Fannie Mae Announcements

Document Name Document Date

SEL-2021-02 - March 2021 Selling Guide Update

Fannie Mae has announced updates to their selling guide. Credit Policy is currently reviewing the following and will update the guidelines accordingly:

Topic

Update

Power of Attorney

Effective 03/03/2021, including loans currently in process. 

Added the following flexibilities from COVID-19 into the selling guide:

  • allowing all borrowers to sign the loan documents pursuant to a POA,
  • allowing certain interested parties to serve as attorney-in-fact for purchase transactions, and
  • requiring a closing protection letter when the attorney-in-fact or agent o
    • is an employee of the title insurer, or
    • is an employee of the policy-issuing agent of the title insurer.

Additionally, a new requirement pertaining to the use of a POA with an inter vivos revocable trust was added.

Note: All of the current flexibilities related to use of a POA in LL-2021-03 due to COVID-19 will remain until further notice.

Risk factors evaluated by Desktop Underwriter (DU)

The changes in the DU 11.0 release will apply to new loan casefiles submitted to DU on or after the weekend of 03/13/ 2021.

Note: These changes will not impact existing loan casefiles created and resubmitted in DU Version 10.3.

To align with the Desktop Underwriter (DU) Version 11.0 Release Notes, FNMA  has updated the Selling Guide to reflect changes to the following risk factors evaluated by DU:

Debt-to-Income Ratio:

  • The composition of the borrower’s debt will be taken into consideration in addition to the actual ratio itself (the lower the ratio, the lower the risk and vice versa).
    • Borrowers whose revolving debt makes up a smaller percentage of their monthly expense have shown to represent less risk than those whose revolving debt makes up a large percentage of their monthly expenses.
    • Borrowers with student loan debt show to represent less risk than those with only revolving debt.

Self-Employment/Variable Income

  • FNMA has removed self-employment as a risk factor and replaced it with variable income.
    • DU will view a borrower whose total annual income is made up of a higher percentage of variable income (bonus, overtime, commission, and other) as representing increased risk. (Note that other income is based on entry in Form 1003 of “Other” gross monthly income type in current employment, and “Other” in income from other sources.)

Planned Unit Development (PUD)

FNMA has updated the definition of a planned unit development (PUD) to align throughout the selling guide as follows:

  • A project or subdivision that consists of common property and improvements that are owned and maintained by an HOA for the benefit and use of the individual PUD unit owners. The unit owners in the project have title to a residential property (lot and structure) and an interest in the HOA that owns or manages the common areas and facilities of the PUD.

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03/03/2021

DU Integration Impact Memo Update - May 2021

Fannie Mae will implement updates to Desktop Underwriter (DU) on May 1, 2021, in support of the redesigned URLA (Form 1003) mandate on March 1. The following changes in this update will apply to Conventional, FHA, and VA loan casefiles created on or after 05/01/2021:

DU Message

  • 1 new DU message within the DU Underwriting Findings report in support of the redesigned Form 1003.
    • Integrated systems that parse the DU Codified Findings (UNDERWRITING_FINDINGS_XML), DU Underwriting Findings report data file (RES) or DU Messages API response file (JSON) may require updates to support the new message.

DU

Out of Scope Message

  • The following message will be issued when the Out of Scope recommendation is received on conventional loan casefiles created on or after May 1 using a legacy file format (1003 3.2 or MISMO AUS v2.3.1).
    • Message ID 3521: This loan casefile is out of scope as it was submitted using the 1003 v3.2 or MISMO v2.3.1 loan application. As of March 1, 2021, all new loan applications must be submitted using the redesigned Form 1003 (MISMO v3.4).

Note: An Out of Scope recommendation indicates that DU is unable to underwrite the particular product, mortgage, or borrower described in the submission

DU

Casefile

Create Date Message

  • DU supports the Casefile Create Date in the DU Underwriting Findings report.
    • Message ID 943 – DU: This loan casefile was submitted to Desktop Underwriter version %a by %a. The following information is associated with this loan: The casefile ID is %a, the loan casefile was created on %a, and the submission number is %a. If the loan is delivered to Fannie Mae, the Casefile ID must be provided at delivery.
  • Same message will be issued for DO users as ID#237.

DU for Government Loans

FHA and VA loan casefiles created on or after May 1 using a legacy 1003 v3.2 or MISMO AUS v2.3.1 file format will receive an Error recommendation from DU.

Reminders

  • The mandate for implementing the redesigned Form 1003 and DU MISMO v3.4 is March 1, 2021.
  • All new loan applications started on or after March 1 must use the redesigned form and DU MISMO v3.4 file format to submit to DU. The DU MISMO v3.4 file format will not be accepted via a legacy DO or DU Direct Web Post integration or the classic DU UI.
  • Fannie Mae does not have any requirements for how a lender determines the loan application start date; however, the expectation is that the lender will apply its definition consistently.
  • To accommodate loan applications started in a legacy loan application file format, but not submitted to DU by March 1, DU will not issue an Out of Scope recommendation for new loan applications created using the legacy 1003 v3.2 or MISMO AUS v2.3.1 file format until May 1, 2021.
  • Conventional loan casefiles created on or after May 1 and submitted to DU using a legacy 1003 v3.2 or MISMO AUS v2.3.1 file format will receive an Out of Scope recommendation from DU.
  • All loan applications started in legacy formats that may take longer than average to close, such as loans for new construction, can continue to use a legacy 1003 v3.2 or MISMO AUS v2.3.1 file format to re-submit to DO/DU via Direct Integration or the classic DU UI until February 28, 2022.
  • Effective March 1, 2022, DU will no longer underwrite any loans in legacy formats, regardless of start date or initial DU submission date.

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02/26/2021

Fannie Mae - Mortgage Insurance Forms Update

Fannie Mae has issued a Lender Letter updating their MassHousing Mortgage Insurance Forms as well as the list of Fannie Mae Approved Mortgage Insurance Forms. Previously in LL-2019-08, changes were announced to FNMA's requirements regarding MI master primary policies, related endorsements and other MI forms.

  • MassHousing Mortgage Insurance Fund 
    • Recently, Fannie Mae and Freddie Mac, under the direction of the FHFA, worked with the MassHousing Mortgage Insurance Fund to update the Fund’s Loan Loss Reserve Agreement, Commitment/Certificate, and Mortgage Payment Protection Endorsement Forms (Forms). These Forms describe the Fund’s terms of loss coverage on individual loans sold to or securitized by Fannie Mae, as well as other investors and guarantors. Note: Lenders are prohibited from entering into any agreement that modifies the terms of any approved mortgage insurance master policy on loans delivered to them. The Fund’s Forms are the equivalent of a private mortgage insurer’s mortgage insurance master policy and are subject to this prohibition.
      • Effective: The updated MassHousing Mortgage Insurance Forms are required for loans with application dates on or after April 1, 2021 that are covered by the Fund. Loans with incorrect Forms are not eligible for sale to Fannie Mae.

Reminder! All MI certificates must be presented on the correct form as listed in the Fannie Mae Approved Mortgage Insurance Forms. The form versions are listed under each MI Company.

02/18/2021

Fannie Mae - URLA 2021 FAQs Update

Fannie Mae has updated their URLA FAQs for the 03/01/2021 URLA mandate. The following are New and Updated:

New

Open Production Period Q1-4:

Q4: If my borrower is in the process of completing the legacy URLA on March 1, 2021, what AUS format should I use to complete this transaction?

  • If your borrower began the application process prior to March 1, 2021, they can continue to use the legacy URLA, and you may submit the loan to the GSEs using the legacy AUS formats.  Lenders will have until May 1, 2021 to submit their open loan applications started in legacy formats before March 1, 2021 but not submitted to the GSEs’ AUS.
  • If this is a new transaction starting on/or after March 1, 2021, you must use the redesigned URLA and MISMO v3.4 file formats

Updated

Data Requirements:

Q10: Will the GSEs be releasing the Voluntary Consumer Information Form (VCIF) to collect language preference from the borrower? If so, when?

The GSEs began work on developing the VCIF in 2020; however, due to the impact of the COVID-19 pandemic on the mortgage industry, the GSEs and FHFA postponed the work on the VCIF for the remainder of the year. During 2021, we will re-engage with industry stakeholders to continue the work on the VCIF.

Implementation and Timeline

Q3: Can a lender submit the legacy AUS formats with the redesigned URLA?

No, the redesigned URLA cannot be used with the existing AUS formats. After the GSEs begin accepting the new format, lenders using the redesigned URLA must use the updated AUS Specifications for each GSE.

If a legacy AUS file is submitted prior to the mandate date, the submitted file may remain in the legacy format. The lender may complete the loan using the 7/08 (rev. 6/09) URLA, even after the mandate if they submitted the file using the legacy format. However, all new applications submitted after the mandate will not be accepted if submitted using a legacy AUS file format.

Q4: What should an aggregator do if they receive a redesigned URLA or loan submission file in MISMO V3.4 and they are not ready to submit to the GSEs in the new format?

We encourage our aggregator customers that directly integrate with GSE AUSs to coordinate with their lending partners to ensure the file format they receive is a version they are able to submit to the GSEs. Retrofitting the MISMO V3.4 file format to the current GSE formats is not acceptable.

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02/18/2021

GSE – URLA Mandate Reminder

The GSE’s Fannie Mae and Freddie Mac have published a reminder of the fast approaching March 1, 2021 Uniform Residential Loan Application (URLA) mandate. New loan applications started on or after March 1 will use the redesigned URLA and DU MISMO v3.4 / LPA v5.0.06 file formats. The GSEs have not described how a lender should determine the “loan application start date.” However, the expectation is that the lender will apply its chosen definition consistently. Please note as follows:

AUS Messaging

Fannie Mae

Freddie Mac

  • To accommodate those loans started in the legacy format prior to March 1, but not submitted by that date, the GSE AUSs will not return an Out of Scope for Fannie Mae or critical edit for Freddie Mac on new loans submitted in the legacy format until May 1, 2021.

  • It is expected that the industry will submit all applications started in the legacy formats to either GSE’s AUS by May 1.  Effective May 1, 2021, any new loan submitted using legacy formats will no longer be accepted.
  • DU will return an Out of Scope recommendation on loan application files submitted using the 1003 v3.2 or MISMO v2.3.1 format with a casefile create date on or after May 1, 2021.

  • This announcement supports the 60-day advance notification for DU system changes
  • LPA versions earlier than v5.0.06 will return a critical edit on loan application files with an Original Submission Date on or after May 1, 2021.

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For more information, please visit the GSE’s URLA/ULAD web pages:

02/16/2021

Fannie Mae News – Net Income for 2020

Fannie Mae has reported net Income of $11.8 Billion for 2020 and $4.6 Billion for fourth quarter 2020. The filing provides consolidated financial statements for the year ended December 31, 2020. The following documents are now available on Fannie Mae's website at www.fanniemae.com:

02/16/2021

Fannie Mae AQM List

Fannie Mae has posted their AQM list for February with no updates since the previous list (January 2021).  As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

02/16/2021

DU Version 11.0 Release Notes

Fannie Mae has announced, during the weekend of March 13, 2021 they will implement DU Version 11.0.  The new version will contain an updated risk assessment that will fine-tune DU’s ability to assess risk while fostering homeownership sustainability. Please Note: Fannie Mae anticipates DU 11.0 to yield minimal change in the overall percentage of loan casefiles receiving an Approve/Eligible recommendation, but each lender’s results may vary depending on their overall mix of business.

  • Effective Dates
    • The changes in this release will apply to new loan casefiles submitted to DU on or after the weekend of March 13, 2021.
    • Loan casefiles created in DU Version 10.3 and resubmitted after the weekend of March 13 will continue to be underwritten through DU Version 10.3.
    • DU Version 10.2 will be retired as of this update.

 Risk factors and updates to align with the selling guide will also be included as follows:

Risk Factors

Risk Factor updates include:

  • Debt-to-Income Ratio/Debt Composition
    • DU casefiles will continue to be viewed as having lower associated risk when the borrower’s debt-to-income ratio (DTI ratio) is low and will evaluate the composition of the borrower’s debt, specifically looking at how revolving debts and student loan debts make up the borrower’s total monthly expenses.
      • Borrowers whose revolving debt makes up a smaller percentage of their monthly expense will represent less risk.
      • Borrowers with student loan debt will represent less risk than those with only revolving debt.
  • Self-Employment / Variable Income
    • DU will no longer view self-employment as representing increased risk but will now evaluate the composition of borrower income.
    • DU will view borrowers whose total annual income is made up of a higher percentage of variable income (i.e., bonus, overtime, commission, and miscellaneous) as representing increased risk.

Updates to Align with the Selling Guide

  • Appraisal Waiver Update
    • The Selling Guide indicates that an appraisal waiver offer may not be exercised when using rental income from the subject property to qualify the borrower. This includes income from an accessory unit.
      • DU will no longer evaluate a loan casefile for appraisal waiver eligibility when accessory unit income is provided on the loan application for use in qualifying.
  • Retirement Income Message
    • The DU retirement income message will be updated related to the use of retirement, government annuity, and pension income updates from the December 2020 selling guide.
  • Source of Gift of Equity with the Redesigned Form 1003
    • When a gift of equity is being used for DU casefiles with the redesigned Form 1003, DU will check the source of the gift of equity.
      • When the source is one that is not a relative or unmarried partner, the loan casefile will receive an Ineligible recommendation because (like a gift of cash) the gift of equity must come from a relative or unmarried partner. 
    • Note: As a reminder, all new loan applications taken on or after March 1, 2021 must be submitted using the redesigned Form 1003 (MISMO v3.4).

