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  • Writer's pictureISAV Smart

Navigating the Changing Tides: Fannie Mae's October 2023 Selling Guide Update

Real estate pros, stay updated! Fannie Mae's latest Selling Guide changes impact rental income, self-employment, and more. Read now!" #RealEstate #FannieMaeUpdates

For business owners in the real estate industry, staying abreast of regulatory changes is crucial to success. Fannie Mae's October 2023 update to its Selling Guide brings forth several significant alterations that real estate professionals need to be aware of. These changes reflect the evolving landscape of the mortgage industry, as well as Fannie Mae's policy positions. In this article, we'll delve into the key modifications that may impact your real estate business.

Rental Income Documentation

One of the major changes in this update pertains to the documentation requirements for rental income used in qualifying decisions. Fannie Mae has responded to questions from lenders and provided additional details on how to document rental income. This clarification aims to reconcile differences in the way income earned from subject and non-subject properties is determined. For real estate professionals dealing with rental properties, it's essential to familiarize yourself with these updated policies to ensure compliance and accurate income assessment.

Self-Employment Income

The Selling Guide now includes changes related to self-employment income qualification. If a borrower has less than a two-year history of self-employment, Fannie Mae's update clarifies the requirements. To use self-employment income, signed personal and business federal income tax returns must reflect a minimum of 12 months of self-employment income from the current business. Real estate professionals working with self-employed clients must ensure they adhere to these guidelines when assessing income for mortgage qualification.

Manufactured Housing Data Plate Requirements

For those involved in the manufactured housing sector, Fannie Mae has made updates to the requirements for the HUD Data Plate and HUD Certification Label. Previously, both pieces of information were required for compliance. However, the update now states that only one of the two will be necessary. This change provides more flexibility for lenders and appraisers. If neither is available, alternative options are provided. Keep in mind that this change does not apply to newly constructed manufactured homes, as these documents are required for all newer units.

Value Acceptance and Property Data

Fannie Mae's update emphasizes the importance of property data collection, explicitly stating that this data must be obtained and submitted to the Property Data API before the note date. This underscores the significance of accurate property information and encourages real estate professionals to ensure data collection procedures are in place.

Pre-Funding Quality Control (QC) Sampling Requirements

There are also changes to pre-funding quality control (QC) sampling requirements. Lenders now have the option to exclude certain government loans with the required government guaranty or government insurance. Additionally, there's an 18-month lookback period for all post-purchase adjustments of loan-level price adjustments from the date of acquisition. These changes offer lenders more flexibility and efficiency in managing their loan portfolios.

Implementation Deadline

While it's encouraged for lenders and real estate professionals to start implementing these changes immediately, it's important to note that all the updates must be fully implemented by January 1, 2024. Therefore, it's crucial to plan and adapt your business operations accordingly to ensure compliance and a smooth transition.

In conclusion, staying informed about updates to Fannie Mae's Selling Guide is essential for business owners in the real estate industry. These changes reflect shifts in the mortgage industry and policy positions that can impact how you conduct your business. By proactively adjusting your practices and policies in response to these updates, you can ensure that your real estate business remains compliant and competitive in the evolving landscape of the mortgage industry.

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