Agency Temporary Selling Guidance Related to COVID-19
Gateway First Bank, Correspondent Lending understands the challenging times our clients and borrowers are faced with during the current COVID-19 Coronavirus pandemic. In accordance with the special flexibility and guidance issued by Fannie Mae and Freddie Mac on how lenders are expected to handle employment verifications and appraisal requirements, Gateway is announcing the following:
Verbal Verifications of Employment (VVOE) and Income
*Note: The guidance below applies ONLY to Conventional, FNMA & FHLMC loans including SETH, CAFA, and GSFA. At this time, we have not yet received guidance from FHA, VA or USDA on what, if any, flexibilities they will offer. Until we receive guidance, please follow agency guidelines as they currently exist unless specifically outlined in our Overlay Matrix. We will advise our clients of any updates and or changes as soon as we learn of them.
Effective immediately:
- If possible, please first attempt to use the normal verbal verification process to verify a borrowers employment within 10 days of the note date. This is still the preferred method. If this is not possible, one of the following alternative measures may be used:
- Clients are permitted to obtain a written VOE confirming the borrower’s current employment status within the same timeframe as the verbal VOE requirements.
- An email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment status may be used in lieu of a verbal VOE. Emails from the employer to the borrower which are then forwarded by the Client or Lender to Gateway will not be acceptable.
- Paystubs: A year-to-date paystub from the pay period that immediately precedes the note date is an acceptable alternative
- Bank statements: Bank statements (or other alternative documentation as permitted by the agency guidelines) evidencing the payroll deposit from the pay period that immediately precedes the note date.
- Continuity of income – Given the current economic climate associated with COVID-19 and its impact on employment and income, we recommend that you practice additional due diligence to ensure the most recent information is obtained. As a reminder correspondents are responsible for ensuring borrowers are employed through closing. It is strongly encouraged to confirm no disruption of borrowers’ employment (or self-employment) and/or income, and the borrower’s ability to repay the loan is not impacted due to COVID-19.
- As an example of additional due diligence for a self-employed borrower, clients are encouraged to attempt to verify that the borrower’s business is operational, closer to the note date rather than rely on current Guide requirements (e.g., within 15 days instead of 120 days).
Appraisal Requirements
Effective for all conventional loans, Gateway is following both Fannie Mae and Freddie Mac’s guidance on appraisal flexibilities, as outlined in the full bulletin links below from both GSEs. These temporary flexibilities are effective immediately with all loan applications on or before May 17, 2020. Flexibilities include:
- FNMA Property Inspection Waivers (PIW) are accepted if obtained and eligible. PIW will not be accepted on cash-out loans.
- Freddie Mac (ACE) are accepted if within Freddie Mac guidelines
- FNMA and Freddie Mac are allowing a signed letter from the Borrower confirming the work was completed. Lenders must also provide further evidence of completion such as photographs, paid invoices, occupancy permit, or other substantial similar documentation
- Desktop appraisals allowed for purchase transactions only
- The Exterior appraisal (2055) can only be ordered when the loan is staying with the same GSE that currently owns the loan. Please check the attached links to see if a property is with Fannie Mae or Freddie Mac owned. Any traditional appraisal ordered is subject to appraiser availability.
- Please include a copy of the below loan look up in your loan file for the AUS cert used, DU or LP
Fannie Mae loan lookup: https://www.knowyouroptions.com/loanlookup
Freddie Mac loan lookup: https://ww3.freddiemac.com/loanlookup/
Reminders
*Please be sure to review the respective agency matrix (attached in the below bulletin links) for Purchase transactions, Limited Cash-out refinances and Cash-out refinances regarding specific requirements
*Clients are required to use the AUS system that corresponds with the selected Agency Loan Program (AUS Pure). Please ensure the agency locked program name matches the supporting AUS Findings.
Links to the full bulletins: Fannie Mae Lender Letters LL2020-03 & LL2020-04 Freddie Mac Bulletin 2020-5
Please direct any questions to your Regional Sales Manager