Selling GuideFannie Mae Single Family

March 31, 2011

Selling Guide: Fannie Mae Single FamilyPublished March 31, 2011

March 31, 2011

Fannie Mae Copyright Notice(1) 2011 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 Web sites 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 Web site 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 Web site 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.

March 31, 2011

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 (03/29/2010) . . . . . . . . . . . . . . . 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 (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . 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 (12/30/2009) . . . . . . . . . . . . . . . . . . . . 20 A2-2.1-04, Limited Waiver of Contractual Warranties for Mortgages Submitted to DU (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 A2-2.1-05, Invalidation of Limited Waiver of Representation and Warranties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 A2-3, Lender Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 A2-3.1, Lender Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 A2-3.1-01, Lender Breach of Contract (04/01/2009) . . . . . . . . . . . . . . . . 31 A2-3.1-02, Sanctions, Suspensions, and Terminations (04/01/2009) . . . . . 33 A2-3.2, Loan Repurchases Requested by Fannie Mae . . . . . . . . . . . . . . . . . . . 36 A2-3.2-01, Loan Repurchases Requested by Fannie Mae (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 A2-3.2-02, Repurchases Resulting From Warranty Violations (08/12/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 A2-3.2-03, No Repurchase of Performing Mortgages for Breach of Contractual Selling Warranties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 42 A2-3.3, Compensatory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 A2-3.3-01, Compensatory Fees (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . 44 A2-4, Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 A2-4-01, Master Agreement Overview (04/01/2009) . . . . . . . . . . . . . . . . . . . . 47 A2-4-02, Terms of a Master Agreement (04/01/2009) . . . . . . . . . . . . . . . . . . . 49 A2-4-03, Variances and Special Provisions (04/01/2009) . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 A2-5.1, Establishment and Maintenance of Mortgage Files and Records . . . . . 53 A2-5.1-01, Overview of Mortgage Files and Records (04/01/2009) . . . . . 53 A2-5.1-02, Individual Mortgage Loan Files (08/12/2010) . . . . . . . . . . . . 54 A2-5.1-03, Electronic Records, Signature, and Transactions (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 A2-5.1-04, Lenders or Document Custodians Electronic Transactions With Third Parties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 (09/20/2010) . . . . . . . . . . . . . . . . . . . 76 A3-3, Third-Party Lending Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 A3-3-01, Outsourcing of Mortgage Processing and Third-Party Originations (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 A3-3-02, Concurrent Servicing Transfers (04/01/2009) . . . . . . . . . . . . . . . . . . 86 A3-3-03, Subservicing (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 A3-3-04, Document Custodians (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . 89 A3-3-05, Custody of Mortgage Documents (10/30/2009) . . . . . . . . . . . . . . . . . 98 A3-3-06, Fannie Mae's Designated Document Custodian(03/02/2010) . . . . . . 101 A3-3.1, Other Document Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 A3-3.1-01, Documentation of the Document Custodian Relationship(10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 A3-3.1-02, Document Custodian Arrangement/Relationship (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 A3-3.1-03, Annual Certification of Document Custodians (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 A3-3.2, Document Custodian Electronic Transactions . . . . . . . . . . . . . . . . . . 107Printed 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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A3-3.2-01, Document Custodian Electronic Transactions (04/01/2009) .......................................................... A3-4, Lending Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A3-4-01, Confidentiality of Information/Conflict of Interest Parameters (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A3-4-02, Data Quality and Integrity (04/01/2009) . . . . . . . . . . . . . . . . . . . . . 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 (04/01/2009) . . . . . . . . . . . . . . . . . . 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, Acceptable Forms of Verification (04/01/2009) . . . . . . . . . . . . . . . . B1-1-03, Blanket Authorization Form (04/01/2009) . . . . . . . . . . . . . . . . . . . . B1-1-04, 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 (09/20/2010) . . . . . . . . . . . . . . . . . . . B2-1.2, Loan Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.2-01, Purchase Transactions (03/29/2010) . . . . . . . . . . . . . . . . . . .

107 109 109 110 112 115 115 117 118 120 121 122 122 123 123 127 130 132 132 134 136 137 137 139 140 141 142 143 144 144 146 148 149 154 154

