• The minimum borrower contribution requirements for the selected mortgage loan type must be met.
• Proceeds from the transaction must be used to
  • finance the acquisition of the subject property,
  • finance the acquisition and rehabilitation of the subject property,
  • convert an interim construction loan or term note into permanent financing, or pay off the outstanding balance on the installment land contract or contract for deed.
• Proceeds from the transaction may not be used to give the borrower cash back other than the following:
  • an amount representing reimbursement for the borrower’s overpayment of fees and charges, including refunds that may be required in accordance with certain federal laws or regulations. The settlement statement must clearly indicate the refund, and the loan file must include documentation to support the amount and reason for the refund; and
  • a legitimate pro-rated real estate tax credit in locales where real estate taxes are paid in arrears.

Note: If the borrower receives cash back for a permissible purpose as listed above, the lender must confirm that the minimum borrower contribution requirements associated with the selected mortgage product, if any, have been met. Reimbursements or refunds permitted above may also be applied as a principal curtailment in accordance with B2-1.5-05, Principal Curtailments. A pro-rated real estate tax credit is not an interested party contribution, and it cannot be considered when determining if the borrower has sufficient assets for the transaction.

LTV, CLTV, or HCLTV Ratio

• 95.01 to 97%
• Note: The CLTV ratio can be up to 105% if the subordinate lien is a Community Seconds loan.

Loan Type

• Fixed-rate loans with terms up to 30 years.
• Note: High-balance and ARM loans are not permitted.

Property and Occupancy

• One-unit principal residence. Manufactured housing is not permitted, unless the property meets the MH Advantage requirements.
• All borrowers must occupy the property unless there is a Community Seconds subordinate lien.

Borrower Eligibility

• At least one borrower must be a first-time homebuyer, as indicated on the Form 1003 in the Declarations section, when at least one borrower responds “No” to the question about having an ownership interest in a property in the last three years.
• At least one borrower on the loan must have a credit score.

Homeownership Education

• If all borrowers are first-time homebuyers, homeownership education is required. 

Underwriting Method

• DU only

Reserves

• Reserves requirements will be determined by DU.

Other

• All other standard Selling Guide policies apply.

Note: The above requirements do not apply to HomeReady mortgage loans.

• The transaction is being used to obtain a new first mortgage loan secured by the same property to
  • pay off an existing first mortgage loan (including an existing HELOC in first-lien position); or
  • for two-closing construction-to-permanent loans, to pay off an existing construction loan and documented construction cost overruns that were incurred outside of the interim construction financing. (These construction cost overruns must be paid directly to the builder at closing.); or
  • for single-closing construction-to-permanent loans, to pay for construction costs to build the home, which may include paying off an existing lot lien.
• Only subordinate liens used to purchase the property may be paid off and included in the new mortgage. Exceptions are allowed for paying off a Property Assessed Clean Energy (PACE) loan or other debt (secured or unsecured) that was used solely for energy-related improvements.
• The subject property must not be currently listed for sale. It must be taken off the market on or before the disbursement date of the new mortgage loan, and the borrowers must confirm their intent to occupy the subject property (for principal residence transactions).

Existing Loan

• The lender must document that the existing loan being refinanced is owned (or securitized) by Fannie Mae. Documentation may come from
  • the lender’s servicing system,
  • the current servicer (if the lender is not the servicer),
  • Fannie Mae’s Loan Lookup tool, or
  • any other source as confirmed by the lender.
• The lender must inform DU that Fannie Mae owns the existing mortgage using the Owner of Existing Mortgage field in the online loan application before submitting the loan to DU.
• Note: This requirement does not apply if the CLTV exceeds 95% only due to a Community Seconds loan.

LTV, CLTV, or HCLTV Ratio

• 95.01 to 97%
• Note: The CLTV ratio can be up to 105% if the subordinate lien is a Community Seconds loan.

Loan Type

• Fixed-rate loans with terms up to 30 years.
• Note: High-balance and ARM loans are not permitted.

Property and Occupancy

• One-unit principal residence. All borrowers must occupy the property.
• Manufactured housing is not permitted, unless the property meets the MH Advantage requirements.

Credit Score Requirements

• At least one borrower on the loan must have a credit score.

Underwriting Method

• DU only

Other

• All other standard limited cash-out refinance policies apply.

