This Week's Highlights - Wednesday, May 27, 2020

  • Relaxed Conventional COVID-19 Requirements
  • Newly Revised Forbearance Policy
  • Upcoming FHLMC Income Requirements
  • Reminder! Onboarding Correspondent Driver Training Available
  • Ordering VA Appraisal Using Temporary Flexibilities
  • Non-COVID PDMDA Loans
  • HELOC Second Mortgage Product Available
  • VA Well Water Testing
Relaxed Conventional COVID-19 Requirements
Effective immediately, Fairway Wholesale Lending has removed the temporary COVID-19 policy related to Conventional Cash-Out Refinances and will begin accepting locks for Conventional Cash-Out transactions. Along with the reinstatement, Fairway is also lowering the minimum FICO to 620 for all conventional purchase and refinance transactions.
As a reminder, all refinance transactions may be locked at any point and are no longer restricted to being in an APPROVED status. The maximum lock period will remain at 30 days.
Refer to Fairway's COVID-19 Temporary Guidance in Knowledge Owl and the FWL Overlay QRG for any COVID-19 related policy.
Newly Revised Forbearance Policy
As previously announced in a Client Announcement, FNMA and FHLMC have issued the following forbearance guidance, which now applies to all mortgage loans the borrower is obligated on, and all conventional transaction types.

The reason for the borrower forbearance request, as well as any hardship, must be documented as overcome and not likely to recur. Any mortgage loan that has been, or is in forbearance will be analyzed as follows:
  • Borrower is current and has no missed payments
    • For borrowers whose payments are current follow standard conventional guidelines.
  • Reinstatement
    • If the borrower resolved missed payments through reinstatement (i.e. loan is now current), the borrower is eligible for a new mortgage loan.
    • If the reinstatement was completed after the application date, the source of funds must be documented in accordance with standard policy.
  • Repayment Plan
    • The borrower must have resolved / completed the repayment plan; or
    • Have made at least 3 timely consecutive payments (whichever comes first) prior to close. The new loan can include the remaining payments under the repayment plan.
  • Payment Deferral
    • The borrower must have made at least 3 timely consecutive payments following the effective date of the payment deferral agreement. The new loan can include the remaining payments of the deferred amount.
  • Loan Modification
    • The borrower must have made at least 3 timely consecutive payments following the effective date of the Loan Modification Agreement. The new loan can be used to pay-off the modified mortgage.

Refer to Freddie Mac Bulletin 2020-17 and Fannie Mae LL-2020-03 for more details.

Upcoming Freddie Mac Income Requirements
In October 2019, Freddie Mac announced updates to their income requirements effective for mortgages with settlement dates on and after 06/02/2020. As a reminder, some of these changes are as follows:
  • Borrowers with income that is derived from fluctuating hourly employment earnings, in no circumstances, may have <12 month employment history.
  • Income calculation requirements for all fluctuating employment income types (hourly base, OT, bonus, commission and tips) have aligned and are based on whether the income trend is determined to be consistent, increasing or declining.
  • Additional analysis is required when income fluctuation between the prior year(s) and YTD exceeds 10%.
Refer to Freddie Mac Bulletins 2019-20 and 2020-13 for more details.
Reminder! Onboarding Correspondent Driver Training Available
Onboarding Driver training is available for correspondents. Individual or scheduled training sessions are available. If you are interested, please reach out to your AE to get signed up today!
Q. When submitting an appraisal order through the VA portal, is there anything I need to be aware of with the temporary valuation allowances?

A. Yes. VA has issued a reminder to Lenders that when ordering a VA appraisal, the order must indicate the appraisal review type based on the FINANCED loan amount. Eligibility requirements are:
  • Desktop Appraisal: Eligible up to the maximum 2020 CCL limits for a one-unit property for the county or county-equivalent area. Do NOT request a Desktop Appraisal if the financed loan amount (i.e. unpaid principal loan amount) will exceed the maximum limits. Financed loan amounts >$510,400 require an interior/exterior appraisal.
  • Exterior Only Appraisal: Eligible with enhanced assignment conditions up to 1.5x the maximum 2020 CCL limits for a one-unit property for the county or county-equivalent area. Do not request an Exterior-Only Appraisal if the financed loan amount (i.e. unpaid principal loan amount) will exceed the maximum limits. Financed loan amounts >$765,600 require an interior/exterior appraisal.
Q. I have an FHA loan that is located in a PDMDA that was due to a natural disaster (i.e. not COVID related). Can I use the COVID appraisal flexibilities?

A.  No. Any Non-COVID PDMDA will not be afforded the COVID appraisal flexibilities and must follow standard disaster guideline requirements.

HELOC Second Mortgage Product Available
FWL has reinstated the HELOC Second Mortgage Product effective immediately and is available for borrowers that have obtained first mortgage financing through FWL.

This product is an interest-only home equity line of credit with a maximum CLTV/HCLTV of 95%. For full program guidelines, refer to the Second Mortgage Product Matrix available in Knowledge Owl. 

Note: You must be logged into Driver to access guidelines.

VA Well Water Testing
VA has provided further guidance when a water test is required. 
  • Refinance of VA Loans: 
    • Well water testing is waived where the home is already encumbered by a VA loan.
  • Purchases & Refinances of Non-VA Loans: 
    • In areas where testing is suspended, the Veteran will need to sign an acknowledgment stating they are aware that testing cannot be done.
      • A test must be completed within 180 days of the Note date and applicable VA escrow requirements apply.
    • Prior to closing, the Veteran must acknowledge they accept responsibility to install a filtration system at their own cost to correct the issue should the water test fail.
Please refer to VA Circular 26-20-13 for more details.

Steve Jacobson, CEO - "Each day is a new opportunity; no matter what happened yesterday."