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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B2-1.2-02, Limited Cash-Out Refinance Transactions (12/01/2010) . . . . B2-1.2-03, Cash-Out Refinance Transactions (03/31/2011) . . . . . . . . . . B2-1.2-04, Continuity of Obligation (05/27/2010) . . . . . . . . . . . . . . . . . B2-1.2-05, Prohibited Refinancing Practices (04/01/2009) . . . . . . . . . . . B2-1.2-06, Payoff of Installment Land Contract Requirements (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.3, Loan/Amortization Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-1.3-01, Loan/Amortization Types Overview (04/30/2010) . . . . . . . . B2-1.3-02, Fully Amortizing Fixed-Rate Mortgages (12/30/2009) . . . . . B2-1.3-03, Adjustable-Rate Mortgages (ARMs) (09/20/2010) . . . . . . . . B2-1.3-04, Convertible ARMs (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . B2-1.3-05, Refinanced Balloon Mortgages (04/30/2010) . . . . . . . . . . . . B2-1.3-06, Growing-Equity Mortgage (GEM) Loans (04/01/2009) . . . . B2-1.3-07, Temporary Interest Rate Buydowns (12/30/2009) . . . . . . . . . B2-1.4, Other Loan Attributes and Related Policies . . . . . . . . . . . . . . . . . . . . B2-1.4-01, General Mortgage Terms and Conditions (03/31/2011) . . . . . B2-1.4-02, Higher-Priced Loans (04/01/2009) . . . . . . . . . . . . . . . . . . . . B2-1.4-03, Capitalized Mortgages (04/01/2009) . . . . . . . . . . . . . . . . . . . B2-1.4-04, Open-End Advances (04/01/2009) . . . . . . . . . . . . . . . . . . . . B2-1.4-05, Rental Property Leases (04/01/2009) . . . . . . . . . . . . . . . . . . B2-1.4-06, Non-standard Payment Collection Options (01/27/2011) . . . B2-2, Borrower Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-2-01, General Borrower Eligibility Requirements (03/29/2010) . . . . . . . . B2-2-02, NonU.S. Citizen Borrower Eligibility Requirements (03/02/2010) .............................................................. B2-2-03, Multiple Financed Properties for the Same Borrower (04/30/2010) .............................................................. B2-2-04, Guarantors, Co-Signers, or Non-Occupant Co-Borrowers (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 (10/30/2009) . . . . . . . . . . . . . . . . . B2-3-02, One- to Four-Unit Properties (10/30/2009) . . . . . . . . . . . . . . . . . . . B2-3-03, Co-op Properties (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-3-04, Leasehold Estates (08/12/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . B2-3-05, Factory-Built Housing (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . Subpart B3, Underwriting Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-1, Manual Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-1-01, Comprehensive Risk Assessment (10/30/2009) . . . . . . . . . . . . . . . . B3-2, Desktop Underwriter (DU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

156 160 162 164 165 167 167 167 169 183 188 192 193 198 198 208 211 211 212 212 214 214 217 218 223 225 227 231 231 234 236 241 245 247 248 248 252

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

March 31, 2011

B3-2-01, General Information on DU (04/01/2009) . . . . . . . . . . . . . . . . . . . . B3-2-02, Risk Factors Evaluated by DU (04/30/2010) . . . . . . . . . . . . . . . . . . B3-2-03, DU Documentation Requirements (04/01/2009) . . . . . . . . . . . . . . . B3-2-04, Approve/Eligible, EA-I/Eligible, EA-II/Eligible, and EA-III/ Eligible Recommendations (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-2-05, Approve/Ineligible, EA-I/Ineligible, EA-II/Ineligible, and EA-III/ Ineligible Recommendations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-2-06, Refer/Eligible and Refer/Ineligible Recommendations (12/30/2009) .............................................................. B3-2-07, Refer with Caution/IV Recommendations (03/02/2010) . . . . . . . . . B3-2-08, Out of Scope Recommendations (04/01/2009) . . . . . . . . . . . . . . . . . B3-2-09, Erroneous Credit Report Data (03/02/2010) . . . . . . . . . . . . . . . . . . B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-2-11, DU Underwriting Findings Report (03/02/2010) . . . . . . . . . . . . . . . B3-3, Income Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.1, General Information on Income Assessment . . . . . . . . . . . . . . . . . . . B3-3.1-01, Requirements and Uses of IRS Form 4506-T (04/30/2010) .......................................................... B3-3.1-02, Verbal Verification of Employment (09/20/2010) . . . . . . . . . B3-3.1-03, NonU.S. Citizen Borrowers (12/01/2010) . . . . . . . . . . . . . . B3-3.1-04, Using Nontaxable Income to Adjust the Borrowers Gross Income (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.2, Salary, Commissions, and Other Sources of Income . . . . . . . . . . . . . B3-3.2-01, Salary and Commission Income (12/01/2010) . . . . . . . . . . . B3-3.2-02, Verification of Salary and Commission Income (12/01/2010) .......................................................... B3-3.2-03, Commission Income (09/20/2010) . . . . . . . . . . . . . . . . . . . . B3-3.2-04, Bonus and Overtime Income (09/20/2010) . . . . . . . . . . . . . . B3-3.2-05, Part-Time, Second-Job, Multiple-Job, and Seasonal Income (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.2-06, Military Income(04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . B3-3.2-07, Rental Income (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.2-08, Other Sources of Income (12/01/2010) . . . . . . . . . . . . . . . . . B3-3.3, Self-Employment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.3-01, Underwriting Factors and Documentation for a SelfEmployed Borrower (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-3.3-02, Business Structures (03/02/2010) . . . . . . . . . . . . . . . . . . . . . B3-3.3-03, IRS Forms Quick Reference (04/01/2009) . . . . . . . . . . . . . . B3-3.3.1, Documentation Requirements for an Individual . . . . . . . . . . . B3-3.3.2, Documentation Requirements for a Business . . . . . . . . . . . . .

