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Chapter B3-3, Income Assessment
Income Assessment Table of contents
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Section B3-3.1, Employment and Other Sources of Income
- B3-3.1-01, General Income Information
- B3-3.1-02, Standards for Employment Documentation
- B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income
- B3-3.1-04, Commission Income
- B3-3.1-05, Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income
- B3-3.1-06, Requirements and Uses of IRS IVES Request for Transcript of Tax Return Form 4506-C
- B3-3.1-07, Verbal Verification of Employment
- B3-3.1-08, Rental Income
- B3-3.1-09, Other Sources of Income
- B3-3.1-10, Income Calculator
- Section B3-3.2, Self-Employment Income
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Section B3-3.3, Self-Employment Documentation Requirements for an Individual
- B3-3.3-01, General Information on Analyzing Individual Tax Returns
- B3-3.3-02, Income Reported on IRS Form 1040
- B3-3.3-03, Income or Loss Reported on IRS Form 1040, Schedule C
- B3-3.3-04, Income or Loss Reported on IRS Form 1040, Schedule D
- B3-3.3-05, Income or Loss Reported on IRS Form 1040, Schedule E
- B3-3.3-06, Income or Loss Reported on IRS Form 1040, Schedule F
- B3-3.3-07, Income or Loss Reported on IRS Form 1065 or IRS Form 1120S, Schedule K-1
- Section B3-3.4, Self-Employment Documentation Requirements for a Business
- Section B3-3.5, DU Requirements for Income Assessment
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Table Of Contents
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Part A Doing Business with Fannie Mae
- Subpart A1, Approval Qualification
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Subpart A2, Lender Contract
- Chapter A2-1, Contractual Obligations for Sellers/Servicers
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Chapter A2-2, Contractual Representations and Warranties
- A2-2-01, Representations and Warranties Overview
- A2-2-02, Delivery Information and Delivery-Option Specific Representations and Warranties
- A2-2-03, Document Warranties
- A2-2-04, Limited Waiver and Enforcement Relief of Representations and Warranties
- A2-2-05, Invalidation of Limited Waiver of Representations and Warranties
- A2-2-06, Representations and Warranties on Property Value
- A2-2-07, Life-of-Loan Representations and Warranties
- Chapter A2-3, Lender Breach of Contract
- Chapter A2-4, Loan Files and Records
- Chapter A2-5, Fannie Mae Trade Name and Trademarks
- Subpart A3, Getting Started With Fannie Mae
- Subpart A4, Maintaining Seller/Servicer Eligibility
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Part B Origination Through Closing
- Subpart B1, Loan Application Package
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Subpart B2, Eligibility
- Chapter B2-1, Mortgage Eligibility
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Chapter B2-2, Borrower Eligibility
- B2-2-01, General Borrower Eligibility Requirements
- B2-2-02, Non–U.S. Citizen Borrower Eligibility Requirements
- B2-2-03, Multiple Financed Properties for the Same Borrower
- B2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction
- B2-2-05, Inter Vivos Revocable Trusts
- B2-2-06, Homeownership Education and Housing Counseling
- -01, First-Generation Homebuyer Loans
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Chapter B2-3, Property Eligibility
- B2-3-01, General Property Eligibility
- B2-3-02, Special Property Eligibility and Underwriting Considerations: Factory-Built Housing
- B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates
- B2-3-04, Special Property Eligibility Considerations
- B2-3-05, Properties Affected by a Disaster
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Subpart B3, Underwriting Borrowers
- Chapter B3-1, Manual Underwriting
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Chapter B3-2, Desktop Underwriter (DU)
- B3-2-01, General Information on DU
- B3-2-02, DU Validation Service
- B3-2-03, Risk Factors Evaluated by DU
- B3-2-04, DU Documentation Requirements
- B3-2-05, Approve/Eligible Recommendations
