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This Week's Highlights - Wednesday, September 9, 2020
- Fannie Mae Selling Guide Updates
- Freddie Mac Guideline Updates & Clarifications
- Updated! FEMA Disaster Area Declarations for Iowa & Louisiana
- Jumbo Appraisal Review Requirements
- Freddie Mac LIBOR ARM Cutoff
- Knowledge Owl Training Opportunities 9/15
- On-Boarding Correspondent/Broker DRIVER Training
- FWL Releases FHA Case Query Videos
- Appraisal Transfers
- Non-Borrower Payment of Fees
- USDA Turn Times
- Removal of Adverse Market Refinance Fee
- FEMA Disaster Area Declaration for California & Louisiana
- FHA and USDA Extend Temporary Guidelines
Fannie Mae Selling Guide Updates
Fannie Mae has announced updates to their Selling Guide for September as follows:
- Accessory Dwelling Units
- Expanded property eligibility by allowing multi-width manufactured homes titled as real property to be eligible as an accessory unit, which was previously ineligible.
- As a reminder, a subject property that is a manufactured home and has an accessory unit is not permitted.
- Non-Occupant Borrowers - Clarification
- Guarantors, co-signers, and non-occupant borrowers are permitted on purchase, limited cash-out and cash-out refinance transactions.
Refer to SEL-2020-05 for details.
Freddie Mac Guideline Updates and Clarifications
Freddie Mac has updated and/or clarified the below items which became effective 09/02/2020, unless otherwise note below.
- Resale Restrictions
- FHLMC has extended the right of first refusal time period from 90 days to 120 days for properties with resale restrictions.
- Leaseholds
- At least one borrower must have been the lessee on the ground lease or lease agreement for at least 6 months on cash-out refinance transactions. Note: This was not previously addressed by FHLMC.
- Accessory Units
- FWL had previously confirmed with FHLMC that MFHs as accessory units were not permitted. With this update, they will be eligible as accessory units. Refer to topic in Knowledge Owl for full requirements.
- Social Security Income
- SS Income can be grossed up to 15% without documentation validating that the portions of the social security income is tax exempt. Current requirements still apply when using >15% gross up figure.
- Gift Funds
- Wedding gift funds are now permitted when it is verified that they were in the borrowers' account within 90 days of the date of the marriage license/certificate (previously 60 days).
- Appraisals - Effective for all loans on and after 11/02/2020
- Appraisers will need to analyze contract sales and listings, in addition to closed sales, when analyzing market conditions to report one unit housing trends in the neighborhood section of the appraisal. The appraiser’s analysis will support the use of positive or negative adjustments in the sales comparison approach and reflect changing market conditions.
Updated! FEMA Disaster Area Declarations for Iowa & Louisiana
The following areas in Iowa have been updated as disaster areas due to severe storms. The disaster incident period was declared on 08/10/2020.
- Benton, Boone, Cedar, Jasper, Marshall, Polk, Poweshiek, Scott, Story, and Tama Counties
The following areas in Louisiana have been updated as disaster areas due to hurricane Laura. The disaster incident period was declared on 08/22/2020 – 08/27/2020.
- Acadia, Grant, Jackson, Lincoln, Natchitoches, Ouachita, Rapides, Sabine, Vermillion, and Winn Counties / Parishes
Please Note: These are FEMA declarations and 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.
Jumbo Appraisal Review Requirements
Previously, all Jumbo loans required a third-party appraisal review. Effective for all loans, including loans in process not already submitted for review, an appraisal review is not required if either of the following are met:
- CU score of 2.5 or less or
- CDA is within -10% of appraised value
Important Notes: All loans must be locked in order to submit the appraisal for third-party review. Please account for additional time to complete review as rushes are not permitted.
For full program guidelines, refer to the Jumbo Program Matrix in Knowledge Owl.
Freddie Mac LIBOR ARM Cutoff
As a reminder, Freddie Mac will be transitioning LIBOR ARMs to the SOFR ARM in the upcoming months. In order to prepare for the transition of this product, the following cutoff dates have been applied by Fairway Wholesale Lending for the LIBOR ARMs.
