The newly-updated Fannie Mae Selling Guide for November has aimed to modernize special property eligibility and underwriting considerations for leasehold estates, and it has revised the government-sponsored enterprise (GSE)’s project review requirements for properties secured by manufactured homes.
The Selling Guide has also updated requirements “related to the market area analysis of the appraisal report and add[ed] standardized definitions relevant to appraisal market areas to the glossary.” It also clarifies that sellers and servicers are “responsible for preventing, detecting, and reporting mortgage fraud.”
Regarding the leasehold provisions, the GSE revised its eligibility requirements “to provide clarifications and update lease requirements, address scenarios related to leasehold estates in projects, and to include co-ops as eligible property types,” according to the update.
This has included the addition of a “definitive list of eligible property types, definitions, and exceptions to the leasehold topic,” as well as clarification of leasehold provisions related to first-lien enforceability, appraisal and title insurance.
The guide has also clarified that for manufactured homes located within a larger project, the homeowners association “must be the lessee.” And it updates certain lease requirements such as those for default notifications and options for the cure and merger of title. These provisions go into effect in March 2025.
The guide has also added a project review for manufactured homes, including those on leasehold estates.
“To facilitate lending for manufactured homes in projects, we clarified policy to resolve inconsistencies related to when a manufactured home requires submission to Project Eligibility Review Service (PERS),” the update reads. It emphasized that manufactured homes in co-op projects “remain ineligible project types and cannot be delivered to Fannie Mae.” This policy is effective immediately.
There is also a section on appraisals. Fannie Mae is collaborating with fellow GSE Freddie Mac to update requirements related to ”the Market Area analysis of the appraisal report and implementing standardized definitions for the terms ‘Neighborhood’ and ‘Market Area.’” Fannie urges sellers to implement these changes immediately, but they must be in place starting in February 2025.
Finally, the update aims to clarify responsibilities when cases of mortgage fraud are detected.
“Sellers and servicers are responsible for preventing, detecting, and reporting mortgage fraud,” the update said. “Sellers and servicers are reminded to have policies and procedures in place to ensure the integrity of information and processes at every stage in the life of a mortgage, from application through servicing.”
For any sellers or servicers not already complying with this requirement, compliance is encouraged immediately but must be completed by March 2025.
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