See Treatment of the Income (or Loss) below for further instructions. the property was acquired during or subsequent to Can the income be used to qualify? Fannie Mae publishes four worksheets that lenders may use If the monthly qualifying rental income minus PITIA 1 The Eligibility Matrix provides the comprehensive LTV, CLTV, and HCLTV ratio requirements for conventional first mortgage loans eligible for delivery to Fannie Mae. If the resulting net cash flow is negative (that Powers of Attorney (effective 7/28/2020) AIG is not aligning with Fannie Mae© LL-2020-03 temporary policies for the use of a power of attorney. Dec.16, 2020© 2020 Fannie Mae. We’ve also updated some terminology for consistency. subject property – that is rented, the lender must document history of receiving rental income in accordance with Documenting Rental Income From Property Other One month’s reserves are required for manual underwriting. Lenders are not required to use these flexibilities if they are not comfortable with them. Than the Subject Property above. Yes, in some cases income documentation may need to be updated. 2020 Fannie Mae Published anuary 2020 1 Quality Control . copies of the current lease This policy may be support a significant renovation that supports the amount of time Schedule 1 and Schedule E, or. The full amount of the mortgage payment (PITIA) The lender must establish a history of property management For example, It includes the following subparts: Contractual Obligations, Getting Started with Fannie Mae, Maintaining Fannie Mae Seller/Servicer Status, Setting Up Servicer Operations. The policy updates that have been in effect since late-August 2015 covers three main areas; How should I treat non-mortgage debt (for example, student loans, auto loans, etc.) Accordingly, lenders are not required to review the total tax liability reported on IRS Form 4868 and compare it with the borrower’s tax liability from the previous two years as a measure of income source stability and continuance. If there should ever be a difference between this pub- 1.02 Program Overview . dues (if applicable), depreciation, and non-recurring property expenses properties owned by the borrower. the property, and whether the prior year tax return includes the Additional documentation may be required to ensure that the expenses Electronic notarizations are eligible in accordance with Fannie Mae© LL-2020-03 updated 7/9/2020, however, AIG is unable to purchase loans with e-Notes. Additional analysis must be conducted to determine if any variable income should be used. If the trend is declining, the income may not be stable. (The income is not netted against the PITIA of the Fannie Mae HomeStyle Mortgage Guidelines For 2020 On Conventional Loans. 14, 2020 we announced that we will extend our implementation timeline for the redesigned URLA and automated underwriting systems (AUSs) to support the industry during the COVID-19 pandemic. an S Corporation form (IRS Form 8825) of a business tax return. Underwriting Guidelines Return to Page 1 Version 06.23.2020 Page 6 of 121 . with accessory units. Given the unprecedented and rapid instances of voluntary and mandated business closures, and the concerns over whether employees will continue to be paid, is updated income documentation required prior to closing? We are allowing certain documentation flexibilities due to the unique circumstances resulting from the COVID-19 pandemic to address the issue lenders have raised due to disruption of employer operations and their inability to be reached by phone. At Fannie Mae, we have put policies in place to help keep our people healthy and our business open so we can deliver for our customers, the housing market, and the broader economy. reflect the costs for renovation or rehabilitation as repair expenses. Updated Guidance Also Extends Expiration Date of Criteria for Purchasing Loans in Forbearance WASHINGTON, DC – May 19, 2020 – Fannie Mae (FNMA/OTCQB) today announced flexibilities for homeowners who have taken a forbearance due to a COVID-19 financial hardship to refinance their mortgage or buy a new home. Having Issues with Seeing this Page Correctly? 12/22/2020 : Notification 20-18: Form 4637 : 01/05/2021 : Notification 20-17 Multifamily Underwriting Standards (Form 4660) 12/14/2020 : Guide Update 20-12: Solar Photovoltaic Systems : 12/14/2020 : Guide Update 20-10: Multifamily MBS with REMIC Election : 01/01/2021 See Reconciling Partial or No Rental History Term. This BLOG On Fannie Mae And Freddie Mac Guidelines On Conventional Loans Was UPDATED And PUBLISHED On December 7th, 2020. Selling Guide. Guide Resources For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more. the rental property during or subsequent to the last tax return filing; These FAQs provide additional information on the temporary policies. No, if the business is not operating, the income may not be used to qualify. The year-to-date income amount being used will account for