Fannie Mae Announcement 2020-03 issued June 3, 2020, outlined changes to Fannie Mae’s policy regarding the financing of non-delinquent property taxes on rate/term refinance transactions
Fannie Mae will no longer require an escrow account be established in order to finance non-delinquent property taxes (≤ 60 days past due) as part of the loan amount on rate/term refinanced transactions (currently if an escrow account is not established the transaction is required to be cash-out)
The following applies to rate/term refinance transactions when financing non-delinquent property taxes:
- The property taxes must be paid in full through the transaction, and
- The property tax payment must be disbursed directly to the taxing authority through closing; the borrower cannot receive any funds required to pay the property taxes.
NOTE: Fannie Mae continues to require an escrow account be established (unless not allowed by state law) when delinquent real estate taxes (more than 60 days past due) are included in the loan amount on cash-out transactions
The updated policy may be applied to new submissions and loans currently in the pipeline
The Homebridge Fannie Mae guidelines have been updated and posted on the Homebridge website at www.HomebridgeWholesale.com
If you have any questions, please contact your Account Executive.