Definition

A Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. is considered a Secondary Risk Mortgage LoanSecondary Risk Mortgage LoanMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted. when all losses incurred on such Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. are contractually borne by the LenderLenderPerson Fannie Mae approved to sell or service Mortgage Loans. until the Lender'sLender'sPerson Fannie Mae approved to sell or service Mortgage Loans. specified recourse obligation is deemed exhausted.  This obligation to bear all losses is sometimes referred to as a "Top Loss" obligation.  Because Secondary Risk Mortgage LoansSecondary Risk Mortgage LoansMortgage Loan where the Lender bears all losses until the Lender’s recourse obligations are exhausted. will convert to Primary Risk Mortgage LoansPrimary Risk Mortgage LoansMortgage Loan where Fannie Mae bears all losses or where the Lender and Fannie Mae share losses. upon the deemed exhaustion of the Lender'sLender'sPerson Fannie Mae approved to sell or service Mortgage Loans. obligation, Fannie Mae and the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must work together to accurately track amounts for any losses that may have occurred.