Fannie Mae Selling Guide B3-2-06 — Approve/Ineligible Recommendations

Fannie Mae Selling Guide B3-2-06 — Approve/Ineligible Recommendations

Effective 2023-02-01 · publisher's stamp for this provision

B3-2-06, Approve/Ineligible Recommendations (02/01/2023) Introduction This topic contains information on Approve/Ineligible recommendations. Overview of Approve/Ineligible Recommendations Lender Response to an Approve/Ineligible Recommendation Overview of Approve/Ineligible Recommendations Loan casefiles may receive an Ineligible recommendation for a variety of reasons, including: The loan does not comply with stated product requirements or policies that apply to DU loans in this Guide; or The loan complies with stated product requirements or policies, but has a combination of product features or risk factors that place the loan outside of Fannie Mae's current acquisition preferences and constraints for DU loans. The lender must determine if the reason for the ineligibility creates an additional layering of credit risk that should be considered as the lender makes the underwriting decision. The following table provides further information about these recommendations. Approve/Ineligible Eligible for Fannie Mae’s limited waiver of certain mortgage eligibility and underwriting representations and warranties? No (see A2-2-04, Limited Waiver and Enforcement Relief of Representations and Warranties) Satisfies Fannie Mae’s credit risk standards/assessment? Yes Satisfies Fannie Mae’s mortgage loan eligibility criteria? No, the loan does not meet Fannie Mae's stated eligibility requirements for DU loans, or the combination of product features and risk factors place the loan outside Fannie Mae's current acquisition preferences and constraints for DU loans. Eligible for sale to Fannie Mae? Yes, if the lender satisfies at least one of the following criteria: • The lender has negotiated terms (such as variances, exceptions, or special requirements) that specifically permit the sale of the loan as a DU loan. • The lender manually underwrites the loan in accordance with this Selling Guide if the loan product or transaction otherwise allows for sale of manually underwritten loans. See B3-1-01, Comprehensive Risk Assessment and the Eligibility Matrix for appropriate eligibility requirements and considerations. Lender Response to an Approve/Ineligible Recommendation When a loan casefile receives an Approve/Ineligible recommendation, the lender should: Review the DU loan data for accuracy and verify that all income, assets, and liabilities were accurately recorded and fully disclosed by the borrower. Determine if there is any information outside of the data submitted to DU that could have affected DU's recommendation. In some cases, updating information may resolve the issue that resulted in the ineligibility. For example, if the loan is ineligible due to a combination of product features or risk factors that place the loan outside of Fannie Mae's current acquisition preferences and constraints, the borrower may provide documentation of additional income to lower the debt-to-income ratio or provide a larger down payment to lower the LTV ratio. Update the loan application data (if applicable) and resubmit the loan casefile to DU for an updated recommendation. If the loan casefile still receives and Approve/Ineligible recommendation, the lender may manually underwrite the loan in accordance with the requirements in the table above.

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