If the trend was declining but has since stabilized and there is no reason to believe that the borrower will not continue to be employed at the current level, the current, lower amount of variable income must be used (i.e., the monthly year to date income amount). Together, our shared commitment increases the level of quality and risk oversight delivering certainty to lenders and Fannie Mae. If the lender determines that the business has been adversely impacted and the amount of income calculated following standard 1084 methodology must be adjusted, rep and warrant relief does not apply since the lender must make manual adjustments to the output of the tool. Our digital library includes learning modules, videos, frequently asked questions, demos, job aids, guides, and more. 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. LL-2020-03, Impact of COVID -19 on Originations and LL-2020-04, 11, 2020. The lender can continue to deliver loans with loan application dates prior to Jun. Three vertical lines aligned to the left. For single-closing construction-to-permanent mortgages with loan applications dated during the timeframe covered in LL-2020-03, unless the loan meets the requirements for the extended 18 month timeframe permitted in the Selling Guide, the 60-day age of income and asset document requirements stated in the Lender Letter apply at both the time of the original closing date of the construction loan and the time of conversion to permanent financing. If rental income is not used to qualify the borrower, the requirements of Chapter 5306.1 do not apply. Audit profit and loss statements should be prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and audited by an independent certified public accountant who provides an opinion on whether the profit and loss statements are presented fairly, in all material respects, in accordance with U.S. GAAP. You can also download the printable 1,200+ page PDF, which include links. No. For best results, pose your search like a question. About the Mortgage Lender Sentiment Survey, Single-Family Lender Letter (LL-2020-04), Impact of COVID-19 on Appraisals, Single-Family Lender Letter (LL-2020-03), Impact of COVID-19 on Originations, Single-Family Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing, Single-Family Lender Letter (LL-2020-07), COVID-19 Payment Deferral, Single-Family Lender Letter (LL-2020-06), Selling Loans in Forbearance Due to COVID-19, Single-Family Lender Letter (LL-2020-09), Incentive Fees for Retention Workout Options, Single-Family Lender Letter (LL-2020-08), Servicer Principal and Interest Requirements Change, Fannie Mae Announces Updated Protections for Renters Impacted by COVID-19, Fannie Mae Launches "Here to Help" Effort to Help Homeowners and Renters Impacted by COVID-19, Fannie Mae Announces Flexibilities for Refinance and Home Purchase Eligibility, Fannie Mae Announces COVID-19 Payment Deferral, Fannie Mae Helps Multifamily Renters Impacted by COVID-19 With 'Renters Resource Finder', Understand Your COVID-19 Mortgage Options, Multifamily Lender Letter 20-08, COVID-19 Underwriting Guidance, Multifamily Lender Letter 20-07, CARES Act: Paycheck Protection Program, Multifamily Investor Update Regarding COVID-19 Forbearances, Fannie Mae is Providing Greater Liquidity to the Mortgage Market, COVID-19 Foreclosure Prevention Fraud and Other Scams, Single-Family COVID-19 Forbearance Script, Single-Family COVID-19 Servicer Webinar Recording, Multifamily Lender Letter 20-06, Loan Document Update, Multifamily Lender Letter 20-05R, COVID-19 Forbearance Process Guidance, Fannie Mae Multifamily Investor Update Regarding COVID-19. Our Customer Support teams are here to help you — please contact your Account Team if you need assistance. What if an hourly borrower is working less hours now than they worked earlier in the year prior to the COVID-19 impact? Do Fannie Mae’s existing disaster policies in the Selling Guide apply to the COVID- 19 pandemic? Visit Selling and Servicing Guide Communications and Forms. This includes determining the monthly year-to-date income amount and comparing that to prior years’ earnings to determine the appropriate amount of qualifying income for the loan transaction. If you have questions about specific deals, please contact your Deal Team. If the COVID-19 pandemic has caused job loss, income reduction, sickness, or other issues that impact your ability to pay your home mortgage or rent, relief options are available — find details here and take action now.. Are there acceptable alternatives if a lender is unable to obtain a verbal (VOE)? Employees are working remotely over our stress-tested network, with only mission-critical staff needing to enter our worksites. information from other Fannie Mae published sources. If the Renters Resource Finder confirms that Fannie Mae financed the apartment complex where you live, you may also be eligible for COVID-19-related tenant protections. Our COVID-19 task force is monitoring and analyzing the current situation, and we have implemented our business resiliency plans. What if the borrower does not have a business depository account but instead uses a personal checking, money market or savings account to manage business finances? Fannie Mae’s renter hotline number is 1-877-542-9723 and Freddie Mac’s renter hotline number is 1-800-404-3097. 