Fannie Mae is disregarding existing mortgage payments and pending foreclosures on purchase-money loans to hurricane-impacted borrowers.
The nation's largest secondary lender today announced it has eased single-family underwriting to allow lenders to disregard obligations on previously owner-occupied homes when calculating the debt-to-income ratio of borrowers affected by the hurricanes. Instead, lenders can base decisions on a borrower's credit history prior to the hurricanes.
"Many homeowners in the impacted areas with destroyed or severely damaged homes are essentially in limbo as they work through satisfying their current obligations, settling insurance matters, and other considerations," said Fannie executive Ken Bacon in the statement. "These steps will help more families get into new homes faster while the issues and questions regarding their previous properties are being settled."
Outstanding mortgages on heavily damaged or destroyed properties that are unlikely to be repaired and are located in a Federal Emergency Management Agency Disaster Area can be disregarded in the ratio. Lenders must confirm through a property inspection the status, and borrowers must provide lenders proof that they are working with the servicer on the prior mortgage obligation and that they will apply any insurance proceeds to the mortgage on the damaged home.
Any derogatory credit information, including a foreclosure or deed-in-lieu of foreclosure, that resulted from the effects of the hurricanes can also be overlooked to give primary consideration to the borrower's account and payment performance prior to the storms, Fannie said.
Lenders are also allowed to accept as a downpayment funds from the government, insurers, charitable organizations and family.
Additionally, lenders can use additional options for verifying a borrower's previous and current employment history when qualifying a borrower, as well as take into account anticipated future employment and income documented by an employment contract, according to the announcement.
Fannie also said that the loss mitigation and workout team it is placing in impacted areas will develop and implement strategies designed to help mitigate losses, such as reimbursing servicers up to $30 for each property inspection on mortgages secured by properties that most likely incurred damage.