On Dec. 11, Fannie exceptions to borrower ownership requirements.
Fannie issuedSEL-2024-08 on HomeStyle Energy reports and loan agreements.
Added exceptions to borrower ownership requirement for limited cash-out refinances.
Encouraged use of home price indices and other market data to support value accuracy
HomeStyle Energy
As part of energy report requirements (Guide s. B5-3.3-01), borrowers must obtain a home energy report to identify the recommended energy improvements to property.
Currently, for HomeStyle Energy mortgages that require an energy report, the Selling Guide requires it to be dated no earlier than 120 days prior to the note date.
With this policy change, Fannie will allow an energy report for HomeStyle Energy mortgage, when required, to be dated no more than 24 months before the note date.
Limited Cash-Out Refinances
Added 2 exceptions to requirement that at least one borrower is an owner (on title) of the subject property at the time of initial application for a limited cash-out refinance.
Borrower on the new loan is currently financially obligated on the loan being paid off.
Specified that ownership must be transferred to the borrower(s) at time of closing.
Borrower is paying off an installment land contract that was executed more than 12 months prior to the application for the refinance; lender is required to document.
Clarified the payoff of an installment land contract executed more than 12 months before loan application is an acceptable use of a limited cash-out refinance transaction.
Updated Guide s. B2-1.3-02 (transactions) and B2-1.3-05 (payoff of land contracts).
Appraisal Time Adjustments
Use of home price indices (HPIs), statistical analysis, modeling, paired sales, or other commonly accepted methods are acceptable for supporting appraisal time adjustments
Encouraged use of these tools to provide supporting evidence for market trends.
Failure to make market-derived time adjustments when indicated by market data is an example of unacceptable appraisal practice (B4-1.1-04 on unacceptable practices).
Reminded that appraisal reports must summarize all supporting evidence and describe the data sources, tools, and techniques used to determine the overall valuation.
Updated Selling Guide sections B4-1.3-09 (adjustments to comparable sales).
HomeStyle Renovation Execution Date
Clarified that lender and borrower may execute the renovation loan agreement at any time during the closing process; however, agreement date must match the note date.
Updated list of States to include Maine for remote online notarization (s. A2-4.1-03).
For a subject property located in Maine, remote online notarization is permitted, including a remote online notarization taken by a notary outside of the State of Maine.
In accordance with the laws of the State in which the notarial act was performed.
Effectiveness
HomeStyle Energy report policy change may be implemented immediately.
Limited cash-out refinance borrower ownership exemptions take immediate effect.
Must implement appraisal policy changes for appraisals dated on/after Mar. 1, 2025.
Regulators
Fannie
Entity Types
Bank; CU; MG Orig; Servicer; Thrift
Reference
Nt SEL-2024-08, 12/11/2024;
Functions
Actuarial and Valuation; Compliance; Financial; Legal; Operations; Reporting; Underwriting
