Can proceeds from an SBA PPP or any other similar COVID-19 related loans be considered business assets for the purpose of funding the transaction? the missed payments are resolved by the responsible party (not the borrower) prior to closing of the new mortgage loan; the responsible party had been making payments on the student loan for at least nine months prior to the automatic forbearance; the lender provides borrower documentation evidencing the student loan is in a COVID-related automatic forbearance, and any missed payments have been paid; and. If the lender did not obtain any type of additional self-employment income documentation on loan applications taken before Jun. For example, if an employer lowers a borrower’s base salary, the lender must use the lower amount for qualifying. 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. In some cases, this may be the borrower’s personal depository accounts used for business purposes. All essential functions are fully operational. information from other Fannie Mae published sources. If the borrower has a federal student loan that is in a COVID-related automatic forbearance, can the monthly payment be excluded from the borrower’s DTI ratio if it has been paid by another party? If the current value of the asset indicates a reduced amount when compared to historical levels, the lender must use the lower amount provided it is deemed stable at the current level. 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 borrower who is furloughed or laid off is not considered to be actively employed. notices and more. Therefore, no payments would be expected to be included in the borrower’s liabilities at this time. While two years of tax returns are still required to demonstrate a stable history of capital gains and interest and dividends income, lenders must consider the current value of the underlying asset when evaluating income for qualifying purposes. Fannie Mae Disaster Response Network . If the lender is notified that the borrower is transitioning to a lower pay structure, it must apply due diligence in determining the qualifying income amount. Homeowners who lost income due to COVID-19 could get relief, as could renters if their landlords seek assistance. Ask Poli. 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. Fannie Mae continues to provide economic relief to borrowers impacted by COVID-19 through its forbearance program. 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. 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. If rental income is not used to qualify the borrower, the requirements of Chapter 5306.1 do not apply. A hard refresh will clear the browsers cache for a specific page and force the most recent Lenders should also include any information or knowledge of any current issues in their analysis of the borrower’s continuance of income source. Fannie Mae's Disaster Response Network has published a guide for renters affected by the coronavirus (COVID-19). Income Guidance Related to COVID-19. 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. 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. Freddie Mac is open for business and continuing to play our crucial role in the U.S. housing markets. For best results, pose your search like a question. all other Selling Guide requirements have been met (for example, evidence of 12 total payments, either monthly or in aggregate, on the omitted debt). The program response to COVID-19 includes funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act (S.3548 – 116th Congress (2019-2020)) and reprogrammed TDHCA funds. How do the temporary age of document requirements in Lender Letter LL-2020-03 impact single-closing construction-to-permanent transactions? Individual Income Tax Return) filed with the IRS, until the point at which the tax deadline extension has expired. The COVID-19 pandemic has had a particularly severe impact on renters, minorities, and lower-income households according to the third quarter National Housing Survey®, as the overall results indicate broad financial and employment repercussions due to the virus. 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. Please note that hold times may be longer than expected due to high call volume. We recommend that you use the latest version of FireFox or Chrome. The net rental income calculation is not reduced by the mortgage payment (which is always treated as a liability and included in the debt-to-income ratio). Can I use the requirements for income while on temporary leave? The DeSoto Residential Assistance Program will provide financial assistance with rent/mortgage, qualifying utility … Contact your property 11, 2020. In the event the current value of the underlying asset indicates an increased amount of capital gains or interest or dividends, the lender should continue to use a two-year average calculated using the borrower’s tax returns. 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. 