0
0
Answer: Fannie Mae recently announced several underwriting policy & procedural changes in their Selling Guide Announcement SEL-2015-07, dated June 30, 2015. One noteworthy change involves the topic of using vested stocks, bonds and mutual funds (including retirement accounts) when they are used for meeting a borrower’s minimum investment requirement, closing costs and reserves. Previously, a standard reduction in value was required along with evidence of liquidation.
The new policy states that “100% of the value of the asset is allowed when determining reserves” and, if the lender documents that the value of the asset is at least 20% more than the funds needed for the borrower’s down payment and closing costs, no documentation of liquidation is required”. If this criterion cannot be met, then documentation of the borrower’s actual receipt of funds realized from the sale or liquidation must continue to be obtained.
Loading ...It should be noted that FHA’s current policy on stocks and bonds is that the most recent monthly or quarterly statement, evidencing these funds, must be obtained and the borrower’s actual receipt of such funds must be verified and documented.
However, if the loan receives an Accept/Approve AUS recommendation, the lender is not required to provide evidence of liquidation and the full amount of the asset may be counted. For IRAs and 401(k) accounts, however, only up to 60% of the value of these types of assets may be included in the underwriting analysis.
This policy change by Fannie Mae is good news for mortgage lenders as it helps to reduce the overall paperwork burden and also increase a borrower’s total eligible assets used in qualifying them for mortgage financing.