- B3-2-06, Approve/Ineligible Recommendations
- B3-2-07, Refer with Caution Recommendations
- B3-2-08, Out of Scope Recommendations
- B3-2-09, Erroneous Credit Report Data
- B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report
- B3-2-11, DU Underwriting Findings Report
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Chapter B3-3, Income Assessment
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Section B3-3.1, Employment and Other Sources of Income
- B3-3.1-01, General Income Information
- B3-3.1-02, Standards for Employment Documentation
- B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income
- B3-3.1-04, Commission Income
- B3-3.1-05, Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income
- B3-3.1-06, Requirements and Uses of IRS IVES Request for Transcript of Tax Return Form 4506-C
- B3-3.1-07, Verbal Verification of Employment
- B3-3.1-08, Rental Income
- B3-3.1-09, Other Sources of Income
- B3-3.1-10, Income Calculator
- Section B3-3.2, Self-Employment Income
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Section B3-3.3, Self-Employment Documentation Requirements for an Individual
- B3-3.3-01, General Information on Analyzing Individual Tax Returns
- B3-3.3-02, Income Reported on IRS Form 1040
- B3-3.3-03, Income or Loss Reported on IRS Form 1040, Schedule C
- B3-3.3-04, Income or Loss Reported on IRS Form 1040, Schedule D
- B3-3.3-05, Income or Loss Reported on IRS Form 1040, Schedule E
- B3-3.3-06, Income or Loss Reported on IRS Form 1040, Schedule F
- B3-3.3-07, Income or Loss Reported on IRS Form 1065 or IRS Form 1120S, Schedule K-1
- Section B3-3.4, Self-Employment Documentation Requirements for a Business
- Section B3-3.5, DU Requirements for Income Assessment
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Section B3-3.1, Employment and Other Sources of Income
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Chapter B3-4, Asset Assessment
- Section B3-4.1, General Asset Requirements
- Section B3-4.2, Verification of Depository Assets
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Section B3-4.3, Verification of Non-Depository Assets
- B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds
- B3-4.3-02, Trust Accounts
- B3-4.3-03, Retirement Accounts
- B3-4.3-04, Personal Gifts
- B3-4.3-05, Gifts of Equity
- B3-4.3-06, Grants and Lender Contributions
- B3-4.3-07, Disaster Relief Grants or Loans
- B3-4.3-08, Employer Assistance
- B3-4.3-09, Earnest Money Deposit
- B3-4.3-10, Anticipated Sales Proceeds
- B3-4.3-11, Trade Equity
- B3-4.3-12, Rent Credit for Option to Purchase
- B3-4.3-13, Sweat Equity
- B3-4.3-14, Bridge/Swing Loans
- B3-4.3-15, Borrowed Funds Secured by an Asset
- B3-4.3-16, Credit Card Financing and Reward Points
- B3-4.3-17, Personal Unsecured Loans
- B3-4.3-18, Sale of Personal Assets
- B3-4.3-19, Cash Value of Life Insurance
- B3-4.3-20, Anticipated Savings and Cash-on-Hand
- B3-4.3-21, Borrower's Earned Real Estate Commission
- Section B3-4.4, DU Requirements for Asset Assessment
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Chapter B3-5, Credit Assessment
- Section B3-5.1, Credit Scores
- Section B3-5.2, Credit Reports
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Section B3-5.3, Traditional Credit History
- B3-5.3-01, Number and Age of Accounts
- B3-5.3-02, Payment History
- B3-5.3-03, Previous Mortgage Payment History
- B3-5.3-04, Inquiries: Recent Attempts to Obtain New Credit
- B3-5.3-05, Credit Utilization
- B3-5.3-06, Authorized Users of Credit
- B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit
- B3-5.3-08, Extenuating Circumstances for Derogatory Credit
- B3-5.3-09, DU Credit Report Analysis
- Section B3-5.4, Nontraditional Credit History
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Chapter B3-6, Liability Assessment
- B3-6-01, General Information on Liabilities
- B3-6-02, Debt-to-Income Ratios
- B3-6-03, Monthly Housing Expense for the Subject Property
- B3-6-04, Qualifying Payment Requirements
- B3-6-05, Monthly Debt Obligations
- B3-6-06, Qualifying Impact of Other Real Estate Owned
- B3-6-07, Debts Paid Off At or Prior to Closing
