Fannie Mae issued Selling Guide Announcement SEL-2017-10 (Announcement), setting forth updates to the Selling Guide. As set forth in the Announcement, Fannie Mae updated policy with respect to borrowers that have frozen their credit data at one or more of the credit repositories (Experian, Equifax or TransUnion). If the borrower’s credit information is frozen at one of the credit repositories, the borrower’s credit report is still acceptable as long as: credit data is available from the other two repositories; a credit score is obtained from at least one of the two repositories; and the lender requests a three in-file merged report. In the event there is no credit score or information available from the other two credit repositories, the borrower must be underwritten under Fannie Mae’s nontraditional credit guidelines. The Announcement also clarifies policy with respect to premium pricing (Premium pricing refers to situations when a borrower selects a higher interest rate on a mortgage loan in exchange for a lender credit).
Per the announcement, the use of lender credit to fund any portion of the borrower’s down payment or reserves is prohibited; and Community Seconds loans used to provide down payment assistance may not be funded in any way through the first lien mortgage, such as through premium pricing. In addition, under the Announcement: lenders are relieved of certain selling representations and warranties when offering disaster related forbearance plans; duplicative content between the Selling and Servicing Guides pertaining to ownership and retention of loan files and records is consolidated and streamlined; Fannie will allow time held in an LLC (controlled or majority owned by the borrower) to counts towards the borrower’s six-month ownership requirement in connection with a cash-out refinance; and additional requirements are set forth with respect to internal audit and management controls for sellers/servicers.
Furthermore, the Announcement also states that Fannie Mae will not purchase Texas equity loans during the first 12 days of 2018 due to recent amendments to the Texas Constitution (including a revised 12-day notice). The additional requirements with respect to internal audit and management controls are effective July 1, 2018. All other updates are effective immediately.
Click here to view the Fannie Mae Selling Guide Announcement SEL-2017-10
