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. 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