Fannie Mae recently updated Lender Letter 2020-03 to address COVID-19’s impact on loan originations by adding new temporary eligibility requirements for borrowers and requirements to qualify self-employed borrowers. Additional links to prior Lender Letters and FAQs related to COVID-19 are also provided in the updated Lender Letter.
In addition to other guidance, Fannie Mae is directing that lenders should not consider borrowers that have missed payments during a forbearance period related to COVID-19 as historical delinquencies for purposes of Fannie Mae’s excessive mortgage delinquency policy. This change applies to loans with application dates on or after June 2, 2020, until further notice, but does not apply high LTV refinance loans.
Lenders assessing self-employment income are now required to obtain additional documentation to support income requirements for self-employed borrowers. An audited or unaudited year-to-date profit and loss statement created no earlier than 60 days from the date of the note must be reviewed. Additional requirements apply for unaudited profit and loss statements. If the lender determines that COVID-19 has impacted the business’ current year net income, Fannie directs lenders to use the “currently stable level of income.” WBK’s previous coverage of changes to Fannie Mae’s guidance on self-employed income requirements is available here.