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More Relatively Big Changes in Most Recent Fannie Selling Guide

Friday, August 28, 2015

Fannie Mae has published a set of changes to its Selling Guide.  The changes affect verification of self-employed income, Home-Style Renovation loans, eligibility reviews for Planned Unit Developments (PUDs), use of new disclosure forms, and cash-back pair-offs on mandatory whole loan commitments.

Self-Employment Income

The changes to self-employment income policies affect calculation and documentation of business income where the borrower does not have a history of business income distributions.  The Guide has been updated to provide an alternative approach in which the lender can verify by confirming the borrower has (1) access to the business income and (2) there is adequate liquidity in the business to support withdrawal of earnings.  The previous method of verification remains in effect as an alternative lenders may use.

 

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