News & Announcements

FNMA has recently made the following guideline changes/clarifications.

Per Bulletin #20-07
  • Retirement, Government Annuity, and pension income and employment-related assets as income.
    • Add financial and bank account statements to the list of eligible documents to show current receipt of income.
    • Clarified the requirements for documenting income from a pension or annuity account when the income will begin on or before the first payment date of the new loan
    • Clarified that a three-year continuance of income is only required for retirement income paid in the form of a distribution from a 401(k), IRA or Keogh retirement account.
      • No allow eligible retirement account balances to be combined for the purpose of determine said continuance.
    • Removed the requirement to reduce the value of retirement assets consisting of stocks, bonds, and mutual funds by 30% when measuring the three-year continuance for retirement income, and for calculating net documented assets when employment-related assets are used as income.
  • Sale of personal assets
    • Limiting the requirement to provide proof of the borrower’s ownership of the asset to only those assets that have a title, for example an automobile title.
    • Limiting the requirement to obtain an independent valuation of an asset to only those cases where the proceeds from the sale exceed 50% of the total monthly income used in qualifying. With this update that provides clearly defined guidelines, we are removing the prior policy that allowed for alternative documentation if the proceeds from the sale represented a minor percentage of the borrower’s overall financial contribution.
    • As a reminder, proceeds from the sale of personal assets are an acceptable source of funds for the down payment, closing costs, and reserves provided the individual purchasing asset(s) is not a party to the mortgage transaction.
  • Pro-Rate Real Estate Tax Credits
    • Clarifying that pro-rated real estate tax credits provided by the seller at closing cannot be considered when determining if the borrower has enough funds for the transaction.
      Please contact your Account Executive if you have any questions.

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