- B3-6-08, DU: Requirements for Liability Assessment
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Subpart B4, Underwriting Property
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Chapter B4-1, Property Assessment and Valuation
- Section B4-1.1, General Appraisal Requirements
- Section B4-1.2, Documentation Standards
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Section B4-1.3, Appraisal Report Assessment
- B4-1.3-01, Review of the Appraisal Report
- B4-1.3-02, Subject and Contract Sections of the Appraisal Report
- B4-1.3-03, Neighborhood Section of the Appraisal Report
- B4-1.3-04, Site Section of the Appraisal Report
- B4-1.3-05, Improvements Section of the Appraisal Report
- B4-1.3-06, Property Condition and Quality of Construction of the Improvements
- B4-1.3-07, Sales Comparison Approach Section of the Appraisal Report
- B4-1.3-08, Comparable Sales
- B4-1.3-09, Adjustments to Comparable Sales
- B4-1.3-10, Cost and Income Approach to Value
- B4-1.3-11, Valuation Analysis and Reconciliation
- B4-1.3-12, Appraisal Quality Matters
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Section B4-1.4, Special Appraisal and Other Valuation Considerations
- B4-1.4-01, Factory-Built Housing: Manufactured Housing
- B4-1.4-02, Factory-Built Housing: Modular, Prefabricated, Panelized, or Sectional Housing
- B4-1.4-03, Condo Appraisal Requirements
- B4-1.4-04, Co-op Appraisal Requirements
- B4-1.4-05, Leasehold Interests Appraisal Requirements
- B4-1.4-06, Community Land Trust Appraisal Requirements
- B4-1.4-07, Mixed-Use Property Appraisal Requirements
- B4-1.4-08, Environmental Hazards Appraisal Requirements
- B4-1.4-09, Special Assessment or Community Facilities Districts Appraisal Requirements
- B4-1.4-10, Value Acceptance (Appraisal Waiver)
- B4-1.4-11, Value Acceptance + Property Data
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Chapter B4-2, Project Standards
- Section B4-2.1, General Project Standards
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Section B4-2.2, Project Eligibility
- B4-2.2-01, Limited Review Process
- B4-2.2-02, Full Review Process
- B4-2.2-03, Full Review: Additional Eligibility Requirements for Units in New and Newly Converted Condo Projects
- B4-2.2-04, Geographic-Specific Condo Project Considerations
- B4-2.2-05, FHA-Approved Condo Review Eligibility
- B4-2.2-06, Project Eligibility Review Service (PERS)
- B4-2.2-07, Projects with Special Considerations and Project Eligibility Waivers
- Section B4-2.3, PUD and Co-op Eligibility Requirements
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Chapter B4-1, Property Assessment and Valuation
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Subpart B5, Unique Eligibility and Underwriting Considerations
- Chapter B5-1, High-Balance Mortgage Loans
- Chapter B5-2, Manufactured Housing
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Chapter B5-3, Construction and Energy Financing
- Section B5-3.1, Conversion of Construction-to-Permanent Financing
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Section B5-3.2, HomeStyle Renovation Mortgage
- B5-3.2-01, HomeStyle Renovation Mortgages
- B5-3.2-02, HomeStyle Renovation Mortgages: Loan and Borrower Eligibility
- B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations
- B5-3.2-04, HomeStyle Renovation Mortgages: Costs and Escrow Accounts
- B5-3.2-05, HomeStyle Renovation Mortgages: Completion Certification
- B5-3.2-06, HomeStyle Renovation: Renovation Contract, Renovation Loan Agreement, and Lien Waiver
- Section B5-3.3, HomeStyle Energy Mortgages
- Section B5-3.4, Property Assessed Clean Energy Loans
- Chapter B5-4, Property-Specific Products
- Chapter B5-5, Community Seconds, Loans with Resale Restrictions, and Shared Equity Transactions
- Chapter B5-6, HomeReady Mortgage
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Chapter B5-7, High Loan-to-Value Refinance Option
- B5-7-01, High LTV Refinance Loan and Borrower Eligibility
- B5-7-02, High LTV Refinance Underwriting, Documentation, and Collateral Requirements for the New Loan
- B5-7-03, High LTV Refinance Alternative Qualification Path
