HomeBridge has updated our Fannie Mae guidelines to align with the updates detailed in Fannie Mae Announcement SEL-207-04 dated April 25, 2017. These updates are effective immediately and are available for loans currently in the pipeline and new submissions.
Student Loan Payment Calculation
Calculation of student loan payments have been simplified; student loans will be calculated as follows:
- If a payment amount is indicated on the credit report, that payment listed on the credit report may be used for qualifying (applies to loans in repayment, forebearance, deferred and may also be used for income based payments),
- If a payment is not indicated on the credit report one of the following may be used:
- 1% of the outstanding loan balance, or
- A full amortizing payment calculated using the documented loan terms
Student Loan Cash-Out Refinance
Fannie Mae is introducing a new cash-out refinance feature designed specifically to payoff student loans. The LLPA adjustment that applies to cash-out transactions will be waived when all of the following requirements are met:
- At least one student loan, on which the borrower is personally obligated, must be paid in full; partial payments are not allowed, and
- Cash-out proceeds must be paid directly to the student loan servicer, and
- The cash-out proceeds may also be used to payoff an existing first mortgage (including a HELOC in first lien position) and/or any subordinate financing used to purchase the subject property, and
- The maximum cash-back to the borrower is the lesser of 2% or $2,000 (over and above the student loan payoff, and
- The property cannot be listed for sale at time of loan disbursement, and
- The payoff of taxes is ineligible unless an escrow account is established, and
- Delinquent taxes cannot be paid, and
- Standard cash-out LTV/CLTV ratios are eligible.
Unless stated above, all other cash-out refinance transaction requirements apply
Debt Paid by Others: Non-Mortgage
Non-mortgage debt (installment loans, revolving, lease payments, student loans, etc.) on which the borrower is obligated may be excluded from the DTI calculation if documentation is provided that another party has been making the payments on the debt for the previous 12 months with no lates (0x30 in 12 months). Acceptable documentation includes cancelled checks or bank statements.
The debt may not be excluded when:
- There are any delinquent payments on the debt in the previous 12 months, or
- The party paying the debt is an interested party to the transaction.
Properties Listed for Sale in the Previous Six Months: Cash-Out Transactions
Cash-out transactions that were listed for sale in the previous 6 months only require the proptery be taken of the market on or before the disbursement date of the new loan. The requirement limiting the transaction to the lesser of 70% LTV/CLTV or the maximum LTV for product/occupancy/property type has been removed.
Condo Project Review Waiver: Fannie Mae to Fannie Mae Rate/Term Refinance
The requirement for a condo project review may be waived on a rate/term refi when the loan being refinanced is owned by Fannie Mae subject to all of the following:
- The LTV for the transactions is 80% or less (the CLTV/HCLTV may be higher), and
- The condo project has the required project-related property and flood insurance coverage (if applicable), and
- The project is not an illegal project has defined by Fannie Mae
Truncated Account Numbers
Truncated account numbers (i.e. only the last 4 didgits of the borrower’s account number are identified) are acceptable on the loan application, in DU and on bank or financial account statements provided by the borrower to document assets.
The updated Fannie Mae guidelines have been posted on the HomeBridge Wholesale website at www.HomeBridgeWholesale.com
If you have any questions, please contact your Account Executive.