Eligibility Requirements for Manually Underwritten Loans (Effective June 1, 2019)
As a result of the adjustment to the credit risk assessment in Desktop Underwriter® (DU®) Version 10.3, we are making corresponding updates to our eligibility requirements for manually underwritten loans. These updates address loans with multiple risk factors, such as lower credit scores and higher debt-to-income ratios. The changes reflect our continued effort to deliver access and affordability while maintaining sustainable homeownership.
These changes did not impact any topics in the Selling Guide; however, we have updated the Eligibility Matrix (which is incorporated by reference into the Guide). For ease of reference, we have shaded the rows where changes were made in the two matrices that apply to manually underwritten loans in Attachment 2 of this Announcement. Refer to the updated Eligibility Matrix for complete details.
Lenders may implement these changes immediately but are required to do so for loans with application dates on or after June 1, 2019 and may deliver loans meeting the prior requirements through August 19, 2019.
Leasehold Estates (Effective Immediately)
We have clarified that one of the lender’s responsibilities in the proper review of leasehold estates is to ensure Fannie Mae’s first-lien enforceability as part of the terms of the lease. Failure to comply with this requirement at any time is a breach of the life of loan representation and warranty.
Mortgage Electronic Registration System (Effective Immediately)
In our continued effort to combine similar content in the Selling and Servicing Guides, we have consolidated shared requirements for sellers and servicers related to the use of Mortgage Electronic Registration Systems (MERS), Inc. Going forward, sellers/servicers may locate MERS-related content in one, streamlined topic in Part B of the Selling Guide.
Miscellaneous Selling Guide Updates (Effective Immediately)
B2-1-01, Occupancy Types: A principal residence is a property that the borrower occupies as his or her primary residence. However, the parents or legal guardians of a physically handicapped or developmentally disabled adult child do not have to occupy the property and it is also considered a principal residence. With this update, we removed the terms “physically” or “developmentally” from this topic to clarify this long-standing policy as inclusive of all disabilities.