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On December 5, Freddie Mac released Guide Bulletin 2018-24 (Bulletin) announcing selling and servicing updates, including updates to the Single-Family Seller/Servicer Guide to reflect 2019 loan limit increases for both base conforming and super conforming mortgages. (As previously covered by InfoBytes, on November 27, the FHFA raised the maximum base conforming loan limits for mortgages purchased in 2019 by Fannie Mae and Freddie Mac.) The Bulletin notes that Freddie Mac’s Loan Quality Advisor and Loan Product Advisor have been updated to allow sellers to immediately begin evaluating and originating mortgages with these new loan amounts. However, the Bulletin states that qualifying mortgages may not be sold to Freddie Mac until on or after January 1, 2019.
Among other things, the Bulletin also provides (i) single security initiative updates; (ii) updates to 10-day pre-closing verification requirements for union members; (iii) revised master insurance policy requirements for unaffiliated condominium projects or planned unit developments; and (iv) updates for document custodian requirements.
On December 4, Fannie Mae issued SEL-2018-09, which announces updates to the Selling Guide, including a new self-employment income calculation tool and an updated policy for appraisal waivers for disasters. Specifically, the guide now addresses the use of an approved vendor tool to assist lenders in calculating self-employment income: Fannie Mae “will provide representation and warranty enforcement relief on the accuracy of the calculation of the amount of self-employment income” to lenders that use this tool and enter the income calculated into Fannie Mae’s Desktop Underwriter. Additionally, the guide now allows lenders to exercise appraisal waiver offers on loans in process at the time of a disaster. If a property was damaged during a disaster, but the damage does not affect the safety, soundness, or structural integrity of the property and the repair items are covered by insurance, the lender may still deliver the loan to Fannie Mae; however, the lender must obtain a cost estimate for the repair and ensure that funds are available to the borrower to guarantee the completion of the repairs. The appraisal waiver change is available starting on or after the weekend of December 8. Among other things, the updates also include changes to (i) commission income and unreimbursed business expenses; (ii) Desktop Underwriter Version 10.3; (iii) small business administration loans; and (iv) duplicative provisions regarding flood insurance coverage.
On November 13, Freddie Mac released Guide Bulletin 2018-21 announcing selling and servicing updates, including new requirements for mortgages secured by energy and/or water efficient properties. Effective for mortgages with settlement dates on or after May 1, 2019, Freddie Mac’s GreenCHOICE Mortgages program seeks to improve home affordability by reducing homeowners’ monthly energy or water expenses by facilitating the financing of energy efficient improvements and homes. The bulletin lists specific requirements for the program, including caps for financing the costs of improvements, escrow, and energy reporting requirements. Freddie Mac will apply a $500 credit to help offset transactional costs, provided the seller delivers the requisite Investor Feature Identifier. The Bulletin also includes servicing and transfer of servicing requirements for the program.
Finally, the Bulletin covers property insurance requirements related to flood insurance for condominium projects and revisions to insurance policy premium requirements for condominiums located in Puerto Rico, both of which are effective immediately.
On November 7, Freddie Mac issued Bulletin 2018-20 (Bulletin) to announce temporary selling requirements for certain mortgages secured by properties that Hurricane Michael impacted, and borrowers whose properties or places of employment Hurricane Michael impacted. For properties located in eligible disaster areas that Hurricane Michael affected on or after October 11, the Bulletin, among other things, provides (i) age of documentation requirements that will remain in effect for six months; (ii) specific collateral requirements and guidance; and (iii) for reimbursement of property inspections completed on and before April 11, 2019, for sellers that meet certain requirements. The Bulletin notes that Freddie Mac will not update the Single-Family Seller/Servicer Guide to include the temporary requirements that the Bulletin announces, and advises sellers to retain a copy of the Bulletin to ensure compliance with these requirements.
Find continuing InfoBytes coverage on disaster relief here.
On October 31, Freddie Mac released Guide Bulletin 2018-19, which announces selling updates, including updates to the Settlement/Closing Disclosure Statement that sellers are required to use for mortgages with note dates on or after September 25, 2017. Effective immediately, Freddie Mac and Fannie Mae have jointly agreed that sellers “must create or obtain . . . the [c]losing [d]isclosure form for each [m]ortgage, regardless of whether another form might also be required by a [s]tate or local law.” Bulletin 2018-19 additionally states that, with the exception of certain servicing transactions, the Settlement/Closing Disclosure Statement means the closing disclosure required under TILA for mortgages subject to TRID rules, “whether or not the TRID rules apply to the transaction.”