Note: The above requirements do not apply to HomeReady or high LTV refinance loans.

• The transaction must be used to pay off existing mortgages by obtaining a new first mortgage secured by the same property or be a new mortgage on a property that does not have a mortgage lien against it.
• Properties that were listed for sale must have been taken off the market on or before the disbursement date of the new mortgage loan.
• The property must have been purchased (or acquired) by at least one borrower no less than six months prior to the disbursement date of the new mortgage loan except for the following:
  • There is no waiting period if the lender documents that the borrower acquired the property through an inheritance or was legally awarded the property (divorce, separation, or dissolution of a domestic partnership).
  • The delayed financing requirements are met. See Delayed Financing Exception below.
  • If the property was owned prior to closing by a limited liability corporation (LLC) that is majority-owned or controlled by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower’s six month ownership requirement. (In order to close the refinance transaction, ownership must be transferred out of the LLC and into the name of the individual borrower(s). See B2-2-01, General Borrower Eligibility Requirements for additional details.)
  • If the property was owned prior to closing by an inter vivos revocable trust, the time held by the trust may be counted towards meeting the borrower’s six month ownership requirement if the borrower is the primary beneficiary of the trust.
• For DU loan casefiles, if the DTI ratio exceeds 45%, six months reserves is required.

Fannie Mae purchases or securitizes conventional, fully amortizing, fixed-rate first mortgage loans. Conventional fixed-rate loans are not assumable as of the note date. When selling such loans to Fannie Mae, the Assumption Indicator in the Loan Delivery application must be “False” (which means not assumable).

The payments must be structured as follows:

• level monthly installments of principal and interest (P&I),
• due on the first day of each month, and
• payment of interest in arrears.

The loan can be subject to a temporary interest rate buydown plan, provided that the subject property is secured by a principal residence or a second home. 

• Fannie Mae does not set a minimum remaining term requirement at the time of loan purchase.
• The initial adjustment period in months must align with the initial fixed-rate period in years. For example, a “3-year ARM” must have an initial fixed period of 36 months, and a “5-year ARM” must be 60 months.
• Each ARM plan must offer lifetime and per-adjustment interest rate change limitations.
  • Lifetime interest rate change limitations apply to interest rate increases only.
  • Per-adjustment interest rate change limitations apply to interest rate increases and decreases.
• Mortgage interest rates may never decrease to less than the ARM’s margin, regardless of any downward interest rate cap.
• Fannie Mae restricts purchase or securitization of seasoned ARMs to those that are delivered as negotiated transactions.

Lenders must determine whether an ARM loan is acceptable for purchase by Fannie Mae by subtracting the initial note rate of the loan from the fully indexed rate in effect when the loan was originated. The difference must not exceed 3%.

• The loan being delivered must not be subject to any current litigation with respect to the manner in which the interest rate and/or payment adjustments were calculated or implemented.
• The lender must not be servicing other ARMs that include interest rate and payment adjustment provisions similar to those of the mortgage being sold to Fannie Mae that are the subject of current litigation related to the manner in which adjustments were made.

A principal residence is a property that the borrower occupies as their primary residence. The following describes conditions under which Fannie Mae considers a residence to be a principal residence even though the borrower will not be occupying the property.

Multiple borrowers

• Only one borrower must occupy and take title to the property, except as otherwise required for mortgages that have guarantors or co-signers.

Military service members

• A military service member borrower currently on active duty and temporarily absent from their principal residence because of military service is considered to be an owner occupant.
• Lenders must verify the borrower’s temporary absence from the subject property by obtaining a copy of the borrower’s military orders.
• The military orders must evidence the borrower will be absent from the subject property as of the date the owner occupancy must be established as required by the security instrument.
• Loans that meet these requirements must be delivered with Special Feature Code 754.

Parents or legal guardian wanting to provide housing for their handicapped or disabled adult child

• If the child is unable to work or does not have sufficient income to qualify for a mortgage on their own, the parent or legal guardian is considered the owner/occupant.

Children wanting to provide housing for parents

• If the parent is unable to work or does not have sufficient income to qualify for a mortgage on their own, the child is considered the owner/occupant.

