If the trend is declining, the income may not be stable. The loan file must include other supplemental documentation, such as business contracts or additional depository account statements, to support the continuing nature of the amount of self-employment income used to qualify the borrower. Lenders must utilize these additional documents along with the standard documentation required in the Selling Guide (B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower) when calculating the income used to qualify the borrower. New Resource is Part of Broader Effort to Help People Remain in Their Homes. Learn more. Please refer to Fannie Mae Multifamily Lender Letter 20-05 for guidance as of April 6, 2020. Airbnb has an initiative with Fannie Mae and four lenders to help hosts refinance their mortgages. Yes, lenders can continue to follow the requirements in the B3-4.3-02, Trust Accounts. We will continue to take immediate action based on our business continuity plans and guidance and risk assessments from the CDC and local health agencies. The lender must use the profit and loss statement (and other supplemental documentation) to determine the current level of stable income. COVID-19 FAQs Selling - Underwriting & General Last Updated Dec. 16, 2020 . General Requirements for Documenting Rental Income. For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more. Is it acceptable to exclude the payroll and other expenses (e.g., utilities, business rent) covered by PPP loan proceeds when assessing current business cash flow? Our Customer Support teams are here to help you — please contact your Account Team if you need assistance. Refer to B3-3.1-01, General Income Information. With mortgage rates near all-time lows, the demand for refinancing remains high despite the COVID-19 pandemic. Supporting customers as they manage their pipeline — from hedging to funding loans — to minimize risk in this volatile market. Mortgagee Letter 2020-23, Continued 4 Rental Income In addition to the requirements in SF Handbook 4000.1 Sections II.A.4.c.xii(I) and II.A.5.b.xii(I) Rental Income (TOTAL and Manual) and Section 3.50 through Section 3.55 of the HECM Financial Assessment and never self-employed income for Fannie Mae or Freddie Mac? The lender can continue to deliver loans with loan application dates prior to Jun. The extension provides lenders and other stakeholders additional time to prepare and implement the redesigned URLA (Fannie Mae Form 1003). The Multifamily team is here to support our lender customers, property owners, and their residents. The flexibilities were set to expire on July 31, 2020. If, due to continued market volatility, the lender cannot determine the income is stable at its current level, the income should not be used for qualifying purposes. When variable income is used to qualify the borrower(s), can a gap of employment (due to COVID-19) be excluded from the method of calculation? – The Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities until November 30, 2020. No, Fannie Mae’s existing policies related to disasters do not apply to loans impacted by COVID-19. The net rental income calculation is not reduced by the mortgage payment (which is always treated as a liability and included in the debt-to-income ratio). Rental Income Calculation Worksheets. Launch Fannie Mae’s renter hotline number is 1-877-542-9723 and Freddie Mac’s renter hotline number is 1-800-404-3097. The COVID-19 pandemic has had a particularly severe impact on renters, minorities, and lower-income households according to the third quarter National Housing Survey®, as the overall results indicate broad financial and employment repercussions due to the virus. This includes determining the monthly year-to-date income amount and comparing that to prior years’ earnings to determine the appropriate amount of qualifying income for the loan transaction. Note:  The numbering sequence is from the PDF document that contains all COVID-19 Selling FAQs. However, lenders are not required to obtain a copy of the IRS Form 4868 (Application for Automatic Extension of Time to File U.S. Selling, Securitizing, and Delivering Loans, Research This income is not stable, predictable, or likely to continue and therefore does not meet the requirements in Selling Guide B3-3.1-01, General Income Information; Continuity of Income. In addition, lenders must apply the age of document and other requirements and guidance in LL-2020-03 for any market-based assets in the trust account required for the transaction. If rental income is not used to qualify the borrower, the requirements of Chapter 5306.1 do not apply. For a comprehensive list of resources such as forms, announcements, lender letters, Having Issues with Seeing this Page Correctly? Freddie Mac is open for business and continuing to play our crucial role in the U.S. housing markets. If I provide a lease to verify rental income, does it have to comply with the Age of Documentation requirements in Lender Letter LL-2020-03? The new mandate date for the use of the redesigned URLA and AUS specifications is Mar. For student loans, if the monthly payment is provided on the credit report, the lender may use that amount for qualifying purposes. The existence of a PPP loan could be helpful information in analyzing the borrower's business. If your mortgage is backed by Fannie Mae… Also, note that loans in forbearance due to COVID-19 are not subject to the disaster-related forbearance policies in A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility. The National Low Income Housing Coalition is tracking which properties are covered by the CARES Act moratorium. Yes. No. We are allowing certain documentation flexibilities due to the unique circumstances resulting from the COVID-19 pandemic to address the issue lenders have raised due to disruption of employer operations and their inability to be reached by phone. Lenders must continue to analyze the impact of the pandemic on the business income used in qualifying as outlined in LL 2020-03. Contact your property When the current level is less than the calculated amount, the lender must adjust the income downward to reflect the current level of stable income. SUBJECT: SELLING GUIDANCE RELATED TO COVID-19 We continue to work closely with Fannie Mae under the