Fannie Mae issued Selling Guide Announcement SEL-2024-05 (Announcement), setting forth updates to the Selling Guide. Per the Announcement, Fannie Mae:
- Updated rent credit with an option to purchase policy to permit more than 12 month’s rent credit to be used towards the down payment or minimum borrower contribution under a documented rental/purchase agreement;
- Expanded the rent credit with an option to purchase documentation requirements to include:
- Rent verification documentation, including bank statements or other reasonable methods evidencing the rental payments over the term of the agreement; and
- Minimum terms outlined in the rental/purchase agreement;
- Updated rent-back policy and guidelines by:
- Clarifying that rent-back credit may not be used as an eligible source of funds for closing costs, down payment, or reserves; and
- Requiring lenders to underwrite the loan without any consideration of the rent-back credit and to document that the borrower has sufficient funds for the transaction from eligible sources;
- Aligned the process for obtaining a tax transcript post-closing with an existing pre-closing policy to allow the use of a 4506-C or “an alternative IRS form or process”; and
- Clarified that a moderate interest rate buydown provides for a temporary reduction in the initial interest rate of 2% or less between the actual note rate and the “bought-down” interest rate, and a buydown period of 2 years or less.
Revisions related to the rent-back policy are effective for loans with application dates on and after Oct. 7, 2024. All other revisions are went into effect August 7, 2024.
Click to view the Fannie Mae Selling Guide Announcement SEL-2024-05: https://www.tenaco.com/wp-content/uploads/2024/08/Fannie-Mae-Selling-Guide-Announcement-SEL-2024-05-08-07-24.pdf