- B5-7-04, High LTV Refinance Representations and Warranties
- B5-7-05, High LTV Refinance Pricing, Mortgage Insurance, and Special Feature Codes
- Subpart B6, Government Programs Eligibility and Underwriting Requirements
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Subpart B7, Insurance
- Chapter B7-1, Mortgage Insurance/Loan Guaranty
- Chapter B7-2, Title Insurance
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Chapter B7-3, Property and Flood Insurance
- B7-3-01, General Property Insurance Requirements for All Property Types
- B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties
- B7-3-03, Master Property Insurance Requirements for Project Developments
- B7-3-04, Individual Property Insurance Requirements for a Unit in a Project Development
- B7-3-05, Additional Insurance Requirements
- B7-3-06, Flood Insurance Requirements for All Property Types
- B7-3-07, Evidence of Property Insurance
- B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements
- Chapter B7-4, Liability and Fidelity/Crime Insurance Requirements for Project Developments
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Subpart B8, Closing: Legal Documents
- Chapter B8-1, General Information on Legal Documents
- Chapter B8-2, Security Instruments
- Chapter B8-3, Notes
- Chapter B8-4, Riders and Addenda
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Chapter B8-5, Special-Purpose Legal Documents
- B8-5-01, General Information on Special-Purpose Legal Documents
- B8-5-02, Inter Vivos Revocable Trust Mortgage Documentation and Signature Requirements
- B8-5-03, HomeStyle Renovation Mortgage Documentation Requirements
- B8-5-04, Sample Legal Documents
- B8-5-05, Requirements for Use of a Power of Attorney
- Chapter B8-6, Mortgage Assignments
- Chapter B8-7, Mortgage Electronic Registration System (MERS)
- Chapter B8-8, Sale of eMortgages to Fannie Mae
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Part C Selling, Securitizing, and Delivering Loans
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Subpart C1, General Information on Execution Options and Loan Delivery
- Chapter C1-1, Execution Options Overview
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Chapter C1-2, Loan Delivery Overview
- C1-2-01, General Information on Delivering Loan Data and Documents
- C1-2-02, Loan Data and Documentation Delivery Requirements
- C1-2-03, Ownership of Mortgage Loans Prior to Purchase or Securitization and Third-Party Security Interests
- C1-2-04, Delivering eMortgages to Fannie Mae
- C1-2-05, Bailee Letters
- Chapter C1-3, Loan Remittance Types Overview
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Subpart C2, Whole Loan Transactions
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Chapter C2-1, Mandatory and Best Efforts Commitments to Sell Whole Loans
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Section C2-1.1, Mandatory Commitments to Sell Whole Loans
- C2-1.1-01, Mandatory Commitment Process
- C2-1.1-02, General Information about Mandatory Commitment Pricing and Fees
- C2-1.1-03, Mandatory Commitment Terms, Amounts, Periods and Other Requirements
- C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs
- C2-1.1-05, Servicing Fees
- C2-1.1-06, Accrued Interest Payments for Regularly Amortizing Mortgages
- C2-1.1-07, Standard ARM and Converted ARM Resale Commitments
- Section C2-1.2, Best Efforts Commitments to Sell Whole Loans
- Section C2-1.3, Servicing Execution Tool to Sell Whole Loans
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Section C2-1.1, Mandatory Commitments to Sell Whole Loans
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Chapter C2-2, Whole Loan Deliveries to and Purchasing by Fannie Mae
- C2-2-01, General Requirements for Good Delivery of Whole Loans
- C2-2-02, Documentation Requirements for Whole Loan Deliveries
- C2-2-03, General Information on Whole Loan Purchasing Policies
- C2-2-04, Timing of Distribution of Whole Loan Purchase Proceeds
- C2-2-05, Whole Loan Purchasing Process
- C2-2-06, Authorization to Transfer Funds
- C2-2-07, Purchase Payee Codes
