Carrington Government Loan Program Underwriting Guideline Updates

April 30, 2020rashtonBulletin

Overview

Carrington Mortgage Services, LLC (CMS) is pleased to announce the following recent Government product underwriting updates (highlighted in red). These updates are clarifications of existing guidance or were announced via previous bulletins and are effective immediately. Please note this is an abbreviated summary of the guideline changes. All updates should be viewed within the context of the full FHA, VA and USDA guidelines available here.

FHA Underwriting Guidelines

Old Requirements

Updated Requirements

Property Types

The following property characteristics represent ineligible collateral for CMS financing:

· mobile homes

· co-ops (cooperative homes or apartments)

· houseboats

· single wide manufactured homes

· commercial or industrial zoned properties

· properties not meeting the criteria as listed in these guidelines

· properties containing more than one manufactured home unless specifically classified as an Accessory Dwelling Unit by the appraiser

· properties located within designated Coastal Barrier Resource System (CBRS) areas

· properties located on Tribal Lands or Reservations

· properties with deed restrictions

· shared lots (including condominiums) with undivided interests

· time shares

· unimproved land

· working farm, ranch, or orchard

Property Types

The following property characteristics represent ineligible collateral for CMS financing:

· mobile homes

· co-ops (cooperative homes or apartments)

· houseboats

· single wide manufactured homes

· commercial or industrial zoned properties

· mixed-use with residential building use less than 51% or not meeting the criteria as listed in these guidelines

· properties encumbered with Property Assessed Clean Energy (PACE) or Home Energy Renovation Opportunity (HERO) obligations,

· State-approved medical marijuana producing properties,

· construction to permanent,

· properties located in the area of Wrightwood, CA,

· properties containing more than one manufactured home unless specifically classified as an Accessory Dwelling Unit by the appraiser

· properties located within designated Coastal Barrier Resource System (CBRS) areas

· properties located on Tribal Lands or Reservations which include section 248

· Hawaiian properties in Lava Zones 1 & 2

· Native Hawaiian Housing Loan Guarantee Program (Section 184A) properties with sink holes

· properties with a wastewater stabilization pond/lagoon (aka sewage lagoon)

· properties with individual water purification systems required to make the water safe for human consumption (does not include systems installed to improve the taste or softness of the water)

· properties with deed restrictions

· shared lots (including condominiums) with undivided interests

· time shares

· unimproved land

· working farm, ranch, or orchard

Business Debt in Borrower’s Name

When business debt is reported on the Borrower’s personal credit report, the debt must be included in the DTI calculation, unless CMS can document that the debt has been paid by the Borrower’s business for at least 12 months, on time payments without delinquency are required, and the debt was considered in the cash flow analysis of the Borrower’s business. The debt is considered in the cash flow analysis where the Borrower’s business tax returns reflect a business expense related to the obligation, equal to or greater than the amount of payments documented as paid out of company funds. Where the Borrower’s business tax returns show an interest expense related to the obligation, only the interest portion of the debt is considered in the cash flow analysis.

This guidance does not apply to Sole Proprietors/Schedule C self-employed borrowers.

Business Debt in Borrower’s Name

This guidance does not apply to Sole Proprietors/Schedule C self-employed borrowers,borrower debts paid by Sole Proprietors/Schedule C businesses may not be excluded.

Forbearance due to a Major Disaster

Consideration should be given to disaster impacted borrowers that entered into a Formal or Informal Forbearance loss mitigation plan due to a Presidentially Declared Major Disaster.

FHA will not consider mortgage payments as “late” because the payments were not “due” during the disaster relief period. Lenders must continue to analyze the borrower’s payment history for the period before and after (where applicable) the Forbearance period to determine if the borrower’s payment history meets FHA refinancing program requirements.

For Streamline Refinances, the new loan may include the unpaid principal balance, plus up to 60 days of interest and 2 months annual Mortgage Insurance Premium (MIP), less Up-Front MIP refund (if any) plus new Up-Front MIP. If the borrower’s forbearance results in greater than 60 days of interest due on the current loan, the borrower will need to pay the difference at closing.

Cash-Out Refinances > Occupancy Requirements

Cash-out refinance transactions are only permitted on owner-occupied Principal Residences.

The Property securing the cash-out refinance must have been owned and occupied by Borrower as their Principal Residence for the 12 months prior to the date of case number assignment. If the property was owned prior to closing by a limited liability corporation (LLC) that is 100% owned by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower’s 12 month ownership requirement.

Documentation – CMS must review the Borrower’s employment documentation or obtain utility bills to evidence the Borrower has occupied the subject Property as their Principal Residence for the 12 months prior to case number assignment.

Cash-Out Refinances > Occupancy Requirements

Cash-out refinance transactions are only permitted on owner-occupied Principal Residences.

