Bulletin 2021-106 Conforming and Government Underwriting Guide Updates and Overlay Removals

Conforming, FHA, VA and USDA Guide Updates and Overlay Removals

Topic

Current Guideline

New Guideline

Housing Choice Voucher Homeownership Program (Section 8)

Not permitted

Permit per applicable agency guidelines with the following exception:

· Housing Choice Voucher payments are only allowed if the employer sends the funds to the borrower.

· The program may not pay the mortgage lender directly.

Mortgage Differential

Not permitted

Permitted per applicable agency guidelines with the following exception:

· Mortgage differential payments are only allowed if the employer sends the funds to the borrower.

· The employer may not pay the mortgage lender directly.

Conforming Guide Updates and Overlay Removals

Topic

Current Guideline

New Guideline

Verification of Funds Required to Close
Fannie Mae SEL-2021-06

Fund required to close must be documented per DU

Purchase Transactions

· Two (2) months account statements or quarterly statement.

Refinance Transactions

· One month account statement or quarterly statement.

DU will reflect these updates.

Delayed Financing
Freddie Mac 2021-27

Additional cash out not permitted

Cash-out proceeds may be used to pay off or pay down the borrowed funds, as reflected on the Closing Disclosure Statement and additional cash-out is permitted only when all borrowed funds are paid in full.

All other Delayed Financing guideline apply

Freddie Mac LPA 2021-29

Manufactured Housing
Rate and Term Refinance

Two options based on length of ownership of land.

Use the current appraised value of the manufactured home and land, regardless of length of ownership.

Paystubs

Freddie Mac 2021-29

Silent

Paystubs must be dated no earlier than 30 days prior to the loan application

Group Homes
Freddie Mac 2021-29

Silent

Group homes are now eligible for individuals with disabilities.

The group home may be owner occupied or an investment property.

VA Guide Updates

Topic

Current Guideline

New Guideline

Lava Flow Hazard

Not permitted

Lava Flow Hazard Zones are designated by the US Geological Survey. Properties located in Lava Zones 1 and 2 are not permitted.

· In Hawaii, Lava Zones are acceptable with exception to properties located in Lava zones 1 and 2. A Lava Insurance Policy, with coverage for at least the amount of the loan, is required for all properties located in Lava Zones 3 through Lava Zone 9.

Joint Loans

Not Permitted

Permitted per VA policy