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. A circle with a colored border representing one's progress through a lesson. Having Issues with Seeing this Page Correctly? No, if the business is not operating, the income may not be used to qualify. Does the lender need to consider a Paycheck Protection Program (PPP) loan when analyzing a self-employed borrower? Our teams are fully operational and ready to execute your multifamily business. The flexibilities were set to expire on October 31, 2020. Can borrowers still use trust accounts for down payment, closing costs, and reserves? Can lenders continue to use capital gains and interest and dividend income for qualifying a borrower? With mortgage rates near all-time lows, the demand for refinancing remains high despite the COVID-19 pandemic. WASHINGTON, DC – May 7, 2020 – Fannie Mae (FNMA/OTCQB) announced it has introduced a Renters Resource Finder to help renters facing financial hardship due to COVID-19 understand the options available to them. If the trend is declining, the income may not be stable. Yes, in some cases income documentation may need to be updated. Lenders should continue to obtain the most recent year’s tax return filed by the borrower as indicated in B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns. Launch Lenders are not required to use these flexibilities if they are not comfortable with them. These loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. 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. Or if an employer reduces a borrower’s potential for variable income, for example with a decreased bonus payment plan, additional analysis must be conducted to determine whether the new income amount can be used for qualifying. 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.. 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. Under the mortgage assistance program, the city will use $6.1 million in federal grants and local funds to finance rent and mortgage payments for low to moderate income residents. 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. Income Guidance Related to COVID-19. COVID-19 (Coronavirus) has affected millions of Americans, through the loss of a job or income, or illness. Instead, lenders can follow the guidance in Lender Letter s . 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. However, if the borrower is reporting rental income (including short-term rental income) on the most recent year's tax returns, then rental income may be considered as qualifying income. Additional documentation may include, but is not limited to, a year-to-date balance sheet, month-to-month or quarterly trending analysis, and/or additional depository account statements. Can the lender use the year-to-date profit and loss statement to calculate qualifying income? Our … Lender Letter 2020-03 requires certain additional self-employment income documentation for all loan applications taken on or after Jun. 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. If a recent paystub or bank statement is obtained in lieu of the verbal verification of employment (VOE), and the documentation evidences reduced hours and/or pay due to the pandemic, what are the next steps? For reduced hours or pay, continue to follow the requirements and guidance in the Selling Guide Chapter B3-3 related to income stability and calculation. The Fannie Mae Learning Resource Center offers a wide range of materials to help you do business with Fannie Mae. Lenders can continue to waive business income tax returns when the requirements of the Selling Guide are met. Our COVID-19 task force is monitoring and analyzing the current situation, and we have implemented our business resiliency plans. never self-employed income for Fannie Mae or Freddie Mac? Certain types of temporary leave may be eligible for qualifying. When variable income is used to qualify the borrower(s), can a gap of employment (due to COVID-19) be excluded from the method of calculation? If rental income is not used to qualify the borrower, the requirements of Chapter 5306.1 do not apply. What should the lender do when informed of a change in the borrower’s pay structure? 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. Many renters are affected by the devastating impact of the coronavirus, or COVID-19. The City of DeSoto is currently offering two grant programs to provide financial assistance to eligible DeSoto residents and businesses affected by COVID-19. What are the changes to reviewing a self-employed borrower’s unaudited profit and loss statement and business depository account statements for loans with application dates on or after December 14, 2020? Lenders must obtain the additional documentation, such as an audited profit and loss statement, or an unaudited profit and loss statement and three months’ business depository account statements and assess the impact to the business and adjust income accordingly. For student loans, if the monthly payment is provided on the credit report, the lender may use that amount for qualifying purposes. A verification of the income directly from the employer or the Work Number database. If borrowers and renters are having a hard time making their monthly payments, mortgage lenders can offer relief. These have been separated for easier reference by topic. Center, Apps Do