This Week's Highlights - Tuesday, August 25, 2020

  • HELOC Second Mortgage Product Updates
  • FEMA Disaster Area Declaration for Iowa & California
  • Six Tips to Calculating Income During COVID-19
  • Reminder! Underwriting Turn Times
  • FHA Renegotiated Contract Eligibility
  • Reinstated Forbearance Loans
  • Conventional Refinance Pricing Adjustment
  • Fairway Removes COVID Cash-Out Refinance Adjustment
  • Important! Mortgage Alliance Association (MAA) Call to Action
  • USDA Handbook Updates
  • Condo Approvals
HELOC Second Mortgage Product Updates
Effective for all loans, including loans in process, on and after 08/15/2020, the following updates have been made to the HELOC second mortgage product guidelines. 
  • Non-Occupant Borrowers Ineligible
  • Business Assets Ineligible (Closing and Reserves)
  • Appraisal Options
  • Asset Reserves 
For full program guidelines, refer to the Second Mortgage Product Matrix in Knowledge Owl. Note: As a reminder, you must be logged into KO to access guidelines.

FEMA Disaster Area Declaration for Iowa & California
The following areas in Iowa have been added as a disaster area due to severe storms. The disaster incident period was declared on 08/10/2020.
  • Linn County

The following areas in California have been added as disaster areas due to wildfires. The disaster incident period declared 08/14/2020 and is ongoing.

  • Lake, Monterey, Napa, San Mateo, Santa Cruz, Solano, Sonoma, and Yolo Counties

Please Note: This is a FEMA declaration and it will affect all programs; therefore, we are implementing Fairway’s Disaster Area Appraisal and Re-Inspection requirements for both conventional and government loans. 

This information has been added to FIMC’s Disaster Area List in Knowledge Owl for future reference.
Six Tips to Calculating Income During COVID-19
Genworth Mortgage Insurance Company has released a compilation of their top 6 tips to calculating income during COVID-19 to help you through the changes.
For details, refer here.
Reminder! Underwriting Turn Times
Fairway Wholesale Lending wants to remind our valued clients that during these increased activity levels, turnaround times may vary. Please ensure you are reviewing our current turn times on rate sheets or the Resource Page of DRIVER.

Incomplete submissions could delay your file being submitted to Underwriting. For submission checklists, access the Forms & Documents in DRIVER.


Q: Does FHA allow the purchase price and the amount the seller is contributing towards closing costs to increase after the appraisal has been completed?

A: Yes. FHA permits any part of a purchase contract to be renegotiated at any point in the loan transaction as long as all applicable parties agree to the renegotiation by having all of the new terms outlined in a fully executed purchase contract addendum.

  • Increases to the purchase price requires a revised amendatory clause.
  • Contributions exceeding 6% of the purchase price are considered an inducement to purchase.

Q: Is my loan considered “reinstated” if the borrower has come out of a CARES Act forbearance where they have not made any payments during the forbearance but have not missed any payments before or after?

A: No. In order for a loan to be “reinstated”, any payments not made during a CARES Act forbearance must be paid using the borrowers own funds.  If they did not reinstate the loan prior to the application date, we are required to ensure the funds are sourced according to standard policy using eligible funds. If the borrower hasn’t or cannot reinstate past due payments, and the deferred payments have been rolled into the current balance of the loan, the borrower must make 3 scheduled payments on time prior to being eligible to refinance.


Conventional Refinance Pricing Adjustment
Fannie Mae and Freddie Mac 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.

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.
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”.

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.
Condo Approvals
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.

Steve Jacobson, CEO - "We need courage not only to endure times of adversity, but also to make the changes that adversity propels us to make."