Fannie Mae Hurricane Harvey Updates
Fannie Mae recently published Lender Letter (ll1704) and Business Partner Frequently Asked Questions (FAQ) providing reminders of current selling policies for loans impacted by a disaster, as well as additional guidance surrounding Hurricane Harvey.
The Lender Letter covers various topics, including:
- Property Eligibility,
- Reimbursement for Property Inspection Costs,
- Updates to DU for Impacted Areas, and
- Additional flexibilities for impacted loans
With regard to Property Eligibility, Fannie Mae advises, “Before delivery of a loan secured by a property in a disaster area, the lender is expected to take prudent and reasonable actions to determine whether the condition of the property has materially changed since the effective date of the appraisal report.”
The required action depends upon whether, as of August 25, 2017, the loan is in process or closed but not delivered to Fannie.
Loans in Process
- If the appraisal effective date is prior to August 25, 2017, lender is responsible for determining if an inspection of the property and/or new appraisal is necessary.
- Lenders may not exercise a property inspection waiver (PIW) offer for properties in impacted areas.
Closed, Not Delivered
- Lenders must determine whether the condition of the property has materially changed, regardless of whether an appraisal or PIW was used.
Fannie also released Business Partner FAQs, which address various frequently asked questions, some of which are:
- What are the most important updates I need to know about Fannie Mae’s policies on natural disasters, such as Hurricane Harvey?
- Are lenders required to re-verify borrower employment on closed loans prior to delivery to Fannie?
- Many homeowners have evacuated their flooded and damaged properties for safety reasons. If the borrower stops making monthly payments, are servicers required to advance delinquent payments to Fannie?
Please visit our website to review the other recent industry updates related to Hurricane Harvey.
Proctor will continue to monitor federal, state and investor requirements for Hurricane Harvey assistance and will provide updates as they develop.