Christmas season is a fantastic time of the year, but it can be very distracting! The month of December is full of work parties, time with family, and a crazy school schedule for the kids which are all things we don’t normally deal with. This all can lead up to distractions at work!
I wanted to create this blog with a quick list of some of the key changes just in case the FNMA announcements got lost in the email box at work. These changes are not rare and obscure guidelines, but in fact are pretty common. I don’t want you on QC Santas naughty list for underwriting errors!
Subject property rental income restrictions
For many years Fannie Mae had never put restrictions on a new landlord in their guidelines. But on SEL 2019-08 issued 10/02/2019, they now do have restrictions on the subject properties for borrowers who have little to no landlord experience.
Home ownership education requirements
SEL 2019-08 issued 10/02/2019 reviews the current home ownership education requirements and outlines these new requirements. From the announcement, FNMA stated the following
We believe home ownership education helps borrowers gain essential knowledge to prepare for sustainable home ownership. To that end, we are updating our home ownership education requirements.
Current guidelines require at least one borrower to complete home buyer education prior to closing
- If all borrowers on the loan are relying solely on nontraditional credit to qualify OR
- For all HomeReady® purchase transactions.
With this update, at least one borrower must complete home buyer education for the following transactions:
- if all borrowers on the loan are relying solely on nontraditional credit to qualify, regardless of the loan product or whether the borrowers are first-time home buyers (no change to current requirement);
- HomeReady purchase transactions when all occupying borrowers are first-time home buyers, regardless of the LTV ratio; or
- purchase transactions with LTV, CLTV, or HCLTV ratios greater than 95% when all borrowers are first-time home buyers.
New higher loan limits will be updated in DU
The new limits are effective for whole loans delivered, and mortgage loans delivered into MBS with pool issue dates, on or after January 1, 2020 (per the loan letter issued 11/26/2019)
Desktop Underwriter® Implementation The 2020 loan limits will be applied to Desktop Underwriter (DU®) Version 10.2 and Version 10.3 loan case files submitted (or resubmitted) on or after the weekend of December 7, 2019. Also note that loan case files underwritten through DU prior to December 7 that receive an Ineligible recommendation due only to exceeding the 2019 loan limit may be delivered after January 1, 2020 (or in January 1, 2020 MBS pools). The loan case file does not have to be resubmitted to DU if the loan amount complies with the applicable 2020 loan limit.
Happy Holidays from UberWriter
That is all for this week, I truly hope you take some time this December and enjoy all the extra things about this Holiday Season. A good friend of mine always tells me how important it is to be present for people…. Don’t worry about what stuff you can get… give the gift of your presence to someone who needs it you would be surprised how great of a gift that is!
Merry Christmas and thank you for following my blog. That present is much appreciated!