• must be occupied by the borrower for some portion of the year
• is restricted to one-unit dwellings
• must be suitable for year-round occupancy
• the borrower must have exclusive control over the property
• must not be rental property or a timeshare arrangement
• If the lender identifies rental income from the property, the loan is eligible for delivery as a second home as long as the income is not used for qualifying purposes, and all other requirements for second homes are met (including the occupancy requirement above).
• cannot be subject to any agreements that give a management firm control over the occupancy of the property
• must be underwritten in DU and receive an Approve/Eligible recommendation, with the exception of high LTV refinance loans required to be underwritten in accordance with the Alternative Qualification Path.

A Loan-Level Price Adjustment (LLPA) applies to certain loans secured by second homes. This LLPA is in addition to any other price adjustments that are otherwise applicable to the particular transaction. 

An investment property is owned but not occupied by the borrower. An LLPA applies to all mortgage loans secured by an investment property. These LLPAs are in addition to any other price adjustments that are otherwise applicable to the particular transaction.

Loans secured by an investment property must be underwritten in DU and receive an Approve/Eligible recommendation, with the exception of high LTV refinance loans that are required to be underwritten in accordance with the Alternative Qualification Path.

Fannie Mae purchases or securitizes first-lien mortgages that are subject to subordinate financing except for co-op share loans that are subject to subordinate financing. Subordinate liens must be recorded and clearly subordinate to Fannie Mae’s first mortgage lien. Lenders must disclose the existence of subordinate financing and the subordinate financing repayment terms to Fannie Mae, the appraiser, and the mortgage insurer. If a first mortgage is subject to subordinate financing, the lender must calculate the LTV, CLTV, and HCLTV ratios.

The lender must consider any subordinate liens secured by the subject property, regardless of the obligated party, when calculating CLTV and HCLTV ratios. This includes business loans, such as those provided by the Small Business Administration.

• Variable payment mortgages that comply with the details below.
• Mortgages with regular payments that cover at least the interest due so that negative amortization does not occur.
• Mortgages with deferred payments in connection with employer subordinate financing.
• Mortgage terms that require interest at a market rate.

If financing provided by the property seller is more than 2% below current standard rates for second mortgages, the subordinate financing must be considered a sales concession and the subordinate financing amount must be deducted from the sales price.

The HomeReady mortgage is a conventional community lending mortgage that offers underwriting flexibilities to qualified borrowers who meet specific income criteria. The HomeReady mortgage is a standard product offering available to all Fannie Mae lenders. No special approvals are required.

A HomeReady mortgage is a first mortgage, purchase money, or limited cash-out refinance transaction for one- to four-unit properties used as the borrower’s principal residence.

Eligible properties include:

• one-unit properties, including manufactured housing, and units in condos and PUDs;
• units in co-ops, provided the unit conforms to Fannie Mae’s requirements, and the lender has received specific authority to deliver mortgages on co-ops to Fannie Mae;
• existing structures and new construction; and
• two-, three-, and four-unit properties.

Additional restrictions apply to transactions with LTV, CLTV, or HCLTV ratios of 95.01 — 97%.

Refer to the Eligibility Matrix for maximum allowable LTV, CLTV, and HCLTV ratios for HomeReady mortgage loans. HomeReady loans that are originated in connection with manufactured homes must follow the more restrictive LTV, CLTV, and HCLTV ratios that apply. For example, the maximum LTV, CLTV, and HCLTV ratio for a one-unit HomeReady manufactured home that does not meet the MH Advantage requirements is 95%.

LTV, CLTV, or HCLTV Ratio

• 95.01 to 97%
• Note: The CLTV ratio can be up to 105% if the subordinate lien is a Community Seconds loan.

Loan Purpose

• Purchase transactions or limited cash-out refinances only.

Existing Loan

For limited cash-out refinances:

• The lender must document that the existing loan being refinanced is owned (or securitized) by Fannie Mae. Documentation may come from
  • • the lender’s servicing system,
    • the current servicer (if the lender is not the servicer),
    • Fannie Mae’s Loan Lookup tool, or
    • any other source as confirmed by the lender.
• The lender must inform DU that Fannie Mae owns the existing mortgage using the Owner of Existing Mortgage field in the online loan application before submitting the loan to DU.
• Note: This requirement does not apply if the CLTV exceeds 95% only due to a Community Seconds loan.

Loan Type

• Fixed-rate loans with terms up to 30 years.
• Note: High-balance and ARM loans are not permitted.

