Fannie Mae recently issued Selling Guide Announcement SEL-2024-06 to announce forthcoming changes to Selling Guide requirements. Fannie Mae included the following updates:
Green MBS Program
Fannie Mae is expanding its current delivery options for loans that meet the Green MBS Program criteria. The program currently only includes whole loan deliveries but is being expanded to also include mortgage-backed securities (“MBS”). The loans in Fannie Mae’s Green MBS Program are secured by newly constructed properties that received green building certification within the previous five years, with a focus on properties that have received an ENERGY STAR or Department of Energy certification. To receive a green building certification, the property must be at least 10% more efficient than a property built to a state’s energy code. For a new Green MBS pool, all loans must be secured by properties with green building certification dated within five years of the issuance of the pool. Lenders may begin delivering Green MBS pools with an issue date on or after November 1, 2024.
Appraisal Practice Policies
Fannie Mae is updating appraisal practice policies for loans with an application date of December 3, 2024, or later. The changes are intended to mitigate the risks of prohibited or subjective terminology being used in appraisal reports. The updates are intended to refine appraisal terminology, such as removing the term “employment stability” and adding the term “fact-based and objective”. The term “judgment” is also being replaced with “analysis.”
Additionally, lenders will be required to establish policies and procedures to monitor appraisals for prohibited language to lessen the risk of discriminatory practices and appraisal bias affecting the appraisal valuation. A hyperlink to the topic Unacceptable Practices is being added in multiple sections of the Selling Guide.
DU Validation Service – Revalidation of Employment
When a borrower’s employment has been validated with an asset verification report and the loan does not close on time, a lender must obtain a supplemental asset report and perform a manual review of the report to satisfy the verbal verification of employment requirement. Fannie Mae will make an update for new and resubmitted casefiles dated on or after September 20, 2024, to automate review of the supplemental asset report when it is provided to Fannie Mae’s Desktop Underwriter (DU) for revalidation.
The DU validation service will issue an updated “close by date.” If employment review can be completed with the automated process, lenders will not be subject to employment-related representations and warranties if all other requirements are met. The update also provides that a supplemental asset report no longer needs to be obtained from the same vendor that provides an initial 12-month asset verification report.
Click here to view Fannie Mae Selling Guide Announcement SEL-2024-06.
