source:
  type: guide
  id: fnma-sel-b2-1.3-04
  authority: Fannie Mae Selling Guide B2-1.3-04 — Prohibited Refinancing Practices
  description: Fannie Mae Selling Guide B2-1.3-04 — Prohibited Refinancing Practices.
  coverage_tier: operative
obligations:
- id: fnma-sel-b2-1.3-04-full
  canonical_id: fnma-sel-b2-1.3-04-full
  section: Fannie Mae Selling Guide B2-1.3-04 — Prohibited Refinancing Practices
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B2-1.3-04 — Prohibited Refinancing 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: 'B2-1.3-04, Prohibited Reﬁnancing Practices (08/04/2021) Introduction
      This topic contains information on prohibited reﬁnancing practices, including:
      Lender Solicitation for Reﬁnancing Prearranged Reﬁnancing Agreements Agreements
      to Advance Borrower Payments Conditional Tenders of Payment Lender Solicitation
      for Reﬁnancing Sellers/servicers may not: speciﬁcally target Fannie Mae borrowers
      for oﬀers to reﬁnance; treat loans they hold in their own portfolios and those
      sold to another investor or Fannie Mae as separate classes of loans for purposes
      of promoting reﬁnancing. Sellers/servicers may not, as a means of making a loan
      eligible for repurchase from an MBS pool (for future reﬁnancing), encourage
      a borrower to refrain from making loan payments. Prearranged Reﬁnancing Agreements
      Sellers/servicers may not deliver a loan to Fannie Mae that is in the process
      of being reﬁnanced. Fannie Mae considers the delivery of a seasoned loan that
      is in the process of being reﬁnanced as a form of targeting, and is therefore
      unacceptable, even if no agreement for future reﬁnancing was entered into at
      the time of origination. The seller/servicer must have in place procedures to
      ensure that it does not deliver to Fannie Mae any loan that it is in the process
      of reﬁnancing or acquiring from, or funding for, a third-party originator. Similarly,
      a seller/servicer may not deliver a loan to Fannie Mae if the seller/servicer
      (or any aﬃliate or third- party originator) and the borrower have entered into
      an arrangement: for special terms (such as reduced fees) for a future reﬁnance
      of the loan - unless the seller/servicer obtains a negotiated contract from
      Fannie Mae that allows delivery of the loan in spite of its shortened prepayment
      expectation. If the seller/servicer believes that there might be such a reﬁnance
      agreement, the seller/servicer should contact its Fannie Mae customer account
      team to determine whether the loan is eligible for delivery. to complete a reﬁnance
      transaction that circumvents Fannie Mae''s cash-out reﬁnance policies and pricing.
      A transaction is not eligible as a limited cash-out reﬁnance if the borrower
      completed a cash-out reﬁnance transaction with a note date 30 days or less prior
      to the application date of a new reﬁnance secured by the same property. Published
      May 6, 2026 186 Agreements to Advance Borrower Payments Reﬁnancing arrangements
      that call for the seller/servicer to advance a number of payments on the borrower’s
      behalf and then to reﬁnance the mortgage once the agreed-upon payments have
      been advanced are not permitted. Fannie Mae also restricts reﬁnancing practices
      that aﬀect prepayment patterns. Fannie Mae analyzes MBS pools that have high
      levels of prepayments. If such analysis raises concerns about a seller/servicer’s
      practices, Fannie Mae may review the seller/servicer’s origination and reﬁnancing
      activities to ensure compliance with our requirements. With respect to any mortgage
      loan that pays oﬀ within 120 days from the whole loan purchase date or the MBS
      issue date, Fannie Mae in its sole discretion may require reimbursements by
      the seller/servicer for any premium paid or buyup proceeds paid in connection
      with the purchase of the mortgage loan. (For mortgage loans repurchased by a
      seller/servicer, Fannie Mae may require reimbursement in its sole discretion,
      without regard to the 120-day limitation.) See C1-1-01, Execution Options and
      C3-3-02, Accessing Buyup and Buydown Ratios and Calculating Payments or Charges
      for speciﬁc requirements. Conditional Tenders of Payment Conditional tenders
      of payment are not an acceptable alternative to reﬁnancing for Fannie Mae loans,
      regardless of whether they relate to a loan being serviced for Fannie Mae or
      to a loan that is being delivered to it. Fannie Mae does not consider a reﬁnancing
      to have occurred unless the mortgage debt is satisﬁed and the lien against the
      property is released. The only exceptions to this are negotiated transactions
      involving seasoned loans held in a seller/servicer’s portfolio that have been
      modiﬁed since they were originated; and transactions involving loans secured
      by properties in New York that are originated under the statutory provisions
      that permit reﬁnanced loan to be documented by a consolidation, extension, and
      modiﬁcation agreement. If the transaction that permits the reﬁnance to be documented
      by a consolidation, extension and modiﬁcation agreement is related to an eMortgage,
      the seller/servicer must follow the applicable procedures in the Servicing Guide.
      The seller/servicer must not use conditional tenders of payment as a reﬁnancing
      alternative, or honor requests it receives for conditional tenders of payment
      for any loan that it services for Fannie Mae. The seller/servicer that oﬀers
      conditional tenders of payment as a reﬁnancing alternative must not deliver
      any reﬁnanced loan to Fannie Mae unless it is documented by a new note and a
      new loan, unless it is one of the previously mentioned authorized exceptions.
      If Fannie Mae’s post-purchase underwriting performance review of a reﬁnanced
      loan reveals that the conditional tender of payment procedure was used as an
      alternative to reﬁnancing the loan, Fannie Mae will require the seller/servicer
      to repurchase the loan in question and, if multiple occurrences of this practice
      are identiﬁed, Fannie Mae may take other appropriate action against the seller/servicer.
      Published May 6, 2026 187 Recent Related Announcements The table below provides
      references to recently issued Announcements that are related to this topic.
      Announcements Issue Date Announcement SEL-2021-07 August 04, 2021 Announcement
      SEL-2020-05 September 02, 2020 Announcement SEL-2019-07 August 07, 2019'
  judgment: false
