Last week we began to go over the multiple changes to the underwriting guidelines announced in the last few months of SEL’s published by FNMA. The change in the way FNMA now looks at assets will be a change that will impact most every file since assets are such a common and key piece of getting a mortgage.
The departure residence rule being removed was unexpected as far as timing but since market values of homes have stabilized the change does make a lot of sense. FNMA’s change on assets, for me just came out of the blue since this rule has been around since I started the mortgage business in 1995. The information below is directly from SEL 2015-07
Fannie Mae is updating the policies related to the use of vested stocks, bonds, and mutual funds (including retirement accounts) when they are used for down payment, closing costs, and reserves. Instead of requiring a standard reduction in value, the policies have been simplified as follows:
§ One hundred percent (100%) of the value of the asset is allowed when determining available reserves.
§ If the lender documents that the value of the asset is at least 20% more than the funds needed for the borrower’s down payment and closing costs, no documentation of liquidation is required. Otherwise, documentation of the borrower’s actual receipt of funds realized from the sale or liquidation must be obtained.
NOTE : As a reminder, non-vested assets are not eligible for down payment, closing costs, or reserves
FNMA has announced that as of 07/30/2015 you no longer have to discount these funds 30%-40% but instead you can use them at 100% of the value, no more reduction in value. Also included in this rule FNMA now allows that if your borrower is pulling no more than 80% of the value of that account to use for down payment you don’t have to document the liquidation of funds. Again this to me was clear out of the blue, since this rule has been in place for years, arguing about assets has been very low on my radar. But good news is easier and much more streamlined.
As always I encourage you to pull out these SEL’s and read them for you self to make sure the details of these rules are not missed! For those of you who follow me on these blogs you know that I am all about process and procedure to get loans done with maximum speed and quality at the same time. In my free guide “10 point plan to almost perfect underwriting” reading the guidelines is in step one “Read the Story” which is about knowing the program your using and the loan the borrower is requesting. If you have not downloaded your free copy you can find it here, UberWriter 10 Point Underwriting Plan
As I stated earlier I think this change will be the one most noticed on a day to day basis. I think this change does make it easier for borrowers to qualify AND a big perk for your borrowers is less paperwork. It is nice to see another change that streamlines the mortgage process. Not to much teaching I can offer on this one, bottom line assets just got easier.
More changes to go over in the next few weeks stay tuned as we go over the self employed income requirements that will be put in place in early 2016
“The Underwriting Guy”