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02/11/2021

Fannie Mae: Appraisal News You Can Use

It has been a longstanding myth that condition and quality ratings are interdependent, or change based on location. Fannie has created two new videos by the Noble Appraiser to vanquish this myth by spreading the word that condition and quality ratings should be based solely on UAD standardized definitions, and must reflect a holistic view of the property improvements. View the following videos on clearing the cloud of confusion around condition ratings and disentangle the trees of turmoil around quality of construction ratings:

Additionally, for ongoing reference included is a new reference guide on these topics with examples of each rating.

02/10/2021

LL-2021-03 - FNMA - Impact of COVID-19 on Originations and LL-2021-04 FNMA - Impact of COVID-19 on Appraisals

Fannie Mae has extended their COVID-19 Temporary Policies via Lender Letters: LL-2021-03LL-2021-04. Temporary flexibilities for Verbal Verifications of Employment, Power of Attorney and Appraisals continue to be effective for all loans in process and loans with application dates through 03/31/2021. 

02/10/2021

Fannie Mae Outages to CU, UCDP and Loan Delivery – 02/19 to 02/20/2021

Fannie Mae's technology applications for CU, UCDP, and Loan Delivery will be unavailable as follows:

  • CU outage impacts CU, UCDP, and DU users
    • Collateral Underwriter (CU) will undergo scheduled maintenance on Friday, Feb. 19 from 9 p.m. ET to 11 p.m. ET. During this outage: 
    • CU will be unavailable.
    • Any new appraisal submissions to Fannie Mae will show the status “In Progress” in Uniform Collateral Data Portal (UCDP) and will be processed automatically when maintenance is complete.
    • All collateral applications and services, including appraisal waiver services, value rep and warrant relief messages, and CU messages in Desktop Underwriter® (DU), will be unavailable.
  • Loan Delivery
    • Loan Delivery will be unavailable from 10 p.m. ET Friday, Feb. 19 until 10 a.m. ET Saturday, Feb. 20 for system maintenance and implementations.
02/05/2021
SEL-2021-01 - February 2021 Selling Guide Update

Fannie Mae has announced they have simplified the verification requirements related to seasonal and secondary income employment. The following is effective on and after 02/03/2021, including loans currently in process:

  • Secondary Employment
    • Clarified that while a borrower may have different employers, they may not have any gap in employment greater than one month in the most recent 12-month period, unless the secondary employment is considered seasonal income.
  • Seasonal Income
    • Removed the requirements to confirm with the employer if the borrower is likely to be re-hired the next season and to confirm if the work is in the same job (or same line of work) as the previous two years.
02/03/2021

EarlyCheck Release Notes

Fannie Mae has announced upcoming EarlyCheck release notes for February and March 2021. Please refer to the announcement for details. In addition, please refer to EarlyCheck Edit Messages for the 2/22/2021 update.

02/01/2021

Fannie Mae – QC Tips: Income & Employment Reverification

Fannie Mae periodically provides updates to the Quality Insider. The QC Insider highlights specific topics related to post closing. In their most current issue: Fannie Mae has highlighted some helpful best practices on the importance of driving successful Income and Employment reverification processes.

01/28/2021

GSE: FNMA and FHLMC Uniform Appraisal Dataset (UAD) and Forms Redesign Initiative

Freddie Mac and Fannie Mae are collaborating to build on the success of the UAD to improve appraisal data quality and consistency. The UAD redesign is focused on retiring the existing appraisal forms and redesigning the Uniform Residential Appraisal Report (URAR) to reflect current value and market drivers. The new UAD will bring one single standardized appraisal report for any property type.

This is a multi-year undertaking and an industry collaborative effort involving many appraisers, lenders and other industry stakeholders. Fannie Mae and Freddie Mac are sharing their vision through a new video.

Please note, there is no implementation date set for this transition. The GSE’s will continue to communicate in future announcements.

01/28/2021

GSE- UCD Critical Edits Phase 1 – Coming 05/2021

The GSEs, Freddie Mac and Fannie Mae previously announced in August 2020, their implementation of a two-year transition to convert certain edits in their Uniform Closing Dataset (UCD) collection systems from “warning” to “critical.” This transition will begin 05/31/2021 designed to enhance data quality and consistency for single-family loans the GSEs purchase.

To prepare for this transition, the GSE’s have recommended that lenders and software partners take the following steps and review as follows:

  • GSE-specific feedback messages
  • Test your UCD XML files.
  • Plan implementation with the updated UCD Critical Edits Implementation Guide 
  • UCD Critical Edits Matrix 2.0 
  • Transition Timeline

Please refer to the Freddie Mac UCD page and the Fannie Mae UCD page for links to these resources or for more information

01/26/2021

Extension of COVID-19 Flexibilities to 02/28/2021

Fannie Mae  has extended their COVID-19 Temporary Policies via LL-2021-03LL-2021-04. Temporary flexibilities continue to be effective for all loans in process and loans with application dates through 02/28/2021. Additionally, please note as follows:

  • Lender Letter LL-2021-03; formerly LL-2020-03 Originations
    • Content reorganized such that the policies with explicit expiration dates are shown first, and like content was moved closer together (income and employment). Content that no longer applies was removed (such as quality control flexibilities and submission of financial statements), as have reminders of current policies in the Selling Guide.
  • Lender Letter LL-2021-04; formerly LL-2020-04 Appraisals
    • Content reorganized and like content was moved closer together (e.g., HomeStyle Renovation content). Two sections were removed (Identification of a Fannie Mae loan and Delivery requirements).
  • FNMA COVID-19 FAQs
    • The FAQS updated to address year-to-date profit and loss statements and remove several FAQs pertaining to post-funding quality control flexibilities that are no longer in effect.
01/15/2021

DU for Government Loans Release Notes - January 2021

Fannie Mae has announced during the weekend of 01/16/2021, Desktop Underwriter (DU) for government loans will update to support the 2021 FHA and VA loan limits as follows:

FHA Loan Limits

FHA county loan limits are applied by the FHA TOTAL mortgage scorecard, so a DU update is not required for FHA’s 2021 county loan limit updates. However, please note as follows:

  • In cases where a property county cannot be determined, DU applies the FHA National Low Cost Area Limit and the FHA National Low Cost Area Limit amounts, will be updated to reflect the new values
    • Prior to the weekend of 01/16/2021 for FHA loan casefiles submitted or resubmitted:
      • DU will display the 2020 limits where a property county cannot be determined, regardless of Agency Case Number assignment date.
    • Effective on or after 01/16/2021 for FHA loan casefiles submitted or resubmitted:
      • DU will display the 2021 FHA National Low Cost Area Limit where a property county cannot be determined, regardless of Agency Case Number assignment date.

Note: It is the Lenders responsibility for verifying that the correct limit is applied when determining eligibility.

VA  Loan Limits

The 2021 county loan limits are available on VA’s website.

  • Prior to the weekend of 01/16/2021 for VA loan casefiles submitted or resubmitted:
    • Will be underwritten using the 2020 VA county loan limits.
  • Effective on or after 01/16/2021 for VA loan casefiles submitted or resubmitted:
    • Will be underwritten using the 2021 VA county loan limits.

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01/13/2021

Fannie Mae - MLK Day

Fannie Mae's business offices will be closed on Monday 01/18/2021, with the exception of their Technology Support Center in observance of Martin Luther King Jr., Offices will re-open on Tuesday 01/19/2021.

01/13/2021

Fannie Mae AQM List

Fannie Mae has posted their AQM list for January with no updates since the previous list (December 2020). As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

01/12/2021

SEL-2020-07- December Selling Guide Updates

Fannie Mae has announced and updated their Selling Guide for December. Unless otherwise stated, the updates are effective on and after 12/16/2020. Credit Policy is currently reviewing all additions, clarifications and removals and will update the corresponding topic guidelines in KO accordingly.

Eligibility for Single – Width Manufactured Homes

Effective for loans delivered to Fannie Mae on and after 02/01/2021.

Please Note: Credit Policy is currently reviewing the new Single-Wide (MH) home requirements. Fairway does not currently permit Single-Wide (MH) homes. If this becomes available, CP will provide an update in the near future.

Single-Wide (MH) homes - Expanded Eligibility Requirements:

  • Must be titled as real property
  • Located on an individual lot or in a Fannie Mae-approved project
  • Principal Residence:  Purchase and LCOR
  • Manufacture date of 10 yrs. or less – measured from the effective date of the appraisal.
  • Be at least 12 feet wide with minimum of 400 Sq. ft. of gross living area
  • Cannot include an accessory dwelling unit (ADU)
  • Not permitted for MH Advantage product
  • Two minimum comparable sales:
    • One comp must be a closed sale of another single- width MH. When not avail – additional comp under contract sale or active listing permitted.
    • In addition to the numbers on the HUD Data plate and Cert labels, the appraiser must provide photos to document this information.
  • Consult your MI Companies if coverage is available for single-width (MH).

Additionally:

  • DU is not able to identify single width vs. double-wide. The requirements must be applied manually.
  • DU will issue a message referencing this requirement when the property type is shown as a manufactured home
  • New SFC codes 235 and 791are required for delivery.

Retirement, Government Annuity, and Pension income AND

Employment-Related Assets as Income

Effective with application dates received on or after 02/15/2021.

Added:

  • Financial and bank account statements as eligible to show current receipt of income
  • Eligible retirement account balances can be combined for continuance

Clarification:

  • Requirements clarified when documenting income from a pension or annuity account when the income will begin on or before the first payment date of the new loan.
  • Three-year continuance of income is only required for retirement income paid in the form of a distribution from a 401(k), IRA, or Keogh retirement account.
    • Note: The retirement income message in DU will be updated in a future release to reflect these changes

Removed:

  • The requirement to reduce the value of retirement assets consisting of stocks, bonds, and mutual funds by 30% when measuring the three-year continuance for retirement income, and for calculating net documented assets when employment-related assets are used as income.

Sale of Personal Assets

Effective for loans locked on and after 12/16/2020

Updated:

  • Proof of borrower’s ownership of the sold asset is limited to only those assets that have a title, for example an automobile title.
  • An independent valuation of the asset required in cases where the proceeds from the sale exceed 50% of the total monthly income used in qualifying.  

Removed:

  • The prior policy that allowed for alternative documentation if the proceeds from the sale represented a minor percentage of the borrower’s overall financial contribution

Community Land Trust – Eligibility

Please Note: Fairway does not currently permit Community Land TrustsThe following is for informational purposes only.

Updated:

  • Simplified existing policy with regard to the community land trust’s experience, staff, and annual reports.  

Added:

  • Example to illustrate the calc of LTV ratio for a Community Land Trust purchase.

Pro-rated Real Estate Tax Credits

Effective for loans locked on and after 12/16/2020

Clarified:

  • In places where real estate taxes are paid in arrears;  Pro-rated real estate tax credits provided by the seller cannot be considered when determining if the borrower has enough funds for the transaction
  • Continue to verify that the borrower has sufficient assets from the list of eligible sources
  • A pro-rated tax credit is not an interested party contribution.

IRS Form 4506-C, IVES Request for Transcript of Tax Return

4506-C form must be used to request a tax transcript beginning 03/01/2021

New Form:

  • IRS Form 4506-C created for authorized IVES participants to order tax transcripts with the consent of the taxpayer.
  • IRS Forms 4506-T and 4506T-EZ will phase out for use by third parties in early 2021.

Redesigned Loan Application 1003

01/01/2021:  Open Production will begin

03/01/2021: Required to use the redesigned Form 1003 (and the MISMO v3.4 format for DU loan casefiles) for new loan applications

The Selling Guide reflects multiple topic updates that reference both the current and redesigned forms with specific references to fields in Form 1003 (7/05 rev.6/09) and Form 1003 (1/2021):

Added:

  • New fields that are on the redesigned Form 1003 that have related policies. Examples:
    • Separate maintenance income has been added to alimony and child support income policy.
    • Grants are considered donations from others and no longer referred to as gifts.
  • The terms “loan application” and “Form 1003” generally mean the same. The term “online loan application” refers to the DU user interface (or the lender’s loan origination system) where data is collected that is not on the Form 1003.

Removed:

To account for changes in the location of data between the current and redesigned forms, where possible, references to specific Form 1003 section numbers and field names have been removed.

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12/16/2020

Appraiser Newsletter - December 2020

Fannie Mae provides a newsletter to Appraisers on a monthly, if not quarterly basis. The Appraiser Update Newsletter was designed to assist appraisers with common questions in the industry, clarifications on selling guide updates relating to appraisals, and always includes a common myth-buster section. The following highlights in the December 2020 edition, are as follows.

  1. COVID-19 appraisals: No assumptions
  2. Why should value rep and warrant relief matter to appraisers?
  3. The one-mile myth Vanquished!
  4. The myth of “recent sales only”
  5. Accessory Dwelling Unit updates as previously announced in the September Selling Guide
  6. Clarifications to project standards policies
12/14/2020

LL-2020-03 - Impact of COVID-19 on Originations and LL-2020-04 Impact of COVID-19 on Appraisals

Extension of COVID- 19 Flexibilities

The GSE's Fannie Mae and Freddie Mac have extended their COVID-19 Temporary Policies via Fannie Mae LL-2020-03LL-2020-04 and Freddie Mac 2020-47 . All temporary flexibilities continue to be effective for all loans in process and loans with application dates on or before 01/31/2021 and are currently outlined on the COVID-19 Temporary Guidance topic.