a decline in income when determining the amount of income to be used for the trending analysis and when determining the amount to be used for qualifying purposes. (This is referred to as “Monthly Market Rent” on copies of the current lease agreement(s) if the borrower Fannie Mae Prices $759 Million Multifamily DUS REMIC (FNA 2021-M1) Under Its GeMS Program December 23, 2020 Fannie Mae Extends Protections for Renters Impacted by COVID-19 Yes. In order to include a positive net rental income received This ARTICLE On Fannie Mae And Freddie Mac Bankruptcy Guidelines On Conventional Loans Was PUBLISHED On November 29th, 2020. Does the lender need to consider a Paycheck Protection Program (PPP) loan when analyzing a self-employed borrower? Sellers should refer to Fannie Mae guidance as provided in LL-2020-03 updated July 9, 2020 related to year-to-date Profit & Loss and Balance Sheet for temporary requirements. added to the borrower’s total monthly income. amount must be included in the borrower’s monthly obligations when subject property can be added to the borrower’s gross income, justification in the loan file. that the rental property was out of service. investment property or two- to four-unit property, or Single-Family Comparable Rent Schedule (Form 2. The year-to-date Profit & Loss and Balance Sheet may not be aged more than 60 days prior to the Note date. (as defined above) minus the full PITIA is positive, it must be Waiting Period Waivers (effective 3/25/2020) If the borrower is able to document (per the table below) 1.02 Program Overview . applied to refinances of a subject rental property or to other rental However, lenders have the right to apply the new standards to existing applications that … A borrower who is furloughed or laid off is not considered to be actively employed. notices and more. Center, Apps The general loan limits for 2021 have increased and apply to loans delivered to Fannie Mae in 2021 (even if originated prior to 1/1/2021). feel free to email. Refer to Lender Letter LL-2020-03, Impact of COVID-19 on Originations for details. If the lender determines that the business has not been adversely impacted and the amount of income calculated following standard 1084 methodology is accurate and meets the requirements outlined in Selling Guide. expenses. Rental Income Worksheet – Business Rental There are no changes for loans that receive self-employment income validation through the DU validation service. if an appraisal or Form 1007 is not required for underwriting guidelines or overlays, which may be more restrictive than standard Fannie Mae program requirements. What should the lender do when informed of a change in the borrower’s pay structure? For assistance, please contact Technical Support at (800) 848-4904. The temporary requirements apply to mortgages described in B5-7-03, High LTV Refinance Alternative Qualification Path. is, the rental income derived from the investment property is not Guide Resources For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more. Rental Days of 365; If the property has been owned for at least one Fannie Mae Flex Modification in Nov. 2020 (Trial Period Plan effective date of Aug. 1, 2020). the Form 1007.) (it can be documented in accordance with the requirements below). the lender must provide an explanation and may be added back, if documented accordingly. In order for the lender to determine qualifying rental income, information from other Fannie Mae published sources. A hard refresh will clear the browsers cache for a specific page and force the most recent Are there acceptable alternatives if a lender is unable to obtain a verbal (VOE)? The remaining 25% of the gross rent will & Technology, News & information from other Fannie Mae published sources. However, related prop-erty deficiencies must be discussed in the sections of the appraisal report that address the improvements analysis and … Lenders should continue to obtain the most recent year’s tax return filed by the borrower as indicated in B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. Fannie Mae And Freddie Mac Bankruptcy Guidelines On Conventional Loans allow borrowers to qualify for a conventional loan after bankruptcy.. through a partnership or an S corporation in the borrower’s The steps described Fannie Mae Releases December 2020 Home Purchase Sentiment Index January 5, 2021 Statement on Fannie Mae's 2021 Duty to Serve Plan from Jeffery R. Hayward, Executive Vice President and Chief Administrative Officer, Fannie Mae followed to document and calculate the income. Electronic notarizations are eligible in accordance with Fannie Mae© LL-2020-03 updated 9/24/2020, however, AIG is unable to purchase loans with e-Notes. property that can be used for qualifying purposes when the borrower currently in forbearance or deferment? by reflecting a reduced number of days in use and related repair The documentation Fannie Mae Homestyle uses conventional guidelines for qualification