Property and Occupancy

• One-unit principal residence. Manufactured housing is not permitted, unless the property meets the MH Advantage requirements.
• All borrowers must occupy the property unless there is a Community Seconds subordinate lien.

Credit Score Requirements

• At least one borrower on the loan must have a credit score.

Underwriting Method

• DU only

Reserves

• Reserves requirements will be determined by DU.

Other

• All other standard purchase and limited cash-out refinance and HomeReady requirements apply.

Refer to the Eligibility Matrix.

Fannie Mae purchases or securitizes mortgages made to borrowers who are natural persons and have reached the age at which the mortgage note can be enforced in the jurisdiction where the property is located. There is no maximum age limit for a borrower.

Exceptions to the requirement that borrowers be natural persons are:

• inter vivos revocable trusts,
• HomeStyle Renovation mortgages, and
• land trusts in those states where the beneficiary is an individual. (Note: Fannie Mae permits land trusts on a negotiated basis for states where land trusts are widely accepted.)

A “Borrower” is any applicant (e.g., individually or jointly) whose credit is used for qualifying purposes to determine ability to meet Fannie Mae’s underwriting and eligibility standards. 

“Co-borrower” is a term used to describe any borrower other than the borrower whose name appears first on the note.

Lenders must confirm each borrower’s identity prior to the extension of credit. Fannie Mae’s requirements for borrower identity verification are intended to align with lenders’ existing federal obligations under laws requiring information and document verification, including the Department of Treasury’s Office of Foreign Assets Control (OFAC) regulations and the U.S. Patriot Act. See A3-2-01, Compliance With Laws, for additional information concerning borrower identity verification.

Fannie Mae purchases and securitizes mortgages made to non–U.S. citizens who are lawful permanent or non-permanent residents of the United States under the same terms that are available to U.S. citizens. Fannie Mae does not specify the precise documentation the lender must obtain to verify that a non–U.S. citizen borrower is legally present in the United States. The lender must make a determination of the non–U.S. citizen’s status based on the circumstances of the individual case, using documentation it deems appropriate. By delivering the mortgage to Fannie Mae, the lender represents and warrants that the non–U.S. citizen borrower is legally present in this country.

Education with an established curriculum and instructional goals, provided in a group, classroom setting, or via other formats, that covers homeownership topics such as the home-buying process, how to maintain a home, budgeting, and the importance of good credit.

One-on-one assistance that addresses unique financial circumstances and housing issues, and focuses on overcoming specific obstacles to achieve housing goals. Counseling includes topics such as repairing credit, locating cash for a down payment, recognizing predatory lending practices, understanding fair lending and fair housing requirements, avoiding foreclosure, and resolving a financial crisis.  All housing counseling involves the creation of a budget and a written action plan, and includes a homeownership education component.

For the following transactions, at least one borrower on the loan must complete homeownership education prior to loan closing:

• if all borrowers on the loan are relying solely on nontraditional credit to qualify, regardless of the loan product or whether the borrowers are first-time homebuyers;
• HomeReady purchase transactions, when all occupying borrowers are first-time homebuyers; or
• purchase transactions with LTV, CLTV, or HCLTV ratios greater than 95%, when all borrowers are first-time homebuyers.

Note: The requirements that apply to purchases also apply to construction-to-permanent transactions that are processed as a purchase.

• If a borrower opts to work with a housing counselor, completion of housing counseling prior to closing will satisfy Fannie Mae’s homeownership education requirement. The lender must retain a copy of the certificate of course completion in the loan file.
• HomeReady borrowers who complete housing counseling prior to the execution of the sales contract may be eligible for a loan-level price adjustment credit. The requirements of the counseling are described in the Certificate of Completion of Housing Counseling (Form 1017). This form must be signed by the counseling recipient (the borrower) and the HUD counselor if the counseling is obtained prior to the sales contract. The lender must retain a copy of the form in the loan file. 

Eligible Provider

Homeownership Education

• Any qualified third-party provider, independent of the lender; which can include a mortgage insurance company (without regard to whether they provide mortgage insurance coverage for the particular transaction)
• Education course provided by a Community Seconds or other down payment assistance program provider, where the program requires homeownership education or counseling provided by a HUD-approved agency

Housing Counseling

• HUD-approved agency

Course Content

Homeownership Education

• Course content must align with NIS or HUD standards 

Housing Counseling

• Course content must align with HUD standards 

Method of Delivery

Homeownership Education

• Any method offered by an eligible provider

Housing Counseling

• Any method offered per HUD standards

Date Required for Completion

Homeownership Education

• Prior to loan closing

Housing Counseling

• Prior to loan closing
• Note: There may be an additional incentive for HomeReady loans when housing counseling is completed prior to the execution of the sales contract.

