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Fannie Mae Eliminates Continuity of Obligation Policy
Wednesday, February 24, 2016
Fannie Mae is updating its Selling Guide to include changes several areas. The changes include elimination of the continuity of obligation policy, updates to lender self-reporting requirements and obligations required for HomeStyle® Renovation Mortgages, and a redefinition of Relocation Loans.
The continuity of obligation policy, introduced during the financial crisis, is being eliminated in its entirety. The policy was originally intended to ensure that borrowers who recently acquired ownership of a new property in the absence of a recorded sale of the previous property were properly qualified. The obligation applied to all limited cash-out and cash- out refinance transactions.
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