Updates to the Federal National Mortgage Association’s guidelines impact appraisals, condominiums and borrowers with income tax installment payments.
Washington-based Fannie Mae will now allow outstanding income tax installment agreements with the Internal Revenue Service to
remain open.
In order for the installment plan to remain open, there can be no indication that a federal tax lien has been filed in the county where the property is located.
In addition, the installment payment must be included in the debt-to-income ratio, a copy of the agreement must be provided, and proof will be needed that payments are current.
The update, along with other policy changes, were outlined in Selling Guide Announcement SEL-2018-01.
Fannie’ current policy requires a limited review for detached condominiums and doesn’t allow construction-to-permanent financing on such properties.
But now the secondary lender is waving project review requirements for all detached condominium units. It is also deleting references to site condominiums so that all detached condominiums will be treated the same. In addition, it will allow construction-to-permanent financing.
Fannie reminded lenders, though, that all detached units must meet property standards, appraisal standards, insurance and priority lien requirements.
Special Feature Code 917 will be eliminated, though lenders will now need to provide SFC 588 and project code V at delivery.
The notice indicated that the government-sponsored enterprise will be more flexible about minor litigation in condominium and co-operative projects.
Fannie currently requires a field review on properties valued at $1 million or more with loan-to-value, combined LTVs or
home-equity CLTV ratios in excess of 75 percent. But that requirement is being eliminated.
On transactions where a second appraisal was obtained, Fannie had been requiring that only the second appraisal be utilized for the transaction. But now it will require lenders to document deficiencies that were the basis for ordering a second appraisal and use the most reliable report — not necessarily the second appraisal.
“This clarification more clearly aligns the requirements for second appraisals in the selling guide with the requirements contained in the Appraiser Independence Requirements and in the lnteragency Appraisal Guidelines,” the announcement stated. “These clarifications are designed to simplify lenders’ processes and provide greater consistency with other secondary market investors.”
All of the updates are immediately effective.