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. The lender is not expected to request additional documentation from the borrower. If the credit report does not provide a monthly payment for the student loan, or if the credit report shows $0 as the monthly payment, the lender must either calculate a qualifying payment per B3-6-05, Monthly Debt Obligations, or use the most recent income-driven repayment plan payment (with supporting documentation). Lenders are encouraged to apply these temporary requirements to existing loans in process. 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. How should I treat non-mortgage debt (for example, student loans, auto loans, etc.) The lender must use the profit and loss statement (and other supplemental documentation) to determine the current level of stable income. If you are a renter and live in an apartment financed by Fannie Mae, we can help you navigate your financial challenges with the Disaster Response Network. In no instance may income be averaged over the period of declination. 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. 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. Execution, Learning The flexibilities were set to expire on October 31, 2020. To enroll, contact the state’s low-Income list administrator at 866-454-8387. version of a page. 11, 2020, is the loan eligible for delivery to Fannie Mae? The lender must continue to use the required level of tax return documentation to calculate self-employment income. For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more. For additional information about rental income see B3-3.1-08, Rental Income. If you are a homeowner, have your financial information handy and contact your mortgage servicer (the company listed on your monthly statement) to request help if you’re concerned about your mortgage payments. Lenders should apply due diligence and review the actions of the business and any impact the current situation has taken on the flow of income. WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) wants to help ensure families who are renting in multifamily properties are able … No. Can the lender use the year-to-date profit and loss statement to calculate qualifying income? The National Low Income Housing Coalition is tracking which properties are covered by the CARES Act moratorium. Rental Income Matrix Rental income may be used in qualifying the borrower(s) provided the requirements of Guide Section 5306.1 and the documentation requirements contained in Guide Sections 5102.3 and 5102.4 and Chapter 5302 are met. We will continue to support our customers by: Fannie Mae will stay in constant communication with the Federal Housing Finance Agency (FHFA) to address any potential impacts to our employees and business operations. Many renters are affected by the devastating impact of the coronavirus, or COVID-19. Note: This guidance was updated due to the CARES Act. And, if Fannie Mae owns your mortgage loan, our Disaster Response Network™ (DRN) can help you navigate the mortgage relief process and address other financial challenges. If the lender did not obtain any type of additional self-employment income documentation on loan applications taken before Jun. Income types such as hourly, commission and overtime, are variable by nature. Lease agreements do not need to meet the Age of Documentation requirements. Lender Letter 2020-03 requires certain additional self-employment income documentation for all loan applications taken on or after Jun. If the lender confirms the business depository account statements support the level of revenue reported in the unaudited profit and loss statement, what is required related to the review of business expenses? The lender may find it necessary to obtain additional year(s) of individual and/or business tax returns to support the underwriting decision. We are allowing certain documentation flexibilities due to the unique circumstances resulting from the COVID-19 pandemic to address the issue lenders have raised due to disruption of employer operations and their inability to be reached by phone. Airbnb has an initiative with Fannie Mae and four lenders to help hosts refinance their mortgages. Together, our shared commitment increases the level of quality and risk oversight delivering certainty to lenders and Fannie Mae. Rental Income Calculation Worksheets. 11, 2020) that required the review to “support and/or not conflict” with the information presented in the current YTD profit and loss statement. A verification of the income directly from the employer or the Work Number database. General Requirements for Documenting Rental Income. If I provide a lease to verify rental income, does it have to comply with the Age of Documentation requirements in Lender Letter LL-2020-03? Lenders must continue to analyze the impact of the pandemic on the business income used in qualifying as outlined in LL 2020-03. COVID-19 (Coronavirus) has affected millions of Americans, through the loss of a job or income, or illness. 