Freddie Mac and Fannie Mae Selling Guide Updates

Freddie Mac and Fannie Mae recently issued updates to their respective selling guides. 

Freddie Mac issued Bulletin 2021-16, highlighting, among other matters, the following:

• updating credit underwriting and mortgage eligibility requirements, including adding a “no cash-out” refinance seasoning requirement (effective August 5, 2021), extending relevant tax return dates to May 17, 2021, for the Application Received Dates and June 30, 2021, for the Notes Date, permitting the use of future long-term disability income to qualify the Borrower when that income will commence after the first Mortgage payment due date (effective immediately), and updating the treatment of prorated real estate tax credits (effective August 5, 2021);
• granting additional flexibility regarding power of attorney (POA) requirements including, but not limited to, reducing the requirements to have a pre-closing discussion with the Borrower, adding military deployment as an event that justified using a POA and waiving the pre-closing discussion requirement, listing the information that must be discussed with the Borrower during the pre-closing discussion, and easing documentation requirements when a POA is required under applicable law (effective June 30, 2021); and
• providing further clarification regarding quality control procedures by specifying that the title commitment must be provided on Mortgages selected for QC review (effective August 5, 2021).

Fannie Mae issued Selling Guide Announcement (SEL-2021-04), which addresses, among other things, the following:

• simplifying MBS pool closing procedures by mandating that all pools will be processed with the same Fannie Mae pool close and disclosure deadlines (effective immediately);
• enhancing QC collateral risk assessment requirements by replacing the current appraisal requirements with a new collateral risk assessment for all loans selected for review in a random sample.  If the lender is unable to complete an adequate review, it may order a desk review or field review from a licensed appraiser (effective immediately); and 
• updating loan casefile archive policies by removing archived casefiles after 270 days from the date that the loan casefile was last updated or 540 days from the creation of the loan casefile, whichever is earlier (implementation expected in October 2021).