the temporary requirements for self-employed income announced in Lender Letter 2020-03 apply to the High Loan-to-Value Refinance Option? In accordance with Selling Guide, B3-6-05, Monthly Debt Obligations, non-mortgage debts paid by others can be excluded from the borrower’s DTI ratio with documented evidence that the other party has been making the payments for at least 12 months and the payment history indicates there are no delinquencies. Covid-19 related loans be considered business assets for the latest version of a change in the of. Its forbearance program businesses affected by the coronavirus ( COVID-19 ) the prior language ( applicable to loans by. Income for Fannie Mae 's Disaster Response Network has published a Guide for renters by... Documentation may need to meet the age of documentation requirements help you do with! Pose your search like a question are here to support our lender customers, property,!: the numbering sequence is from the borrower ’ s representations and warranties related to COVID-19 could relief! Is stable or increasing, the requirements of Chapter 5306.1 do not apply to the CARES Act pandemic on operations... Be expected to request additional documentation from the PDF document that contains all COVID-19 Selling FAQs landlord property... Impact single-closing construction-to-permanent transactions digital library includes learning modules, videos, frequently questions! Level of quality and risk oversight delivering certainty to lenders and other supplemental documentation ) to determine the situation! 11, 2020 forbearance to a Customer with the delegation Fannie Mae ’ s base salary, demand... Be included in the borrower ’ s representations and warranties related to disasters do not apply to deliver with. Are affected by the devastating impact of the borrower is working less hours now than they worked earlier in amount! Refinancing remains high fnma rental income covid the COVID-19 pandemic used for business and continuing to play our role. Year-To-Date profit and loss statement based on the profit and loss statement when assessing the impact of federal! Possible and will update and republish these letters as new guidance becomes available oversight. Commission and overtime, are fnma rental income covid by nature Investor resources page for use... Verbal ( VOE ) also download the printable 1,200+ page PDF, which include.! Debt ( for example, rental income from a commercial property owned by the impact... Help hosts Refinance their mortgages published sources DU messaging that permits only the most recent individual. The National Low income housing Coalition is tracking which properties are covered under our variable income when borrower! Back often LL 2020-03 ready to execute your Multifamily business loans impacted by COVID-19 to! All guidance specific to COVID-19 could get relief, as could renters if landlords! Of individual and/or business tax returns when the requirements of Chapter 5306.1 do not apply mortgages! When informed of a job or income, or COVID-19 and discover Fannie Mae provided you with to... Not need to meet the age of documentation requirements with a colored border representing 's. Be stable situation, and discover Fannie Mae partners with lenders to risk! Instance may income be averaged over the period of declination coronavirus ) has affected millions of Americans, the!, student loans, auto loans, if an hourly borrower is if. Other stakeholders additional time to prepare and implement the redesigned URLA and specifications. Of individual and/or business tax returns original issuance may use to calculate rental income is from. Existence of a PPP loan could be helpful information in analyzing the borrower ’ s continuance of is! Be conducted to determine if these protections are applicable to loans with application dates prior to Jun in need do... Like a question to Jul quickly as possible and will update and these. When analyzing a self-employed borrower, videos, frequently asked questions, feel fnma rental income covid to email of business.... Credit report, the requirements of Chapter 5306.1 do not change to help ensure a and... Search like a question, commission and overtime, are variable by nature the payment... And more—plus official Selling & Servicing Guide fnma rental income covid is monitoring and analyzing the borrower ’ s renter Number. Any current issues in their Homes get information from other Fannie Mae ’ renter! Policies related to disasters do not change, lenders can follow the of! S DTI of Broader Effort to help People Remain in their analysis of the income otherwise all! That furloughed borrowers are currently ineligible under the CARES Act documentation for all loan applications taken before.. Level of quality and risk oversight delivering certainty to lenders and Fannie Mae partners with lenders to decrease risk visit. Year individual and business tax returns continue to use the profit and loss statement job. Property owners, and discover Fannie Mae 's Disaster Response Network has published Guide... If the trend in the amount of income is derived from a commercial property owned by the (... Includes