Required Documentation

Homeownership Education

• Certificate of course completion from the provider

Housing Counseling

• If after execution of the sales contract but prior to closing, certificate of course completion from the provider.
• If prior to execution of the sales contract (HomeReady loans) Form 1017 signed by both the counseling recipient (borrower) and the HUD counselor.

Liquid financial reserves are those liquid or near liquid assets that are available to a borrower after the mortgage closes. Liquid financial reserves include cash and other assets that are easily converted to cash by the borrower by

• drafting or withdrawing funds from an account,
• selling an asset,
• redeeming vested funds, or
• obtaining a loan secured by assets from a fund administrator or an insurance company.

Reserves are measured by the number of months of the qualifying payment amount for the subject mortgage (based on PITIA) that a borrower could pay using his or her financial assets. 

The definition of reserves applies to both manually underwritten mortgage loans and loan casefiles underwritten through DU. Funds to close are subtracted from available assets when considering sufficient assets for reserves.

Examples of liquid financial assets that can be used for reserves include readily available funds in

• checking or savings accounts;
• investments in stocks, bonds, mutual funds, certificates of deposit, money market funds, and trust accounts;
• the amount vested in a retirement savings account; and
• the cash value of a vested life insurance policy.

The following cannot be counted as part of the borrower’s reserves:

• funds that have not been vested;
• funds that cannot be withdrawn under circumstances other than the account owner’s retirement, employment termination, or death;
• stock held in an unlisted corporation;
• non-vested stock options and non-vested restricted stock;
• personal unsecured loans;
• interested party contributions (IPCs);
• any amount of a lender contribution; and
• cash proceeds from a cash-out refinance transaction on the subject property.

Minimum required reserves vary depending on

• the transaction,
• the occupancy status and amortization type of the subject property,
• the number of units in the subject property, and
• the number of other financed properties the borrower currently owns.

Manually underwritten loans: The minimum required reserves are documented in the Eligibility Matrix. However, when a borrower has multiple financed properties and is financing a second home or investment property, the lender must apply the applicable additional reserve requirements for the other financed second home and investment property transactions. Refer to the Calculation of Reserves for Multiple Financed Properties below for additional details.

DU loan casefiles: DU will determine the reserve requirements based on the overall risk assessment of the loan, the minimum reserve requirement that may be required for the transaction, and whether the borrower has multiple financed properties.

If a borrower has multiple financed properties and is financing a second home or investment property, DU will base the reserve calculations for the other financed properties on the number of financed properties determined by DU. Refer to the Calculation of Reserves for Multiple Financed Properties below for additional details.

Note: High LTV refinance loans are exempt from the minimum reserve requirements.

The mortgaged premises must be

• residential in nature as defined by the characteristics of the property and surrounding market area;
• secured by an interest in real property within the meaning of the Internal Revenue Code as such term is defined in 26 C.F.R. § 1.856-3;
• safe, sound, and structurally secure;
• adequately insured per Fannie Mae guidelines for property and flood insurance;
• the highest and best use of the property as improved (or as proposed per plans and specifications), and the use of the property must be legal or legal non-conforming use;
• readily accessible by roads that meet local standards;
• served by utilities that meet community standards; and
• suitable for year-round use.

Note: Certain aspects of the location of a property will require special consideration. For example, properties in resort areas that attract people for seasonal or vacation use are acceptable only if they are suitable for year-round use.

Dwelling units for security properties may be detached, attached, or semi-detached.

Properties may be located

• on an individual lot,
• in a condo project,
• in a co-op project, or
• in a planned unit development (PUD) or subdivision project.

Properties located in a condo, co-op, or PUD project must meet Fannie Mae’s project standards requirements.

Fannie Mae defines a “manufactured home” as any dwelling unit built on a permanent chassis that is attached to a permanent foundation system and evidenced by a HUD Data Plate and HUD Certification Label(s). 

• The manufactured home must be built in compliance with
  • the Federal Manufactured Home Construction and Safety Standards that were established June 15, 1976, as amended and in force at the time the home is manufactured; and
  • additional requirements that appear in HUD regulations at 24 C.F.R. Part 3280.

