Fannie Mae recently
unveiled a series of updates to its December Selling Guide with the
intent to streamline lending processes, modernize requirements governing
allowable methods for making credit determinations and bolster
transparency.
Under the new
guide, lenders will have more flexibility in the employment verification process
as they will be permitted to leverage alternative methods and to gross-up
certain nontaxable income without providing additional documentation.
Lenders will
be allowed to use a borrower-provided paystub and to use updated asset
documentation to satisfy Fannie Mae’s verification of employment (VOE) requirement
in instances where an employer will not complete a verbal verification of
employment, the guide notes.
“In both
cases, lenders remain responsible for representations and warranties related to
the borrower’s income, employment, and assets,” the guide states. “This
includes re-underwriting the loan if the documentation introduces new
information (such as impacts to the debt-to-income ratio if the income amount
changes or evaluating large deposits, if applicable).”
Ascertaining
monthly qualifying income for self-employed borrowers could become simpler with
the addition of an optional income calculator.
Aside from
employment considerations, new requirements will be applied when restricted
stock units and restricted stock are considered as eligible income in the
updated guide. It also includes a list of shared equity provider programs to
assist lenders in reviewing shared equity transactions.
The Guide
to Delivering eMortgages to Fannie Mae has been incorporated
into the new Selling Guide, as well as information clarifying the use of
special purpose legal documents. Fannie Mae positioned the incorporation of the
eMortgage information in the new guide as part of its “continuous efforts to
improve operational efficiency.”
Large
non-depository sellers and servicers will be mandated to submit the Mortgage
Banker’s Financial Report Short Form (Form 1002A) every month.
Lenders also
will be permitted to obtain a lender’s title insurance policy or, in limited
circumstances, an attorney opinion letter under the revised guide, which can be
found here.