Hazard Insurance Policy Requirements (12/20/2011) . . . . . . . . . . . 871 B7-3-02, General Hazard Insurance Coverage (06/28/2011) . . . . . . . . . . . . . . 875 B7-3-03, Determining the Amount of Required Hazard Insurance Coverage (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xiii

August 21, 2012

B7-3-04, Hazard Coverage for Units in Project Developments (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 878 B7-3-05, Additional Insurance Coverage (04/01/2009) . . . . . . . . . . . . . . . . . . 885 B7-3-06, Evidence of Hazard Insurance (12/20/2011) . . . . . . . . . . . . . . . . . . 888 B7-3-07, Flood Insurance Coverage Requirements (08/21/2012) . . . . . . . . . . 891 B7-3-08, Mortgagee Clause for Hazard and Flood Insurance (05/24/2011) . 896 . B7-4, Additional Project Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899 B7-4-01, Liability Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 899 B7-4-02, Fidelity Insurance (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 B7-4-03, Rent Loss Insurance for Co-op Projects (04/01/2009) . . . . . . . . . . . 902 Subpart B8, Closing: Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 903 B8-1, General Information on Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 904 B8-1-01, Publication of Legal Documents (06/28/2011) . . . . . . . . . . . . . . . . . 904 B8-2, Security Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 907 B8-2-01, Security Instruments for Conventional Mortgages (04/30/2010) . . . 907 B8-2-02, Special-Purpose Security Instruments (04/30/2010) . . . . . . . . . . . . . 910 B8-2-03, Signature Requirements for Security Instruments (04/01/2009) . . . . 914 B8-3, Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 915 B8-3-01, Notes for Conventional Mortgages (06/26/2012) . . . . . . . . . . . . . . . 915 B8-3-02, Special Note Provisions and Language Requirements (03/02/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 917 B8-3-03, Signature Requirements for Notes (04/01/2009) . . . . . . . . . . . . . . . 919 B8-3-04, Note Endorsement (12/20/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920 B8-4, Riders and Addenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 923 B8-4-01, Riders and Addenda (05/27/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . 923 B8-5, Special-Purpose Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 927 B8-5-01, General Information on Special-Purpose Legal Documents (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 927 B8-5-02, Inter Vivos Revocable Trusts (04/01/2009) . . . . . . . . . . . . . . . . . . . 928 B8-5-03, Texas Section 50(a)(6) Mortgage Documentation (03/29/2010) . . . . 931 B8-5-04, HomeStyle Mortgage Documentation Requirements (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 932 B8-5-05, Sample Legal Documents (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . 933 B8-6, Mortgage Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 936 B8-6-01, General Information (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . 936 B8-6-02, Mortgage Assignment to Fannie Mae (04/01/2009) . . . . . . . . . . . . . 937 B8-6-03, Authorized Use of Intervening and Blanket Assignments (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 939 B8-7, Mortgage Electronic Registration System (MERS) . . . . . . . . . . . . . . . . . . . . 942 B8-7-01, Mortgage Electronic Registration Systems (MERS) (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xiv

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Part C, Selling, Securitizing, and Delivering Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946 Subpart C1, General Information on Execution Options and Loan Delivery . . . . . . . . . 948 C1-1, Execution Options Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949 C1-1-01, Execution Options (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . 949 C1-2, Loan Delivery Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 954 C1-2-01, General Information on Delivering Loan Data and Documents (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955 C1-2-02, Loan Data and Documentation Delivery Requirements (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 957 C1-2-03, Third-Party Security Interests Overview (10/25/2011) . . . . . . . . . . . 960 C1-2-04, Bailee Letters (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 961 C1-3, Loan Remittance Types Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966 C1-3-01, General Information on Remittance Types (12/30/2009) . . . . . . . . . 966 Subpart C2, Whole Loan Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 969 C2-1, Mandatory and Best Efforts Commitments to Sell Whole Loans . . . . . . . . . 970 C2-1.1, Mandatory Commitments to Sell Whole Loans . . . . . . . . . . . . . . . . . 971 C2-1.1-01, Mandatory Commitment Process (10/30/2009) . . . . . . . . . . . 971 C2-1.1-02, Pricing, Fees, and Pricing Adjustments (04/01/2009) . . . . . . 972 C2-1.1-03, Mandatory Commitment Terms, Amounts, Periods and Other Requirements (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975 C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 978 C2-1.1-05, Servicing Fees (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . 980 C2-1.1-06, Accrued Interest Payments for Regularly Amortizing Mortgages (06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 981 C2-1.1-07, Standard ARM and Converted ARM Resale Commitments (04/09/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 982 C2-1.2, Best Efforts Commitments to Sell Whole Loans . . . . . . . . . . . . . . . . 985 C2-1.2-01, Best Efforts Commitment Process (10/25/2011) . . . . . . . . . . 985 C2-1.2-02, Best Efforts Commitment Pricing, Periods, and Fees (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 986 C2-1.2-03, Best Efforts Commitment Terms, Amounts, and Other Requirements (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 988 C2-1.2-04, Servicing Execution Tool in eCommitONE (10/25/2011). . . 991 C2-2, Whole Loan Deliveries to and Purchasing by Fannie Mae . . . . . . . . . . . . . 994 C2-2-01, General Requirements for Good Delivery of Whole Loans (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 995 C2-2-02, Documentation Requirements for Whole Loan Deliveries (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 998 C2-2-03, General Information on Whole Loan Purchasing Policies (06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1000Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xv

