However, lenders are not required to obtain a copy of the IRS Form 4868 (Application for Automatic Extension of Time to File U.S. Please visit Multifamily | COVID-19 for the latest guidance and policy information related to COVID-19. Our digital library includes learning modules, videos, frequently asked questions, demos, job aids, guides, and more. Yes, however, lenders should apply additional due diligence to capital gains and interest and dividend income since it is calculated using a historical view which may not be sustainable given current market volatility. For mortgage loans underwritten using DU, DU will provide guidance on the treatment of the debt, and lenders do not need to conduct additional analysis. No, Fannie Mae’s existing policies related to disasters do not apply to loans impacted by COVID-19. Income Guidance Related to COVID-19. On Apr. Mortgagee Letter 2020-23, Continued 4 Rental Income In addition to the requirements in SF Handbook 4000.1 Sections II.A.4.c.xii(I) and II.A.5.b.xii(I) Rental Income (TOTAL and Manual) and Section 3.50 through Section 3.55 of the HECM Financial Assessment and What if an hourly borrower is working less hours now than they worked earlier in the year prior to the COVID-19 impact? Keeping our Capital Markets desks open and trading mortgage-backed securities (MBS). Fannie Mae continues to provide economic relief to borrowers impacted by COVID-19 through its forbearance program. However, if the borrower is reporting rental income (including short-term rental income) on the most recent year's tax returns, then rental income may be considered as qualifying income. We are working with and following guidance from the Centers for Disease Control and Prevention (CDC) and local health agencies, and we are actively adhering to our corporate internal business continuity and contingency plans. Learn More See Frequently Asked Questions about Enterprise assistance options for homeowners and renters impacted by COVID-19 or Information for Tenants in Rental Properties With a Fannie Mae or Freddie Mac Mortgage. Refer to B3-3.1-01, General Income Information for additional details. In addition to the year-to-date profit and loss statement and three months business depository account statements, as applicable, the lender can continue to follow the DU message for the required level of self-employment income documentation. Lenders must utilize these additional documents along with the standard documentation required in the Selling Guide (B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower) when calculating the income used to qualify the borrower. Learn more. 11, 2020, without the additional level of documentation provided the lender determines the income amount used for qualifying purposes is stable and likely to continue by performing a self-employment income analysis in compliance with Selling Guide requirements. We have taken numerous steps to protect our employees, customers and consumers from the impacts of the coronavirus (COVID–19). A verification of the income directly from the employer or the Work Number database. Additional analysis must be conducted to determine if any variable income should be used. As a DUS lender, you can grant forbearance to a customer with the delegation Fannie Mae … You can also download the printable 1,200+ page PDF, which include links. We’re concerned for the health and well-being of our employees, customers, and communities, and we urge everyone to take precautions to protect themselves. 11, 2020. A borrower who is furloughed or laid off is not considered to be actively employed. In those cases, the reduced amount of declining variable income can only be used for qualifying if it has since stabilized and there is no reason to believe the borrower will not continue to be employed at the current level. Yes, in some cases income documentation may need to be updated. currently in forbearance or deferment? For example, for declining variable income, the requirements and guidance for declining income trends in the B3-3.1-01, General Income Information are applicable. Can the income be used to qualify? These FAQs provide additional information on the temporary policies. ... Fannie Mae COVID-19 Updates Fannie Mae LL2020-03 updated from original issuance. Click below to access COVID-related FAQs, Lender Letters and other resources: Do Fannie Mae’s existing disaster policies in the Selling Guide and the Servicing Guide apply to the COVID-19 pandemic? The COVID-19 pandemic has had a particularly severe impact on renters, minorities, and lower-income households according to the third quarter National Housing Survey®, as the overall results indicate broad financial and employment repercussions due to the virus. The temporary self-employment income policy requirements in LL-2020-03 apply to all borrowers using self-employment income to qualify. To: All Fannie Mae Single-Family Sellers Impact of OVI -19 on Originations We are actively monitoring the spread of COVID-19 (coronavirus) in the United States and understand there are concerns about its potential impact on borrowers, businesses, and loan originations. Lenders should also include any information or knowledge of any current issues in their analysis of the borrower’s continuance of income source. No, Fannie Mae’s existing policies related to disasters do not apply to loans impacted by COVID-19. If the borrower has a federal student loan that is in a COVID-related automatic forbearance, can the monthly payment be excluded from the borrower’s DTI ratio if it has been paid by another party? Yes. CONFIDENTIAL Bulletin 2020-5 & 2020-23 Calculating Income 28 If the borrower is furloughed but continues receiving income for a specified period of time, such as four weeks, can the income be used for