The Property securing the cash-out refinance must have been owned and occupied by all Borrowers as their Principal Residence for the 12 months prior to the date of case number assignment. If the property was owned prior to closing by a limited liability corporation (LLC) that is 100% owned by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower’s 12 month ownership requirement.

Documentation – CMS must review the Borrower’s employment documentation or obtain utility bills to evidence that all Borrowers have occupied the subject Property as their Principal Residence for the 12 months prior to case number assignment.

Maximum Mortgage Calculation for Streamline Refinances

For owner-occupied Principal Residences the maximum Base Loan Amount for Streamline Refinances is:

· the lesser of:

o the outstanding principal balance of the existing Mortgage as of the month prior to mortgage Disbursement; plus:

§ interest due on the existing Mortgage; and

§ MIP due on existing Mortgage; or

o the original principal balance of the existing Mortgage (including financed UFMIP);

· less any refund of UFMIP

Maximum Mortgage Calculation for Streamline Refinances

For owner-occupied Principal Residences the maximum Base Loan Amount for Streamline Refinances is:

· the lesser of:

o the outstanding principal balance of the existing Mortgage as of the month prior to mortgage Disbursement; plus:

§ interest due on the existing Mortgage; and

§ MIP due on existing Mortgage; or

o the original principal balance of the existing Mortgage (including financed UFMIP);

· less any refund of UFMIP

Excess interest due to a disaster-related forbearance may not be included in the loan amount. See Forbearance due to a Major Disaster

Identifying an Accessory Dwelling Unit > Required Analysis and Reporting

As part of the highest and best use analysis, the Appraiser must make the determination to classify the Property as a Single Family dwelling with an ADU, or a two-family dwelling. The conclusion of the highest and best use analysis will then determine the classification of the Property and the analysis and reporting required.

An ADU is usually subordinate in size, location and appearance to the primary Dwelling Unit and may or may not have separately metered utilities or separate means of ingress or egress. The Appraiser must not include the living area of the ADU in the calculation of the Gross Living Area (GLA) of the primary dwelling.

The Appraiser must notify CMS of the deficiency in MPR or MPS if more than one ADU is located on the subject Property.

If the ADU or living unit distinction is in question by the D.E. Underwriter, CMS will require a detailed explanation of the appraiser’s highest and best use analysis.

Identifying an Accessory Dwelling Unit > Required Analysis and Reporting

HUD permits ADUs as long as the total number of units is four (4) or less. The Appraiser must perform a full inspection, verify the construction is legal and complies with local zoning requirements and is marketable.

The Appraiser must notify CMS of the deficiency in MPR or MPS if more than one ADU is located on the subject Property.

If the ADU or living unit distinction is in question by the D.E. Underwriter, CMS will require a detailed explanation of the appraiser’s highest and best use analysis.

203(k) Initial Draw at Closing

CMS must document the amount and purpose of an initial draw at closing on the form HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary.

203(k) Initial Draw at Closing

CMS must document the amount and purpose of an initial draw at closing on the form HUD-92900-LT,FHA Loan Underwriting and Transmittal Summary.

The borrower and/or contractor must obtain all required permits prior to closing. If a required permit may not be obtained prior to closing, the contractor may not receive an initial draw at closing. Once the permit is obtained, the borrower and contractor may contact escrowaccountservicing@carringtonms.com to request and process the initial materials draw.

VA Underwriting Guidelines

Old Requirements

Updated Requirements

Determining Amount of Entitlement

Entitlement is the amount available for use on a loan. The amount of available basic entitlement is $36,000. This may be reduced if a veteran has used entitlement before which has not been restored. The amount of basic entitlement will be displayed near the center of the COE. For example it may say:

“THIS VETERAN’S BASIC ENTITLEMENT IS $_____. TOTAL ENTITLEMENT CHARGED TO PREVIOUS VA LOANS IS $_____.”

For certain loans in excess of $144,000, additional entitlement may be available. ~~For loans greater than $144,000, but less than $484,350,~~ the maximum entitlement is 25 percent of ~~$484,350~~, which equals $121,087.50. For loans greater than $484,350, the maximum entitlement is 25 percent of the appropriate “loan limit” which can vary by county. For a description of loan limits, as well as the limits for counties, visit the VA Loan Limits webpage. Please note county limits can change yearly. VA will post the limits for each year on our website as they change.

Even though the veteran may have entitlement for certain loans greater than $144,000, the COE will never reflect this potential “extra” entitlement. Instead, an asterisk by the word “available” refers to a note, which explains the possibility of additional entitlement.

If the veteran previously used entitlement, which has not been restored, available entitlement is reduced by the amount used on the prior loan(s). CMS requires the veteran to have combined entitlement and equity totaling 25% of the contract price for purchase transactions, or 25% of the appraised value for cash-out refinance transactions.