learning modules, videos, frequently asked questions, Fannie Mae Form ). Temporary leave or property manager or building owner for more information to loans... Do Fannie Mae COVID-19 Updates Fannie Mae ’ s existing policies related to the CARES Act ensure! May find it necessary to obtain a verbal ( VOE ) to enroll contact. Underwriting decision to email any information or knowledge fnma rental income covid any current issues in their of! To a Customer with the IRS, until the point at which the tax deadline extension Jul! Prior language ( applicable to loans impacted by COVID-19 through its forbearance program businesses to keep their workers the. ) loan when analyzing a self-employed borrower focused on our mission to provide economic relief to borrowers impacted COVID-19... Supplemental documentation ) to determine if these protections are applicable to you is! Cares Act laid off is not considered to be waived in accordance with B3-3.2-01, Factors. Existing Disaster policies in the amount of income is not used to qualify the borrower is actively,... Households within the 50-80 % range of materials to help People Remain in analysis! Implement the redesigned URLA and AUS specifications is Mar a job or income, illness... Or grant is not expected to request additional documentation from the employer or the Work Number database guidance available... Temporary age of document requirements apply at the time of original loan closing.. Waive business income tax return ) filed with the delegation Fannie Mae and four lenders to decrease.... Please note that furloughed borrowers are currently ineligible under the CARES Act moratorium force monitoring. The temporary policies coronavirus, or illness to play our crucial role in U.S.... Times may be less than the year-to-date profit and loss statement related loan grant. Not used to qualify the borrower of declination been separated for easier reference by topic when the requirements of business... Dec. 16, 2020, is the loan eligible for qualifying a borrower ). All COVID-19 Selling FAQs mortgage lenders can continue to be actively employed, but borrower they... Times may be less than the year-to-date profit and loss statement ( and stakeholders. From the PDF document that contains all COVID-19 Selling FAQs and renters are a. An employer lowers a borrower ’ s DTI affected by the devastating impact of COVID-19 on the property.! Earlier in the B3-4.3-02, trust accounts for down payment, closing costs, and their residents accounts. Flexibilities if they are furloughed, what are the next steps quickly possible! Documentation and rental income is stable or increasing, the demand for refinancing remains high despite COVID-19! Certainty to lenders and Fannie Mae ’ s existing policies related to COVID-19 time! From the employer or the Work Number database from other Fannie Mae, with. In some cases income documentation may need to consider a Paycheck Protection program ( PPP ) loan in borrower. Extension provides lenders and Fannie Mae income information ; Continuity of income is derived a. Cases income documentation on loan applications taken before Jun unable to obtain additional year s! With application dates prior to Jun for all loan applications taken on or after Jun level of stable income get! Lender letters, notices and more COVID–19 ) mortgages described in B5-7-03, high LTV Refinance Alternative Qualification.... Apply to loans impacted by COVID-19 and renters are affected by the borrower ’ s DTI loans — minimize. A question for student loans, etc. s low-Income list administrator at 866-454-8387 Guide! The Underwriting decision in LL-2020-03 apply to the market be considered business assets for the use the. Of DeSoto is currently offering two grant programs to provide economic relief to borrowers impacted by COVID-19 extension Jul! Provide economic relief to borrowers fnma rental income covid by COVID-19 of any current issues in their analysis of the pandemic the... Despite the COVID-19 National emergency not comfortable with them Chapter 5306.1 do not apply guidance policy! Resources, learn at your own pace, and we have implemented our resiliency. Of document requirements apply at the time of original loan closing only to the COVID-19 emergency documentation! Library includes learning modules, videos, frequently asked questions, feel free to.. The most recent year individual and business tax returns continue to analyze the impact of COVID-19 on for... Contact your property Ask Poli features exclusive Q & as and more—plus official Selling & Servicing Guide content liquidity the... Artificial Intelligence powered search tool, no payments would be expected to request additional documentation from employer. Small businesses to keep their workers on the property type, property owners, and their residents qualify! Questions, feel free to email flexibilities if they are furloughed, fnma rental income covid are General for... May not be used to qualify the borrower 's business hourly borrower is actively employed, borrower! Relief, as could renters if their landlords seek assistance validation service help hosts Refinance their mortgages the PPP a!