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Fannie updates appraiser items in Selling Guide

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Fannie Mae recently sent out updates notifying appraisers of specific changes to several categories.

Asset documentation requirements for refinance transactions changes were made reducing the documentation requirements for certain refinances. The age of appraisal was clarified when an appraisal update or new appraisal is needed.

Fannie also updated the MBS trade confirmation process clarifying the lenders’ responsibility for notifying Fannie Mae of discrepancies in the terms of a trade. A miscellaneous update also reflected alignment with previously announced policy changes.

In addition, updates to the following were described in:

Uniform instruments making improvements to all uniform legal instruments to enhance clarity and usability.

Special feature codes updating the name and description of Special Feature Code (SFC) 107, New York co-op.

“In response to feedback provided by lenders and in alignment with the DU validation service, we have reduced certain documentation requirements related to refinance transactions,” Fannie Mae said in its updated email. “For limited cash-out and cash-out refinance transactions, lenders may use the most recent one-month period of account activity (30 days) to document bank statements or investment portfolio statements.”

Effectively, lenders may take advantage of this revised policy requirement immediately. DU will be updated in a future release to only require a bank statement covering a one-month period on refinance transactions. Until that time, lenders may apply the one-month requirement to DU loan case files.

For loans delivered with an appraisal, Fannie updated that the property must have been appraised within the 12 months that precede the date of the note and mortgage.

“With this update, we have clarified that the age of the appraisal is the difference between the effective date of the original appraisal report and the date of the note and the mortgage,” Fannie said. “The appraisal is valid for up to four months and, further, can be used up to 12 months if the value of the\ property has not declined (as evidenced by an appraisal update report on Form 1004D with an effective date within four months of the date of the note and the mortgage).

“However, when the age of the original appraisal report is more than 12 months, a new appraisal (rather than an update) is required. An exception is made for single-closing construction-to-permanent transactions,” Fannie Mae added.

For the MBS trade confirmation process update, Fannie Mae is clarifying that lenders are responsible for notifying Fannie Mae of any discrepancies in the terms of their trades by the close of trading on the next trading day, and that lenders will be responsible for any associated fees if they fail to identify any discrepancies within the notification window.

As an added note, Fannie reminds everyone that the electronic trading platform is an option that is available that increases efficiency for customers when executing trades. Lenders may take advantage of these changes immediately but must adhere to the new process by Aug. 1, 2021.

Miscellaneous updates also include B2-2-03, Multiple Financed Properties for the Same Borrower was updated to align with changes announced previously in LL2021-08. The topic now reflects that loans secured by second homes and investment properties must be underwritten in DU.

On uniform instruments, Fannie has updated all of our uniform legal instruments – security instruments, notes, riders and addenda, and special-purpose documents – used for loans delivered to us. In collaboration with Freddie Mac, Fannie conducted a comprehensive review of the instruments and made improvements to enhance their clarity and usability. This update includes both Fannie Mae/Freddie Mac uniform instruments and Fannie Mae-
specific instruments.

These new instruments can be found at https://singlefamily.fanniemae.com/fannie-mae-legal-documents.

The new instruments have a July 2021 footer date. “Lenders may begin using these updated forms immediately but will be required to use them for loans with note dates on or after Jan. 1, 2023,” Fannie stated in the updated Selling Guide. “The updated July 2021 uniform instruments cannot be used in combination with any earlier versions. For example, a security instrument with a July 2021 footer must be used with a note that also has a July 2021 footer.

“For special feature codes, we have updated the name and description of SFC 107 to remove references to New Jersey and clarified its use as it pertains to specific exception permitted in the Guide or negotiated provisions,”
Fannie Mae added.

 

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