B3-5.3-03, Previous Mortgage Payment History (07/25/2017)

The lender must review the borrower's credit report to determine the status of all mortgage accounts. If a borrower had previous mortgages, the lender does not have to independently verify the mortgage’s payment history provided the credit report includes a reference to the mortgage (or mortgages) and reflects 12 months of the most recent payment activity.

If adequate mortgage payment history is not included in the borrower’s credit report, the lender must use the following to verify the borrower’s payment history on a previous mortgage(s):

• a standard mortgage verification;

• loan payment history from the servicer;

• the borrower’s canceled checks for the last 12 months; or

• the borrower’s year-end mortgage account statement, provided the statement includes a payment receipt history, and, if applicable, canceled checks for the months elapsed since the year-end mortgage account statement was issued.

When a lender relies on standard mortgage verifications from servicers or holders, it must ensure that the verifications include:

• the unpaid principal balance of the mortgage and monthly payment amount;

• the present status of the mortgage, such as current, 30 days’ delinquent, etc.; and

• the borrower’s payment history.

When a servicer fails to provide all of the requested information, the lender must rely on information provided through the borrower’s canceled checks. The checks must:

• be legible,

• identify the mortgage servicer or mortgage holder as the payee,

• indicate that the servicer or holder endorsed the check for deposit, and

• indicate the date the servicer or holder deposited the check.

On the date of the loan application, the borrower’s existing mortgage must be current, which means that no more than 45 days may have elapsed since the last paid installment date.

The lender must review the borrower’s credit history to determine previous mortgage delinquency, severity (e.g., 30, 60, or 90 days), and recency of the delinquency. Loans with excessive prior mortgage delinquencies are not eligible for delivery to Fannie Mae. Excessive prior mortgage delinquency is defined as any mortgage tradeline that has one or more 60-, 90-, 120-, or 150-day delinquency reported within the 12 months prior to the credit report date. See B3-5.3-02, Payment HistoryB3-5.3-02, Payment History, and B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing CreditB3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit for additional information.

Note: For purposes of complying with the guidelines in this topic, timeshare accounts identified as mortgage tradelines are not required to meet the requirements described above, and are considered to be installment accounts.