Please plan accordingly.
- Application Cutoff Date: 09/15/2020
- Lock Cutoff Date: 10/01/2020
- Final Funding Date: 11/02/2020
Knowledge Owl Training Opportunities 9/15
As a reminder, Fairway Wholesale Lending is excited to be offering live Knowledge Owl Training opportunities scheduled for the 3rd Tuesday of the every month for our valued clients.
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 the ins & outs of KO's functionalities and assist you with various tips for accessing guidelines in a quick and efficient manner, as well as allow the opportunity for you to ask any questions you may have.
Register below for this month's opportunity! You don't want to miss out!
Tuesday, September 15th @ 12:00 CST
On-Boarding Correspondent/Broker DRIVER Training
FWL Releases FHA Case Query Videos
To help ensure you have a successful FHA process from the start, Fairway Wholesale Lending has created several short training videos to provide step-by-step instructions when completing tasks in FHA Connection.
These helpful videos are posted in KnowledgeOwl in the corresponding FHA topic. This week's videos talk about performing FHA Case Queries. Note: As a reminder, you must be logged into Knowledge Owl to access guidelines.
Q: Are there certain property types that are not permitted on a Conforming Appraisal Transfer?
A: Without an exception from management, an appraisal transfer is not permitted on 2-4 units (form 1025), Manufactured Homes (form 1004C) and in some cases, new construction as a Collateral Underwriter (CU) score will not generate.
Q: Can a Non-Borrower pay required fees on our Borrower's loan?
A: Yes. However the contribution would be considered a gift and the Non-Borrower will have to be an acceptable donor as defined by the agency guides. The funds would have to be considered during the underwriting process, including but not limited to, entering the gift funds into the AUS system.
Note: If the Borrower received and used funds to pay fees, and the Non-Borrower is an unacceptable donor, documentation is required to evidence the Non-Borrower was repaid in full (i.e. Canceled Check, Cashier's Check / Money Order, Bank Statement). Repayment in cash is unacceptable.
USDA Turn Times
Are you interested in knowing the current status of USDA's turn times? USDA provides this information on their website. Refer to USDA's turn times here for the most up-to-date information.
Removal of Adverse Market Refinance Fee
Fannie Mae and Freddie Mac have extended the effective date to the LLPA of 50 basis points for refinance transactions with settlement dates on and after 12/01/2020. Additionally, exemptions that are not subject to the LLPA have been added:
- Refinance loans with an original principal amount of <$125,000
- Single-Close Construction-to-Perm transactions (not offered by FWL)
- HomeReady and Home Possible refinance transactions
As a reminder, Fairway Wholesale Lending has removed the .50 Adverse Market Fee on all new locks. A new timeline will be released at a later date to coincide with the 12/01 delivery date.
Refer to LL-2020-12 and 2020-35 for details.
FEMA Disaster Area Declaration for California & Louisiana
The following areas in California have been added as disaster areas due to wildfires. The disaster incident period was declared on 08/14/2020 and is ongoing.
- Lake, Monterey, Napa, San Mateo, Santa Cruz, Solano, Sonoma, and Yolo Counties
The following areas in Louisiana have been added as disaster areas due to hurricane Laura. The disaster incident period was declared on 08/22/2020 – 08/27/2020.
- Allen, Beauregard, Calcasieu, Cameron, Jefferson Davis, and Vernon Counties
Please Note: These are FEMA declarations and 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.
FHA & USDA Extend Temporary Guidelines
FHA and USDA have both extended their policy expiration dates for the current temporary guidance established due to COVID-19 (FHA - 10/31/2020 / USDA - 11/30/2020). Items extended are as follows:
- Appraisal Requirements
- Employment Verifications
Steve Jacobson, CEO - "Taking our eyes off ourselves—-FOCUSING on helping and serving others—-can pull us out of those dark places."
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