source:
  type: guide
  id: fnma-sel-a3-2-02
  authority: Fannie Mae Selling Guide A3-2-02 — Responsible Lending Practices
  description: Fannie Mae Selling Guide A3-2-02 — Responsible Lending Practices.
  coverage_tier: operative
obligations:
- id: fnma-sel-a3-2-02-full
  canonical_id: fnma-sel-a3-2-02-full
  section: Fannie Mae Selling Guide A3-2-02 — Responsible Lending Practices
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide A3-2-02 — Responsible Lending Practices
    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: 'A3-2-02, Responsible Lending Practices (09/01/2021) Introduction
      This topic contains information on responsible lending practices, including:
      Overview Responsible Lending Policies Underwriting Standards Overview Each seller/servicer
      must use prudent, sound, and responsible business practices in its marketing
      and origination eﬀorts. The seller/servicer’s operating policies and procedures
      must provide an eﬀective means of ensuring responsible lending practices, and
      identifying and avoiding predatory lending practices. Sellers/servicers must
      update their business practices as necessary to ensure responsible lending practices
      that are in line with current market conditions. They must have policies and
      procedures, including quality control procedures, to ensure that loans delivered
      to Fannie Mae comply with these responsible lending requirements. For quality
      control requirements, see Part D, Ensuring Quality Control (QC). Responsible
      Lending Policies Published May 6, 2026 102 Sellers must comply with the responsible
      lending practices described in the following table. Topic Policy Steering Sellers
      must: • seek to oﬀer the lowest-cost product with the lowest-risk loan terms
      for which they qualify, • not steer borrowers toward a particular loan program
      to qualify the borrower for a loan in an eﬀort to misrepresent the borrower’s
      true credit or income related qualiﬁcations, and • ensure their loan originator
      compensation practices comply with the loan originator compensation provisions
      of the TILA and Regulation Z, and that loan originators comply with these requirements
      when presenting loan options to consumers. HOEPA Loans The following loans are
      ineligible for sale to Fannie Mae: • a loan that is subject to the Home Ownership
      and Equity Protection Act of 1994 as described in Section 32 of Regulation Z
      (HOEPA); and • a loan that is part of a larger transaction that is structured
      in a manner intended to circumvent the requirements of HOEPA and Section 32
      of Regulation Z. State Higher-Priced Loans Certain state-deﬁned higher-priced
      loans are ineligible for sale to Fannie Mae, regardless of whether the seller
      is subject to such state requirements as a matter of law. Any state higher-priced
      loan described in B2-1.5-02, Loan Eligibility, is ineligible for sale to Fannie
      Mae. Single Premium Credit Insurance Sellers may not require the borrower to
      purchase, and no proceeds of the loan may be used to purchase, single premium
      credit insurance (e.g., life, disability, accident, unemployment, or health
      insurance) or a single fee debt cancellation agreement. Prepayment Penalties
      Loans subject to prepayment penalties are ineligible for sale to Fannie Mae.
      Arbitration A loan that was originated on or after October 31, 2004, and is
      subject to mandatory arbitration is ineligible for delivery to Fannie Mae. Published
      May 6, 2026 103 Topic Policy Interagency Guidance on Nontraditional Mortgage
      Product Risks A loan that has a loan application date on or after September
      13, 2007, and that is a “nontraditional loan” within the meaning of the Interagency
      Guidance on Nontraditional Mortgage Product Risks, 71 Fed. Reg. 58609 (Oct.
      4, 2006), must comply in all material respects with such guidance, regardless
      of whether the lender is subject to the guidance as a matter of law. Statement
      on Subprime Mortgage Lending (Subprime Statement) An adjustable-rate mortgage
      (ARM) loan that has a residential loan application date on or after September
      13, 2007, must comply in all material respects with the Statement on Subprime
      Mortgage Lending, 72 Fed. Reg. 37569 (July 10, 2007), regardless of whether
      the lender is subject to such statement as a matter of law. Ability to Repay
      Sellers must comply with all applicable requirements. See B2-1.5-02, Loan Eligibility,
      for additional information. Underwriting Standards Every loan sold to Fannie
      Mae must be underwritten in order to establish that the borrower has the ability,
      willingness, and capacity to repay the debt. Sellers must have adequate internal
      controls and processes in place to evaluate borrower income and liabilities.
      The requirements in the following table apply to all loans sold to Fannie Mae.
      ✓ The seller must... analyze a borrower’s repayment capacity, including an evaluation
      of the borrower’s capacity to repay the debt by its ﬁnal maturity, assuming
      a fully amortizing repayment schedule. maintain written policies and procedures
      for how it takes into account income or assets, debt obligations, alimony, child
      support, and monthly DTI ratio in its ability to repay determination. Published
      May 6, 2026 104 ✓ The seller must... if risk-layering is involved: • demonstrate
      the existence of eﬀective compensating factors that support the seller’s underwriting
      decision and borrower’s repayment capacity, • have clear policies governing
      the use of risk-layering features, • not rely solely on one factor to compensate
      for the risk, but instead must consider a combination of compensating factors.
      verify and document the borrower’s income (both source and amount), assets,
      and liabilities used in the underwriting decision, except as otherwise expressly
      provided in the Selling Guide. analyze the borrower’s DTI, including • total
      monthly housing-related payments, (principal, interest, taxes, insurance, and
      other property-related assessments); and • long-term and signiﬁcant short-term
      monthly debts ensure the ﬁnal loan application signed by the borrower at closing
      includes all income and debts of the borrower that were veriﬁed, disclosed,
      or identiﬁed during the mortgage process and considered by the lender in the
      qualiﬁcation for the loan, except as otherwise expressly provided in the Selling
      Guide. A lender may be required to repurchase a loan that is in breach of the
      requirements of this topic at any time notwithstanding that the loan is otherwise
      eligible for relief from enforcement for breaches of certain underwriting and
      eligibility representations and warranties in accordance with A2-3.2-02, Enforcement
      Relief for Breaches of Certain Representations and Warranties Related to Underwriting
      and Eligibility Recent Related Announcements The table below provides references
      to recently issued Announcements that are related to this topic. Announcements
      Issue Date Announcement SEL-2021-08 September 01, 2021 Chapter A3-3, Third-Party
      Lending Functions and Servicing Published May 6, 2026 105 Arrangements Introduction
      This chapter explains Fannie Mae’s requirements regarding the outsourcing of
      mortgage origination and servicing functions. It also addresses other servicing
      arrangements as well as the requirements related to document custody and document
      custodians.'
  judgment: false
