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What are acceptable flood insurance policies? Down arrow Up arrow

The flood insurance policy must be one of the following:

  • a standard policy issued under the NFIP; or
  • a policy issued by a private insurer as long as
    • the terms and amount of coverage are at least equal to that provided under an NFIP policy based on a review of the full policy issued by a private insurer, and
    • the insurer meets Fannie Mae’s rating requirements as specified in B7-3-01, Property Insurance Requirements for Insurers.

A Policy Declaration page is acceptable evidence of flood insurance.

Note: A mortgagee clause is not required for a Residential Condominium Building Association Policy or an equivalent private flood insurance master policy. For additional information on mortgagee clause requirements refer to B7-3-08, Mortgagee Clause for Property and Flood Insurance.

For additional information, see B7-3-07, Flood Insurance Coverage Requirements.

Can a home be powered by solar panels only? Down arrow Up arrow

No, the property must maintain access to an alternate source of electric power that meets community standards.

For additional information, see B2-3-04, Special Property Eligibility Considerations and related FAQ: What are the requirements for property site utilities?

What is required when a property is located on a private road? Down arrow Up arrow

If the property is located on a community-owned or privately-owned and maintained street, an adequate, legally enforceable agreement or covenant for maintenance of the street is required. The agreement or covenant should include the following provisions and be recorded in the land records of the appropriate jurisdiction:

  • responsibility for payment of repairs, including each party’s representative share;
  • default remedies in the event a party to the agreement or covenant fails to comply with his or her obligations; and
  • the effective term of the agreement or covenant, which in most cases should be perpetual and binding on any future owners.

Note: If the property is located within a state that has statutory provisions that define the responsibilities of property owners for the maintenance and repair of a private street, no separate agreement or covenant is required.

If the property is not located in a state that imposes statutory requirements for maintenance, and either there is no agreement or covenant for maintenance of the street, or an agreement or covenant exists but does not meet the requirements listed above, the lender may still deliver the loan. However, the lender is required to indemnify Fannie Mae (as described in A2-1-03, Indemnification for Losses) against all losses incurred by Fannie Mae as a result of the physical condition of the street or in order to establish and/or retain access to the street.

For additional information, see B4-1.3-04, Site Section of the Appraisal Report

When can rental income be used to qualify? Down arrow Up arrow

Rental income is an acceptable source of stable income if it can be established that the income is likely to continue. If the rental income is derived from the subject property, the property must be one of the following:

  • a two- to four-unit principal residence property in which the borrower occupies one of the units, or
  • a one- to four-unit investment property.

If the income is derived from a property that is not the subject property, there are no restrictions on the property type. For example, rental income from a commercial property owned by the borrower is acceptable if the income otherwise meets all other requirements. For additional information about rental income see B3-3.1-08, Rental Income.

Can part-time income be used to qualify? Down arrow Up arrow

Part-time income can be used to qualify the borrower provided the requirements of the DU Underwriting Findings report and/or Selling Guide are met. Refer to B3-3.1-02, Standards for Employment Documentation and B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income.

If the part-time income is variable, refer to FAQ: How is variable income calculated?

For information on part-time income that is seasonal, refer to FAQ: What are the requirements for seasonal income?

For information on secondary employment, refer to FAQ: Can income from a second job be used as qualifying income?

What are the steps to review a property after a disaster? Down arrow Up arrow

Disasters are earthquakes, floods, hurricanes, or other catastrophes caused by either nature or a person or event beyond the borrower's control resulting in devastation in terms of property damage and destruction.

When a disaster event occurs, the servicer must determine the extent and nature of any damage to a property securing a mortgage loan by attempting to contact the borrower. When a regional disaster event occurs, the servicer must determine the extent of the damage to any property securing a mortgage loan in the disaster area (regardless of whether the property is in a FEMA-Declared Disaster Area eligible for Individual Assistance) through reasonable means, including but not limited to:

  • obtaining information from the borrower;
  • using predictive modeling data or alternative technology, such as aerial photography, to estimate the likelihood of damage in a particular area or to a particular property; or
  • performing a property inspection when necessary.

When inspecting impacted properties, the servicer must utilize the Property Inspection Report (Form 30) or equivalent. The servicer must exercise discretion in determining whether an interior or exterior property inspection is appropriate depending on the individual circumstances. The servicer is authorized to request reimbursement for disaster inspection costs incurred on current and delinquent mortgage loans when a property inspection is necessary. To request reimbursement, the servicer must follow the procedures in Requesting Reimbursement for Property Inspections and Property Preservation Expenses in F-1-05, Expense Reimbursement.

For more information, please see Servicing Guide D1-3-01: Evaluating the Impact of a Disaster Event and Assisting a Borrower.

What is Fannie Mae’s defined grass cut schedule? Down arrow Up arrow

Fannie Mae does not provide a defined grass cut schedule. Yard services are expected to be performed year round, as needed, regardless of season.

For additional information please see: Property Preservation Matrix and Reference Guide, Section 5, Initial Securing and Initial Services.

When should the payment reminder notice be sent to the borrower for a first lien mortgage? Down arrow Up arrow

The servicer must send a payment reminder notice to the borrower no later than the 17th day of delinquency if the payment has not been received, unless the mortgage loan is a second lien mortgage loan.

For more information please see: D2-2-03, Sending a Payment Reminder Notice.

Do you prefer clear boarding, re-glazing or window repair? Down arrow Up arrow

Where feasible, Fannie Mae prefers to re-glaze/repair windows. The servicer should determine the appropriate strategy. Cost, number of windows, likelihood of additional breaks, etc. should all be considered.

For additional information please see: Property Preservation Matrix and Reference Guide, Section 5, Initial Securing and Initial Services.