Fannie Mae tightens grip on homebuyer education requirements
Fannie Mae is tightening its grip on homebuyer education requirements, particularly for first-time homebuyers and purchasers utilizing high loan-to-value mortgages.
"We believe homeownership education helps borrowers gain essential knowledge to prepare for sustainable homeownership," said Fannie in its update announcement.
The current policy calls on at least one borrower to complete homebuyer education before closing if borrowers are relying on nontraditional credit to qualify and for all HomeReady purchase transactions, according to Fannie. But the government-sponsored enterprise amended those terms to also include purchase transactions with LTV, combined LTV or high-combined LTV ratios over 95% when all borrowers are first-time homebuyers.
To support ongoing efforts for better borrower education, the GSE will waive the fee for the Framework Homeownership course (beginning Oct. 23), which helps keep costs down for purchasers.
Amendments to the education requirements go into effect on Dec. 7. For manually underwritten HomeReady loans, the updates will apply to new applications dated on or after the December date.
In conjunction with revisions to homebuyer education, the GSE also made updates to rules regarding employment offers and contracts and its rental income policy.
Fannie clarified policies permitting the use of income for a borrower yet to start employment but has an offer or contract to begin working after the application date (but no later than 90 days following the note date) to eliminate unintended operational complexities related to delays in timing of payroll and employer documentation.
Further updates help dictate when rental income can be used for qualifying purposes, and also address risks like reverse occupancy fraud. The changes set aim at first-time borrowers of investment properties.