source:
  type: guide
  id: fnma-sel-b3-5.3-08
  authority: Fannie Mae Selling Guide B3-5.3-08 — Extenuating Circumstances for Derogatory
    Credit
  description: Fannie Mae Selling Guide B3-5.3-08 — Extenuating Circumstances for
    Derogatory Credit.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-5.3-08-full
  canonical_id: fnma-sel-b3-5.3-08-full
  section: Fannie Mae Selling Guide B3-5.3-08 — Extenuating Circumstances for Derogatory
    Credit
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-5.3-08 — Extenuating Circumstances for
      Derogatory Credit
    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: B3-5.3-08, Extenuating Circumstances for Derogatory Credit (12/16/2014)
      Introduction This topic provides information on extenuating circumstances for
      derogatory credit information. Extenuating Circumstances Extenuating Circumstances
      Extenuating circumstances are nonrecurring events that are beyond the borrower’s
      control that result in a sudden, signiﬁcant, and prolonged reduction in income
      or a catastrophic increase in ﬁnancial obligations. If a borrower claims that
      derogatory information is the result of extenuating circumstances, the lender
      must substantiate the borrower’s claim. Examples of documentation that can be
      used to support extenuating circumstances include documents that conﬁrm the
      event such as a copy of a divorce decree, medical reports or bills, notice of
      job layoﬀ, job severance papers, etc.; and documents that illustrate factors
      that contributed to the borrower’s inability to resolve the problems that resulted
      from the event such as a copy of insurance papers or claim settlements, property
      listing agreements, lease agreements, tax returns (covering the periods prior
      to, during, and after a loss of employment), etc. The lender must obtain a written
      explanation from the borrower explaining the relevance of the documentation.
      The written explanation must support the claims of extenuating circumstances,
      conﬁrm the nature of the event that led to the bankruptcy or foreclosure-related
      action, and illustrate that the borrower had no reasonable options other than
      to default on his or her ﬁnancial obligations. The written explanation may be
      in the form of a letter from the borrower, an email from the borrower, or some
      other form of written documentation provided by the borrower. Recent Related
      Announcements Published May 6, 2026 477 There are no recently issued Announcements
      related to this topic.
  judgment: false