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C2-2-04, Timing of Distribution of Whole Loan Purchase Proceeds (06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C2-2-05, Whole Loan Purchasing Process (06/28/2011) . . . . . . . . . . . . . . . . C2-2-06, Authorization to Transfer Funds (04/01/2009) . . . . . . . . . . . . . . . . C2-2-07, Purchase Payee Codes (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . C2-2-08, Triparty Wiring Instructions (04/01/2009) . . . . . . . . . . . . . . . . . . . Subpart C3, Mortgage-Backed Securities (MBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-1, MBS Program Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-1-01, General Information About Fannie Maes MBS Program (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-1-02, Preparing to Pool Loans into MBS (10/30/2009) . . . . . . . . . . . . . . C3-2, Entering Into an MBS Pool Purchase Contract . . . . . . . . . . . . . . . . . . . . . C3-2-01, Determining Eligibility for Loans Pooled into MBS (10/25/2011) ............................................................. C3-2-02, Establishing the Contract Amount (12/30/2009) . . . . . . . . . . . . . . C3-2-03, Selecting a Servicing Option (04/01/2009) . . . . . . . . . . . . . . . . . . C3-2-04, MBS Remittance Type and Selecting a Remittance Cycle (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-2-05, Obtaining a Pool Purchase Contract (06/26/2012) . . . . . . . . . . . . . C3-3, MBS Guaranty Fees and Guaranty Fee Buyups and Buydowns . . . . . . . . . C3-3-01, Determining and Remitting Guaranty Fees (10/25/2011) . . . . . . . . C3-3-02, Accessing Buyup and Buydown Ratios and Calculating Payments or Charges (02/28/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-3-03, Buying Up and Buying Down the Guaranty Fee for MBS (02/28/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-4, Pooling Loans into Fixed-Rate MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-4-01, Term-Related Fixed-Rate Mortgage Pooling Parameters (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-4-02, Commingling Fixed-Rate Mortgages in MBS (03/02/2010) . . . . . C3-5, Pooling Loans into ARM MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-5-01, Creating Stated-Structure ARM MBS (08/30/2011) . . . . . . . . . . . . C3-5-02, Stated-Structure ARM MBS Pooling Process (04/01/2009) . . . . . . C3-5-03, Creating Weighted-Average ARM MBS (04/01/2009) . . . . . . . . . . C3-5-04, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin (04/01/2009) . . . . . . . . . . . . . . . . . . C3-5-05, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Weighted-Average MBS Margin (04/01/2009) . . . . . . . . C3-5-06, Pooling ARMs with a Conversion Option (04/01/2009) . . . . . . . . C3-5-07, Uniform Hybrid ARM MBS (04/01/2009) . . . . . . . . . . . . . . . . . . . C3-5-08, Commingling ARMs in MBS (04/01/2009) . . . . . . . . . . . . . . . . . . C3-6, Pooling Loans into Fannie Majors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1002 1003 1006 1008 1010 1013 1014 1015 1019 1021 1021 1025 1026 1027 1028 1031 1031 1033 1036 1038 1038 1041 1044 1045 1047 1052 1053 1056 1059 1061 1063 1064