Among other things, Bulletin 2018-19 also (i) updates certain rental income and documentation requirements; (ii) removes the special loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit TLTV ratio requirements for a “no cash-out” refinance of a mortgage owned or securitized by Freddie Mac with settlement dates on or after February 1, 2019; and (iii) removes the mandatory expiration date on Guide Form 960 (the Concurrent Transfer of Servicing Agreement), eliminating the need for sellers to submit a new guide form each year.
On October 17, Freddie Mac released Guide Bulletin 2018-18, which announces selling updates, including a new chapter on properties affected by disasters. Effective November 19, the Freddie Mac Selling Guide will now include Chapter 4407, Properties Affected by Disasters, which outlines requirements and provides certain flexibilities for the origination of mortgages secured by properties impacted by disasters. The chapter also introduces a “major disaster plan,” which, if implemented by Freddie Mac, would allow for flexibilities in both documentation requirements and in value estimates for Freddie Mac Relief Refinance Mortgages.
The Bulletin also covers, among other things, (i) updates to the Loan Collateral Adviser for mortgages secured by condominium units; and (ii) updates to the requirements for Condominium Projects.
On October 3, Freddie Mac issued Bulletin 2018-17 (Bulletin) to announce temporary revisions to its selling requirements for certain mortgages and borrowers impacted by Hurricane Florence. The Bulletin also reminds servicers that the previously announced temporary reimbursement process for property inspections conducted on or after August 29, 2017, of mortgaged premises located in “Eligible Disaster Areas,” remains in effect. Among other things, the temporary selling requirements: (i) provide that sellers who meet certain requirements will be reimbursed for property inspections completed on and before March 14, 2019; (ii) specify age of documentation requirements that will remain in effect for six months for certain mortgages and borrowers; (iii) provide specific collateral requirements and guidance, including sellers’ responsibilities with respect to property damage, appraisal waivers, and collateral representation and warranty relief—along with notice of updates to Loan Selling Advisor, Loan Quality Advisor, and Loan Product Advisor. The Bulletin notes that the Single-Family Seller/Servicer Guide will not be updated to include the temporary requirements and advises sellers and servicers that they must retain a copy of the Bulletin to ensure compliance with these requirements.
Find continuing InfoBytes coverage on disaster relief here.
On October 2, Fannie Mae issued SEL-2018-08, announcing updates to its Selling Guide. Notably, Fannie Mae expanded its policy on the use of employment-related assets as qualifying income, increasing to 80 percent the maximum LTV, CLTV, and HCLTV ratios for loans held by asset owners who are at least 62 years old upon loan closing. With respect to jointly-owned assets, all owners must be listed as borrowers on the loan, but only the borrower whose employment-related asset is being used as income must meet the minimum age requirement. Fannie Mae indicates that, until Desktop Underwriter is updated to reflect this policy change, it will accept delivery of any loan that receives an Approve/Ineligible recommendation because of a ratio over 70 percent and has been confirmed compliant by the lender.
Effective immediately, other announced updates to the Selling Guide include: (i) clarifications to employment verification policies for union member borrowers employed in a series of short-term job assignments; (ii) changes intended to provide clarity to Fannie’s expectations for lenders managing third-party originators; and (iii) clarifications to comparable sales requirements for appraisers of MH Advantage homes.
On September 4, Fannie Mae issued SEL-2018-07, which announces updates to its Selling Guide including, among other things, the introduction of rural high-needs appraisal waivers. The rural high needs appraisal waiver is contingent on obtaining a home inspection to confirm safety, soundness, and structural integrity consistent with Fannie’s property condition guidelines. The waiver is available on a limited basis for purchase transactions containing certain characteristics, such as borrowers with income at or below 100 percent of the area median income and property located in designated rural-high needs areas, as defined by Fannie’s “Duty to Serve” obligations. Additionally, the Selling Guide includes updates to (i) the name of the property inspection and property field work waivers; (ii) liability and fidelity/crime insurance for projects; (iii) single-entity ownership of co-op projects; and (iv) the approved mortgage insurers list and mortgage insurance forms.
On August 29, Freddie Mac released Guide Bulletin 2018-13, which announces selling updates, including the consolidation of Freddie Mac’s “Home Possible” and “Home Possible Advantage” mortgage programs into a single offering. The Bulletin compares the previous requirements of both programs with the new requirements of the consolidated program, which now allows non-occupant borrowers to be eligible for the program with a loan-to-value ratio less than or equal to 95%. The changes to the revised “Home Possible” mortgage program are effective October 29.
The Bulletin also updates several mortgage eligibility and credit underwriting requirements, including (i) student loan debt payment calculations; (ii) cash back requirements for “no cash-out” refinance mortgages; and (iii) timelines for evaluating credit report inquiries. Additionally, the Bulletin provides an update to the requirements for property, flood, liability and fidelity or employee dishonesty insurance for condominium projects.