The table below provides Fannie Mae requirements for treatment of buydown funds.
|Buydown accounts must be established and fully funded by the time the lender submits the mortgage to Fannie Mae for purchase or securitization.|
|Funds for buydown accounts must be deposited into custodial bank accounts.
|The borrower’s only interest in buydown funds is to have them applied toward payments as they come due under the note.|
|Buydown funds are not refundable unless the mortgage is paid off before all the funds have been applied.|
|Buydown funds cannot be used to pay past-due payments.|
|Buydown funds cannot be used to reduce the mortgage amount for purposes of determining the LTV ratio.|
For additional information, see B2-1.4-04, Temporary Interest Rate Buydowns.