Selling Guide

Published June 3, 2020

The Selling Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Selling Guide in PDF format.

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B3-2-07, Refer with Caution (01/27/2015)


This topic contains information on Refer with Caution recommendations, including:


Overview of Refer with Caution Recommendations

The layering and degree of risk factors that result in a Refer with Caution recommendation represent a greater risk of serious delinquency than for those loan casefiles that receive an Approve recommendation.

Any loan casefile that receives a Refer with Caution recommendation from DU does not represent a level of risk that is acceptable to Fannie Mae for DU loans. If the data DU considered was an accurate representation of the borrower’s income, assets, liabilities, and credit profile, the loan is not eligible for delivery to Fannie Mae as a DU loan.

The following table provides further information about this DU recommendation.

Refer with Caution
Eligible for Fannie Mae’s limited waiver of certain mortgage eligibility and underwriting representations and warranties? No
Satisfies Fannie Mae’s credit risk standards/assessment? No, not the standards for DU loans
Satisfies Fannie Mae’s mortgage eligibility criteria? No, not the eligibility criteria for DU loans
Eligible for delivery to Fannie Mae? Not as a DU loan


Lender Response to a Refer with Caution Recommendation

When a loan casefile receives a Refer with Caution 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. If meaningful information was not included in the data submitted to DU, it should be entered and the loan casefile resubmitted.

  • Review the credit report data to determine if the information accurately represents the applicant’s credit history. Erroneous data in the credit report, or contradicting or derogatory information, could have affected DU’s recommendation. (See B3-2-01, General Information on DU, for additional guidance.)

  • Determine if there is any information outside of the data submitted to DU that could have affected DU’s recommendation, and should investigate whether there were any extenuating circumstances that contributed to serious instances of derogatory credit.

If the loan casefile is resubmitted to DU and still receives a Refer with Caution recommendation, the lender may manually underwrite the loan in accordance with this Selling Guide (if the loan product or transaction otherwise allows for delivery of manually underwritten loans), and deliver the loan as a manually underwritten loan.

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