Fannie Mae and Freddie Mac Selling Guide Updates
Fannie Mae and Freddie Mac recently issued updates to their respective selling guides.
Fannie Mae issued Selling Guide Announcement SEL-2021-02, highlighting, among other matters, the following:
- Allowing all borrowers to sign loan documents pursuant to a power of attorney, and allowing certain interested parties to serve as attorney-in-fact for purchase transactions, subject to certain conditions (effective immediately);
- In connection with the retirement of Fannie Mae’s Servicing Execution Tool (SET), removing references to SET in the Selling Guide and adding Servicing Marketplace where applicable. The SET Purchase and Sale Agreement Exhibit has also been replaced with a revised Servicing Marketplace Mortgage Loan Servicing Purchase and Sale Agreement;
- Updating the Selling Guide to reflect changes to the risk factors evaluated by Desktop Underwriter (DU) for debt-to-income ratio and self-employment/variable income. The composition of the borrower’s debt will now be taken into consideration in addition to the actual ratio itself. Borrowers whose revolving debt makes up a smaller percentage of their monthly expense will be viewed as representing less risk than those whose revolving debt makes up a large percentage of their monthly expenses. These changes will apply to new casefiles submitted to DU on or after the weekend of March 13, 2021, and will not impact casefiles already created or resubmitted.
Freddie Mac issued Bulletin 2021-9, announcing updates to its Selling Guide, including, among other matters, the following:
- Providing greater flexibility for quality control processes by permitting Sellers to select a post-closing sample for compliance with applicable law separately from the sample chosen for compliance with eligibility and underwriting requirements, so long as the minimum number of loans selected meets the requirements of the Guide;
- Adding flexibility in the required documentation to evidence mortgage insurance coverage. Sellers now have the option of including electronic evidence of mortgage insurance coverage instead of a copy of the mortgage insurance certificate (effective immediately);
- Extending the implementation date for certain updates to Freddie Mac’s POA requirements (previously announced in Bulletins 2020-48 and 2021-4) to June 30, 2021;
- Updating requirements for third-party income and employment verifications (effective June 3, 2021); and
- For 30-day accounts (i.e., accounts that require the balance to be paid in full monthly), removing the option of including 5% of the balance as the qualifying monthly payment in a borrower’s debt-to-income ratio (effective July 6, 2021).
