This Week's Highlights - Tuesday, June 2, 2020

  • Fairway Announces Positive Government Updates
  • New Live Knowledge Owl Training Available
  • Updated! FWL Overlay QRG
  • FNMA & FHLMC Self-Employed Income Updates
  • COVID Related Modification
  • Removing a Borrower from a USDA Streamline
  • Freddie Mac Income Requirements - Effective 06/02/2020
  • Relaxed Conventional COVID-19 Requirements
  • Newly Revised Forbearance Policy
Fairway Announces Positive Government Updates
Fairway Wholesale Lending is pleased to announce we've updated our government guidelines effective immediately. These updates apply to loans currently in the pipeline.

Positive Government Changes:

  • FHA and VA Cash-Out Refinance transactions available
  • 640 minimum credit score for all government transactions - purchase, rate/term refinance, cash-out refinance, and streamline refinance transactions
  • 30 day locks available at time of application; 15 day locks on all refinance transactions available at Approval milestone
  • Removal of DTI restrictions - follow AUS feedback

Please see the rate sheet for all applicable loan level price adjustments.

New Live Knowledge Owl Training Available
Fairway Wholesale Lending is excited to announce they are offering live Knowledge Owl Training opportunities scheduled for the 3rd Tuesday of the every month. Knowledge Owl (KO) is the system in which Fairway's program guidelines are housed and are accessible by logging into DRIVER.

The training will provide various tips and tools for navigating the system successfully as well as allow the opportunity for you to ask any questions you may have.

Register below for one of the upcoming scheduled trainings:
Updated! FWL Overlay QRG
Due to the number of positive guideline changes in the recent weeks, the FWL Overlay QRG has been updated. Please refer to the guide as a quick reference for any Fairway Wholesale Lending key items or overlays. 
NEW! FNMA & FHLMC Self-Employed Income Updates
Both FNMA/FHLMC have announced requirements for additional documentation to support the decision in the qualification process of self-employment income effective for loans submitted to Underwriting on and after 06/08/2020. 
Key guideline requirements are as follows:
  • One of the following must be obtained:
    • An audited P&L, or
    • An unaudited P&L and 2 months business account statements (statements must be no older than the latest 2 months on the P&L)
      • The gross receipts and expenses on the P&L must be consistent with deposits and withdrawals (expenses) reflected on the  bank statements.
    • Note:  P&L (both audited and unaudited) must be no older than 60 calendar days old as of the note date and must include the most recent month preceding the loan application date.
  • YTD income must be calculated based on the P&L and compared with the income average (based on tax returns) using the standard income calculation requirements.
    • Standard adjustments can be made to P&L (i.e. add back depreciation, depletion)
  • The underwriter's review of the income must address any impact that COVID-19 has had on the business / income, using the guidance in LL-2020-03 and 2020-19The file must include a written analysis of the self-employed income amount and justification of the determination that the income used to qualify the Borrower is stable.
  • Income Eligibility:
    • If the self-employed income can be classified as stable, the income can be used as follows:
      • Income is the same or has increased (YTD vs tax returns), the income calculated using tax returns can be used in qualifying.
      • Income has declined, only the YTD (based on P&L) may be used in qualifying.
    • If the income has declined and has not stabilized, the income cannot be included for qualifying
  • Business Asset Clarification
    • Loan proceeds from the SBA Payroll Protection Plan (PPP) and/or any other similar COVID 19 programs are not permitted as business assets for the purpose of eligible funds to qualify the borrower for the mortgage transaction including but not limited to, funds for Down Payment, closing costs and reserves.
Refer to LL-2020-03 and Bulletin 2020-19 for further details and updates.
Q.  I have a purchase loan where the borrower entered into a COVID-19 related loan modification on a property they are simultaneously selling.  They will not have made 3 payments on the loan by the time the new loan closes.  Do they have to wait and make 3 payments?​

A. No. They do not have to postpone their closing on the new loan as long as the modified mortgage on their departure residence is paid in full. If for some reason the sale falls through, then they would be required to make 3 timely payments or satisfy all the missed payments in full (reinstatement).
Q. Can I refinance and remove borrowers on the USDA Streamline-Assist program?​

A.  Borrowers may be added, but may not be removed from the current loan unless one of the borrowers is deceased. This is the only circumstance in which the borrower can be removed.

If you have a loan situation where a borrower is being removed for any reason whatsoever, the loan is not eligible for Streamline Assist and must qualify under one of the other available USDA refinance products. 

Freddie Mac Income Requirements - Effective 06/02/2020
In October 2019, Freddie Mac announced updates to their income requirements effective for mortgages with settlement dates on and after 06/02/2020. 
Please refer to Freddie Mac Bulletins 2019-20 and 2020-13 for more details.
Relaxed Conventional COVID-19 Requirements
As previously announced, the following relaxations related to COVID-19 were implemented to Fairway Policy and were effective immediately for all conventional loans.
  • Minimum FICO: 620
  • DTI: Follow AUS
  • Reserves: Follow Agency
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.

Steve Jacobson, CEO - "You should judge your success by how much you are able to help others."