12/10/2020

Fannie Mae AQM List

Fannie Mae has posted their AQM List for December with no updates since the previous list (November 2020).

12/08/2020

GSE - UMDP Joint Announcement

The GSE's will begin accepting the redesigned Uniform Residential Loan Application (URLA) and MISMO v3.4 submissions to our automated underwriting systems (AUS) on January 1, 2021.

The two-month Open Production Period (OPP) runs through February 28, 2021. The OPP follows the successful Limited Production Period (LPP), which started August 1, 2020. During this time, early adopters have been submitting production loan files using the redesigned URLA and updated AUS files.

The OPP is the final implementation phase leading up to the March 1, 2021, mandate and is the culmination of a multi-year collaborative effort among lenders, technology solution providers, government agencies, mortgage insurance companies, document preparation companies and other industry stakeholders to improve and modernize the loan application and automated underwriting process.

The redesigned URLA, AUS specifications, and additional supporting resources for the redesigned URLA are available on the Freddie Mac URLA/ULAD web page and the Fannie Mae URLA web page.

12/08/2020

FNMA COVID-19 FAQs

Revisions were made to answer additional questions related to self-employed borrower income.

  • New: Q28, & 29
  • Updated: Q14, 15,22,27
11/30/2020

Fannie Mae LL-2020-14 - 2021 Loan Limits

Announced the 2021 maximum conforming loan limits effective for loans acquired by the GSE's on and after 01/01/2021. The first mortgage loan limits are defined in terms of general loan limits and high-cost area loan limits which are increasing in 2021. Fairway will issue a joint department announcement in the next few days regarding when we will have the ability to accept locks under the new loan limits

For DU loan Casefiles:

  • The 2021 loan limits will be applied to Desktop Underwriter Versions 10.3 loan casefiles submitted (or resubmitted) on or after the weekend of 12/12/2020.
    • Note: Loan casefiles underwritten through DU prior to 12/12/2020 that receive an Ineligible recommendation due only to exceeding the 2020 loan limit may be delivered after 01/01/2021. The loan casefile does not have to be resubmitted to DU if the loan amount complies with the applicable 2021 loan limit.
11/24/2020

DU Version 10.3 January Release Notes

The changes in this release will apply to loan casefiles submitted or resubmitted on or after the weekend of 01/16/2021 and include as follows:

Manufactured Housing Message (DU)

  • A new observation message will be added to DU informing lenders if a loan may be eligible for delivery as a Duty to Serve manufactured housing loan.
    • The message will be issued using information associated with the borrower’s income, the transaction, and the subject property

Support of the Redesigned 1003

  • A new observation message will be issued for MISMO V3.4, V3.2 or V2.3.1 1003 loan applications used on the loan casefile submission.

Submission Detail Messages (DO)

  • A new Observation message will be issued on loan casefiles submitted using DO that also includes the name of the broker institution used for the submission and the submission type (interim or final).

Minimum Amortization Term

  • DU will issue an Ineligible recommendation on loan casefiles with an amortization term less than 85 months.

Updates to Align with the Selling Guide

  • Lease Review Message Removal
    • As previously announced in June, FNMA updated their policy to no longer prescribe action the lender must take at the loan level to ensure rental property leases do not adversely impact first lien position or enforceability.
    • The DU message requiring review of the lease is being removed.
  • Support of LIBOR ARM Retirement
    • ARM 3252 is being removed as a valid Fannie Mae ARM plan in DU.
    • Please Note: Fairway does not currently permit FNMA ARM loans.
  • Miscellaneous Message Text Changes
    • To continue to provide clarity and consistency with the Selling Guide, various DU messages will be updated

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11/20/2020

EarlyCheck Release Notes 6.6 and 6.7

Announced EarlyCheck edits made as of 11/16/2020 and has included a preview of January 2021 edits as follows:

  • 11/16/2020 Version 6.6
    • Existing edit related to Borrower, Original Term, Appraisal, Unpaid Principal Balance (UPB), Credit Score, Property-Project Code, and Counseling are changing severity.
    • New edits are related to Closing Data.

  • 01/25/2021 Version 6.7
    • Existing edits related to UPB, Counseling, Closing Data, Original Term, Credit Score, Project-Property Type and Underwriting are changing severity.
11/20/2020

Fannie Mae - Thanksgiving Holiday Hours

Following SIFMA’s recommended holiday closings, Fannie Mae's Capital Markets Pricing, Sales Desk and Business offices will be closed on Thursday 11/26 and will be closing early on Friday 11/27 at 2 p.m. 

11/20/2020

GSE's: COVID-19 Extension of Temporary Policies and Business Account Statement Increase

The GSE's Fannie Mae and Freddie Mac have extended their COVID-19 Temporary Policies via Fannie Mae Lender Letters: LL-2020-03LL-2020-04LL-2020-06  and Freddie Mac Bulletin 2020-44.

  • Temporary flexibilities continue to be effective for all loans in process and loans with application dates through 12/31/2020.
  • Selling Loans in Forbearance Due to COVID-19 have extended for eligible note dates to Dec. 31, 2020 and delivery to Feb. 28, 2021.

Important Note: The GSE’s have revised their requirement for Self-Employed Borrowers in the collection of the number of months in which business account statements are required when an unaudited year-to-date (YTD) profit and loss statement is obtained.

  • Effective for mortgage loan applications received on or after 12/14/2020:
    • The number of months to collect business statements is increasing from two months to three months in order to remain consistent with their responsible lending commitment.
    • When reviewing YTD profit & loss statements and business account statements, determine if the business revenue documented in the unaudited YTD profit and loss statement supports the level of revenue documented on the business account statements.

Additionally, The GSE’s have updated their COVID- 19 FAQs as follows

“When using the appraisal flexibilities may appraisers make assumptions concerning relevant characteristics of the subject property, such as interior condition, without a data source? “No.

Please refer to the COVID-19 Temporary Guidance topic in KO for full requirements

11/13/2020

Fannie Mae – November AQM List

Fannie Mae has posted their AQM list for November with no updates since the previous list (October 2020). As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

11/09/2020

Fannie Mae News - Classic FICO Credit Score Approved for Continued Use

In accordance with the requirements of the Validation and Approval of Credit Score Models Rule, Fannie Mae has performed the required assessments for the Classic FICO credit score model, and Fannie Mae and the Federal Housing Finance Agency have approved it for continued use. This is an incremental step while Fannie Mae continues to assess additional credit score model applications.  Check out the timeline and credit score models in mortgage lending.

11/11/2020

Fannie Mae - Election Day Closures

Fannie Mae’s Selling Guide and Servicer support centers are closing for Election Day, Tuesday 11/03/2020 and will re-open on Wednesday 11/04/2020. Capital Markets Pricing & Sales Desk will remain open.

10/29/2020

Fannie Mae – Perspectives Blog - Condominium Market

Check out Fannie Mae’s latest Perspective Blog where lenders expect stable levels of condominium lending and identify opportunities for improvement. FNMA economists captured feedback from nearly 200 senior mortgage executives to understand lender perspectives on trends in the condominium market and to identify opportunities to streamline or enhance policy and process requirements in order to more effectively and efficiently manage condominium project risks.

10/29/2020

Fannie Mae – UCDP Maintenance 10/31-11/01/2020 

The Uniform Collateral Data Portal (UCDP) will have an extended maintenance period from 5 p.m. ET on Saturday, 10/31/2020 until 8 a.m. ET on Sunday, 11/01/2020. During this time, any new appraisal submissions to Fannie Mae will have a status of “In Progress” and will be processed automatically in UCDP when maintenance is complete.

10/23/2020

Fannie Mae – October AQM List

Fannie Mae has posted their AQM list for October with one update since the previous list (September 2020): Appraiser Mark Hopkins – TX #1322747 – Appraisals are no longer accepted. As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

10/21/2020

GSE's COVID-19 Temporary Policies Extended

The GSE's Fannie Mae and Freddie Mac have extended their COVID-19 Temporary Policies via Fannie Mae LL-2020-03LL-2020-04 and Freddie Mac 2020-40.  All temporary flexibilities continue to be effective for all loans in process and loans with application dates on or before 11/30/2020 and are currently outlined on the COVID-19 Temporary Guidance topic. Additionally, Fannie Mae has updated their COVID-19 FAQs in regards to RON – Remote Online Notarization in Q112: Was there a methodology for determining the states that are acceptable in the remote online notarization (RON) grid originally published?

10/19/2020

Fannie Mae - DU – Required Maintenance Outage

Fannie Mae’s DU (AUS) will experience a required maintenance outage this weekend on Sunday 10/18/2020 between 1 a.m. and 7 a.m. ET. Loans submitted to DU during the outage will not receive DU results.

10/16/2020

Fannie Mae – COVID-19 FAQs - Updated

Fannie Mae has updated their COVID-19 FAQs. The following are listed when new or updated:

  • Underwriting & General
    • Q23 (New): What are general standards for an audited profit and loss statement?
  • Temporary Purchase and Refinance Eligibility (Updated)
    • Q51 (Updated):  Can missed payments during forbearance on an existing mortgage loan be refinanced into the new loan amount?
    • Q60 (Updated): If the borrower has entered a repayment plan or other loss mitigation solution described in Lender Letter LL-2020-03, must the required three timely payments be consecutive?
    • Q68 (New):  Is a credit supplement an acceptable form of additional due diligence to determine whether the borrower’s existing mortgage payments are current?
  • Appraisals
    • Q105 (New): If a lender took advantage of the COVID-19 appraisal flexibilities and obtained a desktop appraisal, can that appraisal be reused for a subsequent refinance transaction?
    • Q106 (New): If a lender took advantage of the COVID-19 appraisal flexibilities and obtained an exterior-only appraisal, can that appraisal be reused for a subsequent refinance transaction?
10/12/2020

Fannie Mae - October Selling Guide Updates

Fannie Mae has announced and updated their Selling Guide for October. Unless otherwise stated, the updates are effective on and after 10/07/2020. Credit Policy is currently reviewing and will update the corresponding guidelines in KO accordingly.

Remote Online Notarizations

RONs became effective for all loans beginning 03/31/2020 due to COVID in which FNMA provided a number of flexibilities. This Guide update aligns the remote online notarization policies in the Selling Guide with the COVID requirements with additional clarifications for a few of the policies s follows;

  • Updated terms and conditions required for the use of remote online notarization, including additional details regarding system requirements;
  • The list of states where remote online notarization is permitted; and
  • For states not on the list, the ability for lenders to utilize remote online notarization as long as certain requirements are met.

Project Standards Requirements

Effective for all loan applications on and after 12/07/2020

Red Flags have been published along with additional guidance added to:

  • Condotel Ineligibility
    • Supplemental requirements, including projects that are transient in nature, offer hotel-type services, voluntary rental pooling, or sharing of revenue from short-term rentals and related activities
  • Projects subject to recreational leases are ineligible for sale to FNMA.

Cash-Out Refinance Transactions - Vesting Requirements

C/O requirements currently reflect: “the property must have been purchased (or acquired) by the borrower at least six months prior to the disbursement date of the new mortgage”, and it lists some exceptions.

  • Clarification added to “at least one borrower” on the loan to address situations where there is more than one borrower.

Gifts of Equity

Gifts of Equity are permitted to fund all or part of the down payment and closing costs (including prepaid items) but may not be used towards financial reserves.

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10/07/2020

Fannie Mae Appraiser Newsletter - September 2020

Fannie Mae provides periodic updates for residential appraisers serving Fannie Mae lender customers, known as their Appraiser Newsletter. In the September 2020 edition, Fannie Mae focuses on:

  • The new 1004 Desktop and the 1004 Hybrid Forms
    • What’s important to know is that the 1004 Desktop and 1004 Hybrid are not Selling Guide-compliant, meaning lenders cannot deliver loans to FNMA with appraisals on the new forms unless the lender has a formal agreement to participate in FNMA’s appraisal modernization testing. Consequently, new forms not utilized unless specifically instructed by client/lender.  Please note: Fairway does not participate.
    • Additionally, the forms are ineligible with the COVID-19 flexibilities.
  • Clarification on Appraising Homes with Solar Panels and Energy-Efficient Improvements.
    • This policy does not allow appraisers to adjust on a mechanical dollar-for-dollar basis for equipment and installation costs, replacement cost, or the discounted present value of expected savings or cash flow over the useful life of the equipment. Further, appraisers may not adjust the value of the property solely based on the cost or income approach. The appraiser must analyze the market reaction to the energy-efficient feature. Fannie Mae has provided:
    • An overview on Appraising Properties With Solar Panels, which breaks down appraisal requirements by common types of ownership and debt financing.
    • Additionally, a  short tutorial video is offered which describes the most common leasing and ownership structures for solar panels and how these structures affects the value analysis.
  • Data on Appraisal Assignment Volume and Appraiser Workload
    • It has been a busy year!
09/28/2020

Fannie Mae – Updates to EarlyCheck Release Notes & Messages

Fannie Mae has announced their EarlyCheck release notes for Version 6.3.4. Effective on 09/21/2020, the existing edits were revised (including changes to severity) related to DTI, MI, and property attachment turning fatal. Please refer to the EarlyCheck Messages spreadsheet for details.

