• Rental Income Lease Review Requirements
  • Leases that predate the mortgage could have a superior claim to the mortgage. State laws may differ on the relationship between an unrecorded lease and a subsequent mortgage. Ensure clear title and first lien enforceability in accordance with Representations Warranties. 
  • Note: ​The lease review message in DU can be disregarded until a future DU update removes the message.
• Escrow Waiver Limited Cash-Out Refinance
  • An escrow account is no longer required to be established in order to close a LCOR that includes non-delinquent subject property real estate taxes as part of the loan amount.
• Condo Policy Clarifications 
  • When there are 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.

Refer to SEL-2020-03 for more details.

Note: If the borrower is renting the property without a contract or agreement with the option to buy, the Right of Rescission does not apply.  It would close as a regular purchase transaction.

A.  Yes, on conventional loans. In summary, the forbearance (or other loss mitigation action) will be considered on a case-by-case basis subject to the type of action the borrower has taken in lieu of making regularly scheduled payments. If the loan is in forbearance/deferment, and all payments have been moved to the end of the loan, provide the forbearance / deferment documentation in order to be considered.  Other loss mitigation options must include the documentation of the agreement as well as evidence the loan has not been delinquent since the agreement has been in place. Any delinquent / derogatory credit prior to the agreements is subject to standard guidelines and underwriting risk assessment. 

The guidance for Consumer Loan Debt in Forbearance is posted on the COVID-19 Temporary Guidance page.  Note: As a reminder, you must be logged into KO to access guidelines.