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Agency Guideline Updates

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Fannie Mae and Freddie Mac have updated their seller-servicer guidelines and issued additional lender requirements for energy loans. Meanwhile, Ginnie Mae has added flexibility for issuing multiple issuer pools and has reduced processing times. Ginnie also has begun releasing its monthly disclosure files more than two weeks earlier than before.

Fannie’s and Freddie’s updates apply to borrowers as well as to loan sellers.

Fannie has updated its unemployment, income and debt-to-income ratios, while Freddie has revised its underwriting requirements regarding borrowers’ FICO scores and inquiries on borrowers’ credit reports and emphasizes that all borrower debts must be included when calculating DTIs.

In addition, Freddie has increased the recovery time period for reestablishment of credit after a Chapter 13 bankruptcy from 60 months to 84 months. And it now classifies all short sales as significant derogatory events.

Freddie also has increased to 12 months from six months the time period before the first interest rate change can occur in its ARM program.

Freddie’s other changes pertain to appraisals, including requiring interior as well as exterior photos, when interior as well as exterior inspections are required. Other updates remove some requirements regarding condominium projects. Projects in which more than 20 percent of income is from sources other than dues and assessments are no longer ineligible for sale to Freddie and the agency no longer requires that sellers warrant that a right of first refusal in project documents will not adversely impact certain rights of a mortgagee or assignee.

Fannie Mae, in response to lender concerns about current market conditions, has refined its policy regarding loans secured by properties subject to unexpired redemption periods, and now permits the delivery of such loans when certain conditions are met, including when the property is located in a state where it is “common and customary” to sell a single-family property during a redemption period and the mortgagee title insurance policy contains a specific exception for the unexpired right of redemption.

Fannie also no longer maintains its Flexible mortgages as a separate loan product line, rather integrating its key elements, including 97 percent loan-to-value ratios and flexible sources of funds, into its standard eligibility requirements.

And to help lenders identify and correct potential eligibility and data issue problems prior to loan delivery as early in their processes as possible, Fannie has introduced EarlyCheck into its DU system.

With Property Assessed Clean Energy, or PACE, loans, which are made by localities to finance residential energy improvements, the two agencies have taken a number of precautions in response to a concern by the Federal Housing Finance Agency that PACE and similar programs “pose unusual and difficult risk management challenges for lenders, servicers and mortgage securities investors.” Fannie and Freddie, for example, will not purchase mortgages secured by properties subject to PACE obligations that provide for first lien priority.

And both agencies state that seller-servicers are responsible for monitoring state and local laws to determine whether a jurisdiction has a PACE program that provides for first lien priority.

And lenders, says Fannie Mae, must first attempt to qualify borrowers for a cash-out or limited cashout refinance, with the PACE loan being paid off as part of the refinance.

Ginnie Mae lenders now will be able to issue multiple issuer pools throughout the month. The Bank of New York, Ginnie’s Pool Processing Agent will accept and deliver multiple issuer pools for daily settlement with the Federal Reserve Bank of New York. At the end of each month, the loan packages will be aggregated by coupon rate and term and the multiple issuer pool will be finalized. Previously Ginnie’s multiple issuer pools were delivered based on the recommended notification dates published by the Securities Industry and Financial Markets Association.

Processing times for multiple issuer pools that are submitted electronically through Web-based GinnieNET also have been reduced. Pools received and certified before 2 p.m. Eastern Time will be issued on that same day and delivered to the New York Federal Reserve Bank for settlement on the next business day. If received and certified after 2 p.m., pools will be issued on the next business day with delivery of the security to the Fed on the following business day.

Ginnie also has speeded up its monthly release of securities activity data. In the past, data was collected for monthly periods on the second business day of the following month and then released one month later, on the second business day of the following month. Thus when data was released it was not for the previous month, but for the month before. Data is now being released 13 business days after it was collected, that is, on the 15th business day of the month it was collected.

Ginnie additionally issued new guidance for its manufactured home loan program, which supports the FHA’s new Title I Manufactured Home Loan Program.

Because of new issuer eligibility requirements, even current approved issuers must apply for the new program, which includes new adjusted net worth and collateral requirements. In addition, minimum pool balances, at origination, have been raised to $1 million and the loans must be serviced by the issuer of record. Subservicing is prohibited.

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