The waiting period after forbearance in order to be eligible for a new USDA loan is as follows:

• Purchase Transactions (Manually Underwritten, Refer and Refer with Caution):
  • Borrower(s) emerging from forbearance must have resumed repayment of their mortgage loan for a period of at least 3 months prior to applying for a new loan.
• Non-Streamlined and Streamlined Refinance Transactions:
  • Loan must have closed at least 12 months prior to the request to refinance, and
  • Borrower must have resumed making payments for a period of at least 3 months, and
  • Have a total of 180 day period of satisfactory payments, excluding the time the loan was in forbearance.
• Streamlined Assist Refinance Transactions:
  • Borrower must have resumed making payments for a period of at least 3 months, and
  • Not have any defaults in the previous 12 months period, excluding the time the loan was in forbearance.

Refer to USDA FAQs for details.

FEMA Disaster Area Declarations for Oregon and Alabama
The following areas in Oregon have been added as disaster areas due to wildfires and straight-line winds. The disaster incident period declared 09/07/2020 and is ongoing.

• Clackamas, Douglas, Jackson, Klamath, Lane, Lincoln, Linn, and Marion Counties 

The following areas in Alabama have been added as disaster areas due to Hurricane Sally. The disaster incident period declared 09/14/2020 and is ongoing.

• Baldwin, Escambia, and Mobile Counties

Please Note: These are FEMA declarations and will affect all programs; therefore, FWL is implementing the 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.

As a reminder, FWL created the PDMDA Job Aid, which will assist in determining what appraisal and re-inspection requirements are to be applied in certain disaster areas eligible for individual assistance.

Jumbo Second Home Occupancy Requirements
Effective for loans on and after 09/16/2020, including loans in process, second homes with short term rental income are eligible to be classified as Second Homes providing the following are met:

• Purchase and Rate & Term Refinance only.  
• 1 unit properties only
• Occupancy of borrower for a minimum of 14 days/yr
• Property must be available to the borrower half the year (i.e., in place rental needs to be <=6 months)
• Income from the in-place rental cannot be used in qualifying income
• Copy of any/all rental agreement(s) must be included in the loan file

For full program guidelines, refer to the Jumbo Program Matrix in Knowledge Owl. Note: As a reminder, you must be logged into KO to access guidelines.

FHA Self-Sufficiency Rental Income Test Reminder
Underwriting has seen an increase in loans being submitted without the necessary worksheets for 3-4 unit properties. As a reminder, the Self Sufficiency Test Worksheet and the Rental Income Worksheet are required for all 3-4 unit subject properties. Net self-sufficiency rental income refers to the rental income produced by the subject property that is over and above the PITI amount. Calculate by using the Appraiser's estimate of fair market rent from all units, including the unit the Borrower chooses for occupancy, and subtract the greater of:

• the Appraiser's estimate for vacancies and maintenance, or
• 25% of the fair market rent.

The subject property's PITI divided by the monthly net self-sufficiency rental income amount may not exceed 100% for 3- to 4-unit properties. If self-sufficiency is not met, the loan is ineligible for FHA financing.

Additionally, 3 months PITI reserves are required.  For additional guidance, refer to the FHA Rental Income topic.

• 45-day locks beginning September 28, 2020
• 30-day locks beginning October 12, 2020
• 15-day locks beginning October 26, 2020 

Any loan that funds or is purchased after November 9th, 2020 will be subject to the 50 bps adverse market fee at the time of extension.  The adverse market fee does not apply to:

• Loan Amounts <$125,000
• Home Ready or Home Possible Mortgages

Q: Can my borrower’s sales contract be in the name of a trust and are we allowed to disclose the file in the name of the trust?

A: The loan application and disclosures must be in the borrower’s name and not the trust because we have to use the individual as a credit-qualifying borrower. The sales contract can be in the name of the trust, as long as the borrowers sign the contract as the trustees of the trust. The borrowers will be personally liable for the FIMC loan, but can still vest title in the name of the trust as long as it meets agency guidelines for Living Trusts.

Q: Do I need to re-pull a credit report if the DOB was entered incorrectly?

A: Yes. If the borrower’s initial credit report was ordered with data errors such as misspelled name, address or incorrect birth date, a new credit report will need to be pulled reflecting the accurate information.

During the beginning of each fiscal year, funding for the Single Family Housing Guaranteed Loan Program (SFHGLP) may not be available for a short period of time (historically about two weeks). Rural Development will issue Conditional Commitments “subject to the availability of commitment authority” for purchase and refinance transactions”.  

• As we have in the past, FWL will continue closing and funding USDA loans if there is a lapse in funding during the fiscal changeover. 
• Conditional Commitments will be accepted from RD with "subject to commitment authority" language in them, which means USDA loans continue closing and funding. (Business as usual.)

Refer to Fiscal Year 2021 Conditional Commitment Notice for details.

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

FHA Updates for Borrowers with Prior Mortgage Payment Forbearance
FHA announced their stance for borrowers who were granted forbearance and are seeking new FHA insured financing. These changes may be implemented immediately but must be effective for case numbers assigned on or after 11/09/2020. Full guidelines can be found COVID-19 Temporary Guidance topic in KO.