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2 / 7

Product

Change

Various

Revised national pricing structure – we: Implemented new LLPAs for loans with LTVs of 70.01% and above, combined with certain “representative” credit scores [excludes MCM; EA, with or without the Timely Payment Rewards® (TPR) feature; and mortgages with terms of 15 years or less] Implemented revised LLPAs for loans with subordinate financing based on “representative” credit score and whether the loan has an interest-only (IO) feature (excludes MCM) Extended our existing 0.50% LLPA for loans on 2-unit properties with LTVs of 90.01% to 95.00% to also apply to 2-unit loans with LTVs of 75.01% to 90.00% (excludes MCM)

Effective Date(s)* March 1, 2008

Source Doc(s)/ Reference

Selling Guide (Announcement 07-16)

LLPA Matrix and AMDC Information

Pricing/delivery changes effective for whole loans purchased or loans delivered into MBS with issue dates on or after the specified date.

Underwriting Policies

Policy

Impact on

Principal Residence Conversion to Second Home or Investor Property

All loans (for DU loans, DU will determine reserve requirements)

Revised Property Value Lender Rep and Warrant

All loans

Change

Policy changes for borrowers buying a new home and converting a current residence to a second home or rental (or selling a home if the sale will not close prior to the new transaction); such borrowers:

  • Must qualify using current and proposed mortgage payments and

establish reserves; but

  • With equity of at least 30 percent:

    • o

      for conversion to a second home, may qualify using current and proposed mortgage payments and reduced reserves; or

      • o

        for conversion to an investment property, may qualify using up to 75 percent of rental income to offset the mortgage payment

  • Lenders must warrant the property’s current value as not less than its original value for loans sold to us more than 6 months and up to 12 months from the closing date.

  • Otherwise, loans may be submitted for review and pricing as part of a bulk transaction.

Effective Date(s)*

Source Doc(s)/ Reference

August 1, 2008 (loan application date)

Selling Guide (Announcement 08-16)

August 1, 2008 (delivery)

Selling Guide (Announcement 08-16)

Bankruptcy and Foreclosure

Manually underwritten loans

Key changes (refer to Announcement for detailed matrix):

  • Update our policy to specify that the time period to reestablish credit following a bankruptcy action must be measured from the discharge date or the dismissal date (whichever is applicable)

  • Require a four-year elapsed time period after bankruptcies have been dismissed or discharged (or a two-year elapsed time period in the case of bankruptcies that have been discharged following successful completion of a Chapter 13 plan)

August 1, 2008 (loan application date)

Selling Guide (Announcement 08-16)

© Fannie Mae 2008

  • What’s New? Changes to Fannie Mae Pricing, Underwriting Policies, Desktop Underwriter, and Products

  • August 21, 2008

  • Page 2 of 7

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