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. Individual Income Tax Return) filed with the IRS, until the point at which the tax deadline extension has expired. We recommend that you use the latest version of FireFox or Chrome. If your apartment or rental unit is in a multifamily building financed by Fannie Mae, and your employment or income have been affected, we can help you navigate your financial challenges with our Disaster Response Network. Under the CARES Act, PPP loan terms allow deferred payments for a specified period, no personal loan guarantee, and the potential for all or some portion of the loan to be forgiven. All guidance specific to COVID-19 will be communicated through Lender Letters and FAQ documents such as this. Instead, lenders can follow the guidance in Lender Letter s . Instead, lenders can follow the guidance in Lender Letters LL-2020-03, Impact of COVID-19 on Originations, and LL-2020-04, Impact of COVID-19 on Appraisals. How do lenders determine stability of variable income when a borrower has been impacted by COVID-19? These loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. A circle with a colored border representing one's progress through a lesson. Does the lender need to consider a Paycheck Protection Program (PPP) loan when analyzing a self-employed borrower? The PPP is a loan issued by Small Business Administration lenders under the CARES Act. We will continue to update this page with the latest resources and information, so please check back often. A circle with a colored border representing one's progress through a lesson. Freddie Mac is open for business and continuing to play our crucial role in the U.S. housing markets. For example, if an employer lowers a borrower’s base salary, the lender must use the lower amount for qualifying. Having Issues with Seeing this Page Correctly? No. See B3-3.1-09, Other Sources of Income; Temporary Leave Income. There are no changes for loans that receive self-employment income validation through the DU validation service. If you still have Technical Support questions, Does the lender need to consider a Paycheck Protection Program (PPP) loan in the borrower’s DTI? Lender Letter LL-2020-03 – Impact Covid-19 Originations December 10, 2020 This Lender Letter provides reminders and temporary flexibilities to support mortgage originations. 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. Please visit our COVID-19 Investor Resources page for the latest investor news and information related to COVID-19. The worksheets are: Rental Income Worksheet – Principal Residence, 2– to 4–unit Property , The new mandate date for the use of the redesigned URLA and AUS specifications is Mar. – The Federal Housing Finance Agency (FHFA) announced today that Fannie Mae and Freddie Mac (the Enterprises) will extend several loan origination flexibilities until August 31, 2020 to ensure continued support for borrowers during the COVID-19 national emergency. Fannie Mae partners with lenders to decrease risk. Hosts in the U.S. will be able to work with participating lenders to recognize Airbnb home sharing income from their primary residence as part of their mortgage refinancing application. The Fannie Mae Learning Resource Center offers a wide range of materials to help you do business with Fannie Mae. Visit KnowYourOptions.com to learn about our available mortgage assistance and relief options. Homeowners who lost income due to COVID-19 could get relief, as could renters if their landlords seek assistance. A verification of the income directly from the employer or the Work Number database. never self-employed income for Fannie Mae or Freddie Mac? COVID-19 UPDATE: Find out how Fannie Mae is responding. Streamline your refinance process. For full details on these temporary flexibilities, read Lender Letter (LL-2020-03) – Impact of COVID-19 on Originations and Lender Letter (LL-2020-04) – Impact of COVID-19 on Appraisals. Ask Poli is an Artificial Intelligence powered search tool. 10-Day Pre-Closing Verification (10-day PCV) A circle with a colored border representing one's progress through a lesson. Can the income be used to qualify? Use of these worksheets is optional. Homeowners and renters who have been financially impacted by COVID-19 or natural disaster can also download our app to find relief options and resources on the go. No. What are general standards for an audited profit and loss statement? We will be adding more FAQs, therefore we encourage you to check in frequently for updates - refer to the "NEW" or "UPDATED" notations after the question. Please reach out to your landlord or property manager to determine if these protections are applicable to you. If Net Rental Income is not entered in VI R, DU will calculate it using the following formula: Gross rental income — 75% = net rental income In response to the COVID-19 national emergency, Fannie Mae and Freddie Mac have provided temporary guidance to lenders on several policy areas that support selling mortgage originations. Fannie Mae partners with lenders to decrease risk. These FAQs provide additional information on the temporary policies. A gap in employment or a reduction in income due to COVID-19 cannot be excluded from the calculation, and the year to date income must continue to be calculated over the entire time period. 14 ... Bulletins, Documentation and Rental Income Matrix Calculating Income. 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. 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