Wholesale ALERT – Updates for Fannie Mae, Freddie Mac, FHA, and USDA

Effective immediately for all Fannie Mae loans, Arc Home will align with the change communicated by Fannie Mae in Announcement SEL-2023-08 for the topics below.

·         Personal Gifts and Gifts of Equity: Expanded guidelines to allow gift funds to be sourced from an estate of an acceptable donor or a trust established by an acceptable donor. Refer to Fannie Mae Selling Guide B3-4.3-04 for details.

·         3D Printed Homes: New topic to address acceptability of 3D printed homes with traditional design and conventional building materials. Refer to Fannie Mae Selling Guide B4-1.3-05 for complete details.

Effective immediately for all Freddie Mac loans, Arc Home will align with the change communicated in Freddie Mac Bulletin 2023-18 for the topics below.

·         Student Loan Payments: Revised guidelines to specify that an amount greater than zero must be included in the qualifying debt-to-income (DTI) ratio for all student loans. Refer to Freddie Mac Selling Guide Section 5401.2 for complete details.

·         No Cash-Out Refinance Mortgages: Updated the allowable use of proceeds to specify that payoff of the existing first mortgage may include a balance deferred under a loss mitigation plan, as well as any costs or fees associated with the lien satisfaction. Refer to Freddie Mac Selling Guide Section 4301.4 for details.

·         Cash-Out Refinance Mortgages: Modified requirements to indicate that the transfer of title from a limited liability company or limited partnership into the borrower’s name must occur on or before the Note Date. Refer to Freddie Mac Selling Guide Section 4301.5 for details.

Effective for all Freddie Mac loans with an application dated on or after September 18, 2023, Arc Home will align with the change communicated by Freddie Mac in Bulletin 2023-15 for the following topic:

·         Projects in Need of Critical Repairs: Added guidelines related to condo projects in need of critical repairs and projects with material deficiencies or special assessments. Refer to Freddie Mac Selling Guide Sections 5701.1 – 5701.7 for the updated condo project review requirements.

Arc Home will align with the update announced in FHA Info 2023-75 for the topic noted below. This revision will become a permanent policy and incorporated in the FHA Single Family Housing Policy Handbook 4000.1 (available HERE on the HUD website) at a later date.

·         Waiver of Mortgage Credit Reject: Removed requirement for Mortgage Credit Reject information to be entered into FHA Connection. This waiver is effective for all cases pending endorsement on or after September 11, 2023. For cases pending endorsement, any Mortgage Credit Reject case warning flags will be removed.

The USDA 2023 Fiscal Year will end on September 30, 2023, and the 2024 Fiscal Year will begin on October 1, 2023.

At the beginning of each fiscal year, funding for the guaranteed loan program is not available for a short period of time – approximately two weeks. USDA anticipates this brief lapse in funding to continue for Fiscal Year 2024. During the temporary lapse in funding, Rural Development will issue Conditional Commitments (Form RD 3555-18/18E) “subject to the availability of commitment authority” for purchase and refinance transactions.

All USDA loans may proceed to closing as normal during this period, subject to all requirements of the Conditional Commitment. Once the USDA funding is reinstated, the agency will move any loan with a Conditional Commitment to an “Obligate Application” status. After the loans are obligated, USDA will process the Arc Home Loan Note Guarantee requests when the loan closing is verified, and all conditions of the Conditional Commitment are satisfied.