This topic contains general information on government mortgage loan requirements, including:
All eligible government mortgage loans purchased or securitized by Fannie Mae must comply with the requirements of the respective government agency. Those loans must also comply with Fannie Mae requirements for government mortgage loans as specifically addressed in this Selling Guide.
Most government mortgage loans can only be delivered to Fannie Mae under a variance in the Lender Contract.
The term of a government mortgage loan may not extend more than 30 years beyond the date of the first monthly payment.
All government mortgage loans must have been originated within the 12 months that precede the date it is delivered to Fannie Mae. Lenders must contact their Fannie Mae customer account team for delivery terms if the loan is greater than 12 months old.
The security instrument for a government mortgage loan must be a first lien on the borrower’s real property. The security property may be subject only to liens for taxes and special assessments that are not yet due and payable and to conditions, restrictions, and encumbrances that Fannie Mae does not consider as material. The lender must provide documentation to show that the current installments of taxes and assessments (including those that may have been attached as prior liens, but are not now in arrears) have been paid or that sufficient deposits are being collected to pay them.
When the property that secures the mortgage is rented, the rental agreement or lease may not include any provision that could affect significantly Fannie Mae’s position as mortgagee. In some jurisdictions, leases that predate the mortgage have a superior claim to the mortgage even if they have not been recorded. Normally, a tenant’s rights under a pre-existing lease remain intact on the sale of the leased premises. Accordingly, if the lease is not subordinate to the mortgage, the lender must review each lease to ensure that any tenant’s rights to purchase the property, and any other rights that could affect adversely the mortgagee’s interest, have been waived formally by the tenant or tenants.
Fannie Mae will purchase or securitize a government mortgage loan that includes an open-end advance provision only if the provision gives Fannie Mae the option not to make any advances. If funds were advanced prior to delivery, the transaction is considered a modified mortgage that is not eligible for delivery. See B2-1.5-02, Loan Eligibility.
Because Fannie Mae will not decline delivery submissions for slight differences in payment calculations, the lender may use any widely accepted amortization table or formula. However, the monthly payment provided as part of the delivery data and the one that Fannie Mae calculates cannot differ by more than $1.00.
When lenders deliver government mortgage loans to Fannie Mae for purchase or securitization, they must report the transfer of the loan in accordance with the applicable agency’s requirements, if applicable.
Government mortgage loans (for example, FHA-insured, VA-guaranteed, HUD-guaranteed, and RD-guaranteed) that are securitized must be pooled in government-prefix MBS pools. Government mortgage loans cannot be commingled in the same pool with conventional mortgage loans.
For all government mortgage loans, the actual/actual remittance type is required for whole loans. The scheduled/scheduled remittance type is required for all government mortgage loans delivered into MBS. (Lenders should refer to Fannie Mae’s whole loan committing application for additional information regarding eligible whole loan remittance types.)
All government mortgage loans are subject to a minimum representative credit score of 620. Manually underwritten government mortgage loans with nontraditional credit are exempt from this policy.
For government mortgage loans, the lender must report all applicable data elements at delivery, including but not limited to, the Section of the Act and certain government loan-specific special feature codes. Refer to the Fannie Mae Implementation Guide for Loan Delivery Data on Fannie Mae's website for additional information.