This Week's Highlights - Tuesday, August 18, 2020
- Conventional Refinance Pricing Adjustment
- Tell Congress: Urge FHFA and the GSEs to Withdraw Adverse Market Refinance Fee
- Fairway Removes COVID Cash-Out Refinance Adjustment
- USDA Handbook Updates
- New Appraisal Ordering Platform
- SBA Paycheck Protection Program
- Engaged Borrower to be Married
- Relaxed Government COVID-19 Requirements
- Newly Updated FWL Overlay QRG
- Condo Approvals
- Fannie Mae Announces Selling Guide Updates
- Freddie Mac Announces Selling Guide Updates
NEW! Conventional Refinance Pricing Adjustment
Fannie Mae and Freddie Mac have announced an adverse market fee of 50 bps to be charged to all refinance loans.
Fairway Wholesale Lending began implementing this charge on all refinances effective immediately. All loans locked on and after 08/13/2020 will include the 50 bps charge (until further notice).
Refer to 2020-32 and LL-2020-12 for more details.
Important! Tell Congress: Urge FHFA and the GSEs to Withdraw Adverse Market Refinance Fee
As provided above, the GSE’s have released lender letters applying a new adverse market fee to all refinance transactions. The MBA has been working diligently to understand and block the anticipated imposition of a 50 bps adverse market fee on refinance loans purchased by GSEs, and released a statement to the media in response.
Fairway Wholesale Lending urges everyone (if not done already) to do the very simple action of contacting your U.S. Senators and House of Representative for your State/district to strongly disagree with the FHFA Commissioner’s decision (without any warning) to increase the cost of GSE (Conventional) Refinances with a .5% fee, effective immediately.
Click on the applicable link below to do your part in the “Call to Action”.
NEW! Fairway Removes COVID Cash-Out Refinance Adjustment
As a reminder, Fairway Wholesale Lending has removed the 50 bps COVID cash-out refinance adjustment effective as of 08/13/2020.
USDA Handbook Updates
Last month, USDA announced future updates being made to Chapter 15 of their handbook. These updates have been published and updated in Knowledge Owl where applicable. There were no changes made to guidelines.
Additionally, updates to Chapter 13 have been provided due to duplicate information throughout the chapter, which has now been consolidated. In this update, USDA has clarified that modular homes are considered stick-built and USDA will follow standard SFR requirements. This information was not previously provided in the handbook.
Coming Soon! New Appraisal Ordering Platform
Stay tuned for an announcement adding additional AMC's to our approved AMC list in addition to a new, robust appraisal ordering platform.
Q: Can my self-employed borrower use their SBA PPP loan toward their down payment?
A: No. The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses. It is not an eligible source of funds.
Q: What is required when a Borrower is engaged at the time of initial application but will be married prior to closing on their loan?
A: The initial application must be taken to reflect the Borrower's current marital status at the time of application and be updated to reflect any changes in marital status for the final application. A few items of note:
- Fairway permits single Borrowers to be on the same application for all loan types. Refer to the Joint Applications topic in KO for additional guidance.
- A new credit report is required if the Borrowers legally change their names prior to closing. Follow the Borrower Names, AKA Statements policy for the Agency your loan is placed with.
- An AKA statement reflecting all variations of the borrower's names is required on all loan types.
Note: You must be logged into Knowledge Owl to access program guidelines provided above.
Relaxed Government COVID-19 Requirements
FWL announced that effective for new loan submissions and locks on and after 08/10/2020, the minimum FICO is 620 (previously 640). Reminder: VA loan amounts that exceed the county loan limit require a minimum credit score of 640.
Newly Updated FWL Overlay QRG
The FWL Overlay QRG, which is a quick reference guide for our valued clients, has been updated to reflect some recent changes. As a reminder, the QRG is available on the home page of Knowledge Owl.
Due to COVID delays, some HOAs are taking much longer to complete and return the required documents. Please be aware that the FWL Condo Department review process may be at longer turn times so ensure you are setting proper expectations.
Note: Engaging the seller on the transaction may potentially speed up the HOA.
Fannie Mae Announced Selling Guide Updates
Fannie Mae announced updates to their Selling Guide for August 2020 adding clarifications to their underwriting and appraisal requirements associated with different financing structures used for the purchase of solar panels, provided as follows:
- for panels owned outright by the borrower, and
- further guidance concerning the calculation of the DTI ratio and CLTV ratio when solar panels are subject to financing in the form of a power purchase agreement or lease agreement.
Freddie Mac Announced Selling Guide Updates
Freddie Mac announced updates to their Selling Guide effective for settlement dates on and after 10/05/2020, but can be implemented immediately.
Please see 2020-31 for details.
- For Mortgages with a non-occupying Borrower and secured by a second homes or investment property, the monthly rental housing payment (if the principal domicile is not owned) must be included in the housing-to-expense ratio, and must be documented as follows:
- Direct verification of rent from a management company, or
- Direct verification of rent from an individual landlord (supported by two months of canceled checks or other evidence of two months’ payments), or
- A copy of the current, fully-executed lease agreement (supported by two months of canceled checks or other
- evidence of two months’ payments), or
- Six months of canceled checks or bank statements supporting consistent payments in the amount used in qualifying
- If excluding installment loans, child support, alimony and separate maintenance, documentation is required to show that 10 or fewer months of payments remain.
- For loans secured by assets other than real property, the terms of the loan no longer need to be verified, however documentation which supports the loan being secured by the asset must be provided. Note: The ownership and value of the asset continues to be required.
- LPA messaging will be updated by 11/05/2020.
- Clarification has been added that the use of estimated real estate taxes based on the value of the improvements plus the value of the land to calculate the monthly housing expense ratio applies only to newly constructed properties and the actual real estate tax amount is not yet available.
- Effective on and after 08/05/2020:
- Building Sketches: For atypical or functionally obsolete properties, the building sketch must include interior walls with dimensions.
- Opinion of Market Value Clarification: Freddie Mac permits the use of Form 10333 under specific conditions. If an appraisal or field review is used to underwrite the Mortgage, it must be retained in the Mortgage file.
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