I personally have not but FNMA says they issue them. And I thought you were saying that you had only seen a), which is the type that would require appraisals if they hadn't already been done.

Type a) would not require appraisals or flood insurance if they are only secured by the notes. It would be no different than making an accounts receivable loan.

OTHER SECURITY INTERESTS 11. If a borrower offers a note on a single-family dwelling as collateral for a loan but the lender does not take a security interest in the dwelling itself, is this a designated loan that requires flood insurance?

No. A designated loan is a loan secured by a building or mobile home that is located or to be located in an SFHA in which flood insurance is available under the Act. In this example, the lender did not take a security interest in the building; therefore, the loan is not a designated loan.

My [next to] last comment on this thread that has drug out beyond anyone's interest other than you and me: I fully agree with you on that point. My point was that that is a type of MBS, and by having the general reference to MBS in the regulation without specifying that they were referring to the other kind can lead to the impression that the regulation actually does require appraisals even though that doesn't make sense or fit with the rest of the definition.

I totally agree with your point. And issuance of bonds that are secured by notes (which in turn are secured by mortgages) is just doing that on a large scale instead of one at a time.

Whew - glad we beat that to death late on a Friday

Have a great weekend

You too. You're two hours closer to finishing than I am.