Selling Guide

Published December 16, 2020

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When is a loan-level price adjustment required?

For both whole loan and MBS transactions, Fannie Mae may apply one or more loan-level price adjustments (LLPA) that are charged at loan delivery based on certain loan-level credit risk characteristics, such as credit score, loan purpose, occupancy, number of units, and product type. All LLPAs are calculated based on the acquisition date principal balance of the mortgage
loan and are cumulative.

All applicable LLPAs for whole loan transactions will be deducted from the purchase proceeds. All applicable LLPAs for MBS transactions will be drafted from the lender’s account designated for that purpose.

Lenders may be eligible for an LLPA refund on certain mortgage loans repurchased by the lender, as determined by Fannie Mae in its sole discretion. The refund will be calculated based on the LLPAs charged at acquisition less a processing fee of 50 basis points of the unpaid principal balance at acquisition. If the total of all LLPAs paid by the lender for a mortgage loan
is 50 basis points or less, Fannie Mae will not refund the LLPA. The LLPA refunds are available only for mortgage loans originally delivered as whole loans and repurchased within 18 months of acquisition by Fannie Mae. The refunds will be issued to the responsible party for the selling representations and warranties as a separate transaction (independent from the repurchase transaction) in the month following the completion of the repurchase.

For a current listing of LLPAs, see the Loan-Level Price Adjustment (LLPA) Matrix.

 

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