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.