Selling Guide

Published August 29, 2017

  • Selling Guide: Main Page
    • Part B: Origination Through Closing
      • B5: Unique Eligibility and Underwriting Considerations
        • B5-4: Property-Specific Products
          • B5-4.1: General Requirements of Texas Section 50(a)(6) Mortgages (03/292010)
            • B5-4.1-03: Texas Section 50(a)(6) Underwriting and Collateral Considerations (10/24/2016)

B5-4.1-03: Texas Section 50(a)(6) Underwriting and Collateral Considerations (10/24/2016)

This topic contains information on Texas Section 50(a)(6) underwriting and collateral considerations, including:

LTV/CLTV

Per Texas law, the maximum allowable LTV and combined LTV is 80%, notwithstanding any conflicting provisions of this Guide or any specific DU recommendation or finding. HELOC subordinate financing is not permitted, so no maximum HCLTV is applicable.

Underwriting and Loan Documentation

Texas Section 50(a)(6) mortgages are eligible for the reduced documentation requirements recommended by DU, provided that all other terms and conditions described herein for Texas Section 50(a)(6) mortgages shall apply.

This includes, but is not limited to, the additional representations and warranties, and requirements related to mortgage documentation, property valuation, title insurance, committing and delivery and servicing.

For a mortgage that represents the refinance of a Texas Section 50(a)(6) mortgage, the borrower must requalify even if the lender is currently servicing the existing mortgage that is being refinanced.

Manually underwritten Texas Section 50(a)(6) mortgages are subject to minimum credit score requirements per the Selling Guide, based on the transaction as either a cash-out refinance or a limited cash-out refinance, as applicable.

Note: Texas Section 50(a)(6) mortgages are eligible for refinance under DU Refi Plus and Refi Plus. See B5-5.2-01, DU Refi Plus and Refi Plus Eligibility.

Property Valuation

Lenders must obtain a new full appraisal, including both interior and exterior inspections, to determine current value on either Uniform Residential Appraisal Report (Form 1004), or Individual Condominium Unit Appraisal Report (Form 1073), even if DU recommends a different property valuation method or a PIW.

The appraisal for the property and the acknowledgment of fair market value must not include any property other than the homestead.

The survey (or other acceptable evidence) must demonstrate that:

  • the homestead property and any adjacent land are separate parcels, and

  • the homestead property is a separately platted and subdivided lot for which full ingress and egress is available.

The lender selling the mortgage to Fannie Mae must not have any interest (such as an option to purchase, a security interest, or an easement) in any parcel adjacent to the homestead property that is owned by the borrower, if such interest could constitute additional security for the Texas Section 50(a)(6) mortgage.

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-2010–04 March 29, 2010
Announcement 09-13 May 11, 2009