09/25/2020

GSE's - COVID-19 Temporary Policies Extended and Update to  LLPA (Market Condition Credit Fee)

The GSE's Fannie Mae and Freddie Mac have extended their COVID-19 Temporary Policies via Fannie Mae LL-2020-03 LL-2020-04 and Freddie Mac 2020-37. All temporary flexibilities continue to be effective for all loans in process and loans with application dates on or before 10/31/2020 and are currently outlined on the COVID-19 Temporary Guidance topic.

FNMA/FHLMC is updating the LLPA to  exclude additional mortgages from the Market Condition Credit Fee in Price and the below will not be charged for the following mortgages:

  • Mortgage in an original NOTE amount of less than or equal to $125k, or
  • Construction Conversion Mortgages that are documented using Integrated Documentation (single closing) or Modification Documentation without a new Note.

Please refer to the following announcements for full details Fannie Mae  LL-2020-12 & Freddie Mac 2020-37

Additionally, Fannie Mae and Freddie Mac have update their Fannie Mae COVID-19 FAQs and Freddie Mac Covid 19 FAQ 

FNMA:(On-Line Notarizations)

  • Q109. How does the Aug. 27, 2020 update to the period of time that the recordation of the notarial ceremony must be retained impact loans delivered before Aug. 27, 2020?
  • Updated (Forbearance):
    • Q130. Does Fannie Mae purchase loans that are in forbearance?
    • Q136. If a loan goes into forbearance on the sale date of the loan, does the lender owe the LLPA?

FHLMC: New (Student Loan Contingent Liability)

  • Q2 : If the borrower has a federal student loan that is in a COVID-related automatic forbearance, can the monthly payment be excluded from the debt payment-to-income ratio if it has been paid by another party (i.e. the student loan is a contingent liability)?
  • Updated (On-Line Notarizations) 
    • Q5:  Sellers are to maintain the recording of the notarial ceremony for greater of (a) 10 years, or (b) the time period specified in the RON law(s) of the State in which the notary is licensed. Does this mean that the Sellers are responsible to obtain a copy of the recorded notarization session and retain it in their files?
    • Q7: How does the update to the period of time that the recordation of the notarial ceremony must be retained impact mortgages delivered before August 27, 2020?
    • Revised seller/servicer FAQs from bulletin 2020-12
09/24/2020

Fannie Mae – AQM List September 2020

Fannie Mae has posted their AQM List for September with no updates since the previous list (August 2020). As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

09/18/2020

Fannie Mae – DU Validation Service Release Notes

Fannie Mae has announced effective on and after 10/17/2020; they will discontinue using the manual verification report approach for validation of employment and income within the DU Validation system. There are no changes to employment and income validation using automated reports. (FWL does not participate in DU Validation

Automated Reports vs. Manual Reports

  • Automated reports provide data that is contained from the report supplier’s existing database that consist of employer provided information.
  • A manual verification report is data developed as a manual request from lender to report supplier to contact the employer directly to obtain the information.

The use of third-party employment verification vendors to obtain income and employment may continue to be utilize without DU Validation and Rep and warrant relief.

Please Note:  

  • Asset validation with DU Validation is still operational.
  • Employment Validation currently remains suspended until further notice per COVID requirements.

Additionally, Fannie Mae has provided a job aid: Fannie Mae - Best practices for income and employment verifications.pdf. Please note:

  • This job aid describes common red flags related to borrower income and employment and suggests ways to investigate them. This document is for informational purposes. In case of any conflict with the provisions of the Fannie Mae Selling Guide, the Guide rules.
09/16/2020

Fannie Mae – September Selling Guide Updates

Fannie Mae has announced updates to their Selling Guide for September as follows:

  • Accessory Dwelling Units:
    • Expanded property eligibility by allowing multi-width manufactured homes titled as real property to be eligible as an accessory unit, which was previously ineligible. 
      • As a reminder; a subject property that is a manufactured home and has an accessory unit is not permitted. 
  • Non-Occupant Borrowers
    • Clarifications made based on common industry questions. Guarantors, co-signers, and non-occupant borrowers are permitted on purchase, limited cash-out and cash-out refinance transactions and must meet the requirements of General Borrower Eligibility Requirements. (Credit Policy had previously vetted this eligibility that there was not a limitation to product type, therefore there is no change).
09/02/2020

Fannie Mae News - Options for Borrowers Affected by Hurricane Laura and the California Wildfires

Fannie Mae has issued a news release, as a reminder for those impacted by Hurricane Laura and the California Wildfires of available mortgage assistance and disaster relief options. For single-family mortgages impacted by a natural disaster, Fannie Mae permits as follows:

  • Homeowners may request mortgage assistance by contacting their mortgage servicer following a disaster
  • Mortgage servicers are authorized to suspend or reduce a homeowner's mortgage payments for up to 90 days – even without establishing contact – if the servicer believes the homeowner was affected
  • Homeowners affected by disaster are often eligible to reduce or suspend their mortgage payments for up to 12 months
  • During this temporary payment break:
    • Homeowners will not incur late fees
    • Foreclosure and other legal proceedings are suspended
  • There are a number of options available to potentially help homeowners catch up on missed payments

Homeowners currently on a COVID-19-related forbearance plan who are subsequently impacted by the storm or fires should contact their mortgage servicer to discuss options

08/27/2020

Fannie Mae – Updates URLA FAQ’s

Fannie Mae has published new and updated URLA FAQs in support of the New Form 1003 timeline:

  • Updated FAQ’s
    • General (Q5) - The GSEs do not intend to require a lender to repurchase a mortgage loan started before the mandate date solely due to the lender’s use of the legacy AUS data format with the redesigned URLA (and vice versa).
  • New FAQ’s
    • Data Requirements (Q4) - GSE will list of software providers that have been approved to support the URLA
    • Limited production Period (All new Q1-4)
      • Loans originated by sellers approved for the LPP by one GSE can be purchased by either GSE
      • Aggregators that purchase loans originated during the LPP can sell those loans to the GSEs
      • The GSEs have no requirements for or limits on the loan volume lenders may submit during the LPP
      • The GSEs will not publish their lists of lenders participating in the LPP.
08/26/2020

DU Extended Outage on 08/16/2020

Desktop Underwriter (DU) will experience an extended outage on Sunday, 8/16/2020 between 1 a.m. and 7 a.m. ET due to required maintenance. Loans submitted to DU during the outage will not receive DU results and users should submit loans after conclusion of the scheduled outage.

08/14/2020

Fannie Mae LL-2020-12 - New Adverse Market Refinance Fee

In light of market and economic uncertainty resulting in higher risk and costs incurred by the GSE’s, Fannie Mae is implementing new loan-level price adjustment (LLPA) of 50 basis points (0.500%) in addition to any other price adjustments pertaining to Rate and Term -Limited cash-out and Cash-out refinances. The GSE’s will announce applicable selling guide updates in a future announcement. 

08/13/2020

GSE - Uniform Closing Dataset UCD Critical Edits Implementation Timeline

The GSE’s, Fannie Mae and Freddie Mac have announced they are implementing a two-year transition to convert a select number of edits in the UCD Collection Solution from “warning” to “critical/fatal.” 

The transition is to enhance data quality and consistency for single-family loans purchased by the GSEs and will begin in May 2021. The effective date of each edit transition to “critical/fatal” identified by phases 1-4 in this announcement. The GSEs will publish the complete list of edits known to-date for any lenders who wish to implement the required technical changes all at once or ahead of schedule.

For more information, visit the GSE UCD pages:

08/11/2020

Fannie Mae AQM List

Fannie Mae has posted their AQM list for August with no updates since the previous list (July 2020). As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

08/10/2020

Fannie Mae – Appraising Properties with Solar Panels

As previously announced in the Fannie Mae Selling Guide for August, they added clarifications to Solar Panel guidelines. Due to these clarifications, Fannie Mae has created a job aid to explain appraisal requirements for properties with solar panels, broken down by common types of ownership and debt financing. In addition, check out the following:

08/06/2020

Fannie Mae – August Selling Guide Updates

Fannie Mae has announced updates to their Selling Guide for August 2020. Please Note: Credit Policy is currently reviewing these updates and will advise of any further clarifications to policy in a future announcement. Updates are as follows:

  • Solar Panel Policies
    • Clarifications made to the underwriting and appraisal requirements associated with different financing structures used for the purchase of solar panels due to increased popularity in the market. The clarifications made include:
      • Panels owned outright by the borrower and
      • Further guidance concerning the calculation of the DTI ratio and CLTV ratio when the solar panels are subject to financing in the form of a power purchase or lease agreement.
  • Representations and Warranties Framework for Loans in Forbearance
    • Aligning the Selling Guide with previously announced Lender Letter stating loans in forbearance are eligible for enforcement relief based on the payment history, without regard to being in forbearance.
  • Removal of Master Agreements
    • Removed references to Master Agreements, as they are no longer applicable to the lender contract process.
08/05/2020

GSE’S - Selling Loans in Forbearance Due to COVID-19

The GSE’s, Fannie Mae and Freddie Mac have announced that under the guidance and direction of the Federal Housing Finance Agency (FHFA) they are extending eligible note dates to 8/31/2020 and delivery dates to 10/31/2020 when selling loans in forbearance due to COVID-19. Please refer to the GSE announcements for complete details:

08/03/2020

DU Version 10.3 August Update

during the weekend of 08/15/2020, DU Version 10.3 will be updated Retiring the Functionality within the DU Risk assessment that was originally updated in July 2019 to Disregard delinquencies reported on credit report accounts with a Remarks Codes indicating “Affected by natural or declared disaster.”  This change will impact NEW loan casefiles created on and after 08/16/2020.

07/30/2020

Fannie Mae has updated their COVID-19 FAQs. Clarifications have been made as follows:

  • Non-Mortgage Debt in COVID Related Forbearance
    • Whether forbearance or deferment is related to COVID-19, consider the monthly debt payment in the borrower’s DTI. Standard guidelines apply. ( Refer to Deferred Debt)
  • Appraisal Waivers
    • Not permitted when a COVID-19 exterior-only or desktop appraisal is available. Please Note: Fannie Mae policy for appraisal waivers has always prohibited the execution of an appraisal waiver for a loan transaction for which the lender has obtained an appraisal.
  • COVID-19 Exterior-Only Appraisal Assignment
    • Subject property and comparable sales photographs are required.
07/30/2020

Fannie Mae NEWS! - Second Quarter 2020 Financial Results 07/30/2020

Fannie Mae has announced plans to report their second quarter 2020 financial results on Thursday morning, 07/30/2020 with a conference call for the media to discuss the company's results at 8:00 a.m. Fannie Mae’s quarterly report on Form 10-Q, and other supplemental information will be available on the company's Quarterly & Annual Results webpage at fanniemae.com/financialresults.

07/28/2020

Scheduled Maintenance - CU and UCDP 07/25 - 07/26

  • Collateral Underwriter (CU) - 9 p.m. ET on Saturday 07/25 until 1 a.m. ET on Sunday, 07/26
    • CU will be unavailable and Desktop Underwriter (DU) collateral related messages including appraisal waiver, Value Rep & Warrant and CU messages will not be available.
  • Uniform Collateral Data Portal (UCDP) - 2 p.m. ET on Saturday, 07/25 until 5 a.m. ET on Sunday, 07/26
    • Any new appraisal submissions to Fannie Mae will show the status “In Progress”. Once the maintenance is complete, the submissions will process automatically.
07/21/2020

Fannie Mae AQM List

Fannie Mae has posted their AQM List for July. The following appraisers were added to the list and will require 100% QC review:

  • Rubinshteyn, Yakov I.
    • NY 45000046579
    • NJ  42RC00212800             
  • Jacobs, Michael W.
    • AZ 20939
    • CA  AR029338

As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

07/15/2020

GSE - Uniform Appraisal Dataset UAD and Forms Redesign Initiative FAQs

The GSE’s, Fannie Mae and Freddie Mac have published FAQs for the Uniform Appraisal Dataset (UAD) and Forms Redesign initiative to answer some common questions received during their ongoing engagement with the industry. Please Note:

  • There is no implementation timeline date that is currently set, as the GSE’s are currently collecting additional feedback and updating requirements.
  • There will be appraisal forms that will retire and then replaced with data-driven, flexible, dynamic structure for appraisal reporting in the form of a redesigned URAR.
  • The new report will have a similar look and feel to the redesigned Uniform Residential Loan Application (URLA) and the Closing Disclosure (CD).
  • Educational training and materials provided by the GSEs will be available prior to the adoption of the updated UAD.
07/14/2020

GSE's - COVID-19 Temporary Policies Extended Along With Some New Flexibilities

The GSE's Fannie Mae and Freddie Mac have extended their COVID-19 Temporary Policies via Fannie Mae LL-2020-04LL-2020-03 and Freddie Mac 2020-27 . All temporary flexibilities continue to be effective for all loans in process and loans with application dates on or before 08/31/2020 and are currently outlined on the COVID-19 Temporary Guidance topic. In addition the following update was also announced:

  • Both Fannie Mae and Freddie Mac increased the self-employment timeframe for verification of business existence from 10 days to 20 days. Note: Fairway currently requires all self-employed borrower's employment verifications to be completed within 7 calendar days from the note date.
07/09/2020

FNMA COVID-19 FAQs

Fannie Mae has updated their COVID-19 FAQs. Additions made are to self-employed and variable income in connection with the current temporary guidance. FAQs 13 thru 30 are new.