253 255 260 262 263 264 267 269 269 271 274 277 278 278 280 282 283 285 285 289 291 292 294 296 297 302 317 317 320 325 327 339

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

March 31, 2011

B3-3.4, DU Requirements for Income Assessment . . . . . . . . . . . . . . . . . . . . . B3-3.4-01, Documents Used for DU Income Assessment (12/01/2010) .......................................................... B3-3.4-02, Income and Employment Documentation and Verbal Verification Requirements for DU (12/01/2010) . . . . . . . . . . . . . . . . . . . B3-3.4-03, Income From Rental Property (03/31/2011) . . . . . . . . . . . . . B3-4, Asset Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.1, General Asset Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.1-01, Minimum Reserve Requirements (09/20/2010) . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.2-01, Verification of Deposits and Assets (04/01/2009) . . . . . . . . . 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 (10/30/2009) . . . . . . . . . . . . . . . . . . . . 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, Sales Contract Deposit (04/01/2009) . . . . . . . . . . . . . . . . . . . B3-4.3-10, Anticipated Sales Proceeds (04/01/2009) . . . . . . . . . . . . . . . B3-4.3-11, Trade Equity (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-12, Credit for Value of Lot (04/01/2009) . . . . . . . . . . . . . . . . . . B3-4.3-13, Rent Credit for Option to Purchase (04/01/2009) . . . . . . . . . B3-4.3-14, Sweat Equity (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . B3-4.3-15, Bridge/Swing Loans (04/01/2009) . . . . . . . . . . . . . . . . . . . . B3-4.3-16, Borrowed Funds Secured by an Asset (10/30/2009) . . . . . . . B3-4.3-17, Credit Card Financing (10/30/2009) . . . . . . . . . . . . . . . . . . . B3-4.3-18, Personal Unsecured Loans (09/20/2010) . . . . . . . . . . . . . . . . B3-4.3-19, Sale of Personal Assets (04/01/2009) . . . . . . . . . . . . . . . . . .

345 345 347 353 358 359 359 365 368 372 372 373 374 376 377 378 378 379 380 381 384 385 387 388 391 392 393 395 396 397 398 398 400 401 401

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

March 31, 2011

B3-4.3-20, Cash Value of Life Insurance (04/01/2009) . . . . . . . . . . . . . . B3-4.3-21, Anticipated Savings and Cash-on-Hand (04/01/2009) . . . . . . B3-4.4, DU Requirements for Asset Assessment . . . . . . . . . . . . . . . . . . . . . . B3-4.4-01, Asset Verification (04/30/2010) . . . . . . . . . . . . . . . . . . . . . . . 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 (04/30/2010) . . . . . B3-5.1-02, Determining the Representative Credit Score for a Mortgage Loan (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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) . . . . . . . . . . . . . . . . . . B3-5.2-03, Accuracy of Credit Information in a Credit Report (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.3, Traditional Credit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.3-01, Number and Age of Accounts (04/01/2009) . . . . . . . . . . . . . B3-5.3-02, Payment History (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . B3-5.3-03, Previous Mortgage Payment History (04/01/2009) . . . . . . . . B3-5.3-04, Inquiries: Recent Attempts to Obtain New Credit (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.3-05, Credit Utilization (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . B3-5.3-06, Authorized Users of Credit(10/30/2009) . . . . . . . . . . . . . . . . B3-5.3-07, Significant Derogatory Credit Events Waiting Periods and Re-establishing Credit (06/30/2010) . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.3-08, Extenuating Circumstances for Derogatory Credit (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.3-09, DU Credit Report Analysis (01/27/2011) . . . . . . . . . . . . . . . B3-5.4, Nontraditional Credit History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-5.4-01, Nontraditional Mortgage Credit Reports (10/30/2009) . . . . . B3-5.4-02, Types of Credit (Tiers I, II, and III) (10/30/2009) . . . . . . . . . B3-5.4-03, Verification and Documentation of Alternative Credit (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-6, Liability Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-6-01, General Information on Liabilities (09/20/2010) . . . . . . . . . . . . . . . B3-6-02, Debt-to-Income Ratios (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . B3-6-03, Monthly Housing Expense (10/30/2009) . . . . . . . . . . . . . . . . . . . . . B3-6-04, Borrowers Monthly Housing Expense for Qualifying Purposes (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B3-6-05, Monthly Debt Obligations (09/20/2010) . . . . . . . . . . . . . . . . . . . . . B3-6-06, Qualifying Impact of Other Real Estate Owned (10/30/2009) . . . . .

402 403 404 404 406 411 412 412 416 418 418 422 425 427 427 427 428 430 430 431 433 438 439 447 447 449 452 455 455 457 461 462 465 470

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/. vii

March 31, 2011

B3-6-07, Debts Paid Off At/Prior to Closing (09/20/2010) . . . . . . . . . . . . . . . 475 B3-6-08, DU: Requirements of Liability Assessment (12/01/2010) . . . . . . . . 477 Subpart B4, Underwriting Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 B4-1, Appraisal Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480 B4-1.1, General Appraisal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 B4-1.1-01, General Information on Appraisal Requirements (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 B4-1.1-02, Lender Disclosure of Information to Appraisers (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 B4-1.1-03, Appraiser Selection (12/01/2010) . . . . . . . . . . . . . . . . . . . . . 487 B4-1.1-04, Use of Supervisory or Review Appraisers (10/30/2009) . . . . 490 B4-1.1-05, Field Reviews (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . 492 B4-1.2, Appraisal Document Standards, Report, and Property Inspections. . . 494 B4-1.2-01, Age of Appraisal or Age of Property Inspection (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494 B4-1.2-02, Objective and Unbiased Appraisals (04/01/2009) . . . . . . . . . 496 B4-1.2-03, Definition of Market Value (04/01/2009) . . . . . . . . . . . . . . . 497 B4-1.2-04, Requirements for Postponed Improvements (12/01/2010). . . 498 B4-1.2-05, Requirements for the Appraisal Report (04/01/2009) . . . . . . 502 B4-1.2-06, Appraisal Forms and Report Exhibits (06/30/2010) . . . . . . . 504 B4-1.2-07, Certifications and Statements of Assumptions and Limiting Conditions (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509 B4-1.3, Special Appraisal Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 B4-1.3-01, Special Appraisal Considerations for Properties Affected by Environmental Hazards (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 B4-1.3-02, Special Appraisal Considerations for Factory-Built Housing (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 B4-1.3-03, Special Appraisal Considerations for Modular, Prefabricated, Panelized, or Sectional Housing (04/01/2009) . . . . . . . . . 514 B4-1.3-04, Special Appraisal Considerations for Mixed-Use Properties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515 B4-1.3-05, Special Appraisal Considerations for Properties in Special Assessment Districts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516 B4-1.3-06, Special Appraisal Considerations for Properties Subject to Leasehold Interests (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 B4-1.3-07, Special Appraisal Considerations for Units in Co-op Projects (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 B4-1.3-08, Special DU Property Fieldwork Requirements for Foreclosure and REO Properties (10/30/2009) . . . . . . . . . . . . . . . . . . . . 523 B4-1.4, Appraisal Report Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 B4-1.4-01, Reviewing the Appraisal Report (04/01/2009) . . . . . . . . . . . 525Printed 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