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C3-6-01, Parameters for Pooling Loans Into Fannie Majors (06/26/2012) . . 1064 C3-7, Delivering and Trading MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1068 C3-7-01, Establishing an MBS Trading Account (10/25/2011) . . . . . . . . . . . 1069 C3-7-02, Initiating an MBS Sale (10/25/2011) . . . . . . . . . . . . . . . . . . . . . . . 1075 C3-7-03, Making Good Delivery (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . 1078 C3-7-04, Delivering Data and Documents (06/26/2012) . . . . . . . . . . . . . . . . 1081 C3-7-05, Confirming Presettlement Information (04/01/2009) . . . . . . . . . . . 1086 C3-7-06, Settling the Trade (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1089 C3-7-07, Sale of Fannie Mae Securities to Third Parties (04/01/2009) . . . . . 1092 Part D, Ensuring Quality Control (QC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1096 Subpart D1, Lender QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1097 D1-1, Lender QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1098 D1-1-01, General Information on Lender QC Process (01/31/2012) . . . . . . . 1098 D1-1-02, Lender QC Process (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . 1100 D1-1-03, Lender QC Staff and Outsourcing of the QC Process (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1104 D1-2, Lender Prefunding QC Mortgage Review . . . . . . . . . . . . . . . . . . . . . . . . . . 1107 D1-2-01, General Information on Lender Prefunding QC Review Process (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1107 D1-3, Lender Post-Closing QC Mortgage Review . . . . . . . . . . . . . . . . . . . . . . . . 1111 D1-3-01, General Information on Lender Post-Closing QC Review Process (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1111 D1-3-02, Lender Mortgage Selection Process for Post-Closing QC Mortgage Reviews (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 D1-3-03, Lender Post-Closing QC Review of Underwriting Decisions and Documentation (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1115 D1-3-04, Lender Post-Closing QC Review of Data Integrity (01/31/2012). . 1119 D1-3-05, Lender Post-Closing QC Review of Appraisers and Appraisals (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1121 D1-3-06, Lender Post-Closing QC Review of Closing Documents (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1123 D1-3-07, Lender Post-QC Review Reporting, Record Retention, and Audit (01/31/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1127 Subpart D2, Fannie Mae QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1130 D2-1, General Information on Fannie Mae QC Process . . . . . . . . . . . . . . . . . . . . 1131 D2-1-01, General Information on Fannie Mae QC Reviews (04/01/2009) . . 1131 D2-1-02, Fannie Mae QC File Request and Submission Requirements (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1132 D2-1-03, Fannie Mae QC Report of Findings (04/01/2009) . . . . . . . . . . . . . 1133 D2-1-04, Rebuttal of Fannie Mae QC Review Decisions (04/01/2009) . . . . 1134 Part E, Quick Reference Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1135Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xvii