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Chapter C2-1, Mandatory and Best Efforts Commitments to Sell Whole Loans
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Subpart C3, Mortgage-Backed Securities (MBS)
- Chapter C3-1, MBS Program Overview
- Chapter C3-2, MBS Securitization Process
- Chapter C3-3, MBS Guaranty Fees and Guaranty Fee Buyups and Buydowns
- Chapter C3-4, Pooling Loans into Fixed-Rate MBS
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Chapter C3-5, Pooling Loans into ARM MBS
- C3-5-01, Creating Weighted-Average ARM MBS
- C3-5-02, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin
- C3-5-03, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Weighted-Average MBS Margin
- C3-5-04, Pooling ARMs with a Conversion Option
- C3-5-05, Commingling ARMs in MBS
- Chapter C3-6, Pooling Loans into Fannie Majors
- Chapter C3-7, Delivering and Trading MBS
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Subpart C1, General Information on Execution Options and Loan Delivery
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Part D Ensuring Quality Control (QC)
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Subpart D1, Lender QC Process
- Chapter D1-1, Lender Quality Control Process
- Chapter D1-2, Lender Prefunding QC Mortgage Review
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Chapter D1-3, Lender Post-Closing QC Mortgage Review
- D1-3-01, Lender Post-Closing Quality Control Review Process
- D1-3-02, Lender Post-Closing Quality Control Review of Approval Conditions, Underwriting Decisions, and Documentation
- D1-3-03, Lender Post-Closing Quality Control Review of Data Integrity
- D1-3-04, Lender Post-Closing Quality Control Review of Appraisers, Appraisals, Property Data Collectors, and Property Data Collection
- D1-3-05, Lender Post-Closing Quality Control Review of Closing Documents
- D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit
- Subpart D2, Fannie Mae QC Process
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Subpart D1, Lender QC Process
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Part E Quick Reference Materials
- Chapter E-1, Selling Guide Resources
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Chapter E-2, Exhibits
- E-2-01, Required Custodial Documents
- E-2-02, Suggested Format for Phase I Environmental Hazard Assessments
- E-2-03, Revocable Trust Rider (Sample Language)
- E-2-04, Signature Requirements for Mortgages to Inter Vivos Revocable Trusts
- E-2-05, Servicing Marketplace — Mortgage Loan Servicing Purchase and Sale Agreement
- E-2-07, Correcting Errors in eNotes
- E-2-08, Description of eNote Header, Footer, and eNote Clause
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Chapter E-3, Acronyms and Glossary of Defined Terms
- E-3-01, Acronyms and Glossary of Defined Terms: A
- E-3-02, Acronyms and Glossary of Defined Terms: B
- E-3-03, Acronyms and Glossary of Defined Terms: C
- E-3-04, Acronyms and Glossary of Defined Terms: D
- E-3-05, Acronyms and Glossary of Defined Terms: E
- E-3-06, Acronyms and Glossary of Defined Terms: F
- E-3-07, Acronyms and Glossary of Defined Terms: G
- E-3-08, Acronyms and Glossary of Defined Terms: H
- E-3-09, Acronyms and Glossary of Defined Terms: I
- E-3-10, Acronyms and Glossary of Defined Terms: J
- E-3-11, Acronyms and Glossary of Defined Terms: K
- E-3-12, Acronyms and Glossary of Defined Terms: L
- E-3-13, Acronyms and Glossary of Defined Terms: M
- E-3-14, Acronyms and Glossary of Defined Terms: N
- E-3-15, Acronyms and Glossary of Defined Terms: O
- E-3-16, Acronyms and Glossary of Defined Terms: P
- E-3-17, Acronyms and Glossary of Defined Terms: Q
- E-3-18, Acronyms and Glossary of Defined Terms: R
- E-3-19, Acronyms and Glossary of Defined Terms: S
- E-3-20, Acronyms and Glossary of Defined Terms: T
- E-3-21, Acronyms and Glossary of Defined Terms: U
- E-3-22, Acronyms and Glossary of Defined Terms: V
- E-3-23, Acronyms and Glossary of Defined Terms: W
- E-3-24, Acronyms and Glossary of Defined Terms: X
- E-3-25, Acronyms and Glossary of Defined Terms: Y
- E-3-26, Acronyms and Glossary of Defined Terms: Z