March 31, 2011

B4-1.4-02, Appraisal Report Review: Urban Properties (04/01/2009). . 526 B4-1.4-03, Appraisal Report Review: Property Location (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 B4-1.4-04, Appraisal Report Review: Trend of Neighborhood Property Values, Demand/Supply, and Marketing Time (10/30/2009) . . . . . . . . . . 529 B4-1.4-05, Appraisal Report Review: Site Analysis Parameters (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530 B4-1.4-06, Appraisal Report Review: Subject Property Zoning (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 B4-1.4-07, Appraisal Report Review: Site Utilities (04/01/2009) . . . . . . 534 B4-1.4-08, Appraisal Report Review: Off-Site Improvements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535 B4-1.4-09, Appraisal Report Review: Special Flood Hazard Area (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536 B4-1.4-10, Appraisal Report Review: Improvements Analysis Overview (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537 B4-1.4-11, Appraisal Report Review: Conformity of Improvements to Neighborhood (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 B4-1.4-12, Appraisal Report Review: Actual and Effective Ages of the Improvements (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 B4-1.4-13, Appraisal Report Review: Insulation and Energy Efficiency of the Improvements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 B4-1.4-14, Appraisal Report Review: Layout, Floor Plans, and Gross Building and Living Areas (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . 540 B4-1.4-15, Appraisal Report Review: Property Condition of the Improvements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542 B4-1.4-16, Appraisal Report Review: Sales Comparison Approach (06/30/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 B4-1.4-17, Appraisal Report Review: Adjustments to Comparable Sales (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 B4-1.4-18, Appraisal Report Review: Lender Review of the Adjustment Grid (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 B4-1.4-19, Appraisal Report Review: Cost Approach to Value (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 B4-1.4-20, Appraisal Report Review: Income Approach to Value (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555 B4-1.4-21, Appraisal Report Review: Valuation Analysis and Final Reconciliation (06/30/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556 B4-2, Project Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 B4-2.1, General Project Standards and Environmental Hazards . . . . . . . . . . 560 B4-2.1-01, General Information on Project Standards (08/12/2010) . . . . 560Printed 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

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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 (04/01/2009) .......................................................... B4-2.1-05, Project Insurance Requirements (04/01/2009) . . . . . . . . . . . . B4-2.1-06, Priority of Common Expense Assessments (04/01/2009) . . . 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2, Condo Project Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-01, Condo Project Eligibility (01/27/2011) . . . . . . . . . . . . . . . . . B4-2.2-02, Limited Review Process for Attached Condo Units (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-03, Limited Review Process for Detached Condo Units (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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) (12/01/2010) . . . B4-2.2-09, Condo Project Manager (CPM) Expedited Review for New and Established Condo Projects(10/30/2009) . . . . . . . . . . . . . . . . . . . . . B4-2.2-10, FHA-Approved Condo Review Eligibility (12/30/2009) . . . . B4-2.2-11, Fannie Mae Review of Condo Projects Comprised of Manufactured Homes (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-12, Geographic-Specific Condo Project Considerations (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.2-13, Condo Project Review and Legal Document Requirements(10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B4-2.3, PUD Requirements and Cooperative Project Eligibility . . . . . . . . . . . B4-2.3-01, PUD: Lender Full Review Requirements(04/01/2009) . . . . . B4-2.3-02, Cooperative Project Eligibility (08/12/2010) . . . . . . . . . . . . . B4-2.3-03, Legal Requirements for Co-op Projects (04/01/2009) . . . . . .