07/02/2020

LL-2020-10 - Usage of Redesigned Form 1003

Fannie Mae has announced additional information about the use of the redesigned Form 1003, including timelines for DU and Manually Underwritten loans as follows:

  • Beginning 08/01/2020, there will be a Limited Production Period (LPP). Think of this as a “test and learn” period for a limited number of participants.
    • The LPP, designed for lenders who are ready to submit actual loan files in production using the redesigned Form 1003 and the updated DU Specification MISMO V. 3.4 before the Open Production Period that begins on 01/01/2021. Participation will be on a limited and controlled basis.
  • On 01/01/2021, all lenders may begin using the redesigned Form 1003 and updated data specification. This aligns with the 01/2021 effective date in the footer of the Form and is referred to as the Open Production Period.
  • On 03/01/2021, all lenders are required to submit new loan casefiles in the MISMO v3.4 format to Desktop Underwriter® (DU®) and must use the redesigned Form 1003 for those loans.
    • FNMA is providing a transition period for prior loan submissions. Loan casefiles and loan applications in the prior data format and on the prior Form 1003 (rev. 6/09) may continue to use the legacy formats until 03/01/2022, at which time they will be retiring the previous versions
  • The following applies to use of the redesigned Form 1003 for manually underwritten loans:
    • Lenders may begin using it for loans with application dates on and after 01/01/2021, but are not required to do so.
    • It is required for manually underwritten loans with application dates on and after 03/01/2021.

For additional information about the redesigned Form 1003, including links to the Form, instructions, and implementation of the Form and data specification, refer to Fannie Mae’s URLA webpage

07/01/2020

Fannie Mae Appraiser Newsletter - June 2020

Fannie Mae provides periodic updates for residential appraisers serving Fannie Mae lender customers. In the June 2020 edition of the Appraiser Newsletter, they share observations on the implementation of the COVID-19 appraisal flexibilities, highlight the new continuing education class on manufactured housing developed with McKissock, editorialize on distance to comparables, and continues the series of questions from the FNMA mailbox, and more.

06/26/2020

Fannie Mae – HomeReady 2020 Income Limits are Here!

Fannie Mae has released their HomeReady Income Eligibility spreadsheet for 2020. This spreadsheet shows current income eligibility for HomeReady mortgages (purchase or limited cash-out refinance). The 2020 eligibility will continue until an update is made in 2021.To be eligible as a HomeReady mortgage, the total annual qualifying income may not exceed 80% of the AMI for the property’s location. The 80% AMI limit will remain with the 2020 income limits.

As a reminder:

  • DU will apply the 2020 limits to new DU loan casefiles created on or after 06/20/2020.
  • DU loan casefiles created prior to 06/20/2020, will continue to use the 2019 Income Limits 
  • The income limits are also available within the Lookup Tool.
06/22/2020

Reminders! Fannie Mae – AMI Lookup Tool, HomeReady 2020 Income Limits and Other Services Outage 06/20 - 06/21

  • AMI Lookup Tool Outage
    • Fannie Mae will be updating the Area Median Income (AMI) Lookup Tool this weekend. The AMI tool will be unavailable due to planned system maintenance beginning Saturday, June 20th at 9pm until Sunday, June 21st at 6am.
  • HomeReady
    • As a reminder, the HomeReady 2020 Income Limits will be implemented in Desktop Underwriter (DU) on 06/20/2020 and in addition, the new limits will be published within the HomeReady website under related resources to be used for manual underwrites.
    • Note: The 2020 AMI Income spreadsheet will not be available until after the DU update.
    • Please refer to the previously announced Fannie Mae Lender Letter.  
  • Collateral Underwriter (CU)
    • CU will also undergo scheduled maintenance this weekend from 9 p.m. ET on Saturday, June 20 until 6 a.m. ET on Sunday, June 21. During this outage:
      • CU will be unavailable during this time.
      • Uniform Collateral Data Portal (UCDP) will hold new appraisal submissions to Fannie Mae, which will show as “In Progress.” Following the outage, UCDP will process new appraisal submissions and return CU scores and messages.
      • Desktop Underwriter (DU) collateral related messages including appraisal waiver, Value Rep & Warrant and CU messages will not be available.

For the list of technology hours of availability and outages for Fannie Mae applications, please visit the Technology Application Availability 

webpage.

06/19/2020

Fannie Mae - In Case You Missed It 2020

Fannie Mae has updated the In Case You Missed It document. This document is an overview of previously announced Selling Guide updates, Servicing Guide updates, new and updated Lender Letters, and Desktop Underwriter Desktop Originator release notes.

06/17/2020

Fannie Mae AQM List - June 2020

Fannie Mae has posted their AQM List for June 2020. There are no updates since the previous list (May 2020).

As a reminder, the AQM list includes appraisers and their appraisals that are subject to 100% review and those appraisals not accepted by Fannie Mae.

Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file to check against the AQM list once the FraudGUARD report is ran.

06/11/2020

FHFA and GSE's Extend COVID Processing Flexibilities

The FHFA is extending several of the COVID related loan origination flexibilities currently offered by FNMA and FHLMC through 07/31/2020.  The extension applies to the following:

  • Alternative appraisals on purchase and rate term refinance loans;
  • Alternative methods for verifying employment before loan closing;
  • Expanding the use of power of attorney and remote online notarizations to assist with loan closings; and
  • Authority to purchase mortgages in forbearance. 

In addition, the GSE's Fannie Mae and Freddie Mac have also announced the COVID flexibilities extension:

06/11/2020

Fannie Mae – LIBOR Transition Webpage

Fannie Mae has added a LIBOR Transition Webpage, which is a great resource to access the latest information. Included are FAQs, playbooks, and timelines for single-family adjustable-rate mortgages (ARMs), mortgage-backed securities (MBS), and credit risk transfer (CRT). For more information, please visit Fannie Mae’s LIBOR Transition webpage here

06/08/2020

Selling Notice - HomeReady Income Limits 2020

The 2020 HomeReady income limits in Desktop Underwriter (DU) will be updated and also published within FNMA's HomeReady

website under related resources.

  • DU will apply the 2020 limits to new DU loan casefiles created on or after 06/20/2020.
  • Loan casefiles created prior to 06/20/2020 will continue to use the 2019 limits.

Notes:

  • For loan casefiles created on or after 06/20/2020, DU will also use the 2020 AMI limits when issuing the housing goals observation messages.
  • The AMI data in DU and on FNMA’s website may differ from the median income estimates posted on the U.S. Department of Housing and Urban Development’s website. Note: Area Median Income estimates (AMIs) are provided to Fannie Mae by their regulator, the Federal Housing Finance Agency.
06/04/2020

SEL-2020-03 - June 2020 Selling Guide Updates

Fannie Mae has updated their Selling Guide for June and has announced policy changes and clarifications. Credit Policy is currently reviewing and will update KnowledgeOwl accordingly. All of the following are effective on and after 06/03/2020, including loans in process:

Lease Review Requirements

Current Policy: If there is a lease on the property that is being transferred to the borrower, the lender must verify that it does not contain any provisions that could affect our first lien position on the property.

New Policy: No longer requiring a lease agreement and review for the specific purpose of identifying contractual tenant rights. Instead, the method used is at the discretion of the lender (for example, obtain and review the lease agreement, and secure amendments or subordinations, as necessary).

  • Note: DU will update in a future release to remove the message requiring review of the lease. Disregard the lease review message in DU until that time.

Late Charge on the Note

Providing additional flexibility to lenders to choose the late charge amount identified in the note:

  • Requirements are still reflect that the amount of the late charge must be permissible under applicable law. The late charge field on the note must still be completed, but with a percentage not to exceed 5%.
  • The statement that allowed for a late charge higher than 5% was removed.
  • Reminder: the late charge should be calculated based on the principal and interest payment only, not including taxes, insurance, or other assessments.

Escrow Waiver

Limited Cash-Out Refinance

Current Policy: Requires borrowers to establish an escrow account when non-delinquent real estate taxes are financed as part of a limited cash-out refinance transaction.

New Policy: FNMA will no longer require that an escrow account be established in order to close a limited cash-out refinance that includes non-delinquent subject property real estate taxes as part of the loan amount.

Condominium Policy Clarifications 

Project Standards

Horizontal Property Regimes

  • FNMA considers a development to be a condominium project any time it is declared or filed as a horizontal property regime in accordance with local statues.
    • An exception permitted, if the local statute provides for the horizontal property regime created as a PUD development and the project’s legal documents specifically state that the project is a PUD.

Environmental Hazard Assessments

  • When there is environmental problems identified during project review, they must be determined to be acceptable or curable through remedial actions. Some jurisdictions or government agencies will issue a “no further action” notice (or letter) to alert the public that all available remediation steps for an environment hazard are completed.
    • The update addresses “no further action” notices and require lenders to determine if the specific condition in the notice renders the project eligible or ineligible based on FNMA’s environmental standards.

Appraisal

Process Alignment

The Selling Guide updates are to align with some of the current processes and systems related to performing appraisals.

  • Whole Numbers 
    • Whole numbers are required for the Predominant Age and Predominant Price fields to align with UAD requirements and because the Uniform Collateral Data Portal (UCDP) will not accept an appraisal with anything other than whole numbers.
  • Appraisal Waiver
    • An appraisal waiver may be offered on a recently constructed property when there is an existing “as is” prior appraisal for the subject property that is 100% complete.
      • Example, an appraisal of the subject property performed for a different lender or borrower, but that loan did not close. The lender may execute the appraisal waiver when the loan meets all other eligibility requirements for the transaction.

Form 1008 Transmittal Effective Date

Considering the optional nature of the Form 1008, Fannie Mae is no longer requiring the use nor implementation of the updated Form 1008.

  • The updated form is optional if chosen to utilize for manually underwritten loans.  Note: This effective date change did not require an update to the Selling Guide.

X

06/03/2020

GSE- Upcoming UCDP Scheduled Maintenance Outages

The GSE’s Fannie Mae and Freddie Mac have updated the UCDP maintenance calendar. Maintenance on the UCDP will move to 11 p.m. ET on Saturdays until 5 a.m. ET on Sundays. Please note the additional schedule as follows for 06/06/2020 to 06/07/2020:

  • UCDP Scheduled maintenance from 11 p.m. on Saturday, 06/06/2020 until 7 a.m. ET on Sunday, 06/07/2020. During this time, any new appraisal submissions will show as “In Progress.” UCDP will process any new appraisal submissions when the maintenance window is complete.
06/01/2020

GSE- Additions to Assessing Self –Employment and Clarifications During COVID-19

The GSE’s, Fannie Mae and Freddie Mac have announced in their respective Lender Letter and Bulletin, requirements for additional documentation to support the decision in the qualification process of self-employment income. The requirements below are due to the COVID-19 pandemic, which continues to impact businesses throughout the country.  The additions to assessing Self Employed income are Effective for existing and new applications dated on and after 06/11/2020 and until further notice.

05/29/2020

Fannie Mae NEWS – Launch of "Here to Help" Education Effort- for Homeowners and Renters Impacted by COVID-19

Fannie Mae has announced a launch of "Here to Help," which is an education effort to connect U.S. homeowners and renters with tools and resources to navigate the available options if they experience a financial hardship due to COVID-19. The "Here to Help" online portal at KnowYourOptions.com features informative videos, fact sheets, mortgage loan, apartment rental lookup tools, and other resources to equip homeowners and renters with the information they need to successfully navigate their options. In addition, the portal also provides mortgage servicers and lenders with tools to assist their customers along with clear explanations of forbearance, repayment options after forbearance, and training videos for loan servicers.

05/27/2020

Fannie Mae - CU Outage Impacts CU, UCDP, and DU Users

Collateral Underwriter (CU) will undergo scheduled maintenance 9 p.m. ET on Friday, 05/29/2020 until 1 a.m. ET on Saturday, 5/30/2020. During this outage:

  • CU will be unavailable and unable to view appraisals.
  • Uniform Collateral Data Portal (UCDP) will hold new appraisal submissions to Fannie Mae, which will show as “In Progress.” Following the outage, UCDP will process new appraisal submissions and return CU scores and messages. 
  • DU Collateral-Related Messages including appraisal waiver, Value Rep & Warrant and CU messages will not be available.

Please refer to Fannie Mae’s Technology page for hours of availability for all Fannie Mae applications

05/21/2020

Fannie Mae AQM List

Fannie Mae has posted their AQM List for May 2020. For improved readability, this spreadsheet now features a summary tab and separate worksheet tabs for “100% QC Review” and “No Longer Accepted.”

As a reminder, the AQM list includes appraisers whose appraisals are subject to 100% review or whose appraisals are no longer accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file will be checked against the AQM list once the FraudGUARD report is run.

As of 05/06/2020, appraisals are not accepted for the following appraiser in the states of Massachusetts and Rhode Island:

  • Adnan Salam – MA  #75481
  • Adnan A. Salam - RI # CRA.0030038
05/20/2020

FNMA and FHLMC Eligibility for Loans in Forbearance

The GSE’s (in conjunction with the FHFA) have announced updates regarding existing loans in forbearance.  The updates are effected for loans with application dates on and after 06/02/2020.

