This Week's Highlights - Tuesday, September 29, 2020
- FEMA Disaster Declarations Clarification
- PDMDA Job Aid for Properties Not Affected by Disasters
- FHA Mortgage Forbearance Job Aid Released
- USDA Advance Copy of Chapter 6
- Jumbo Program Updates
- Important! Adverse Market Fee Reminder
- September 25th Technology Release
- On-Boarding Correspondent/Broker DRIVER Training
- Missing Appliances
- FHA Case Number for Disclosing
- USDA Fiscal Year 2021 - Business as Usual
- USDA Updated Mortgage Forbearance Requirements
- FEMA Disaster Area Decs for OR and AL
- Jumbo Second Home Occupancy
- FHA Self-Sufficiency Rental Income Test
- New Appraisal Ordering Platform
Please Note: As a reminder, you must be logged into Knowledge Owl to access any links to KO referenced below.
Important Clarification on FEMA Disaster Declarations
FEMA has still yet to declare any Florida Counties for Individual Assistance due to Hurricane Sally, which has resulted in a number of inquiries. The FEMA website currently shows the affected counties in Florida declared for "Public Assistance", which just simply means that only businesses and government entities can currently file claims through FEMA – not residential. From a lending standpoint, we are looking for counties being declared for individual assistance only.
In this specific case (for Florida), just because the counties have yet to be declared as a disaster area for individual assistance does not mean they will not be in the near future. We encourage you to be proactive. If you're aware of a property being in an area that may be affected by a disaster, don't wait and order a reinspection to eliminate any last minute surprises.
As a reminder, we encourage everyone to continue to check the Current Disaster Declarations provided in Knowledge Owl. Once the area has been declared for individual assistance, the information will be reflected in this topic.
PDMDA Job Aid for Properties Not Affected by Disasters
FWL created the PDMDA Job Aid, which is a great go-to tool that will assist in determining what appraisal and re-inspection requirements are to be applied in certain disaster areas eligible for individual assistance for each agency.
FWL Releases FHA Mortgage Forbearance Job Aid
FWL is excited to release the FHA Mortgage Forbearance Job Aid to assist in digesting and applying the updated FHA forbearance guidelines that went into effect this last week. The job aid can also be found in Knowledge Owl.
USDA Advance Copy of Chapter 6
USDA has issued an advance copy of Chapter 6 of the HB 3555 for review and will be available for a minimum of 30 days. A Procedure Notice (PN) will be issued once the chapter has been published. Highlights are provided below, but are not limited to:
- Added contract for deed or land contracts as an eligible loan purpose where previously it was not permitted.
- Clarified guidance for refinancing “Construction Financing” and “Sites without a dwelling”.
- Clarified that loans submitted for refinance must have closed 12 months prior to the request for conditional commitment and that there should be no payments 30 days or more past due.
- Clarified that streamline assist refinance loans cannot exceed the original loan amount.
- Revised the Attachment 6-A which is the comparison for refinance transactions.
- Repetitive guidance has been removed to have a better work-flow.
Jumbo Program Updates
- Appraisal Reviews
- Effective for all Jumbo loans dated on and after 09/24/2020, an appraisal review is no longer required.
- Any Jumbo loan currently sent in for appraisal review must proceed following the previous guidance, as provided in the Jumbo Non-Conforming Matrix.
- Tax Return Requirements
- Additionally, as a friendly reminder, tax transcripts are not permitted in lieu of tax returns on any Jumbo loan. Tax returns must be provided on all loans. No exceptions.
Important! Adverse Market Fee Reminder
As a reminder, Fairway will phase in the application of the 50 bps adverse market fee as an LLPA for all FNMA and FHLMC refinances using the schedule below to comply with the new delivery date requirements:
- 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
September 25th Technology Release Our Technology Team has released a Hot Fix on Friday, 9/25, to address known system issues, which include:
On-Boarding Correspondent/Broker DRIVER Training
- Removing any Pricing Adjustments with a value of “0” from showing when pricing a loan.
- Allowing MI to be financed and price accordingly on government loans based on the accurate Total Loan Amount.
On-Boarding DRIVER training is now available for both new and existing correspondent and broker accounts. Various options are available depending on channel type as well as disclosing preference.
Q: What can we expect on an appraisal when the subject has missing or no appliances on a Fannie Mae loan?
A: It is common for appliances to be considered personal property and not given any contributory value if they are not permanently attached to a property’s structure. However, it is at the appraiser’s discretion to determine if the appliances are considered personal property or permanently attached to or built-in to the property structure. The appraiser should determine which appliances are common in the subject’s market area and, if any appliances are missing, analyze the impact on value and/or marketability.
Q: Is an FHA case number required for initial disclosures?
A: Per Compliance, an FHA case number is not required to issue the initial disclosures, however, a case number is required to order an FHA appraisal.
USDA Fiscal Year 2021 Conditional Commitment Notice
Fiscal Year 2021 will begin 10/01/2020. 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.
USDA Updated Mortgage Forbearance Requirements
USDA updated their FAQs in regards to the waiting period after forbearance for borrower eligibility. Prior to 09/15/2020, previously missed payments were not permitted for USDA loans; however, guidance is now reflected in the FAQs specifying the minimum time period requirements for resuming payments and eligibility. Refer to USDA FAQs for details.
FEMA Disaster Area Declarations for Oregon and Alabama
The following areas in Oregon were 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 were 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.
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.
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.
Coming Soon! New Appraisal Ordering Platform
As a reminder, Fairway is excited to announce that we have partnered with Mercury Network to offer a new and improved Appraisal Ordering Platform inside of DRIVER. This new release will provide a standardized appraisal ordering experience in one place.
In addition to the new platform, we are expanding our approved AMC list by adding 4 additional AMC’s. Stay tuned for additional announcements in the coming weeks.
Steve Jacobson, CEO - "We can never change what has happened, BUT— we can take the responsibility and do the best we can to make stuff right."