Sellers approved by Fannie Mae are now subject to new requirements on condominiums, note endorsements and wrap-around mortgages. In addition, new applicants to become Fannie sellers will be subject to higher applications fees, as will low-producing and reactivated sellers.
The updates were outlined in Selling Guide Announcement SEL-2011-13.
On condominium financing, the amount of HO-6 coverage needed will be changed from 20 percent of the appraised value to an amount sufficient to repair the condo unit to its condition prior to a loss claim event. Jan. 1, 2012, is the effective date of this revision.
Fannie said it will immediately permit master or blanket insurance policies that combine insurance coverage for multiple condominiums as long as the coverage meets certain specific criteria.
The selling guide was updated to clarify that sellers can’t delegate their authority to execute a note endorsement. In addition, other parties cannot execute endorsements by using powers of attorney.
The reference to wrap-around mortgages has been removed from the selling guide. If the borrower on the existing mortgages is not the current property owner of record, then Fannie won’t buy the loan.
The Washington, D.C.-based firm is raising the cost of reviewing a lender’s financial statements on new seller applicants to $5,000 from $1,000. The higher application fee goes into effect on Jan. 1, 2012.
A fee of $1,000 will now be charged to approved sellers and servicers that fail to meet minimum thresholds. This inactivation fee is also effective as of next month.
Servicers that are reviewed for reactivation with Fannie will be charged a reactivation fee of $2,500. The reactivation fee will be implemented in January 2013 based on 2012 activity.
