Selling Guide

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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B8-3-02, Special Note Provisions and Language Requirements (08/20/2013)


This topic contains information on special note provisions and language requirements, including:


Late Charges for Conventional Mortgages

The note for a conventional first mortgage must provide for the borrower to pay a 5% late charge on any installment that is not received by the 15th day after it is due. The late charge should be computed on the principal and interest (P&I) installment only, not on the full monthly payment of principal, interest, taxes, insurance, and other assessments (PITIA).

If state law does not allow a late charge as high as 5%, the maximum amount that is allowed should be used. A note that provides for a late charge of more than 5% is acceptable as long as the amount assessed during the time Fannie Mae holds the mortgage does not exceed 5%. The late charge should be computed on the principal and interest portion of the monthly payment, not on the full PITIA amount.


Requirement for Unit Number

If the subject property is a condo or other property type that is identified by a unit number, the unit number must be included in the property address on the note.


Mandatory Arbitration

Mandatory arbitration is a loan provision or an agreement accompanying the loan that requires the borrower to submit to arbitration any disputes arising out of or relating in any way to the mortgage transaction. Mortgages that are subject to mandatory arbitration are ineligible for sale to, or securitization by, Fannie Mae unless the mandatory arbitration provision provides that, in the event of a transfer or sale of the mortgage or an interest in the mortgage to Fannie Mae, the mandatory arbitration clause immediately and automatically becomes null and void and cannot be reinstated.

The lender must provide the borrower with written notice of the waiver provision within 60 days of the transfer or sale of the mortgage to Fannie Mae. That notice must contain substantially the following language:

Pursuant to your mortgage documents, Fannie Mae is hereby notifying you that an interest in your loan has been transferred or sold to Fannie Mae and therefore the mandatory arbitration clause of your loan, requiring that you submit to arbitration to resolve any dispute arising out of or relating in any way to your mortgage, is immediately null and void.


The lender and servicer shall maintain a copy of such notice in the mortgage file.

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