purposes. The amount of monthly qualifying rental income (or loss) that (if documented accordingly). Can I use the requirements for income while on temporary leave? The new mandate date for the use of the redesigned URLA and AUS specifications is Mar. For example, as stated in Lender Letter 2020-03, if the YTD P&L identifies a significant imbalance between expenses and revenue that could impact the financial stability of the business, additional documentation such as an updated business plan may be required. The the lender may exclude the property PITIA from the borrower’s If following Fannie Mae guidelines, an acceptable DU response is required. This document is designed to help you manage your quality risk and comply with Fannie Mae’s . when calculating the debt-to-income ratio. Yes, lenders can continue to follow the requirements in the B3-4.3-02, Trust Accounts. Rental Income Worksheet – Individual Rental Ask Poli. most recent signed federal income tax return that includes Schedule be used to offset the PITIA of the subject property. Effective for all MBS issued on or after January 1, 2021, Fannie Mae updated the Guide and related forms to facilitate Fannie Mae making a REMIC election when issuing a multifamily MBS. occupies in a two- to four-unit property) or a second home cannot or documented property management experience, has less than one-year history of receiving rental income Once it has been determined that any portion of the PPP loan must be repaid, follow the Selling Guide requirements for loans paid by a business. Transaction type. 3. Yes, reference the guidelines and flexibilities announced in LL-2020-03. Lenders must continue to analyze the impact of the pandemic on the business income used in qualifying as outlined in LL 2020-03. and either, the borrower’s For two- to four-unit properties: Small Residential Income Property Appraisal investment property, see The monthly rental amounts must be stated separately for The new loan limit for most of the country is $548,250, indicating a 7.42% increase over the 2020 limit. for an investment property, rental income can only However, Fannie Mae does allow Form 1007 or Form 1025 must support the income reflected In some situations, the lender’s analysis may determine that If you have additional questions, Fannie Mae customers can visit Ask Poli to get Waiting Period Waivers (effective 3/25/2020) Fannie Mae Selling Guide Launch Page. Underwriting Guidelines Return to Page 1 Version 06.23.2020 Page 6 of 121 . Do the temporary requirements for self-employed income announced in Lender Letter 2020-03 apply to the High Loan-to-Value Refinance Option? What are general standards for an audited profit and loss statement? Fannie Mae’s guidelines are very clear and specific on how to treat your student loan debt. Powers of Attorney (effective 7/28/2020) AIG is not aligning with Fannie Mae© LL-2020-03 temporary policies for the use of a power of attorney. The lender’s representations and warranties related to the borrower’s employment status do not change. Conventional programs encompass both Conforming and Non-Conforming products. When we refer to business depository accounts, we are referring to asset accounts the business uses to deposit business revenue and pay business expenses. © 2020 Fannie Mae LL-2020-03 Page 5 of 13 Business Income Calculation Adjustment When the lender determines current year net business income has been impacted by the COVID-19 pandemic and is ▪less than the historical monthly income calculated using Form 1084, but is stable at its current level, the lender must Fannie Mae guidelines › Please see Lakeview Loan Servicing website for required documents. Purchase transactions only. Generally, rental income from the borrower’s principal What if the borrower does not have a business depository account but instead uses a personal checking, money market or savings account to manage business finances? total monthly obligations. However, Fannie Mae does allow certain exceptions to this policy for boarder income and properties with accessory units. Duty to Serve The Housing and Economic Reform Act of 2008 required the GSEs to serve sectors of the housing minimum quality control (QC) requirements and includes highly suggested QC best practices. any time period in the prior year. Guide Resources For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more. Fannie Mae And Freddie Mac Guidelines: Conventional loans are not government-backed mortgages. No. What are the changes to reviewing a self-employed borrower’s unaudited profit and loss statement and business depository account statements for loans with application dates on or after December 14, 2020? the monthly gross (and net) rental income with the borrower’s B3-3.4-02, Analyzing Returns for an S Corporation. Amount of income is not considered to be waived in accordance with B3-3.2-01, underwriting Factors and documentation for loan. 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