Government-linked mortgage investors, who purchase a large portion of U.S. home loans, will no longer tolerate any reference to crime, either directly or through implied appraisals.
Last month’s update to the Uniform Standards of Professional Appraisal Practice added to its list of unacceptable items that could prevent a loan from being sold to Fannie Mae.
Fannie Mae is also making some changes to the mixed assessment rules for condominium units, which were introduced in December when a data set was developed with Fannie Mae
The major update to this alternative to the traditional appraisal is the addition of a document that lenders can submit when loan characteristics change and invalidate a Value Acceptance Plus Property Data offer. Fannie Mae is instructing lenders to file a 1073 hybrid form when this happens.
Fannie Mae also made two smaller changes to the use of desktop underwriter technology in this area.
One was a reference stating that “property data collection will be obtained following the initial DU offer” which it removed so that the valuation information could be used for multiple transactions. It also removes references to condition and quality ratings as they are not required in DU quotes. New data set.
Fannie Mae also addressed the possibility that the National Flood Insurance Program could expire during the government shutdown through temporary measures it had used in past parts of its guidance. (While Fannie Mae and Freddie Mac are somewhat immune from some of the effects of the government shutdown due to their quasi-governmental status, some of the ancillary services required to close a loan are public.)
The guidance allows lenders to continue selling mortgages to Fannie Mae during the government shutdown without adopting aggressive flooding policies if certain requirements are met.
These include continuing to promptly determine the status of properties in flood zones and all necessary related disclosures and doing everything possible to promptly establish coverage after the lapse of NFIP authority and retain documentation to that effect.
There are also some refinancing-related contingencies that show lenders will need to follow climate-friendly loan renewal procedures if policies terminate during the government shutdown and before selling the mortgage to Fannie Mae.
If the loan requires additional insurance during this period, the mortgage may still be sold if the borrower can prove that they made an endorsement request and paid the required excess premium.
In general, Fannie Mae also clarified that policies that do not cover 100% of replacement cost are unacceptable.
Fannie Mae also provided some clarification on manufactured homes and adjustable-rate mortgages in its latest guidance update.
Cash-out refinances for MH Properties now allow for multiple structures with loan terms up to 30 years.
The qualifying interest rate on a 7-year or 10-year hybrid ARM must be no less than the note rate, unless these loans meet the definition of a high-priced loan. If a loan is higher than the average prime rate, it is generally considered a high-priced loan. Comparable loan increases of 1.5 percentage points or more.