Fannie and Freddie Issue Updated Guidance to Lenders Concerning COVID-19

On March 31, 2020, Fannie Mae and Freddie Mac each updated guidance they had previously issued to single-family lenders concerning changes in their origination requirements in response to the COVID-19 health crisis.  The GSEs noted that they were working closely with each other to offer temporary measures to address issues in the industry caused by the COVID-19 crisis.

Both updated requirements provide for more flexibilities for some requirements, such as flexibilities for the use of a power of attorney, expansion of the use of remote online notarization, certain lender quality control flexibility, and certain flexibility related to appraisals.  The GSEs also provided temporary flexibilities related to construction mortgages.

On the other hand, both GSEs are requiring lenders to confirm that self-employed borrowers’ businesses are open and operating within ten business days of the note date, instead of within 120 days, as was previously required.  In addition, evidence of the borrower’s actual receipt of funds realized from sale or liquidation of stocks, stock options, and mutual funds is required when those funds are used for down payment or closing costs.  Freddie Mac also reminded lenders of the continued requirement for a “wet” signature on notes related to most closings.

The Fannie Mae updated guidance is available here.

The Freddie Mac updated guidance is available here.