Selling Guide

Published December 16, 2020

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What are the delivery and recourse requirements for HomeStyle Renovation loans?

Delivery and Recourse Requirements

A lender may deliver a HomeStyle Renovation loan as soon as it is closed; the renovation does not need to have been completed when the loan is delivered as long as the lender delivers that loan with recourse. If the borrower defaults under the terms of the loan before the work is completed, and that default continues for at least 120 days, the lender may be required to repurchase the loan.

When the HomeStyle Renovation mortgage includes financing of energy-related improvements, the lender may be eligible for an LLPA credit of $500. Lenders will receive the LLPA credit only if the lender delivers the loan with Special Feature Code 375, as shown below.

If the HomeStyle Renovation mortgage is delivered ... And the lender delivers ... Then ...
  • the renovation is not complete,
  • SFC 215
  • the loan is delivered with recourse.
  • the renovation is complete,
  • SFC 279
  • no recourse obligation applies.
  • the renovation is not complete, and
  • the renovation includes HomeStyle Energy improvements.
  • SFC 215, and
  • SFC 375
  • the loan is delivered with recourse, and
  • Fannie Mae applies an LLPA credit of $500.
  • the renovation is complete, and
  • the renovation includes HomeStyle Energy improvements.
  • SFC 279, and
  • SFC 375
  • no recourse obligation applies, and
  • Fannie Mae applies an LLPA credit of $500.
 
 
For additional information, see B5-3.2-01, HomeStyle Renovation Mortgages.

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