FNMA (LL-2020-03) and FHLMC (2020-17)  will permit purchase and refinance transactions for borrowers who have/had a loan (subject or non-subject) in forbearance on any 1-4 family property when the following requirements are met:

  1. The borrower is fully reinstated (can be on or after the application received date) and documentation of the source of funds for reinstatement are verified (Note:  In this case, loan proceeds may not be used to reinstate the Mortgage being refinanced or any other Mortgage.)  OR
  2. The borrower is in forbearance and can meet the requirements in the table below, based on the type of forbearance:

Type of Forbearance

Requirements

Use of Proceeds

Repayment Plan

The Borrower must either:

  • Have successfully completed the repayment plan, OR
  • Be performing under the plan (i.e., has not missed any payments due under the plan) and must have made at least three payments

May be used to pay off the remaining payments under the repayment plan being refinanced or any other Mortgage

Payment Deferral

3 consecutive, timely payments must have been made, after the approval of the deferral agreement

May be used to pay off the deferred amount under the Payment

Deferral

Modification - Trial Period Plan

Trial period must have been successfully completed

May be used to pay off the modified Mortgage

Other type of Loss Mitigation Program

The Borrower must either:

  • Have successfully completed the loss mitigation program, OR
  • Be performing under the program (i.e. has not missed any payments

due under the program) and must

have made at least 3 consecutive full monthly payments

May be used to pay off the remaining payments under the program

X

Notes:

  • AUS will not be updated to reflect these temporary requirements
05/19/2020

Fannie Mae NEWS – Help for Multifamily Renters Impacted by COVID-19 with 'Renters Resource Finder

Fannie Mae has announced it has introduced an online Renters Resource Finder to help renters facing financial hardship due to COVID-19 understand the options available to them. This online tool identifies apartments and other multifamily properties financed by Fannie Mae, whose residents are eligible for eviction protection under the federal CARES Act. And includes

  • Access to HUD-approved housing counselors who can create a personalized action plan, offer financial coaching and budgeting, and provide other support for up to 18 months;
  • Federal and state housing assistance information; and
  • Guidance on unemployment benefits, nutritional assistance, and any other available programs
05/07/2020

Fannie Mae – Updates Special Feature Codes List

Fannie Mae has updated their special feature codes (SFC) list to include:

  • SFC 919, COVID-19 Forbearance Plan and
  • SFC 920, Remote Ink-Signed Notarization.
05/06/2020

LL-2020-03 and LL-2020-04 Updates to COVID-19 Flexibilities

Under the advisement and as announced by the FHFA, the GSE’s Fannie Mae and Freddie Mac have extended the application dates of the COVID-19 temporary agency policies to 06/30/2020 (originally 05/17/202). In addition to the extension, the GSE’s have added the following reminders, clarifications, and additions. Credit Policy is currently reviewing the announcements and requirement will be updated accordingly within the COVID-19 Temporary Guidance topic in KO.

GSE - Reminders & Clarifications 

COVID-19 Flexibiities

Fannie Mae

LL-2020-03 - Originations

LL-2020-04 - Appraisals

Freddie Mac

Bulletin 2020-14

Originations & Appraisals

Extension of

Temporary Policies

  • Extending eligibility for temporary requirements / flexibilities to apply to loans with applications dates on or before 06/30/2020 (previously for application dates through 05/17/2020).

Unemployment Benefits as Qualifying Income 

(Reminder)

  • Permitted for qualification only when associated with seasonal employment.

Furloughed Borrowers 

(Clarification)

  • Income of a furloughed borrower is not eligible under temporary leave policy.
  • Requirements for temporary leave do not extend to employer-initiated actions such as furloughs and layoffs, regardless of whether there is a projected “return to work” date.

Employment Validation through DU Validation Service

(Clarification)

  • Temporary suspension of representation and warranty relief for employment validation through the DU validation service.

N/A

Automated Income Assessment with LPA

(Clarification)

N/A

  • Due to Federal Income Tax Filing – Extension through 07/15/2020, LPA will be revised applicable to using tax return data (i.e., AIM for self-employed).
    • For Mortgages with Loan Product Advisor initial submission dates on or after 08/01/2020, the Borrower’s most recent tax returns filed with the IRS must be the 2019 tax return.  Note: This is an extension of the May 1, 2020 deadline

Sale of Loans Aged Six Months(6)  or Less

(Reminder)

  • All loans are to be purchased or securitized no more than six months from the first payment date.

Remote Online Notarization

(RON)

Added the following states as eligible for RON:

  • Arkansas
  • Georgia
  • Hawaii

Note:  Refer to Fairway's RON requirements for eligible states.

N/A

X

05/05/2020

LL-2020-02 FNMA - Impact of COVID-19 on Servicing

Fannie Mae has updated their Lender Letter in regards to the Impact of COVID-19 on Servicing. As per the FHFA, Fannie Mae is reinforcing their commitment to limit servicer advances of principal and interest to four consecutive missed monthly payments for qualifying mortgage loans. They are evaluating operational changes that will become effective for August 2020, remittance activity and will provide additional guidance in the coming weeks.

04/29/2020

Fannie Mae AQM List- April 2020

Fannie Mae has posted their AQM List for April 2020. There are no updates since the previous list (March 2020). As a reminder, the AQM list includes appraisers whose appraisals are subject to 100% review or whose appraisals are no longer accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file will be checked against the AQM list once the FraudGUARD report is run.

04/08/2020

Fannie Mae NEWS – Forbearance Reminder to Homeowners during COVID-19

Fannie Mae has issued a press release reminding those impacted by COVID-19 that mortgage assistance and relief options are available, including a forbearance plan through their mortgage servicer (the company listed on their mortgage statement). Please refer to the press release for details.

04/27/2020

UCDP - Fannie Mae Messaging Guide

Added messages to the UCDP data portal to support COVID-19 appraisal flexibilities.

04/23/2020

GSE - ULDD Updates - Support SOFR ARM Index

Announced ULDD and Delivery updates along with timeline for 2020 and 2021.

04/23/2020

EarlyCheck Release Notes for May 2020

Announced an update will take place on 05/01/2020 for Loan Delivery and EarlyCheck business rules to support the delivery of loans in forbearance due to COVID-19 as stated in LL-2020-06. 

04/22/2020

LL-2020-06 Selling Loans in Forebearance due to COVID-19

Announced Selling Flexibilities during COVID-19 – Purchase of Mortgage Loans in Forbearance

04/22/2020

DU Version 10.3 May 2020 Update

Fannie Mae has announced they will implement an update to Desktop Underwriter (DU) Version 10.3. in May updating housing goal messages, DU underwriting report findings, real estate owned data in DTI, and rental housing expense. Unless specified below, the changes will apply to DU Version 10.3 loan casefiles submitted or resubmitted on or after the weekend of 05/16/2020:

DU Version 10.3 May 2020 Updates

Housing Goals Messages

DU will no longer require a 16-digit FIPS code and will go to a 11-digit FIPS code. The messages used to indicate when a property is in a high-needs rural region, a low-income area census tract, a minority census tract, or a designated disaster area census tract will be updated to use an 11-digit FIPS code. That 11-digit FIPS code can be provided by the lender on the loan application, or DU will use what is received when the address can be standardized.

The messages used to indicate if the loan casefile may be eligible towards Fannie Mae’s low-income purchase goal, very low-income purchase goal, and low-income refinance goal will be updated to include the following waterfall approach:

  • If an 11-digit FIPS code is received by DU when the address is standardized, or is provided on the loan application, that FIPS code will be used to issue the applicable message.
  • If an 11-digit FIPS code is not received, but a 5-digit FIPS code representing the state and county is received when the address is standardized, or is provided on the loan application, that FIPS will be used to issue the applicable message.
  • If a 5-digit FIPS code is not received (on the loan application or through address standardization), DU will not issue any housing goals messages.

Note: The FIPS code is a unique code assigned to all geographic areas by the U.S. Census Bureau. The census tract is provided on the appraisal, and can also be obtained using other geocoding technology (e.g., the Census Geocoder on the U.S. Census Bureau website).

DU Underwriting Findings Report

Conventional AUS Risk Analysis Fannie Mae

Changes below will be made to the enhanced and classic versions of the DU Underwriting Findings report:

  • Casefile Create Date 
    • When a policy change is made without a new version of DU, that policy change is implemented using the date the loan casefile was created.
      • For lenders to be certain if the policy should apply to a specific loan casefile, the “Casefile Create Date” will be added to the Summary section of the DU Underwriting Findings report.
  • Sales Price
    • The Sale Price field name displayed in the Summary section of the report will be updated to include the phrase “purchase transactions.” This will remind lenders that even if a value is included in the Purchase Price field on the loan application for refinance transactions, it will only be displayed in the Summary Section of the report on purchase transactions
  • Expense Ratio with Undisclosed Debt (classic only):
    • The “With Undisclosed DTI” will be removed from the Expense Ratios section in the Underwriting Analysis Report.

Real Estate Owned Data in Debt-to-Income Ratio

Conventional Mortgage Payment, Qualifying Payment

Requirements Fannie Mae

Conventional Rental Income Fannie Mae

Insurance, Maintenance, and Taxes

  • DU will use the Insurance, Maintenance, Taxes & Misc. entered for the borrower’s current residence in the Schedule of Real Estate Owned (REO) section of the loan application in the debt-to-income (DTI) ratio calculation. ​This update will apply to loan casefiles created on or after 06/01/2020.

Rental Income

  • DU will use either the Gross Rental Income or Net Rental Income entered for a borrower’s 2- to 4-unit current residence in the REO section of the loan application in the DTI ratio calculation.
  • When Net Rental Income is entered, that amount will be used in the DTI ratio calculation.
  • If only Gross Rental Income is entered, DU will use 75% of the Gross Rental Income in the DTI ratio calculation.
  • Note: DU will continue to use the net rental income entered in the income section of the loan application, when provided, even if net rental income is entered in the REO section.

Rental Housing Expense

Conventional Mortgage Payment, Qualifying Payment Requirements Fannie Mae

  • A new DU message will be issued when a borrower discloses rent as their current housing payment on a second home or investment property transaction, or a non-occupant co-borrower discloses rent as their current housing payment.
    • This message will remind lenders that the rental housing payment must be verified and documented.
    • This new message will only be issued on loan casefiles created on or after 06/01/2020

X

04/16/2020

GSE- Extended URLA Implementation Timeline

The GSE’s, Fannie Mae and Freddie Mac have announced an extension to the implementation timeline for the redesigned Uniform Residential Loan Application (URLA) and updated automated underwriting systems (AUS) specifications to support the industry during the COVID-19 pandemic. The new mandate for required use of the redesigned URLA is 03/01/2021. The extension will provide lenders and other stakeholders additional time to prepare and implement the redesigned URLA:

Redesigned URLA TimeLine Revisions

08/01/2020

Limited Production Begins

  • The Limited Production Period can be thought of as a “test and learn” period.
  • The GSEs will begin accepting the MISMO v3.4 loan application submission files in production on a limited basis.

01/01/2021

Open Production Begins

  • All lenders may submit the MISMO v3.4 loan application submission files to GSE-specific AUS production environments using the redesigned URLA.
  • Note: Freddie Mac and Fannie Mae are updating the effective date in the footer of the redesigned URLA to 1/2021.

03/01/2021 

Mandate and Pipeline Transition Period Begins

  • All lenders are required to submit the MISMO v3.4 loan application submission files to the GSEs’ AUS production environments using the redesigned URLA beginning 03/01/2021.

03/01/2022

Retirement Date

  • On 03/01/2022, no current URLA and loan application submission files based on previous AUS specifications, regardless whether they are dated before 03/01/2021 will be accepted.

X

04/16/2020

LL-2020-04 for 4-14-2020 Appraisal

COVID-19 updates.

04/14/2020

UCDP Appraisal Messages - COVID-19

Effective on 04/18/2020, three new proprietary appraisal messages will be displayed in the Uniform Collateral Data Portal (UCDP) to support the temporary appraisal requirement flexibilities published by Fannie Mae due to COVID-19. Please note: The severity of the following messages will result as "warnings":

ID

Message Text

Applicable Forms

FNM0394

DATA CONFIRMATION: Based on the data submitted, the appraiser completed a traditional full appraisal including an interior and exterior inspection of the property. If this is accurate, no further action is required. If the appraisal was performed using the temporary appraisal requirement flexibilities published by Fannie Mae due to COVID-19, the Map Reference must be populated with “exterior” or “desktop” to correspond with the type of appraisal completed

1004, 1073, 2090, 1025, 1004c

FNM0395

The Map Reference appears to be incorrect. Exterior appraisals on forms 2055, 1075 or 2095, performed using the temporary appraisal requirement flexibilities published by Fannie Mae due to COVID-19, should be identified only with a Map Reference of “exterior.

2055, 1075, 2095

FNM0396

The Map Reference appears to be incorrect. Desktop appraisals on forms 1004, 1073 or 2090, performed using the temporary appraisal requirement flexibilities published by Fannie Mae due to COVID-19, should be identified only with a Map Reference of “desktop.”

1004, 1073, 2090

X

04/09/2020

GSE - UCD Critical Edits Delayed - Uniform Closing Dataset 

The GSE’s, Fannie Mae and Freddie Mac have announced that although they have been planning for a 2-year transition to convert certain edits in their Uniform Closing Dataset (UCD) collection solutions from “warning” to “critical”; they have decided the implementation of the UCD critical edits will not happen in 2020. 

  • The decision to delay the critical edits was due to industry feedback, other mandates and COVID-19.
  • The GSE’s do plan to publish a revised UCD critical edits timeline in the next few months.
  • Lenders are encouraged to familiarize themselves with the UCD Critical Edit Matrix, which contains the edits and associated data points for all phases
04/08/2020

DU for Government Loans April 2020 Update - COVID-19

Fannie Mae has announced they will be updating DU for FHA loans this weekend 04/11/2020.

