Fannie Updates LL-2021-03: Impact of COVID-19 Originations

In LL-2021-03, Fannie Mae updated its policies previously published in LL-2020-03.  Effective immediately, Fannie is retiring the age of documentation and market-based asset policies that have been in place.  In addition, Fannie removed from the lender letter the verbal verification of employment policy that previously expired and the power of attorney policy that was moved to the Selling Guide.  Further, Fannie noted that it would also be reinstating representation and warranty relief for employment validation within the DU validation service in a future release.

Prior to the pandemic, Fannie’s age of document requirements for most income and asset documentation was four months (120) days.  In April 2020 and in the wake of the pandemic, Fannie modified age of document requirements from four months (120 days) to two months (60 days) for most income and asset documentation.  In April 2020, Fannie also updated its requirements for employment and income verification received directly third-party verification vendors, requiring that the information in the vendor’s database be no more than 60 days old as of the note date.  Fannie also modified its verbal verification of employment (VOE) policy in April 2020, allowing flexibilities for written VOE, paystub, and bank statements in lieu of verbal VOE.  As noted above, however, these changes and flexibilities have been removed from the lender letter, returning the above-described requirements to their pre-pandemic status.  Moreover, the power of attorney policies published in LL-2020-03 have been removed from the lender letter because of its move to the Selling Guide.