qualifying? What should the lender do when informed of a change in the borrower’s pay structure? The PPP is a loan issued by Small Business Administration lenders under the CARES Act. Is it acceptable to only use year-to-date income to calculate qualifying variable income? Emergency Rental and Mortgage Assistance Program (ERMA) ERMA can provide rental and mortgage assistance to low-income households who have been impacted by the crisis and may not be eligible for RAFT. Together, our shared commitment increases the level of quality and risk oversight delivering certainty to lenders and Fannie Mae. Airbnb has an initiative with Fannie Mae and four lenders to help hosts refinance their mortgages. Accordingly, lenders are not required to review the total tax liability reported on IRS Form 4868 and compare it with the borrower’s tax liability from the previous two years as a measure of income source stability and continuance. Instead, lenders can follow the guidance in Lender Letter s . The net rental income calculation is not reduced by the mortgage payment (which is always treated as a liability and included in the debt-to-income ratio). The City of DeSoto is currently offering two grant programs to provide financial assistance to eligible DeSoto residents and businesses affected by COVID-19. Ask Poli is an Artificial Intelligence powered search tool. For example, rental income from a commercial property owned by the borrower is acceptable if the income otherwise meets all other requirements. Our teams are fully operational and ready to execute your multifamily business. All essential functions are fully operational. As a reminder, loans with applications on or after Aug. 1, 2020 are required to comply with the allowable age of federal income tax returns contained in Selling Guide B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. The lender may find it necessary to obtain additional year(s) of individual and/or business tax returns to support the underwriting decision. For student loans, if the monthly payment is provided on the credit report, the lender may use that amount for qualifying purposes. Note: The numbering sequence is from the PDF document that contains all COVID-19 Selling FAQs. Are there acceptable alternatives if a lender is unable to obtain a verbal (VOE)? If the lender determines that the business has not been adversely impacted and the amount of income calculated following standard 1084 methodology is accurate and meets the requirements outlined in Selling Guide. The Renters Resource Finder is an online tool that identifies apartments and other multifamily properties financed by Fannie Mae, whose residents are eligible for eviction protection … Additional documentation may include, but is not limited to, a year-to-date balance sheet, month-to-month or quarterly trending analysis, and/or additional depository account statements. For mortgage loans that are manually underwritten, lenders must follow Selling Guide B3-5.3-02, Payment History; however, lenders are not required to, and should not, consider payments missed during the time of a COVID-19-related forbearance to be historical delinquencies or derogatory credit. The lender must continue to consider expenses reported on the profit and loss statement when assessing the impact of COVID-19 on the business. We recommend that you use the latest version of FireFox or Chrome. How do lenders determine stability of variable income when a borrower has been impacted by COVID-19? Lenders must continue to analyze the impact of the pandemic on the business income used in qualifying as outlined in LL 2020-03. We encourage residents whose employment or income are impacted by COVID-19 to seek available assistance as soon as possible," said Malloy Evans, Senior Vice President and Single-Family Chief Credit Officer, Fannie Mae. Refer to B3-3.1-01, General Income Information. Fannie Mae partners with lenders to decrease risk. Current Selling Guide policy requires these income types to be calculated considering the borrower’s history of receipt, the frequency of payment, and the trending of the amount of income being received. We are actively monitoring the current situation and taking every step to help ensure a safe and sound housing market. All guidance specific to COVID-19 will be communicated through Lender Letters and FAQ documents such as this. However, please note that furloughed borrowers are currently ineligible under the temporary leave policy. Certain types of temporary leave may be eligible for qualifying. Therefore, no payments would be expected to be included in the borrower’s liabilities at this time. If you haven’t found what you need here, reach us at 1-800-2FANNIE and follow these prompts. 14 ... Bulletins, Documentation and Rental Income Matrix Calculating Income. For best results, pose your search like a question. The DRN offers support from HUD-approved housing counselors, such as a personalized recovery assessment and action plan, financial coaching and budgeting, and ongoing check-ins. How do the temporary self-employment income policies in LL-2020-03 impact the enforcement relief of representations and warranties when self-employment income is calculated using an approved vendor tool as outlined in Selling Guide A2-2-04, Limited Waiver and Enforcement Relief of Representations and Warranties for Mortgages Submitted to DU? Yes. Fannie Mae, along with our lending and servicing partners, is committed to ensuring assistance is available to homeowners in need. How should I treat non-mortgage debt (for example, student loans, auto loans, etc.) For additional information about rental income see B3-3.1-08, Rental Income. Can I use the requirements for income while on temporary leave? Does the tax deadline extension issued as a result of the COVID-19 