Selling Guide

Published October 2, 2019

B5-7-04: High LTV Refinance Representations and Warranties (08/07/2018)

This topic contains information about the representations and warranties for the high LTV refinance option, including:

Lender Representations and Warranties

For high LTV refinance loans, lenders are responsible for the standard representations and warranties described in the Selling Guide, with a number of exceptions as noted below.

For all High LTV Refinances

  • If the lender obtains an appraisal for the subject property, the lender is not responsible for the standard representations and warranties related to the marketability and condition of the property as reflected in the property valuation. The lender remains responsible for the appraisal as it pertains to the value.

    • Lenders may deliver loans on properties with a condition rating of C6 and/or a quality rating of Q6 completed on an “as-is” basis. There is no requirement for the appraisal to be completed “subject to” repairs being made.

  • For properties in a project, the lender is not responsible for the standard representations and warranties related to project eligibility. However, the lender must represent and warrant the property is not a condo or co-op hotel or motel, houseboat project, or a timeshare or segmented ownership project.

Loans Underwritten in DU

  • The lender is not responsible for any of the representations and warranties associated with the loan being refinanced.

  • The lender is relieved of the standard underwriting representations and warranties (eligibility, credit history, liabilities, income and asset assessment) with respect to the new mortgage loan if the lender meets all of the following requirements:

  • When a lender exercises an appraisal waiver, Fannie Mae accepts the property value estimate submitted to DU as the market value for the subject property, and the lender is not required to make any representation or warranty as to the value, marketability, or condition of the subject property.

Manually Underwritten Loans

  • The lender is not responsible for any of the representations and warranties associated with the loan being refinanced other than those related to eligibility of the existing loan being refinanced.

  • The lender must represent and warrant that the new loan meets all the requirements of the high LTV refinance option as described in this Guide.

Applicability of the Representation and Warranty Framework

High LTV refinance loans are eligible for enforcement relief in accordance with the requirements of A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility.

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-2018-06 August 07, 2018