Selling Guide

Published June 5, 2018

Overview

It is imperative that the lender supply Fannie Mae with high-quality data. The accuracy and completeness of the data that a lender provides to Fannie Mae has a direct impact on the lender’s ability to effect efficient secondary marketing transactions. In addition, Fannie Mae must report to the federal government certain information related to its housing goals, and relies on lender-provided data to make these reports.

Quality of Data on Form 1003

Fannie Mae relies on the lender to capture complete and accurate information from the borrower on the Uniform Residential Loan Application (Form 1003) during the loan application process. A complete, signed, and dated Form 1003 must be included in the loan file. It is particularly important for the lender to indicate whether the borrower is a first-time home buyer and for the lender to complete Part X of Form 1003: Information for Government Monitoring Purposes.

Entering Loan Data in Fannie Mae’s Whole Loan Committing Application

Accurately entering loan data through Fannie Mae’s whole loan committing application is critical to ensure that the lender obtains the product pricing desired. Inaccurate or insufficient data entered into the whole loan committing application may delay the transaction and result in unintended pair-off fees or insufficient funding for the lender’s pipelines. Fannie Mae encourages lenders to utilize the additional information available via the links provided below.

Verification of Data in DU

All data entered into DU must be accurate and verifiable. For each underwriting recommendation rendered by DU, Fannie Mae requires the lender to have adequate procedures in place to validate the integrity of specific data. For specific quality control reviews that must be performed for each underwriting recommendation, see D1-3-02, Lender Post-Closing Quality Control Review of Approval Conditions, Underwriting Decisions, and Documentation.

Delivery Data

A lender must provide key information—called loan delivery data—about all of the mortgages that it delivers to Fannie Mae. Required delivery data includes information required under the Home Mortgage Disclosure Act and its implementing Regulation C and Housing Goals data elements. In certain cases, some of these data elements are not required to qualify a borrower or underwrite a loan; however, such data elements are required by Fannie Mae, and lenders must capture this data for delivery. If such data is not obtained through the traditional loan application process, it must be captured by the lender through other means and reported to Fannie Mae. (An example of this is reporting of gross monthly rent — see below.)

Fannie Mae monitors delivery data for completeness and accuracy. The lender will be required to correct data as needed. Initial submission of complete and accurate data is crucial because post-delivery efforts to obtain missing data or reconcile inconsistent data are time consuming and costly to Fannie Mae and the lender. Errors in a lender’s delivery data may delay issuance of funds to the lender.

Reporting of Gross Monthly Rent

Eligible rents on the subject property (gross monthly rent) must be reported to Fannie Mae in the loan delivery data for all investment properties and two- to four-unit principal residence properties, regardless of whether the borrower is using rental income to qualify for the mortgage loan. If the borrower is using rental income from the subject property to qualify for the mortgage loan, the Selling Guide provides a list of acceptable documentation and calculation methods for determining the rental income amounts for qualifying purposes. These sources may also be used to obtain the gross monthly rental amount for reporting purposes. See B3-3.1-08, Rental Income, for details.

If the borrower is not using any rental income from the subject property to qualify, gross monthly rent must be documented only for lender reporting purposes. The borrower can provide one of the sources listed in B3-3.1-08, Rental Income, or may provide one of the following sources (listed in order of preference):

  • the appraisal report for a one-unit investment property or two- to four-unit property, or Single-Family Comparable Rent Schedule (Form 1007), provided neither the applicable appraisal nor Form 1007 is dated 12 months or more prior to the date of the note;

  • if the property is not currently rented, the lender may use the opinion of market rents provided by the appraiser; or

  • if an appraisal or Form 1007 is not required for the transaction, the lender may rely upon either a signed lease from the borrower or may obtain a statement from the borrower of the gross monthly rent being charged (or to be charged) for the property. The monthly rental amounts must be stated separately for each unit in a two- to four-unit property. The disclosure from the borrower must be in the form of one of the following:

    • a written statement from the borrower, or

    • an addition to the Uniform Residential Loan Application (Form 1003).

The lender must retain in the loan file the documentation that was relied upon to determine the amount of eligible rent reported.

Life-of-Loan Representations and Warranties

The lender is responsible for supplying Fannie Mae with high-quality, accurate, and complete data. Even if a mortgage loan has met the requirements for enforcement relief as set forth in A2-2.1-04, Limited Waiver and Enforcement Relief of Representations and Warranties for Mortgages Submitted to DU, andA2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility, the lender remains responsible for representations and warranties for the life of the loan related to misstatements, misrepresentations, omissions, and data inaccuracies subject to the limitations set forth in A2-2.1-07, Life-of-Loan Representations and Warranties.

Sources for Further Information

The sources listed below provide additional information for lenders regarding the delivery of accurate and complete data to Fannie Mae.

Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2016–08 October 24, 2016
Announcement SEL-2015–06 May 26, 2015
Announcement SEL-2014–16 December 16, 2014
Announcement SEL-2013–03 April 9, 2013
Announcement SEL-2012–06 June 26, 2012
Announcement SEL-2011–10 September 27, 2011
Announcement SEL-2011–06 July 26, 2011