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E-1, Selling Guide Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1-01, References to eFannieMae.com (08/21/2012) . . . . . . . . . . . . . . . . . . . . . E-1-02, Acronyms and Abbreviations (08/21/2012) . . . . . . . . . . . . . . . . . . . . . . . E-1-03, List of Contacts (02/28/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1-04, List of Lender Contracts (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2, Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2-01, Borrowers Authorization for Counseling (04/01/2009) . . . . . . . . . . . . . . E-2-02, Document Submission Packages for All Mortgages (12/20/2011) . . . . . . E-2-03, Suggested Format for Phase I Environmental Hazard Assessments (06/28/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2-04, Master Agreement Terms and Conditions (08/21/2012) . . . . . . . . . . . . . . E-2-05, Revocable Trust Rider (Sample Language) (04/01/2009) . . . . . . . . . . . . E-2-06, Signature Requirements for Mortgages to Inter Vivos Revocable Trusts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2-07, Post-Closing Mortgage Loan File Documentation (06/26/2012) . . . . . . . E-3, Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-3-01, Glossary of Fannie Mae Terms: A (01/31/2012) . . . . . . . . . . . . . . . . . . . E-3-02, Glossary of Fannie Mae Terms: B (12/30/2009) . . . . . . . . . . . . . . . . . . . E-3-03, Glossary of Fannie Mae Terms: C (03/31/2011) . . . . . . . . . . . . . . . . . . . E-3-04, Glossary of Fannie Mae Terms: D (01/31/2012) . . . . . . . . . . . . . . . . . . . E-3-05, Glossary of Fannie Mae Terms: E (06/28/2011) . . . . . . . . . . . . . . . . . . . E-3-06, Glossary of Fannie Mae Terms: F (08/21/2012) . . . . . . . . . . . . . . . . . . . E-3-07, Glossary of Fannie Mae Terms: G (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-08, Glossary of Fannie Mae Terms: H (06/28/2011) . . . . . . . . . . . . . . . . . . . E-3-09, Glossary of Fannie Mae Terms: I (04/01/2009) . . . . . . . . . . . . . . . . . . . . E-3-10, Glossary of Fannie Mae Terms: J (04/01/2009) . . . . . . . . . . . . . . . . . . . . E-3-11, Glossary of Fannie Mae Terms: K (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-12, Glossary of Fannie Mae Terms: L (01/31/2012) . . . . . . . . . . . . . . . . . . . E-3-13, Glossary of Fannie Mae Terms: M (06/26/2012) . . . . . . . . . . . . . . . . . . . E-3-14, Glossary of Fannie Mae Terms: N (06/28/2011) . . . . . . . . . . . . . . . . . . . E-3-15, Glossary of Fannie Mae Terms: O (08/21/2012) . . . . . . . . . . . . . . . . . . . E-3-16, Glossary of Fannie Mae Terms: P (12/01/2010) . . . . . . . . . . . . . . . . . . . E-3-17, Glossary of Fannie Mae Terms: Q (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-18, Glossary of Fannie Mae Terms: R (06/28/2011) . . . . . . . . . . . . . . . . . . . E-3-19, Glossary of Fannie Mae Terms: S (01/27/2011) . . . . . . . . . . . . . . . . . . . . E-3-20, Glossary of Fannie Mae Terms: T (10/25/2011) . . . . . . . . . . . . . . . . . . . E-3-21, Glossary of Fannie Mae Terms: U (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-22, Glossary of Fannie Mae Terms: V (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-23, Glossary of Fannie Mae Terms: W (12/20/2011) . . . . . . . . . . . . . . . . . . . E-3-24, Glossary of Fannie Mae Terms: X (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-25, Glossary of Fannie Mae Terms: Y (04/01/2009) . . . . . . . . . . . . . . . . . . .

1136 1136 1138 1141 1146 1149 1149 1150 1153 1162 1168 1170 1172 1176 1177 1180 1183 1189 1192 1195 1200 1201 1203 1206 1206 1206 1209 1217 1218 1219 1223 1224 1228 1233 1235 1235 1236 1236 1237

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E-3-26, Glossary of Fannie Mae Terms: Z (04/01/2009) . . . . . . . . . . . . . . . . . . . 1237

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PrefaceContent Organization The Selling Guide is organized into parts that reflect how lenders generally categorize various aspects 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 Subpart 1: Lender QC Process Subpart 2: Fannie Mae QC Process Part E, Quick Reference MaterialsPrinted copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xx

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Chapter 1: Selling Guide Resources Chapter 2: Exhibits Chapter 3: Glossary Part A through Part D are structured hierarchicallyby subpart, chapter, section, and topicto state Fannie Mae requirements logically and with increasing levels of detail, so that readers can quickly locate a subject of interest and find desired content. Part E includes a variety of support componentsincluding Selling Guide Resources, Exhibits, and Glossary. The Table of Contents provides additional details on the content. To learn more about the content included in a particular part and how content in that part is organized, see the Introduction provided 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 this Selling Guide can help you to navigate the Guide more easily and to recognize where a particular topic is contained within the content hierarchy. Consider the numbering system identifier for the topic Personal Gifts: B2-5.3.2-01 Personal Gifts If you know that each: Part Subpart Chapter Section Level Topic has a corresponding has a corresponding has a corresponding has a corresponding has a corresponding Letter (uppercase beginning with A) Numeral (one-digit beginning with 1) Numeral (one-digit beginning with 1) Numeral (one-digit beginning with 1) Numeral (two-digit beginning with 01)

Then you can use the numbering system identifier (B2-5.3.2-01) to map the location and level of content detail of this topic within the Selling Guide. For example, here is how the numbering system identifier for this topic maps to the content levels:

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As shown above, the part and subpart are combined as B2-. The chapter, section, and level are combined as 5.3.2-. And the topic is added as 01. Keep in mind that not all parts have subparts, not all chapters have sections, and not all sections have topics. For example, the topic Obtaining a Master Agreement has the numbering system identifier A2-7-04 (which does not include sections or levels):

Note: As topics are added, updated and deleted with each publication of the Selling Guide, the chapters, sections and topic identifiers will change accordingly (For example, B2-5.3.2-01 Personal Gifts). Use of Icons to Identify Types of Content The online and PDF versions of this Selling Guide use various icons to help you quickly identify the type of content: Icon Description Overview topics provide the logic behind the arrangement of a part, subpart, or chapter.Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xxii

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Icon

Description Policy topics instruct you about what must or must not be done (for example, laws and rules). Process and Procedure topics present actions that must be followed over time or that must be performed in a particular instance. Supporting Information topics present concepts, facts, structures, or background information that corroborate or expand upon a topic. Glossary topics present key terms and their definitions.