563 567 568 569 570 571 574 576 578 578 580 582 584 587 592 594 595 599 602 604 605 607 612 612 613 618

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March 31, 2011

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 (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-1.1-02, High-Balance Pricing, Mortgage Insurance, Special Feature Codes, and Delivery Limitations (12/30/2009) . . . . . . . . . . . . . . . . . . . . B5-2, DU-Only Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.1, Interest-Only Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.1-01, Mortgages with an Interest-Only Feature (09/20/2010) . . . . . B5-2.1-02, Interest-Only Pricing, Mortgage Insurance and Special Feature Codes (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.2, Expanded Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.2-01, Expanded Approval (12/30/2009) . . . . . . . . . . . . . . . . . . . . . B5-2.2-02, Expanded Approval Pricing, Mortgage Insurance, and Special Feature Codes (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.2-03, Expanded Approval Quality Control (12/30/2009) . . . . . . . . B5-2.3, Manufactured Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.3-01, Manufactured Housing (04/01/2009) . . . . . . . . . . . . . . . . . . . B5-2.3-02, Manufactured Housing Loan Eligibility (04/01/2009) . . . . . . B5-2.3-03, Manufactured Housing Underwriting Method and Requirements (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.3-04, Manufactured Housing Appraisal Requirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-2.3-05, Manufactured Housing Pricing, Mortgage Insurance and Special Feature Code Requirements (12/30/2009) . . . . . . . . . . . . . . . . . B5-2.3-06, 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 (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.1-02, Conversion of Construction-to-Permanent Financing Loan Eligibility (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.1-03, Conversion of Construction-to-Permanent Financing Documentation Requirements (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . B5-3.2, Homestyle Renovation Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-3.2-01, HomeStyle Renovation Mortgage: Lender Eligibility (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

624 628 629 630 630 633 635 636 636 639 641 641 643 644 646 646 648 652 659 664 666 674 675 675 676 680 682 682

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

March 31, 2011

B5-3.2-02, HomeStyle Renovation Mortgages: Borrower Eligibility (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 B5-3.2-03, HomeStyle Renovation Mortgages: Underwriting and Collateral Considerations (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . 687 B5-3.2-04, HomeStyle Renovation Mortgages: Costs and Escrow Accounts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 B5-3.2-05, HomeStyle Renovation Mortgages: Completion (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692 B5-3.2-06, HomeStyle Construction Contract, Construction Loan Agreement, and Lien Waiver (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . 693 B5-3.3, Mortgage Loans with Energy Improvement Features on Existing Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 B5-3.3-01, Mortgage Loans with Energy Improvement Features on Existing Properties (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697 B5-3.4, Property Assessed Clean Energy Loans . . . . . . . . . . . . . . . . . . . . . . . 702 B5-3.4-01, Property Assessed Clean Energy Loans (12/01/2010) . . . . . . 702 B5-4, Geographic-Specific Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705 B5-4-01, Texas Section 50(a)(6) Mortgages (03/29/2010) . . . . . . . . . . . . . . . 705 B5-4-02, Texas Section 50(a)(6) Mortgage Eligibility (03/29/2010) . . . . . . . . 708 B5-4-03, Texas Section 50(a)(6) Underwriting and Collateral Considerations (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 712 B5-4-04, Texas Section 50(a)(6) Mortgage Delivery Considerations (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714 B5-4-05, Texas Section 50(a)(6) Mortgage Legal Considerations (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715 B5-4-06, Native American Conventional Lending Initiative (NACLI) (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717 B5-4-07, Disaster-Related Limited Cash-Out Refinance Flexibilities (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 718 B5-5, Community Seconds, Community Land Trusts, DU Refi Plus and Refi Plus, and Loans with Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722 B5-5.1, Community Seconds, Community Land Trusts, and DU Refi Plus and Refi Plus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723 B5-5.1-01, Community Seconds Mortgages (10/30/2009) . . . . . . . . . . . 723 B5-5.1-02, Community Seconds Loan Eligibility (09/20/2010) . . . . . . . 725 B5-5.1-03, Community Seconds Delivery Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 732 B5-5.1-04, Community Land Trusts (03/31/2011) . . . . . . . . . . . . . . . . . 733 B5-5.1-05, DU Refi Plus and Refi Plus Eligibility (03/31/2011) . . . . . . . 741 B5-5.1-06, DU Refi Plus and Refi Plus Underwriting Considerations (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755Printed 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

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B5-5.1-07, DU Refi Plus and Refi Plus Property Valuation and Project Standards (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.1-08, DU Refi Plus and Refi Plus Closing, Pricing, Delivery, and Quality Control (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2, Loans with Resale Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-01, Loans With Resale Restrictions: Lender Eligibility (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-02, Loans with Resale Restrictions: Loan and Borrower Eligibility (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-03, Loans with Resale Restrictions: Underwriting and Collateral Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-04, Loans with Resale Restrictions: Legal Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-05, Loans with Resale Restrictions: Delivery Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-06, Loans with Resale Restrictions: Pricing, Mortgage Insurance and Special Feature Codes (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . B5-5.2-07, Massachusetts Resale Restriction Loan Eligibility Requirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-6, MyCommunityMortgage (MCM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-6-01, MyCommunityMortgage (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . B5-6-02, MyCommunityMortgage Loan and Borrower Eligibility (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-6-03, MyCommunityMortgage Underwriting Methods and Requirements (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-6-04, MyCommunityMortgage: Additional Eligibility and Underwriting Requirements for Community Solutions and Community HomeChoice (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-6-05, MyCommunityMortgage Pricing, Mortgage Insurance, and Special Feature Codes (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B5-6-06, MyCommunityMortgage: High-Cost Areas and FannieNeighbors (09/20/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subpart B6, Government Programs Eligibility and Underwriting Requirements . . . . . . B6-1, Government Insured and Guaranteed Mortgages . . . . . . . . . . . . . . . . . . . . . B6-1-01, General Government Mortgage Requirements (05/27/2010) . . . . . . B6-1-02, Eligible FHA-Insured Mortgage Loans (10/30/2009) . . . . . . . . . . . B6-1-03, Eligible VA-Guaranteed Mortgages (10/30/2009) . . . . . . . . . . . . . . B6-1-04, Eligible HUD-Guaranteed Section 184 Mortgages (10/30/2009). . . B6-1-05, Eligible RD-Guaranteed Mortgages (10/30/2009) . . . . . . . . . . . . . . B6-1-06, Government Mortgage Loan Guaranty or Insurance (04/01/2009) ..............................................................

