The standard LTV ratio calculation must also be used See B1-1-01, Contents of the Application Package and B7-1-02, Mortgage Insurance Coverage Requirements, for additional information. Irrespective of the use of appraised value or sales price for determining whether mortgage insurance is required, this standard LTV ratio calculation must be used to determine the level of mortgage insurance coverage that is required on the mortgage loan. LTV ratio based on the lower of the sales price or appraised value (standard LTV ratio calculation) for all property types Lenders must base their determination of when mortgage insurance is required for a refinance transaction for co-op share loans solely on the appraised value. LTV ratio based on the appraised value for refinances of co-op share loans For additional information on calculating LTV ratios on loans with resale restrictions, see B5-5.2-02, Loans with Resale Restrictions: Eligibility, Underwriting and Collateral Considerations and B5-5.3-03, Shared Equity: Eligibility, Underwriting and Collateral Requirements. Note: For purchase transactions when the co-op property is subject to resale restrictions that terminate automatically upon foreclosure and the appraised value exceeds the sales price, lenders may use the appraised value of the property without resale restrictions, rather than the sales price when determining when mortgage insurance is required. If the sales price of the property is more than the appraised value, this determination may result in mortgage insurance not being placed on a mortgage loan as would otherwise be required using Fannie Mae’s standard definition. LTV ratio based on the sales price for co-op propertiesįor purchase transactions, lenders must base their determination of when mortgage insurance is required solely on the sales price for the co-op property. If this calculation results in mortgage insurance not being placed on the loan where mortgage insurance would otherwise have been required using Fannie Mae’s standard definition, the lender must deliver the loan to Fannie Mae using the MI Absence Reason Type of “No MI Based On Original LTV” (Sort ID 429). If the appraised value of the property exceeds the sales price, this determination may result in mortgage insurance not being placed on a mortgage loan as would otherwise be required using Fannie Mae’s standard definition.

Lenders must base their determination of when mortgage insurance is required solely on the appraised value of the property. LTV ratio based on the appraised value for non-co-op properties

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