Terms and General Conventions Lenders may contract to sell mortgages to Fannie Mae using either of the two following delivery methods. (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 as whole mortgages (to hold in our portfolio or to include later in MBS pools that we form). We remit 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 convey to an MBS trust under the terms of our MBS program, and we deliver to the lender (or its designee) mortgage pass-through certificates representing interests in the mortgages. These pass-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 MBS pools. In cases where specific requirements apply to one type of transaction, we specify the delivery method. Also, for the sake of brevity, the term loan is used to mean mortgage loan unless specified otherwise. 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, impose other additional requirements, or rescind or amend any and all material set forth in this Selling Guide. The lender must make sure that its staff is thoroughly familiar with the content and requirements of this Selling Guide, as it now exists and as it may be changed from time to time.Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xxiii

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Notification of Changes and Updates Fannie Mae notifies lenders of changes and updates to our Selling Guide policies and procedures as communicated in Announcements, Notices and Lender Lettersin two ways: By posting the documents on eFannieMae.com and the AllRegs website. By email notification of these postings to lenders that subscribe to Fannie Maes email subscription service and select the option Selling News. Fannie Mae does not mail printed copies of Selling Guide updates, announcements, notices or lender letters. Lenders that want printed copies may download and print PDF files of the documents posted on eFannieMae.com. Contents of the Selling Guide The Selling Guide contains the current policies and procedures and all announcements issued to date have been incorporated. Forms, Exhibits, and Content Incorporated by Reference Information about the specific forms that lenders must use in fulfilling the requirements contained in the Selling Guide is given in context within the Guide. Lenders can access the actual forms in several ways: On eFannieMae.com via the Single Family Forms and Documents page, which provides a complete list of forms as interactive PDF files. On the AllRegs website via embedded links in the free electronic version of the Guide (and through 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 in their entirety on eFannieMae.com. In addition, from time to time we issue product-specific guides or directives, which are incorporated into this Selling Guide by reference. Such productspecific informationwhether it currently exists or is subsequently createdand the exhibits referenced in the Guide now or later are legally a part of this Selling Guide (and the Servicing Guide). Technical Issues In the event of technical difficulties or system failures with eFannieMae.com, with delivery of the Selling News option of Fannie Maes email subscription service, or with the AllRegs website, users may contact the following resources:Printed copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. xxiv

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For eFannieMae.com and Fannie Maes email subscription service, use the Contact Us or Legal links on the website to ask questions or obtain more information. For the AllRegs website, submit an email support request from the website or contact AllRegs Customer Service at (800) 848-4904. When Questions Arise This Selling Guide explains how to become an approved Fannie Mae lender and the procedures for normal and routine selling matters. If a lender feels that a situation is not covered or a procedure may not apply because of certain circumstances, the lenders principal contact should be its lead Fannie Mae regional office (see E-1-03, List of Contacts) unless specifically instructed otherwise within this Guide. We specify when a lender may need to contact other groups within Fannie Mae, such as the Capital Markets Sales Desk and others. For contact information on the regional offices and other key contacts, refer to E-1-03, List of Contacts.

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Part A, Doing Business with Fannie MaeDoing Business with Fannie MaeIntroduction This part describes the requirements a lender must satisfy to become a Fannie Mae-approved seller and servicer of residential home mortgage loans. This part contains the following subparts: Subpart A1, Approval Qualification This subpart describes the requirements for becoming an approved Fannie Mae lender and the lender approval process. Subpart A2, Lender Contract This subpart describes some of the Contractual Obligations a lender takes on when it becomes an approved Fannie Mae lender. (See A2-1-01, Contractual Obligations for Lenders.) It includes information on Fannie Maes statutory requirements, representations and warranties a lender makes when delivering mortgages to Fannie Mae, the limited waiver of representations and warranties for mortgages underwritten with Desktop Underwriter (DU), and the policies and procedures associated with obtaining a Master Agreement. It also describes the parameters within which Fannie Mae may impose compensatory fees or formal sanctions and require loan repurchases or substitutions. It articulates some of the circumstances under which the Lender Contract can be terminated and the consequences of any breach of such obligations. This subpart also includes Fannie Maes policies on the establishment, maintenance, retention, and examination of mortgage files and records, and the use of Fannie Maes name and trademark. Subpart A3, Getting Started With Fannie Mae This subpart includes the procedures for obtaining the technology applications and completing the compliance certifications required in order to transact business with Fannie Mae. It describes policies on concurrent servicing transfers and working with third parties such as mortgage brokers, loan correspondents, quality control firms, document custodians, and subservicers. ItPrinted copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. 1