emergency affect documentation requirements? New Resource is Part of Broader Effort to Help People Remain in Their Homes. Can proceeds from an SBA PPP or any other similar COVID-19 related loans be considered business assets for the purpose of funding the transaction? Retail electric providers must also suspend disconnections for residential customers who have been added to the state’s unemployment and low-income list due to the effects of COVID-19. See Lender Letter LL-2020-03. For loans meeting the 18 month extended timeframe requirements, the age of document requirements apply at the time of original loan closing only. Visit Selling and Servicing Guide Communications and Forms. Fannie Mae's Disaster Response Network has published a guide for renters affected by the coronavirus (COVID-19). In addition to now requiring three business depository account statements, we have updated the language to provide additional clarity by requiring the review of the depository account statements to support the level of business revenue reported in the current YTD profit and loss statement. If your mortgage is backed by Fannie Mae… Mortgage & Rental Payment Histories-All Transactions (effective 4/29/2020-updated 7/28/2020) AIG is providing overlays to Fannie Mae’s temporary Purchase and Refinance eligibility requirements, announced in LL- 2020-03 and updated 7/9/2020; Once it has been determined that any portion of the PPP loan must be repaid, follow the Selling Guide requirements for loans paid by a business. Remaining focused on our mission to provide liquidity to the market. Please visit our COVID-19 Investor Resources page for the latest investor news and information related to COVID-19. As reflected in LL-2020-03, self-employed borrowers must provide either a 2020 audited year to date Profit and Loss Statement OR a 2020 unaudited year to date Profit and Loss Statement along with three months business depository account statements. Fannie Mae partners with lenders to decrease risk. For a comprehensive list of resources such as forms, announcements, lender letters, & Technology, News & the missed payments are resolved by the responsible party (not the borrower) prior to closing of the new mortgage loan; the responsible party had been making payments on the student loan for at least nine months prior to the automatic forbearance; the lender provides borrower documentation evidencing the student loan is in a COVID-related automatic forbearance, and any missed payments have been paid; and. Does the lender remain responsible for the representations and warranties related to the borrower’s employment status when using one of the verbal VOE flexibilities? The changes are to ensure continued support for borrowers during the COVID-19 national emergency. As a DUS lender, you can grant forbearance to a customer with the delegation Fannie Mae provided you. Fannie Mae publishes four worksheets that lenders may use to calculate rental income. Do Fannie Mae’s existing disaster policies in the Selling Guide apply to the COVID- 19 pandemic? Fannie Mae Provides Assistance to Help Renters Impacted by COVID-19 Stay in Their Apartments. What are some examples of additional documentation that could be used to assess the impact of the pandemic on business operations and/or support the information reported on the year-to-date profit and loss statement? Published December 16, 2020. Lease agreements do not need to meet the Age of Documentation requirements. No. 12/10/20: Single-Family Lender Letter (LL-2020-04), Impact of COVID-19 on Appraisals, 12/10/20: Single-Family Lender Letter (LL-2020-03), Impact of COVID-19 on Originations, 12/9/20: Single-Family Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing, 11/18/20: Single-Family Lender Letter (LL-2020-07), COVID-19 Payment Deferral, 11/13/20: Single-Family Lender Letter (LL-2020-06), Selling Loans in Forbearance Due to COVID-19, 7/15/20: Single-Family Lender Letter (LL-2020-09), Incentive Fees for Retention Workout Options, 7/15/20: Single-Family Lender Letter (LL-2020-08), Servicer Principal and Interest Requirements Change, 7/15/20: Single-Family Lender Letter (LL-2020-07), COVID-19 Payment Deferral, 7/15/20: Single-Family Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing, 7/9/20: Single-Family Lender Letter (LL-2020-03), Impact of COVID-19 on Originations, 7/9/20: Single-Family Lender Letter (LL-2020-04), Impact of COVID-19 on Appraisals, 6/29/20: Fannie Mae Announces Updated Protections for Renters Impacted by COVID-19, 6/11/20: Single-Family Lender Letter (LL-2020-06), Selling Loans in Forbearance Due to COVID-19, 5/26/20: Fannie Mae Launches "Here to Help" Effort to Help Homeowners and Renters Impacted by COVID-19, 5/19/20: Fannie Mae Announces Flexibilities for Refinance and Home Purchase Eligibility, 5/13/20: Fannie Mae Announces COVID-19 Payment Deferral, 5/7/20: Fannie Mae Helps Multifamily Renters Impacted by COVID-19 With 'Renters Resource Finder', 4/27/20: Understand Your COVID-19 Mortgage Options, 4/24/20: Multifamily Lender Letter 20-08, COVID-19 Underwriting Guidance, 4/23/20: Multifamily Lender Letter 20-07, CARES Act: Paycheck Protection Program, 4/23/20: Multifamily Investor Update Regarding COVID-19 Forbearances, 4/22/20: Fannie Mae is Providing Greater Liquidity to the Mortgage Market, 4/16/20: COVID-19 Foreclosure Prevention Fraud and Other Scams, 4/15/20: Single-Family COVID-19 Forbearance Script, 4/14/20: Single-Family COVID-19 Servicer Webinar Recording (Fannie Mae Connect credentials required), 4/7/20: Multifamily Lender Letter 20-06, Loan Document Update, 4/7/20: Multifamily Lender Letter 20-05R, COVID-19 Forbearance Process Guidance, 3/25/20: Fannie Mae Multifamily Investor Update Regarding COVID-19. 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