guidance of the FHFA to address the ongoing economic implications and uncertainty related to the coronavirus disease (COVID-19) pandemic and its impacts on Borrowers and ... Age of income and assets documentation Selling Guide. If you are a renter and live in an apartment financed by Fannie Mae, we can help you navigate your financial challenges with the Disaster Response Network. Refer to B3-3.1-01, General Income Information for additional details. Income Guidance Related to COVID-19. How do lenders determine stability of variable income when a borrower has been impacted by COVID-19? Employees are working remotely over our stress-tested network, with only mission-critical staff needing to enter our worksites. We are releasing information to our customers as quickly as possible and will update and republish these letters as new guidance becomes available. The lender must continue to use the required level of tax return documentation to calculate self-employment income. A borrower who is furloughed or laid off is not considered to be actively employed. WASHINGTON, DC – May 7, 2020 – Fannie Mae (FNMA/OTCQB) announced it has introduced a Renters Resource Finder to help renters facing financial hardship due to COVID-19 understand the options available to them. – The Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities until August 31, 2020 to ensure continued support for borrowers during the COVID-19 national emergency. The temporary self-employment income policy requirements in LL-2020-03 apply to all borrowers using self-employment income to qualify. currently in forbearance or deferment? If the lender confirms the business depository account statements support the level of revenue reported in the unaudited profit and loss statement, what is required related to the review of business expenses? Rental Income Matrix Rental income may be used in qualifying the borrower(s) provided the requirements of Guide Section 5306.1 and the documentation requirements contained in Guide Sections 5102.3 and 5102.4 and Chapter 5302 are met. An SBA PPP or any other similar COVID-19 related loans are designed to provide short-term relief whereas the payroll, rent/mortgage payments and utilities are ongoing business expenses; therefore, those expenses must be considered in the analysis. Click below to access COVID-related FAQs, Lender Letters and other resources: Do Fannie Mae’s existing disaster policies in the Selling Guide and the Servicing Guide apply to the COVID-19 pandemic? If a VOE indicates the borrower is actively employed, but borrower discloses they are furloughed, what are the next steps? Please visit our COVID-19 Investor Resources page for the latest investor news and information related to COVID-19. These FAQs provide additional information on the temporary policies. Unless the lender has knowledge to the contrary, if the borrower is actively employed, the income does not have a defined expiration date and the applicable history of receipt of the income is documented (per the specific income type), the lender may conclude that the income is stable, predictable, and likely to continue. We encourage residents whose employment or income are impacted by COVID-19 to seek available assistance as soon as possible," said Malloy Evans, Senior Vice President and Single-Family Chief Credit Officer, Fannie Mae. We are releasing information to our customers as quickly as possible and will update and republish these letters as new guidance becomes available. For full details on these temporary flexibilities, read Lender Letter (LL-2020-03) – Impact of COVID-19 on Originations and Lender Letter (LL-2020-04) – Impact of COVID-19 on Appraisals. Fannie Mae Disaster Response Network . Their call center is open 24/7. Yes. See B3-3.1-09, Other Sources of Income; Temporary Leave Income. For single-closing construction-to-permanent mortgages with loan applications dated during the timeframe covered in LL-2020-03, unless the loan meets the requirements for the extended 18 month timeframe permitted in the Selling Guide, the 60-day age of income and asset document requirements stated in the Lender Letter apply at both the time of the original closing date of the construction loan and the time of conversion to permanent financing. An SBA PPP or any other similar COVID-19 related loan or grant is not considered a source of business revenue. Homeowners and renters who have been financially impacted by COVID-19 or natural disaster can also download our app to find relief options and resources on the go. The lender may find it necessary to obtain additional year(s) of individual and/or business tax returns to support the underwriting decision. Ask Poli is an Artificial Intelligence powered search tool. Center, Apps Can I use the requirements for income while on temporary leave? If the trending analysis indicates that the current year to date income has declined, but the borrower is actively employed and the lender has no reason to believe that the borrower will not continue to be employed at the current level, the income can be considered stable. Streamline your refinance process. When the borrower experiences a gap of employment due to COVID-19 and their source of income is variable, is there a minimum amount of documented time the borrower is required to be back at work after the gap period? In addition to the year-to-date profit and loss statement and three months business depository account statements, as applicable, the lender can continue to follow the DU message for the required level of self-employment income documentation. What are general standards for an audited profit and loss statement? No. 11, 2020) that required the review to “support and/or not conflict” with the information presented in the current YTD profit and loss statement. The lender’s representations and warranties related to the borrower’s employment status do not change. What should the lender do when informed of a change in the borrower’s pay structure? 11, 2020, without the additional level of documentation provided the lender determines the income amount used for qualifying purposes is stable and likely to continue by performing a self-employment income analysis in compliance with Selling Guide requirements. 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