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addresses Fannie Maes requirements for its lender customers in the areas of data integrity, fraud prevention, and fidelity bond and errors and omissions coverage. Subpart A4, Maintaining Lender Eligibility This subpart contains the reporting requirements to which lenders must adhere in order to maintain their eligibility to transact business with Fannie Mae. In This Part This part contains the following subparts: Subpart Subpart Subpart Subpart A1, Approval Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 A2, Lender Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 A3, Getting Started With Fannie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 A4, Maintaining Lender Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

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Subpart A1, Approval QualificationApproval QualificationIntroduction This subpart describes the requirements for becoming an approved Fannie Mae lender and the lender approval process. 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 of LenderApplication and Approval of LenderIntroduction This chapter describes the eligibility and application requirements for lenders seeking 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 (06/26/2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

A1-1-01, Application and Approval of Lender (06/26/2012)Introduction This topic contains general information on Fannie Maes lender approval requirements, including: General Information Eligibility Application Requirements Application Review Fee Special Lender Approval

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General Information Lenders must be approved to do business with Fannie Mae. Fannie Mae determines a lenders qualifications by reviewing the lenders financial condition, organization, staffing, servicing experience, and other relevant factors. Fannie Maes standard approval is for the sale and/or servicing of single-family loans (excluding those loans delivered under a negotiated contract). Lenders must obtain special approval to sell and service certain mortgages with unique requirements, such as loans secured by co-op shares or HomeStyle renovation mortgages. Eligibility Approval or rejection of a lenders application is at Fannie Maes sole discretion and is based on Fannie Maes business judgment with respect to the totality of the lenders circumstances. At a minimum, to be considered for approval to sell and service residential first mortgages, a lender must: have as its principal business purpose, the origination, selling, and/or servicing of residential mortgages; have demonstrated the ability to originate, sell, and/or service the types of mortgages for which approval is being requested; have adequate facilities and staff experienced in originating, selling, and/or servicing the types of mortgages for which approval is being requested; be duly organized, validly existing, properly licensed (in good standing) or otherwise authorized to conduct its business in each of the jurisdictions in which it originates, sells, and services residential mortgages; have a net worth of at least $2.5 million, plus a dollar amount that represents 0.25% of the unpaid principal balance of any Fannie Mae portfolio it is servicing. A lenders Fannie Mae portfolio includes mortgages or participation interests in MBS pools, first and second whole mortgages held in Fannie Maes portfolio, Fannie Maes participation interests in first or second mortgages in participation pools held in its portfolio, and multifamily mortgages. Lender net worth, as defined and calculated by Fannie Mae, is the lenders Total Equity Capital as determined by Generally Accepted Accounting Principles (GAAP), less goodwill and other intangible assets (excluding mortgage servicing rights) and, based on Fannie Maes assessment of associated risks, a possible deduction of affiliate receivables and pledgedPrinted copies may not be the most current version. For the most current version, go to the online version at http://www.efanniemae.com/sf/guides/ssg/. 5

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assets net of associated liabilities (hereinafter referred to as Lender Adjusted Net Worth). Based on specific circumstances, a lender may be required to satisfy other financial standards or additional net worth and liquidity eligibility criteria. SeeA4-2-01, Net Worth and Liquidity Requirements for additional information on Fannie Maes net worth requirements for approved lenders; have internal audit and management control systems to evaluate and monitor the overall quality of its loan production and servicing; have written procedures for the approval and management of vendors and other third-party service providers; have a fidelity bond and an errors and omissions policy in effect and agree to modify them as necessary to meet Fannie Mae requirements; satisfy any additional eligibility criteria Fannie Mae imposes. Such additional criteria may apply either to individual lenders, all lenders that are seeking approval to sell and/or service certain types of mortgages,