Selling Guide

Published April 07, 2021

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What mortgage loan products are not purchased by Fannie Mae?

Life-of-Loan Exclusions: Unacceptable Mortgage Products

Certain mortgage loan products are not purchased by Fannie Mae. As such, these products are not eligible for the enforcement relief described in A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility. Note that the list below is not intended to be exhaustive; it should be used as a reference tool in conjunction with the requirements of the Selling Guide.

Examples of loan products that Fannie Mae does not purchase are

  • mortgages with an interest-only feature;
  • graduated-payment mortgages, including growing-equity mortgages;
  • mortgages originated with stated or no income and/or asset documentation (high LTV refinances are not covered by this provision);
  • mortgages subject to negative amortization;
  • construction mortgages (other than construction-to-permanent);
  • daily simple interest mortgages;
  • mortgages with prepayment penalties; 
  • reverse mortgages;
  • mortgages with balloon payments (with or without a reset option); and
  • second liens or other junior mortgages.

For more information, see A2-2-07, Life-of-Loan Representations and Warranties


 

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