Fannie Mae recently unveiled a series of updates to its December Selling Guide with the intent to streamline lending processes, modernize requirements governing allowable methods for making credit determinations and bolster transparency.
Under the new guide, lenders will have more flexibility in the employment verification process as they will be permitted to leverage alternative methods and to gross-up certain nontaxable income without providing additional documentation.
Lenders will be allowed to use a borrower-provided paystub and to use updated asset documentation to satisfy Fannie Mae’s verification of employment (VOE) requirement in instances where an employer will not complete a verbal verification of employment, the guide notes.
“In both cases, lenders remain responsible for representations and warranties related to the borrower’s income, employment, and assets,” the guide states. “This includes re-underwriting the loan if the documentation introduces new information (such as impacts to the debt-to-income ratio if the income amount changes or evaluating large deposits, if applicable).”
Ascertaining monthly qualifying income for self-employed borrowers could become simpler with the addition of an optional income calculator.
Aside from employment considerations, new requirements will be applied when restricted stock units and restricted stock are considered as eligible income in the updated guide. It also includes a list of shared equity provider programs to assist lenders in reviewing shared equity transactions.
The Guide to Delivering eMortgages to Fannie Mae has been incorporated into the new Selling Guide, as well as information clarifying the use of special purpose legal documents. Fannie Mae positioned the incorporation of the eMortgage information in the new guide as part of its “continuous efforts to improve operational efficiency.”
Large non-depository sellers and servicers will be mandated to submit the Mortgage Banker’s Financial Report Short Form (Form 1002A) every month.