To establish an industry standard for first-generation classification, Freddie, Fannie, under guidance of FHFA, aligned definition of First-Generation Homebuyer Mortgage.
First-Generation Homebuyer Mortgage is one in which each Borrower is purchasing the mortgage premises and will reside in the mortgaged premises as primary residence.
Has no ownership interest in another property during last 3 years preceding note date.
Further, no parent of borrower has had ownership interest in property in last 3 years preceding note date, borrower has aged out of foster care or borrower is emancipated.
Identification of mortgage as 1st-generation homebuyer mortgage is currently optional
However, if Seller chooses to deliver a mortgage as a 1st-generation homebuyer Mortgage, must complete Guide Form 1109, First-Generation Homebuyer Certification.
Provided Form 1109 completion instructions and delivery requirements for sellers.
Created B2-2-07, First-Generation Homebuyer Loans; impacted Gude E-3-06, glossary.
Reconsideration of Value
Developed borrower-initiated reconsideration of value (ROV) framework for lenders.
Lenders must have policies and procedures in place for addressing borrower requests to appeal an appraisal when they believe the opinion of value is unsupported.
Is deficient due to unacceptable appraisal practices or reflects discriminatory practices.
Regardless of ROV outcome, lender must ensure values are reliable and supported.
Must ensure borrower’s concerns with the valuation are addressed in a timely manner.
Updated policy included specific instructions for the borrower disclosure that must be provided at the time of loan application and again upon delivery of the appraisal report
Also lender requirements for reviewing and responding to borrower(s) and appraiser.
Affidavit of Affixture is only required when a loan on manufactured housing is delivered with a personal property title and the borrower’s intent is to convert to real property.
If manufactured home was previously converted to real property per applicable law, will not require Affidavit of Affixture unless applicable State law requires new affidavit.
Amended shared equity policy to allow 1-unit MH Advantage manufactured homes subject to community land trusts that are not located in PUD or condo project.
As of application date, manufactured home must be affixed to permanent foundation.
Unless it has already been converted, the lessor must have initiated the conversion of the manufactured home to real property; all other land trust requirements apply.
Removed the exclusion that co-op share loans cannot be registered with Mortgage Electronic Registration Systems, Inc. (MERS); aligns registration with all other loans.
Eliminated need for a subsequent assignment of the security instrument should the seller/servicer sell the loan to another seller/servicer that is a member of MERS.
Revised requirements for submitting the annual Audited Financial Statement (AFS).
Authorization for Verification of Credit and Business References (Form 1001), and the Lender Record Information (Form 582); all submission must be made electronically.
As part of update launched a new dedicated site for submitting AFS, updated email.
Form 582, 1001 must be submitted within 5 business days of any changes to principal officers or partners and/or owners with a interest of 5% or more in the company.
Trust verification documentation must clearly identify the date the trust was created.
Documentation may include a letter from an accountant or attorney who has reviewed documentation, when trustee’s statement not available or when borrower is trustee.
Trusts created within 12 months of loan application date and funded by the borrower’s employment-related assets may be used as income but must meet income calculation
As well as all other requirements in Employment-Related Assets as Qualifying Income.
When variable trust income has been received for less than 24 months, but not less than 12 months, the lender may consider it as stable income if conditions are met.
Variable trust income must have other positive factors that reasonably offset the shorter income history in alignment with our standard variable income guidelines.
Additioanlly, for variable trust income, lenders may rely upon copies of the trust’s federal income tax returns, as an alternative to the borrower’s personal tax returns.
Provisions impacted Selling Guide section B3-3.1-09, other sources of income.
Uniform Instruments
In response to industry feedback, published additional State-specific MultiState 30-day average SOFR ARM instruments that require State-specific authorized changes.
There is no content changes to newly published instruments other than incorporating all State-specific required authorized changes and adding a State-specific tagline.
Miscellaneous Updates
Clarified Housing Choice Voucher Homeownership Program payments are nontaxable.
Lender should develop an adjusted gross income for the borrower using the monthly payment from the public agency; documentation of nontaxable nature not required.
Designation of Wire Transfer Instructions (Form 482) updated to reflect that Fannie will call authorized representative who signed form to confirm validity prior to processing.
Effectiveness
First-generation homebuyer, affidavit of affixture provisions may be used immediately.
Lenders encouraged to implement ROV provisions immediately, must by Aug. 29, 2024
Community land trust eligibility for manufactured housing provisions effective May 1.
Audited financial statement submission provisions must be implemented by Aug. 1.
Trust income provisions effective immediately; uniform instrument provisions available for immediate use but must be used for loans with note dates on/after Nov. 1, 2023.
In May 2024, FHFA reported on appraisal reconsideration of value policies, #210755.
In May 2024, HUD issued amended ROV guidance and lender requirements, #210754.
Aug. 2024 Fannie ROV Implementation
On Aug. 6, 2024, Fannie updated ROV implementation date from Aug. 29 to Oct. 31.
In coordination with Freddie and HUD, extended the implementation date by 60 days to provide more time for lenders to develop and deploy requirements of ROV policy.