  • The DU message will serve as a reminder to all lenders to confirm whether any temporary COVID-19 specific policy rules may apply based on current and to account for future FHA COVID-19 related policy announcements.
  • The message will appear for FHA loan casefiles submitted or resubmitted on or after the weekend of 04/11/2020.

Please Note:

  • Continue to follow all applicable FHA guidelines prior to DU issuing the reminder message the weekend of 04/11/200.
  • This change will not impact the information sent to the FHA TOTAL scorecard by DU, it is informational only.
  • Please be sure to check the COVID-19 Temporary Guidance topic in KnowledgeOwl for up to the minute requirements.
04/07/2020

DU Version 10.3 April 2020 Update - Risk and Eligibility, and COVID-19 

Fannie Mae has announced updates will be made to Desktop Underwriter (DU) Version 10.3 this weekend 04/11/2020 based on Risk and Eligibility, along with COVID-19 messages as follows:

Risk and Eligibility Assessment

Effective for DU Version 10.3 loan casefiles created on or after 04/12/2020.

DU’s risk and eligibility assessments will be updated in response to changing market conditions and to support sustainable homeownership:

  • These changes are intended to help Fannie Mae’s customers better manage credit risk in the current market and provide sustainable options to borrowers.
  •  It is expected that these changes will result in a modest reduction in loan casefiles with high-risk factors receiving an Approve/Eligible recommendation.

Identification of Fannie Mae Owned Loans

Effective for DU Version 10.3 loan casefiles submitted or resubmitted on or after the weekend of 04/11/2020

DU will begin to issue a new message based on COVID -19 appraisal updates stating that the borrower's existing loan has been identified by DU as a Fannie Mae loan.

  • This message will be issued on limited cash-out refinance loan casefiles when DU finds an active Fannie Mae first mortgage loan for the subject property address, and also confirms that the Social Security number (SSN) of at least one of the borrowers on the loan casefile matches one of the SSNs on the existing loan.

New DU Message > Impact of COVID-19

Effective for DU Version 10.3 loan casefiles submitted or resubmitted on or after the weekend of 04/11/2020.

DU will issue a new message as a reminder to lenders to refer to all Fannie Mae Lender Letters related to the “Impact of COVID-19” for additional instructions on temporary policies that may apply to the loan casefile.

X

04/07/2020

Fannie Mae NEWS - February 2020 Monthly Summary

Fannie Mae has released their February 2020 Monthly Summary. The monthly summary report contains information about Fannie Mae’s monthly and year-to-date activities for our gross mortgage portfolio, mortgage-backed securities and other guarantees, interest rate risk measures, serious delinquency rates, and loan modifications.

04/06/2020

SEL-2020-02- April 2020 Selling Guide Update

Fannie Mae has announced their most recent update to the Selling Guide as of 04/01/2020. The April update includes property tax and escrow clarifications. Credit Policy is currently reviewing and will make the guideline clarification within the applicable topics of KnowledgeOwl.

Property Tax and Escrow clarification

Effective for applications on and after 06/01/2020

FNMA has removed the prior policy update that would have required the use of estimated property taxes for the establishment of the escrow account, and replaced it with:

  • For the calculation of the monthly real estate tax payment lenders must comply with all federal and state regulations in calculating the amount to be collected for any established escrow account.

SOFR ARMs – Secured Overnight Financing Rate

Effective  08/03/2020

Note: Fairway does not permit ARMs on Fannie Mae Agency Direct products. The following is for informational purposes only:

  • SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities in the repurchase agreement (repo) market. Note: Fannie Mae uses a 30-day average of the SOFR index as published by the Federal Reserve Bank of New York. Updates include:
    • SOFR ARM and Temp Buydowns
    • DU Generic ARM plans
    • Special Feature codes

X

04/01/2020

COVID-19 Web Page for Appraisers

Fannie Mae has added to their Appraisers web page, helpful tools related to COVID-19 and appraisals. Items on the webpage include (but are not limited to):

04/01/2020

LL-2020-04- COVID-19 Appraisals - Updated and LL-2020-03 - COVID-19 - Originations - Updated

  • Appraisals: 
  • ​​Originations:
    • Age of documentation: modifying age of document requirements from four months to two months for most income
      and asset documentation.
    • Verification of self-employment: requiring lenders to confirm the borrower’s business is open and operating within 10
      business days of the note date
    • Market-based assets: updating policies for use of stocks, stock options, and mutual funds for down payment, closing cost
      costs, and reserves
    • Powers of attorney: providing flexibilities for use of a power of attorney
    • Remote online notarization: providing expansion of the use of remote online notarization
    • Lender quality control requirements: allowing post-closing reverifications to occur verbally or electronically, and other
      flexibility related to the field review of appraisals​​
  • Fannie Mae - COVID-19 FAQs - Updated
04/01/2020

Fannie Mae NEWS - Assistance to Help Renters Impacted by COVID-19 Stay in Their Apartments

Fannie Mae has issued a press release offering help to families who are renting in multifamily properties to remain in their apartments during these unprecedented times by:

  • Allowing lenders to grant forbearance to borrowers in properties financed by Fannie Mae for up to three months if the borrower is experiencing hardship due to the impact of the COVID-19 national emergency.
    • As part of the forbearance plan, borrowers must agree to suspend evictions of tenants who are facing financial hardship due to the current crisis.

Fannie Mae anticipates that this will provide relief to renters across more than 27,000 properties.

03/26/2020

Fannie Mae AQM List - March 2020

Fannie Mae has posted their AQM List for March 2020. There are no updates since the previous list (February 2020). As a reminder, the AQM list includes appraisers whose appraisals are subject to 100% review or whose appraisals are no longer accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file will be checked against the AQM list once the FraudGUARD report is run.

03/26/2020

LL-2020-02 FNMA - Impact of COVID-19 on Servicing and 2020-7 Servicing Requirements and Relief Related to COVID-19

The GSE’s have announced servicing requirements and relief related to COVID-19:

  • Fannie Mae has updated Servicing Lender Letter LL-2020-02 adding clarification of mortgage loan modifications that must be considered near the conclusion of a forbearance plan term to require that a borrower be evaluated for payment deferral prior to these mortgage loan modifications.
  • Freddie Mac has announced in Servicing Bulletin 2020-7:
    • EDR – Reporting Mortgages impacted by COVID-19
    • Temporary Servicer relief from certain property inspections for insurance loss settlements and delinquent Mortgages and property preservation on abandoned properties
    • Temporary limitations to property valuations requirements for Borrower requested cancellations of mortgage insurance.
    • Clarifies requirements for streamlined Flex Modifications evaluations for Borrowers with a COVID-19 related hardship
    • Reminds Servicers of the outreach and collection techniques for Servicing delinquent Mortgages
03/25/2020

LL-2020-05 FNMA - Payment Deferral for Servicers and 2020-6 FHLMC -Servicing Updates

The GSE’s Fannie Mae and Freddie Mac at the direction of the Federal Housing Finance Agency have introduced payment deferral, a new home retention workout option that enables servicers to assist eligible borrowers who have resolved a temporary hardship and resumed their monthly contractual payments but cannot afford either a full reinstatement or repayment plan to bring the loan current. 

  • Servicers are encouraged to begin evaluating borrowers for payment deferral in accordance with FNMA LL-2020-05 and FHLMC Bulletin 2020-6 on or after 07/01/2020; however, servicers must begin evaluating borrowers for payment deferral no later than 01/01/2021. Note: These policy changes will be reflected in the 12/2020 update of the GSE Servicing Guides.
  • Reminders have also been addressed for servicers of the annual reporting deadline extension, the use of electronic records and signatures and seller/servicer business continuity plan requirements as well as information about each GSE business continuity plan.
03/25/2020

Appraiser Newsletter

Fannie Mae has published their first Appraiser Update Newsletter of 2020. The newsletter provides periodic updates throughout the year for residential appraisers serving Fannie Mae lender customers. In this edition, Fannie Mae dives into horizontal property regimes, more about multiple parcels, and the act of selecting comparable sales, along with feedback from appraisers on tools they use for process modernization.

03/24/2020

LL-2020-03, LL-2020-04, and 2020-5 - GSE- Flexibilities during COVID-19 – Appraisals and Operations

The GSE’s, under the guidance of FHFA, are offering temporary measures in regards to COVID-19 to help ensure lenders can continue to lend in a prudent and responsible manner.

  • All Temporary flexibilities are effective immediately for all loans in process and remain in place for loans with application dates on or before May 17, 2020.
  • Credit Policy is currently reviewing all of the temporary flexibilities by the GSE’s and will update the topics in Knowledge Owl accordingly.

Conforming Agency - COVID-19 Temporary Flexibilities

Fannie Mae

Freddie Mac

Appraisals

When a standard appraisal (interior / exterior inspection) cannot be obtained, the following temporary guidance will apply for all except Construction Conversion, Renovation or New Construction Properties:

Purchase Transactions

Agency

LTV Ratio

Occupancy

Acceptable Appraisal Type

FNMA and

FHLMC

Up to 97%

(per program guidelines)

Primary

  • Traditional appraisal
  • Desktop appraisal
  • Exterior-only appraisal

 ≤ 85%

  • Second Home or
  • Investment

> 85%

Second Home

Traditional appraisal

X

Refinance Transactions

All Occupancies

Agency

LTV Ratio1

Loan Purpose

Acceptable Appraisal Type2

FNMA

All

LCO Refi Owned by FNMA

  • Traditional appraisal
  • Exterior-only appraisal
  • LCO Refi Not owned by FNMA and
  • CO Refi

Traditional appraisal

FHLMC

All

No CO Refi Owned by FHLMC

  • Traditional appraisal
  • Exterior-only appraisal
  • No CO Refi Not owned by FHLMC and
  • CO Refi

Traditional Appraisal

  1. LTVs > 80% must meet MI company’s appraisal requirements.  Note: Fairway is working to confirm with each MI company if they will follow FNMA/FHLMC flexibilities.
  2. When there is insufficient information about the property for an appraiser to complete an appraisal assignment with a desktop appraisal or an appraisal with an exterior-only inspection, a full appraisal is required.

Flexibilities listed below have been announced in LL-2020-03 and 2020-5

Continuity of Income

Additional due diligence should be practiced to ensure that the information on the loan application is still accurate (i.e. borrower is still employed).  Example: For a self-employed borrower, lenders are encouraged to attempt to verify that the borrower’s business is operational closer to the note date rather than rely on current Guide requirements (e.g., within 15 days instead of 120 days.)

Notes, Electronic Records, and Signatures

Unless originated as an electronic note, FNMA requires that the Original Promissory Note be in the possession of the document custodian when it certifies the loan for purchase to minimize transit risk and to protect their legal rights in the loan under applicable law.

Please note: Electronic signatures are permitted under the terms of the Selling Guide but Promissory Notes may not be signed electronically unless the promissory note is an electronic note.

In addition, follow requirements located in the Electronic Signatures topic located in KnowledgeOwl related to electronic records, signatures, and notarizations. 

Electronic Records and Signatures are permitted per the lenders origination processes – both with Borrowers and with related third parties. This includes:

  • The use of Electronic real estate purchase and sale agreements, as well as Electronic initial and final disclosures often provided at closing.
  • Electronic Signatures and Records as part of the closing process, and, in many instances, to conduct Electronic closings in which even the Note is created and signed electronically (i.e., “eMortgage” closings.
  • In order for eMortgages to be eligible for sale to Freddie Mac, there is a specific approval process the Seller/Servicer must follow, but in most instances such approvals are forthcoming within a week after Seller/Servicer integration with approved systems and the MERS® eRegistry

Title Insurance

FNMA and FHLMC will accept lender’s policies of title insurance written on the 2006 ALTA loan title insurance form or a local equivalent.

  • Covered Risk 14 in the 2006 ALTA form includes “gap coverage” for matters arising between the loan closing date and the mortgage recording date.

This is accepted as long as there is no exception for this coverage under Schedule B of the policy.

VVOE/ WVOE

Lenders are expected to attempt to obtain the Verbal VOE in accordance with existing requirements guidance. However,  the following flexibilities are permitted:

Written VOE:

  • An email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment status may be used in lieu of a verbal VOE. In addition, the lender may obtain the VOE after loan closing, up to the time of loan delivery (though we strongly encourage getting the verbal VOE before the note date). or

Paystub

  • May obtain a year-to-date paystub from the pay period that immediately precedes the note date, or

Bank Statements

  • The lender can provide bank statements (or other alternative documentation as permitted by Selling Guide) evidencing the payroll deposit from the pay period that immediately precedes the note date.

Note: While the Guides permit obtaining the 10-day PCV after the Note Date but prior to delivery to FNMA and Freddie Mac, Sellers are encouraged to confirm the Borrower’s employment prior to the Note Date.

DU Validation Service (Fannie Mae)

If employment has been validated by the DU

Validation Service, the validation will remain eligible for representation and warranty relief on employment provided the lender complies with the “close by” date in the DU message. Otherwise, the guidance provided above applies.

Additional Notes by the GSE’s

  • Selling Guides along with DU and LPA messages will not be updated to reflect these temporary policies.
  • FNMA and FHLMC’s existing policies related to disasters do not apply to loans impacted by COVID-19. Instead, lenders and servicers can follow the guidance within the announcements and FAQs from each agency.
  • There will be no flexibilities to standard QC practices per both FNMA and FHLMC

X

Fannie Mae and Freddie Mac COVID-19 FAQs

In addition to the Lender Letters (FNMA) and Bulletin (FHLMC), both Agencies have also put out FAQs, which are linked below.

