source:
  type: guide
  id: fnma-sel-d2-1-03
  authority: Fannie Mae Selling Guide D2-1-03 — Outcomes of Fannie Mae QC Reviews
  description: Fannie Mae Selling Guide D2-1-03 — Outcomes of Fannie Mae QC Reviews.
  coverage_tier: operative
obligations:
- id: fnma-sel-d2-1-03-full
  canonical_id: fnma-sel-d2-1-03-full
  section: Fannie Mae Selling Guide D2-1-03 — Outcomes of Fannie Mae QC Reviews
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide D2-1-03 — Outcomes of Fannie Mae QC Reviews
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'D2-1-03, Outcomes of Fannie Mae QC Reviews (11/03/2015) Introduction
      This topic describes the possible outcomes of Fannie Mae QC reviews, including:
      Deﬁnition of Origination Defects Under the Remedies Framework Criteria for Determining
      Signiﬁcant Defects Under the Remedies Framework Breach of Mortgage Insurance
      Policy Published May 6, 2026 1064 Deﬁnition of Origination Defects Under the
      Remedies Framework Upon completion of a full-ﬁle quality control review for
      loans covered by the remedies framework, Fannie Mae will designate any defect
      uncovered during that review as one of the following: A “ﬁnding” is one or more
      defects that, when considered with other loan features, does not necessitate
      a change in the price of the loan or result in the loan being unacceptable even
      if the true and accurate facts about the loan had been known at the time Fannie
      Mae purchased or securitized the loan. A “price-adjusted loan (PAL)” has one
      or more defects that, when considered with other loan features and based on
      the facts of the loan as purchased or securitized by Fannie Mae, result in a
      loan that was otherwise eligible for delivery had the correct data been delivered
      and LLPA been paid to Fannie Mae by the lender. A “signiﬁcant defect” is one
      or more defects that either necessitates a change to the price on which the
      loan was acquired or result in the loan being unacceptable for purchase had
      the true and accurate information about the loan been known at time of purchase.
      Loans with ﬁndings and PALS are not loans with signiﬁcant defects. See A2-3.2-03,
      Remedies Framework, for additional information about the remedies framework.
      Criteria for Determining Signiﬁcant Defects Under the Remedies Framework In
      determining whether there is a signiﬁcant defect on a loan covered by the remedies
      framework, Fannie Mae must give due consideration to the severity of the defect.
      In addition, the defect must relate to one of the following: Signiﬁcant Defect
      Criteria Related To Examples the underwriting of the borrower’s creditworthiness
      and capacity the borrower’s income, credit, liabilities, and assets the borrower’s
      eligibility and qualiﬁcation • area median income • ﬁrst-time homebuyer status
      • status as lawfully present in the United States the underwriting criteria
      related to property or project eligibility • residential use • condo eligibility
      the property appraisal or the physical condition of the property Published May
      6, 2026 1065 Signiﬁcant Defect Criteria Related To Examples a life-of-loan representation
      and warranty as described in A2-2-07, Life-of-Loan Representations and Warranties
      loan and product terms and criteria the criteria provided in the Eligibility
      Matrix, such as • LTV ratio, occupancy, credit score, loan purpose, etc. and
      terms such as • ineligible transaction types • products that may require special
      lender approval as a prerequisite for delivery • limitations on cash out to
      borrowers that determines the type of reﬁnance • any negotiated exception or
      variance requirements applicable at the time of loan purchase • no defaults
      • all taxes and insurance premiums have been paid or escrows established • no
      modiﬁcation, encumbrance, subordination, or release of mortgage the warranties
      and obligations of the lender regarding the FHFA Suspended Counterparty Program
      the existence, suﬃciency, or enforceability of any required insurance or guaranty
      the form and/or execution of Fannie Mae required loan documents, that without
      which make the loan ineligible for sale or limit the enforceability of the required
      loan terms • the Uniform Residential Loan Application • power of attorney •
      a Texas Section 50(a)(6) loan • nonstandard and special purpose documents such
      as living trusts Breach of Mortgage Insurance Policy In the event the defect
      identiﬁed by Fannie Mae also turns out to be a breach of any provision of any
      mortgage insurance policy issued with respect to a loan, the lender is not released
      from any breach of the Lender Contract Published May 6, 2026 1066 that may result
      if the mortgage insurance company insuring the loan rescinds, cancels, denies,
      or curtails the mortgage insurance beneﬁt due to the same or similar acts or
      omissions that make up the defect. Recent Related Announcements There are no
      recently issued Announcements related to this topic.'
  judgment: false
