On May 5, 2020, and May 19, 2020, Fannie Mae updated guidance it previously provided in lender letters LL-2020-03 and LL-2020-04 prescribing requirements for originations and appraisals during the COVID-19 crisis.
Updates to the Fannie Mae Lender Letter (LL-2020-04) addressing the impact of COVID-19 on appraisals are available here. The update extends the appraisal flexibilities to June 30, 2020.
Updates to the Fannie Mae Lender Letter (LL-2020-03) addressing the impact of COVID-19 on originations are available here. As with the updates to LL-2020-04, these updates extend Fannie Mae’s temporary policies as described in LL-2020-03 through June 30, 2020. Additionally, the updates:
- remind lenders of Fannie Mae’s guidelines concerning the use of unemployment benefits as qualifying income;
- provide that furloughed employees are not eligible under Fannie Mae’s Temporary Leave Income policy because they cannot provide evidence of a stable flow of employment-related income;
- temporarily suspend representation and warranty relief for employment validation (although Fannie Mae clarifies that if the lender discovers that the applicant is no longer employed, the associated income cannot be used to qualify the applicant);
- announce the suspension of bulk sales transactions, and require that loans sold to Fannie Mae on a flow basis may not be older than six months.
- describe requirements for a borrower to obtain a new mortgage loan to purchase or refinance a property; and
- provide links to COVID-19 resources, such as prior selling and servicing lender letters and FAQs.