On Nov. 6, Fannie published updates to the selling guide requirements
Fannie issued SEL-2024-07 making updates to the selling guide on leasehold provisions, project review requirements, appraisal requirements, and other updates.
Also issued guidance on market condition adjustments for appraisal reports, #232205.
Leasehold Provisions
Revises eligibility requirements for properties subject to leasehold estates to provide clarifications, update lease requirements, addresses leasehold in projects scenarios.
Adds definitive list of eligible property types, definitions, and exceptions to leasehold.
Clarifies provisions for leaseholds first lien enforceability, appraisal, and title insurance.
Updates to lease requirements, provisions for notices of default and options to cure, merger of title, assignments, protection of lender’s financial interest in condemnation.
Loans with new leases after Sep. 1, 2025, fee estate must not be subject to any prior secured loans or other liens, unless agreed to recognize and not disturb the lease.
Provisions effective for all loans with applications dated on or after Mar. 1, 2025.
Project Review for Manufactured Homes
Clarifies policy to resolve inconsistencies related to when a manufactured home requires submission to Project eligibility review service (PERS) to facilitate lending.
Removed references indicating manufactured homes located in co-op projects require submission to PERS, remain ineligible project types and cannot be delivered to Fannie.
Also removed PERS requirement for single-width units in PUDs and PUD projects.
Lenders may incorporate these policy changes into their review process immediately.
Appraisal Market Areas
Updates requirements related to market area analysis of appraisal report, implementing standardized definitions for the terms neighborhood and market area.
Additional guidance and requirements on selection of comparable sales, establishing 12 month minimum timeframe for market trend, adjustments to comparable sales.
Illustration of methodology to determine adjustments for market condition changes.
Must implement policy changes for loans that require an appraisal from Feb. 4, 2025.
Preventing, Detecting and Reporting Mortgage Fraud
Clarifies that sellers and servicers responsible for preventing, reporting mortgage fraud
Sellers and servicers are reminded to have policies and procedures in place to ensure the integrity of information and processes at every stage in the life of a mortgage.
Sellers and servicers not in compliance with requirement must do so by Mar. 1, 2025.
Other Updates
Adds an exception to allow lenders to apply a principal curtailment post-delivery to refund the overpayment of fees or charges paid by the borrower at loan closing.
Must be in accordance with applicable regulatory requirements, does not exceed $500.
In addition, Fannie published an updated list of Approved Mortgage Insurance Forms, which incorporates changes to approved mortgage insurance forms for certain entities.
Effectiveness
Lenders will be able to take advantage of these policy changes immediately.
However, they must do so for all loans with applications dated on or after Mar. 1, 2025.
Regulators
Fannie
Entity Types
Bank; MG Orig; Servicer; Thrift
Reference
Nt SEL-2024-07, 11/6/2024
Functions
Compliance; Financial; Legal; Operations; Product Administration; Registration/Licensing; Training
