Fannie Mae issued Selling Guide Announcement SEL-2023-09 (Announcement), setting forth updates to the Selling Guide. Per the Announcement, Fannie Mae:
- Updated rental income requirements to align the use of rental income earned from certain non-subject rental properties with that of rental income earned from the subject property;
- Clarified that rental income from multiple rental properties must be calculated on a per-property basis but then aggregated for non-subject properties so the total amount of either income or loss across all rental properties is considered in the borrower’s DTI ratio (aligning the Selling Guide with DU functionality);
- Amended rental income documentation requirements to require that Form 1007 or Form 1025 support the rental income reflected on the lease agreement or that the lease agreement provide evidence the lease has gone into effect along with proof of receipt of 2-month’s rental payments;
- Provided supplemental scenarios for documenting partial rental income when the rental property was not in service the previous tax year or was only in service for a portion of the previous tax year;
- Added a requirement that the signed personal and business federal income tax returns reflect 12 months of self-employment income from the current business when a self-employed borrower has less than a 2-year history of self-employment;
- Updated tax return requirements for self-employed borrowers to allow 1 year of personal and business tax returns when all self-employed businesses have been in existence for 5 years and the borrower has had a 25% or greater ownership interest for the last 5 consecutive years;
- Clarified that only the HUD Data Plate or the Certification Label information is required in the appraisal for existing manufactured homes if only 1 is available to the appraiser, and that an IBTS Label Verification Letter is acceptable if neither the Data Plate or Certification Label are available (previously, both the Data Plate and Certification Label were required to be provided in the appraisal); and
- Clarified that property data collection under the value acceptance + property data option must be obtained and submitted to Property Data API prior to the Note date.
Revisions related to rental income are effective with application dates on or after January 1, 2023 (lenders are, however, encouraged to implement these changes immediately). Revisions related to self-employment are effective for DU loan casefiles created on or after Jan. 1, 2024, and manually underwritten loans with application dates on or after January 1, 2024 (lenders are, however, encouraged to implement these changes immediately). All other revisions are effective October 4, 2023.
Click to view the Fannie Mae Selling Guide Announcement SEL-2023-09: https://www.tenaco.com/wp-content/uploads/2023/10/Fannie-Mae-Selling-Guide-Announcement-SEL-2023-09-10-04-23.pdf