770 775 778 778 780 781 784 785 786 787 789 789 791 795 801 807 808 811 812 813 816 818 819 820 821

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B6-2, FHA Home Equity Conversion Mortgages (HECMs) . . . . . . . . . . . . . . . . . . 823 B6-2-01, HECM Overview and Eligible Borrowers (04/01/2009) . . . . . . . . . 823 B6-2-02, HECM Eligible Properties (04/01/2009) . . . . . . . . . . . . . . . . . . . . . 825 B6-2-03, HECM Eligible Mortgages (10/30/2009) . . . . . . . . . . . . . . . . . . . . . 826 B6-2-04, HECM Mortgage Amount Limits (04/01/2009) . . . . . . . . . . . . . . . . 828 B6-2-05, HECM Mortgage Terms (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . 829 B6-2-06, HECM Payment Plan Options (04/01/2009) . . . . . . . . . . . . . . . . . . 830 B6-2-07, HECM Closing Considerations (04/01/2009) . . . . . . . . . . . . . . . . . . 831 Subpart B7, Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 834 B7-1, Mortgage Insurance/Loan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835 B7-1-01, Provision of Mortgage Insurance (03/31/2011) . . . . . . . . . . . . . . . . 835 B7-1-02, Mortgage Insurance Coverage Requirements (05/27/2010) . . . . . . . 838 B7-1-03, Lender-Purchased Mortgage Insurance (05/27/2010) . . . . . . . . . . . . 840 B7-1-04, Financed Borrower-Purchased Mortgage Insurance (12/01/2010). . 841 B7-1-05, Government Mortgage Loan Guaranty or Insurance (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844 B7-2, Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 848 B7-2-01, Provision of Title Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . . . 848 B7-2-02, Title Insurer Requirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . 849 B7-2-03, General Title Insurance Coverage (04/01/2009) . . . . . . . . . . . . . . . . 850 B7-2-04, Special Title Insurance Coverage Considerations (01/27/2011) . . . . 852 B7-2-05, Title Exceptions and Impediments(08/12/2010) . . . . . . . . . . . . . . . . 857 B7-3, Hazard and Flood Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 861 B7-3-01, Provision of Hazard Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . 861 B7-3-02, Hazard Insurance Policy Requirements (04/01/2009) . . . . . . . . . . . 862 B7-3-03, General Hazard Insurance Coverage (04/01/2009) . . . . . . . . . . . . . . 864 B7-3-04, Determining the Amount of Required Hazard Insurance Coverage (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 866 B7-3-05, Hazard Coverage for Units in Project Developments (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 868 B7-3-06, Additional Insurance Coverage (04/01/2009) . . . . . . . . . . . . . . . . . . 873 B7-3-07, Evidence of Hazard Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . 876 B7-3-08, Flood Insurance Coverage Requirements (12/30/2009) . . . . . . . . . . 878 B7-3-09, Mortgagee Clause for Hazard and Flood Insurance(03/02/2010). . . 884 B7-4, Additional Project Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 886 B7-4-01, Liability Insurance (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 886 B7-4-02, Fidelity Insurance (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 887 B7-4-03, Rent Loss Insurance for Co-op Projects (04/01/2009) . . . . . . . . . . . 889 Subpart B8, Closing: Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890 B8-1, General Information on Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 891 B8-1-01, Publication of Legal Documents (04/01/2009) . . . . . . . . . . . . . . . . . 891Printed 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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B8-2, Security Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-2-01, Security Instruments for Conventional Mortgages (04/30/2010) . . . B8-2-02, Special-Purpose Security Instruments (04/30/2010) . . . . . . . . . . . . . B8-2-03, Signature Requirements for Security Instruments (04/01/2009) . . . . B8-3, Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-3-01, Notes for Conventional Mortgages (04/01/2009) . . . . . . . . . . . . . . . B8-3-02, Special Note Provisions and Language Requirements (03/02/2010) .............................................................. B8-3-03, Signature Requirements for Notes (04/01/2009) . . . . . . . . . . . . . . . B8-3-04, Note Endorsement (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-4, Riders and Addenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-4-01, Riders and Addenda (05/27/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . B8-5, Special-Purpose Legal Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-5-01, General Information on Special-Purpose Legal Documents (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-5-02, Inter Vivos Revocable Trusts (04/01/2009) . . . . . . . . . . . . . . . . . . . B8-5-03, Texas Section 50(a)(6) Mortgage Documentation (03/29/2010) . . . . B8-5-04, HomeStyle Mortgage Documentation Requirements (12/30/2009) .............................................................. B8-5-05, Sample Legal Documents (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . B8-6, Mortgage Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-6-01, General Information (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . B8-6-02, Mortgage Assignment to Fannie Mae (04/01/2009) . . . . . . . . . . . . . B8-6-03, Authorized Use of Intervening and Blanket Assignments (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B8-7, Mortgage Electronic Registration System (MERS) . . . . . . . . . . . . . . . . . . . . B8-7-01, Mortgage Electronic Registration Systems (MERS) (10/30/2009) .............................................................. Part C, Selling, Securitizing, and Delivering Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subpart C1, General Information on Execution Options and Loan Delivery . . . . . . . . . C1-1, Execution Options Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1-1-01, Execution Options (04/30/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . C1-2, Loan Delivery Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1-2-01, General Information on Delivering Loan Data and Documents (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1-2-02, Loan Data and Documentation Delivery Requirements (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1-2-03, Third-Party Security Interests Overview (10/30/2009) . . . . . . . . . . . C1-2-04, Bailee Letters (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1-3, Loan Remittance Types Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1-3-01, General Information on Remittance Types (12/30/2009) . . . . . . . . .

