Fannie Mae Selling Guide B5-5.1-01 — Community Seconds Loans

fnma-sel-b5-5-1-01

Fannie Mae Selling Guide B5-5.1-01 — Community Seconds Loans.

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Verbatim provisions from Fannie Mae Selling Guide B5-5.1-01 — Community Seconds Loans — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

Fannie Mae Selling Guide B5-5.1-01 — Community Seconds Loans

Effective 2023-05-03 · publisher's stamp for this provision

B5-5.1-01, Community Seconds Loans (05/03/2023) Introduction This topic contains information on Community Seconds loans, including: Overview Review of Community Seconds Programs Overview A Community Seconds loan is subordinate financing that is originated under an affordable housing program. Fannie Mae does not purchase Community Seconds loans; however, first mortgages that are originated with this type of subordinate financing are eligible for purchase by Fannie Mae in accordance with the requirements of this Guide. Review of Community Seconds Programs The lender is responsible for reviewing Community Seconds programs to ensure the programs comply with this Guide. The Community Seconds Checklist includes a checklist that lenders may use to evaluate key considerations in determining whether to grant approval of a Community Seconds program. The following table provides lender requirements for reviewing a Community Seconds program. ✓ The lender must... Review all documents applicable to the program, including the legal documents (such as the promissory note and the security instrument), the program description, and any other pertinent documents to confirm compliance with Section B5-5.1, Community Seconds. Determine the mortgage for the Community Seconds loan is clearly subordinate to the first mortgage. The title insurance in effect must ensure priority of the first mortgage being delivered to Fannie Mae by showing the Community Seconds loan in a subordinate position. Confirm the program allows the holder of the first mortgage to foreclose and acquire title to the property free and clear of all interests of the Community Seconds provider. Note: If a Community Seconds provider assumes the first mortgage and cures all outstanding defaults under that mortgage, the Community Seconds financing may be maintained. If applicable, evaluate any recorded deed restrictions or option agreements, or local ordinances that impose similar restrictions, to confirm compliance with other Fannie Mae policies, such as those applicable to resale restrictions (see Section B5-5.2, Loans with Resale Restrictions and Section B5-5.3, Shared Equity Transactions).

Source: Fannie Mae Selling Guide B5-5.1-01 — Community Seconds Loans · source URL · snapshot 2897f21e1e729b42

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