New Fannie Mae Guidelines Allow Verification of Assets in Lieu of Income

by devteam September 15th, 2012 | Share

Late Friday Fannie Mae gave borrowersrnand lenders an alternative to documenting income for Refi Plus loans wherernpayment increases will be under 20 percent. rnRather than requiring that at least one of the borrowers has a documentedrnsource of income, Fannie Mae will now accept verification of liquid financialrnreserves equal to at least 12 months of the new mortgage payment (PITIA).  Documentation can be through one or morernrecent statement of liquid reserves in bank accounts, money markets, stockrnaccounts, retirement savings accounts, or certificates of deposit.  Fannie Mae is also providing streamlinedrndocumentation requirements for other underwriting criteria for these loans.</p

Earlier this week Acting Director of thernFederal Housing Finance Agency (FHFA) released new requirements which granted reliefrnfrom reps and warrantees to lenders when a purchase money mortgage hadrnestablished a 36 month record of on-time payments or when Fannie Mae’s RefirnPlus and DU Refi Plus loans had established 12 months of on-time performance.  In this latest Selling Guide Announcement FanniernMae expanded this relief for both types of Refi Plus loans to include arnrelaxing of appraisal rules.</p

Under the new guidelines, effectivernimmediately the lender is not required to make any representation or warrantyrnat to the value, marketability of condition of the subject property where a newrnappraisal is obtained:</p<ul class="unIndentedList"<liLendersrnmay deliver loans on properties with a condition rating of C6 and a qualityrnrating of Q6 completed on an "as-is" basis with no requirement for thernappraisal to be completed subject to completed repairs.</li<liThernlender is not responsible for the following requirements in the Selling GuidernB4-1.1-01 General Information on Appraisal Requirements (LenderrnResponsibilities.)</li

  • Accuracy and completeness of the appraisal andrnits assessment of the marketability of the property;</li
  • Underwritingrnthe completed appraisal report to determine whether the subject propertyrnpresents adequate collateral for the mortgage;</li
  • Ensuringrnthat the appraiser uses sound reasoning and provides evidence to support thernmethodology used for the opinion, particularly in cases not covered by FanniernMae Guidelines;</li
  • Ensuringrnthat the appraiser provides an accurate opinion, an adequately supported value,rnand an accurate description of the property.</li</ul

    Today’s release, which can be read inrnits entirety here</aalso provides an alternative qualification method when a borrower is beingrnremoved through refinancing, and streamlines verification of rental income forrninvestor owned properties.</p

    It is expected that a similar set ofrnguidelines will be forthcoming from Freddie Mac.

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