894 894 897 901 902 902 904 906 907 910 910 914 914 915 918 919 920 923 923 924 926 929 929 933 935 936 936 940 941 943 945 947 952 952

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Subpart C2, Whole Loan Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955 C2-1, Mandatory and Best Efforts Commitments to Sell Whole Loans . . . . . . . . . 956 C2-1.1, Mandatory Commitments to Sell Whole Loans . . . . . . . . . . . . . . . . . 957 C2-1.1-01, Mandatory Commitment Process (10/30/2009) . . . . . . . . . . . 957 C2-1.1-02, Pricing, Fees, and Pricing Adjustments (04/01/2009) . . . . . . 958 C2-1.1-03, Mandatory Commitment Terms, Amounts, Periods and Other Requirements (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 961 C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 964 C2-1.1-05, Servicing Fees (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . 966 C2-1.1-06, Accrued Interest Payments for Regularly Amortizing Mortgages and HECM Loans (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . 967 C2-1.1-07, Standard ARM and Converted ARM Resale Commitments (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 968 C2-1.1-08, Negotiated Commitments (12/30/2009) . . . . . . . . . . . . . . . . 970 C2-1.2, Best Efforts Commitments to Sell Whole Loans . . . . . . . . . . . . . . . . 973 C2-1.2-01, Best Efforts Commitment Process (10/30/2009) . . . . . . . . . . 973 C2-1.2-02, Best Efforts Commitment Pricing, Fees, and Pricing Adjustments (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 974 C2-1.2-03, Best Efforts Commitment Terms, Amounts, Periods, and Other Requirements (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975 C2-2, Whole Loan Deliveries to and Purchasing by Fannie Mae . . . . . . . . . . . . . 977 C2-2-01, General Requirements for Good Delivery of Whole Loans (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 978 C2-2-02, Documentation Requirements for Whole Loan Deliveries (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 981 C2-2-03, General Information on Whole Loan Purchasing Policies (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 983 C2-2-04, Timing of Distribution of Whole Loan Purchase Proceeds (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 987 C2-2-05, Whole Loan Purchasing Process (03/31/2011) . . . . . . . . . . . . . . . . . 988 C2-2-06, Authorization to Transfer Funds (04/01/2009) . . . . . . . . . . . . . . . . . 991 C2-2-07, Purchase Payee Codes (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . 993 C2-2-08, Triparty Wiring Instructions (04/01/2009) . . . . . . . . . . . . . . . . . . . . 995 Subpart C3, Mortgage-Backed Securities (MBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 998 C3-1, MBS Program Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 999 C3-1-01, General Information About Fannie Maes MBS Program (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1000 C3-1-02, Preparing to Pool Loans into MBS (10/30/2009) . . . . . . . . . . . . . . 1004 C3-2, Entering Into an MBS Pool Purchase Contract . . . . . . . . . . . . . . . . . . . . . 1006Printed 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/. xvi

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C3-2-01, Determining Eligibility for Loans Pooled into MBS (12/01/2010) ............................................................. 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 (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-2-05, Obtaining a Pool Purchase Contract (12/30/2009) . . . . . . . . . . . . . C3-3, MBS Guaranty Fees and Guaranty Fee Buyups and Buydowns . . . . . . . . . C3-3-01, Determining and Remitting Guaranty Fees (04/01/2009) . . . . . . . . C3-3-02, Accessing Buyup and Buydown Ratios and Calculating Payments or Charges (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-3-03, Buying Up or Buying Down the Guaranty Fee for Fixed-Rate Mortgage MBS (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-3-04, Buying Up or Buying Down the Guaranty Fee for ARM MBS (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-4, Pooling Loans into Fixed-Rate MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-4-01, Term-Related Fixed-Rate Mortgage Pooling Parameters (12/30/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 (04/01/2009) . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-6-01, Parameters for Pooling Loans Into Fannie Majors (03/31/2011) . . C3-7, Delivering and Trading MBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-7-01, Establishing an MBS Trading Account (10/30/2009) . . . . . . . . . . . C3-7-02, Initiating an MBS Sale (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . C3-7-03, Making Good Delivery (10/30/2009) . . . . . . . . . . . . . . . . . . . . . . . C3-7-04, Delivering Data and Documents (10/30/2009) . . . . . . . . . . . . . . . . C3-7-05, Confirming Presettlement Information (04/01/2009) . . . . . . . . . . . C3-7-06, Settling the Trade (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . C3-7-07, Sale of Fannie Mae Securities to Third Parties (04/01/2009) . . . . . Part D, Ensuring Quality Control (QC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1006 1010 1011 1012 1014 1017 1018 1020 1022 1022 1024 1024 1026 1029 1030 1032 1037 1038 1041 1044 1046 1048 1049 1049 1053 1054 1060 1063 1066 1072 1074 1078 1082