Compliance with these standards will be evidenced by the presence of both a HUD Data Plate and the HUD Certification Label(s). If the original or alternative documentation cannot be obtained for both the HUD Data Plate and the HUD Certification Label(s), the loan is not eligible for delivery to Fannie Mae.

• The HUD Data Plate is a paper document located on the interior of the subject property that contains, among other things, the manufacturer’s name and trade/model number. In addition to the data required by Fannie Mae, the Data Plate includes pertinent information about the unit, including a list of factory-installed equipment. The HUD Certification Label(s), sometimes referred to as a HUD “seal” or “tag,” is a metal plate located on the exterior of each section of the home. The Manufactured Home Appraisal Report (Form 1004C) must have photos of both the HUD Data Plate and the HUD Certification Label(s).
• As an alternative to the original HUD Certification Label(s), the lender may be able to obtain a verification letter with the same information contained on the HUD Certification Label(s) from the Institute for Building Technology and Safety (IBTS). A duplicate HUD Data Plate may be available from IBTS or by contacting the In-Plant Primary Inspection Agency (IPIA) or the manufacturer. (A list of IPIA offices is posted on HUD’s website.)
• The unit must not have been previously installed or occupied at any other site or location, except from the manufacturer or the dealer’s lot as a new unit.
• The manufactured home must be a one-unit dwelling that is legally classified as real property and cannot include an accessory dwelling unit. See B2-3-04, Special Property Eligibility Considerations for additional information.
• The towing hitch, wheels, and axles must be removed. The dwelling must assume the characteristics of site-built housing.
• The borrower must own the land on which the manufactured home is situated in fee simple, unless the manufactured home is located in a co-op or condo project.
  • For co-ops, both the land and dwelling must be owned by the co-op.
  • For condos, both the land and dwelling, including those located on leasehold estates, must be subject to the condo regime.

Otherwise, mortgages secured by manufactured homes located on leasehold estates are not eligible.

• A manufactured home may be located on an individual lot or in a project development.

A project review is generally not required for a loan secured by a multi-width manufactured home located in a PUD project. Lender approval, or in some cases Fannie Mae PERS approval, is required for condo and co-op projects that consist of multi-width manufactured homes.

PERS approval is required for all condo, co-op, or PUD projects that consist of single-width manufactured homes. For further information about project review requirements, see Chapter B4-2, Project Standards.

• The manufactured home must be at least 12 feet wide and have a minimum of 400 square feet of gross living area.

Except for MH Advantage properties, Fannie Mae does not specify other minimum requirements for size, roof pitch, or any other specific construction details for HUD-coded manufactured homes.

• Site preparation for delivery of the manufactured home must be completed.
• The manufactured home must be attached to a permanent foundation system in accordance with the manufacturer’s requirements for anchoring, support, stability, and maintenance.

The foundation system must be appropriate for the soil conditions for the site and meet local and state codes.

• The manufactured home must be permanently connected to a septic tank or sewage system, and to other utilities in accordance with local and state requirements.
• If the property is not situated on a publicly dedicated and maintained street, then it must be situated on a street that is community owned and maintained, or privately owned and maintained.

There must be adequate vehicular access and there must be an adequate and legally enforceable agreement for vehicular access and maintenance. See B4-1.3-04, Site Section of the Appraisal Report, for additional information about privately maintained streets.

• Mortgages secured by existing manufactured homes that have incomplete items, such as a partially completed addition or renovation, or defects or needed repairs that affect safety, soundness, or structural integrity, are not eligible for purchase until the necessary work is completed.

Exceptions to the foregoing may be made only for minor items that do not affect the ability to obtain an occupancy permit — such as landscaping, a driveway, or a walkway – subject to all requirements and warranties for new or proposed construction provided in B4-1.2-04, Requirements for Postponed Improvements.

• Manufactured homes that have an addition or have had a structural modification are eligible under certain conditions. If the state in which the property is located requires inspection by a state agency to approve modifications to the property, then the lender is required to confirm that the property has met the requirement. However, if the state does not have this requirement, then the structural modification must be inspected and be deemed structurally sound by a third party who is regulated by the state and is qualified to make the determination. In all cases, the satisfactory inspection report must be retained in the mortgage loan file.