03/23/2020

DU Spec URLA Corrections and FAQs for SOFR ARM

Fannie Mae has published changes to the DU Spec MISMO V3.4 as part of the continued effort to support implementation of the redesigned Uniform Residential Loan Application (URLA) Form 1003 and DU Spec by the11/01/2020 deadline. In addition, they have updated the URLA Borrower component in Section 4 for a field name correction, and updated URLA FAQs in response to the previously announced SOFR announcement. Details regarding each of the changes are included in this announcement.

Additional reference updates include:

03/20/2020

Scheduled Maintenance - Collateral Underwriter Outage Impacts CU, UCDP, and DU this Weekend!

Collateral Underwriter (CU) will undergo scheduled maintenance from midnight until 4 a.m. ET on Sunday, 03/22/2020. This outage will impact:

  • CU will be unavailable to view any new appraisal submissions to Fannie Mae. Any new submissions will show as “In Progress” during the outage.
  • UCDP - Following the outage, the Uniform Collateral Data Portal (UCDP) will process any new appraisal submissions and return CU scores and messages.
  • DU - All functionality for Desktop Underwriter (DU) and appraisal waivers will remain available during the outage, but messages from DU and appraisal waiver services will not appear for any new submissions until after the outage.
03/20/2020

LL-2020-02 - COVID-19 Temporary Servicing Policy 

Fannie Mae has announced temporary policies to enable servicers to better assist borrowers impacted by COVID-19.

The Lender Letter contains information related to forbearance plan eligibility, post-forbearance loan modifications, suspension of credit bureau reporting for some borrowers, and suspension of foreclosure sales. Please refer to the Lender Letter for full details.

  • Homeowners who are adversely impacted by this national emergency may request mortgage assistance by contacting their mortgage servicer
  • Foreclosure sales and evictions of borrowers are suspended for 60 days
  • Homeowners impacted by this national emergency are eligible for a forbearance plan to reduce or suspend their mortgage payments for up to 12 months
  • Credit bureau reporting of past due payments of borrowers in a forbearance plan as a result of hardships attributable to this national emergency is suspended
  • Homeowners in a forbearance plan will not incur late fees
  • After forbearance, a servicer must work with the borrower on a permanent plan to help maintain or reduce monthly payment amounts as necessary, including a loan modification
03/20/2020

GSE - Updates to Support SOFR ARM Index Transition

Fannie Mae and Freddie Mac (the GSEs) have announced and updated certain Uniform Mortgage Data Program datasets, including the DU® Specification MISMO V3.4, Uniform Closing Dataset, and Uniform Loan Delivery to support future use of SOFR-indexed ARMs.

In response to the pending discontinuation of the London Interbank Offered Rate (LIBOR) index after 2021, and under the guidance of the Federal Housing Finance Agency (FHFA), the GSEs will no longer acquire Single-Family ARMs indexed to LIBOR as of the end of 2020.

To support the transition to SOFR-indexed ARMs, updates to certain Uniform Mortgage Data Program (UMDP) datasets with new SOFR data as outlined in the sections below. Additionally, implementation notes will be updated with the following LIBOR ARM retirement and delivery eligibility information:

  • LIBOR ARMs must have an Application Received Date on or before 09/30/2020, and
  • (Fannie Mae) All LIBOR-indexed ARMs must be purchased as whole loans on or before 12/31/2020, or in MBS pools with issue dates on or before 12/01/2020, regardless of Application Received Date or Note Date.
  • (Freddie Mac) All LIBOR-indexed ARMs must be purchased on or before 12/31/2020, regardless of the Application Received Date or Note Date.
03/12/2020

Updated URLA Training & Timeline

Fannie Mae has updated their Uniform Residential Loan Application (URLA) eLearning course, “Getting Started with the Redesigned 1003,” to reflect the recent changes to the URLA (Form 1003). The eLearning course and other resources will help prepare to use the new URLA that is required on 11/01/2020. 

02/20/2020

AQM List - February 2020

Fannie Mae has posted their AQM List for February 2020 with th following Appraiser additions since the previous list (January 2020):

Appraiser State License Number Action - Effective 02/25/2020
Armando X. Martinez TX 1360604 Appraisals No Longer Accepted
FL RD7268
Diane Brown CA AL034869  100% QC Review

As a reminder, the AQM list includes appraisers whose appraisals are subject to 100% review or whose appraisals are no longer accepted by Fannie Mae. Credit Policy maintains this list in our FraudGUARD program so all of the parties entered in File Contacts in each Encompass loan file will be checked against the AQM list once the FraudGUARD report is run.

02/25/2020

EarlyCheck Outage 02/22 - 02/23/2020

Fannie Mae’s EarlyCheck will be unavailable from 7 p.m. ET on Saturday, Feb. 22 until 8 a.m. ET on Sunday, Feb. 23. Loans submitted during this time will not receive EarlyCheck results. Users should submit loans once the outage has concluded. See the technology page for hours of availability and outages for EarlyCheck via Fannie Mae’s website.

02/21/2020

Credit Score Solicitation

The FHFA has announced in accordance with the requirements of the Validation and Approval of Credit Score Models Final Rule (12 C.F.R. Part 1254), Fannie Mae and Freddie Mac (collectively, the “Enterprises”) have published the following Credit Score Solicitation to request applications from prospective credit score model developers (“Applicant”).

The Credit Score Solicitation describes the process for credit score model developers to submit applications to Fannie and Freddie (the “Enterprises”).  In order to be considered, each Applicant must complete the application process for each credit score model: Note: The publication of the solicitation is only the first step in many in the process of evaluating new credit score models.  Please refer to the Timeline for details.

  • The Enterprises will begin accepting applications on May 18, 2020. 
  • The application period will be open for 120 days, ending on September 15, 2020. 

In addition, please refer to the following resources:

02/18/2020

Mortgage Insurance Forms Update

Fannie Mae has announced an update to the previously announced Lender Letter LL-2019-08. Fannie Mae has worked with approved mortgage insurers to update their master primary policies and related endorsements and other forms (Forms). An updated list of Approved Mortgage Insurance Forms for each mortgage insurance provider was published on Fannie Mae’s website. That list has now been further updated to include the state-required variation endorsements. Going forward, this list will be updated as necessary.

  • The updated forms list is effective with loans having application dates on or after 03/01/2020.
  • Note: Consult your mortgage insurance provider regarding the applicability of state-required variation endorsements.
02/13/2020

SEL-2020-01 - February 2020 Selling Guide Update

Fannie Mae has announced their most recent update to the Selling Guide as of 02/05/2020. The February update includes policy clarifications and updates which are effective on and after 02/05/2020, unless addressed otherwise. Credit Policy is currently reviewing and will make the guideline clarifications/updates within the applicable topics of KnowledgeOwl.

Calculating Total Monthly Housing Obligation

Effective on and after 06/01/2020 for New Loan Casefiles Submitted to DU.

It is required to include a monthly mortgage payment of PITIA for the borrower’s principal residence to be used as the housing expense in the DTI ratio.

  • Policy has clarified to include the borrower’s rental housing payment as an additional liability in the DTI ratio when the subject transaction is a second home, investment property, or includes a non-occupant co-borrower.
  • The Guide also includes the documentation required to verify this payment, when applicable.
  • Note: DU will include a new message in a future release to remind that the rental housing payment must be verified and documented.

Rental Income - Refinance

Effective on and after 04/01/2020 for New Loan Casefiles Submitted to DU.

When determining the amount of rental income from the subject property that can be used for qualifying purposes:

  • Policy has clarified to apply to refinance transactions in addition to purchases.
  • Note: The DU message reminding that rental income may not be used in qualifying if the borrower does not own a principal residence or have a primary housing expense is currently issued on purchase and refinance transactions. 
    • Lenders may disregard this requirement on refinance loan casefiles created prior to 04/01/2020.

Calculating the Monthly Real Estate Tax Payment

Effective Date – Delayed until further Notice

The 03/01/2020 effective date has been delayed until further notice that would have required lenders to use a reasonable estimate of the real estate taxes based on the market value of the land and completed improvements for all purchase and new construction transactions.This policy applied to the monthly tax payment used for loan qualification purposes and for establishing the payment for the escrow account.

  • We are advised to revert back to and follow the prior policy for estimating the monthly real estate tax payment.

Misc. Update - HomeReady Loans with Resale Restriction

To be eligible as a HomeReady mortgage, the total annual qualifying income may not exceed 80% of the AMI for the property’s location. If the subject property has resale restrictions and the loan is a HomeReady mortgage, the more restrictive of the HomeReady income limit or the resale restriction income limit applies.

X

02/05/2020

FNMA- Misrepresentation of Borrower Employment Scheme - CA Updated 01242020

Fannie Mae has announced they have added 15 apparently fictitious employers to their fraud alert, “Misrepresentation of Borrower Employment.” document.

  • The alert identifies places of employment that appear to be fictitious being used on loan applications in the state of California. In 2018, Fannie Mae has previously posted three Fraud Alerts regarding apparently fictitious employers located in California.
  • The current list alert identifies those entities and also includes the entities identified in the prior alerts.
  • The list contains 65 entities / businesses that were listed as the borrower’s purported place(s) of employment but whose existence Fannie Mae could not confirm.
  • The entities shown in blue are new to this list as of 01/24/2020. Please know that this list is subject to change.

Note: Credit Policy has added the “apparently fictitious employers” to FraudGuard to be flagged.

01/29/2020

URLA Announcement January 2020 - GSEs – URLA Update – Fillable PDF Versions Now Available

The GSE’s Fannie Mae and Freddie Mac, have announced the creation of interactive (fillable) PDF versions of the redesigned Uniform Residential Loan Application (URLA) with an effective date of 09/2020, along with corresponding supporting documents (Refer to appendix 1). These interactive forms comprise the final version of the loan application to be supported by the industry in system development and preparation of the redesigned URLA and updated GSE-specific automated underwriting system (AUS) specifications for the 11/01/2020 mandate. Note:  The GSEs are on track to publish the Spanish Translation Aid to the redesigned URLA in the second quarter of 2020. A complete implementation timeline and the supporting materials referenced in this document are available on Fannie Mae’s and Freddie Mac’s URLA Web pages.

Resources

Interactive Versions:

01/29/2020

EarlyCheck Versions 6.1.3 and 6.2 Release Notes Jan-Feb 2020

Fannie Mae has announced EarlyCheck will be updated consisting of edits changing severity which are related to borrower identification, data validation, and mortgage insurance as follows:

Version 6.1.3

Updates as of 01/27/2020

  • 1003 and MISMO AUS 2.3.1
    • 1 edit with a text change
    • 3 edit changing severity from Warning to Warning-to-Fatal
  • ULDD-MISMO 3.0
    • 1 edit with a text change
    • 8 edit changing severity from Warning to Warning-to-Fatal
    • 4 edit changing severity from Warning-to-Fatal to Fatal

Refer to the 6.1.3 Edit Message Spreadsheet for further details.

Version 6.2 Updates as of

02/24/2020

  • 1003 and MISMO AUS 2.3.1
    • 1 edit with a text change
    • 3 edit changing severity from Warning-to-Fatal to Fatal
  • ULDD-MISMO 3.0
    • 1 edit with a text change
    • 3 edit changing severity from Warning-to-Fatal to Fatal

X

01/27/2020

DU for Government Loans Release - 01.25.2020

Fannie Mae has updated their DU release notes for Government loans pertaining to VA loan casefiles submitted or resubmitted prior to and on or after the weekend of 01/25/2020:

VA Casefiles – County Loan Limits

Because the 2020 VA county loan limits will not be implemented on the date they are in effect, lenders are responsible for ensuring that the correct VA county loan limit is applied to all VA loans underwritten through DU from 01/01/2020 through 01/25/2020:

  • Effective for VA loan casefiles submitted or resubmitted prior to the weekend of 01/25/2020
    • DU will be underwritten using the 2019 VA county loan limits.
  • Effective for VA loan casefiles submitted or resubmitted on or after the weekend of 01/25/2020
    • DU will be underwritten using the 2020 VA county loan limits.

Additional VA Changes

  • One message will be updated in DU to reflect the Blue Water Legislation passed by congress and effective in 2020.

FHA - Recap

2020 Loan Limits and DU Total Scorecard

FHA county loan limits are applied by the FHA TOTAL mortgage scorecard, so a DU update is not required for FHA’s 2020 county loan limit updates. However, please note as follows:

When a County Cannot Be Determined

In cases where a property county cannot be determined, DU applies the FHA National Low Cost Area Limit. The FHA National Low Cost Area Limit amounts will be updated in DU to reflect the new values where a property county cannot be determined regardless of Agency Case Number assignment date:

  • Effective for FHA loan casefiles submitted or resubmitted prior to 01/25/2020
    • DU will display the 2019 limit
  • Effective for FHA loan casefiles submitted or resubmitted on and after 01/25/2020
    • DU will display the 2020 FHA National Low Cost Area Limit

Additionally, lenders are responsible for verifying that the correct limit is applied when determining eligibility.

Additional FHA Changes

  • The text of at least one message will be updated to better align with the Online HUD Handbook 4000.1. These changes will be effective for all loan casefiles submitted on or after the weekend of 01/25/2020.

X

01/09/2020

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