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Subpart D1, Lender QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1083 D1-1, Lender QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1084 D1-1-01, General Information on Lender QC Process (03/29/2010) . . . . . . . 1084 D1-1-02, Lender QC Process (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . 1086 D1-1-03, Lender QC Staff and Outsourcing of the QC Process (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1091 D1-2, Lender Prefunding QC Mortgage Review . . . . . . . . . . . . . . . . . . . . . . . . . . 1093 D1-2-01, General Information on Lender Prefunding QC Review Process (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1093 D1-3, Lender Post-Closing QC Mortgage Review . . . . . . . . . . . . . . . . . . . . . . . . 1097 D1-3-01, General Information on Lender Post-Closing QC Review Process (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1097 D1-3-02, Lender Mortgage Selection Process for Post-Closing QC Mortgage Reviews (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1098 D1-3-03, Lender Post-Closing QC Review of Underwriting Documents (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1101 D1-3-04, Lender Post-Closing QC Review of Data Integrity (03/29/2010). . 1103 D1-3-05, Lender Post-Closing QC Review of Appraisers and Appraisals (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1106 D1-3-06, Lender Post-Closing QC Review of Underwriting Decisions (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1108 D1-3-07, Lender Post-Closing QC Review of Closing Documents (03/31/2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1111 D1-3-08, Lender Post-QC Review Reporting, Record Retention, and Audit (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1114 Subpart D2, Fannie Mae QC Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1116 D2-1, General Information on Fannie Mae QC Process . . . . . . . . . . . . . . . . . . . . 1117 D2-1-01, General Information on Fannie Mae QC Reviews (04/01/2009) . . 1117 D2-1-02, Fannie Mae QC File Request and Submission Requirements (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1118 D2-1-03, Fannie Mae QC Report of Findings (04/01/2009) . . . . . . . . . . . . . 1119 D2-1-04, Rebuttal of Fannie Mae QC Review Decisions (04/01/2009) . . . . 1120 Part E, Quick Reference Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1121 E-1, Selling Guide Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1122 E-1-01, References to eFannieMae.com (10/30/2009) . . . . . . . . . . . . . . . . . . . . . 1122 E-1-02, Acronyms and Abbreviations (01/27/2011) . . . . . . . . . . . . . . . . . . . . . . . 1124 E-1-03, List of Contacts (12/01/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1127 E-1-04, List of Lender Contracts (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1132 E-2, Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1136 E-2-01, Borrowers Authorization for Counseling (04/01/2009) . . . . . . . . . . . . . . 1136 E-2-02, Document Submission Packages for All Mortgages (04/30/2010) . . . . . . 1137Printed 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/. xviii

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E-2-03, Suggested Format for Phase I Environmental Hazard Assessments (04/01/2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-2-04, Master Agreement Terms and Conditions (04/01/2009) . . . . . . . . . . . . . . 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(12/01/2010) . . . . . . . . E-3, Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-3-01, Glossary of Fannie Mae Terms: A (04/01/2009) . . . . . . . . . . . . . . . . . . . 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 (12/01/2010) . . . . . . . . . . . . . . . . . . . E-3-05, Glossary of Fannie Mae Terms: E (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-06, Glossary of Fannie Mae Terms: F (12/01/2010) . . . . . . . . . . . . . . . . . . . E-3-07, Glossary of Fannie Mae Terms: G (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-08, Glossary of Fannie Mae Terms: H (03/31/2011) . . . . . . . . . . . . . . . . . . . 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 (03/31/2011) . . . . . . . . . . . . . . . . . . . E-3-13, Glossary of Fannie Mae Terms: M (09/20/2010) . . . . . . . . . . . . . . . . . . . E-3-14, Glossary of Fannie Mae Terms: N (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-15, Glossary of Fannie Mae Terms: O (03/31/2011) . . . . . . . . . . . . . . . . . . . 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 (12/30/2009) . . . . . . . . . . . . . . . . . . . E-3-19, Glossary of Fannie Mae Terms: S (01/27/2011) . . . . . . . . . . . . . . . . . . . . E-3-20, Glossary of Fannie Mae Terms: T (04/01/2009) . . . . . . . . . . . . . . . . . . . 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 (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-24, Glossary of Fannie Mae Terms: X (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-25, Glossary of Fannie Mae Terms: Y (04/01/2009) . . . . . . . . . . . . . . . . . . . E-3-26, Glossary of Fannie Mae Terms: Z (04/01/2009) . . . . . . . . . . . . . . . . . . .

1139 1148 1154 1156 1158 1162 1163 1166 1169 1175 1178 1181 1186 1187 1189 1192 1192 1193 1196 1204 1205 1206 1210 1211 1215 1220 1222 1223 1223 1224 1224 1225

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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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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 Web site. By e-mail notification of these postings to lenders that subscribe to Fannie Maes e-mail notification service and select the option Selling Policy Updates. 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 Web site 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 Policy Updates option of Fannie Maes e-mail notification service, or with the AllRegs Web site, 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 e-mail notification service, use the Contact Us or Legal links on the Web site to ask questions or obtain more information. For the AllRegs Web site, submit an e-mail support request from the Web site 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

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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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Part A, Doing Business with Fannie Mae Subpart 1, Approval Qualification Chapter 1, Application and Approval of Lender

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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 (03/29/2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

A1-1-01, Application and Approval of Lender (03/29/2010)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 second mortgages. Eligibility To be approved to sell and service residential first mortgages, a lender must, at a minimum: 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 f