Fannie Mae Works to Protect It's Interests in Mortgages

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Fannie Mae in a public announcement today
Announcement SEL-2011-04 - Made the following modifications to mortgage insurances they'll work with:

Prohibition of Certain Mortgage Insurance Agreements

Selling Guide has been updated to incorporate the content of Announcement SVC-2011- 04, Prohibitions on Loss Sharing, Indemnification, and Settlement Agreements with Mortgage Insurers, that prohibits lenders from entering into agreements with mortgage insurance companies that may adversely affect Fannie Mae’s interest in its mortgage loans. Sellers must continue to represent and warrant that each loan delivered to Fannie Mae, where mortgage insurance is required, is insurable as enumerated in B7-1-01, Provision of Mortgage Insurance. As a result, sellers are prohibited from delivering a loan to Fannie Mae where the mortgage insurer would not otherwise provide mortgage insurance coverage absent a loss sharing, indemnification, settlement or similar agreement. Furthermore, additional language concerning captive reinsurance arrangements has been added to the Selling Guide as a result of questions that arose after the issuance of the Servicing Announcement.

This update is effective immediately.

They also announced the following changes for homebuyers credit considerations covering their student loan payments in calculating their mortgage qualifications:

The Selling Guide currently requires deferred installment debts, such as student loans, to be included in the debt-to-income ratio. If the borrower’s credit report does not indicate the monthly amount that will be payable at the end of the deferment period, the lender must obtain a copy of the borrower’s payment letter or forbearance agreement to determine the monthly payment to be used in qualifying the borrower.

With this update, the Selling Guide now includes an exception to this policy for student loans. The lender may calculate a monthly payment based on 2% of the balance of the student loan in lieu of obtaining documentation of the monthly payment when the credit report does not contain one. However, if any documentation is provided by the borrower or obtained by the lender

Some interesting developments to protect Fannie Mae which now along with Freddie Mac account for the lions share of residential home mortgages.
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