Introduction
This section explains the rules for checking a home buyer’s previous mortgage payment history. This includes how to document past mortgage payments and what to do if there’s a history of late payments.
Documenting Previous Mortgage History
When someone applies for a mortgage, the lender must look at the borrower’s credit report to see their mortgage payment history. If the borrower had any mortgages before, the lender doesn’t need to check the payment history separately if the credit report already shows the mortgage details and 12 months of recent payments.
If the credit report doesn’t show enough about the mortgage payments, the lender must use one of the following methods to check the borrower’s payment history:
1. Ask for a standard mortgage verification.
2. Get the payment history from the company that serviced the loan.
3. Look at the borrower’s canceled checks for the last 12 months.
4. Use the borrower’s yearly mortgage statement, as long as it shows the payment history and, if needed, the canceled checks since the last statement was issued.
Standard Mortgage Verifications from Servicers
When a lender gets a mortgage verification from a servicer, it must include:
– The remaining balance and monthly payment amount.
– The current status of the mortgage, like if it’s up-to-date or how many days it’s been late.
– The payment history of the borrower.
If the servicer doesn’t provide all the needed details, the lender must use the borrower’s canceled checks to verify payments. These checks must be clear to read, show the mortgage servicer or holder as the recipient, prove the servicer received and deposited the check, and show the deposit date.
Existing Mortgage Payment Requirements
At the time the borrower applies for a new loan, their current mortgage must be up-to-date. This means no more than 45 days can have passed since their last mortgage payment.
Excessive Mortgage Delinquency
The lender must also check the borrower’s credit history for any past mortgage payments that were very late. A mortgage is considered to have excessive delinquency if there’s any record of being 60, 90, 120, or 150 days late within the 12 months before the credit report date. Mortgages with this level of late payments are not allowed to be sold to Fannie Mae. For more details, see sections “B3-5.3-02, Payment History” and “B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit”.
Note: Timeshare accounts listed as mortgage tradelines are an exception to these rules. They are treated as installment accounts and don’t need to meet the same requirements.
References
For more details, visit Previous Mortgage Payment History of the Fannie Mae Selling Guide.