Determining Amount of Entitlement

“THIS VETERAN’S BASIC ENTITLEMENT IS $_____. TOTAL ENTITLEMENT CHARGED TO PREVIOUS VA LOANS IS $_____.”

For certain loans in excess of $144,000, additional entitlement may be available. For veterans with full entitlement, VA will guaranty 25% of the loan amount on purchase or cash out refinance transactions, regardless of the Freddie Mac Conforming Loan Limit for the subject’s county. For veterans with partial entitlement, the maximum entitlement is 25 percent of the CLL for the subject’s county.

If the veteran previously used entitlement, which has not been restored, available entitlement is reduced by the amount used on the prior loan(s). CMS requires the veteran to have combined entitlement and equity totaling 25% of the lesser of the contract price or appraised value for purchase transactions, or 25% of the appraised value for cash-out refinance transactions.

Vet-Vet Joint Loans

For loans above $144,000 to two veterans who are not married to each other (Vet-Vet Joint Loans), and

· all Veterans have full entitlement: The maximum guaranty is 25% of the loan amount without regard to the FHFA Loan Limit for the subject’s county.

· one or more Veteran has partial entitlement: The maximum guaranty is 25% of the lesser of the loan amount or FHFA Loan Limit for the subject’s county.

Married Veterans using Dual Entitlement

For loans above $144,000 to two Veterans who are married to each other and using dual entitlement, the maximum guaranty is 25% of the loan amount so long as one of the Veterans has full entitlement. If both Veterans have partial entitlement, then the maximum guaranty is 25% of the lesser of the loan amount or FHFA Loan Limit for the subject’s county.

VA Guaranty Examples

Refer to the CMS VA Underwriting Guidelines for updated examples of VA Guaranty for Veterans with full entitlement and Veterans with partial entitlement.

Maximum Loan Amount

~~Unlike other home loan programs, there are no maximum dollar amounts prescribed for VA-guaranteed loans. Limitations on VA loan size are primarily attributable to two factors:~~

1. Lenders who sell their VA loans in the secondary market must limit the size of those loans to the maximums prescribed by Government National Mortgage Association (GNMA) or whatever conduit they use to sell the loans.

VA limits the amount of the loan to the reasonable value of the property shown on the NOV plus the VA funding fee, with the following exception for Regular refinancing loan (cash-out)

~~100~~ percent of the VA reasonable value ~~plus~~ the VA funding fee.

Maximum Loan Amount

The maximum loan amount for VA loans is dependent on the type of loan, the amount of available entitlement to meet the guaranty requirement, and the CMS maximum loan amounts as defined in the VA matrices.

VA limits the amount of the loan to the reasonable value of the property shown on the NOV plus the VA funding fee, with the following exception for Regular refinancing loan (cash-out):

90 percent of the VA reasonable value including the VA funding fee.

Refer to the CMS VA Underwriting Guidelines for additional exceptions.

Down Payment

Because VA loans can be for the full reasonable value of the property, no down payment is required by VA except in the following circumstances:

· If the purchase price exceeds the reasonable value of the property, a down payment in the amount of the difference must be made in cash from the borrower’s own resources, and

· VA requires a down payment on all GPMs.

If a veteran has less than full entitlement available, CMS may require a down payment in order to make the veteran a loan that meets GNMA or other secondary market requirements. The “rule of thumb” for GNMA is that the VA guaranty, or a combination of VA guaranty plus down payment and/or equity, must cover at least 25 percent of the~~loan~~.

Down Payment

Because VA loans can be for the full reasonable value of the property, no down payment is required by VA except in the following circumstances:

· If the purchase price exceeds the reasonable value of the property, a down payment in the amount of the difference must be made in cash from the borrower’s own resources, and

· VA requires a down payment on all GPMs.

Maximum Guaranty Table

Public Law 112-154, the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012, signed August 6, 2012, extended the temporary increase in the maximum guaranty. The increase expired December 31, 2011, but Public Law 112-154, extended it through December 31, 2014. The maximum guaranty varies depending on the location of the property. While VA does not have a maximum loan amount, there are effective “loan limits” for high-cost counties. The limits are derived by considering both the median home price for a county and the Freddie Mac conforming loan limit. To aid lenders in determining the maximum guaranty in high-cost counties, VA has created a Loan Limit chart, with instructions.

Refer to the CMS VA Underwriting Guidelines for the maximum guaranty table values.

Maximum Guaranty Table

Pursuant to the Blue Water Navy Vietnam Veteran’s Act of 2019, VA will guaranty 25% of the loan amount for Veterans with full entitlement seeking a purchase or cash out refinance loan in excess of $144,000, regardless of the FHFA Conforming Loan Limit. Veterans with full entitlement seeking a purchase or cash out refinance loan that exceeds the FHFA Conforming Loan Limit for the subject’s county will generally not require a down payment or equity to meet the 25% guaranty requirement, however CMS maximum loan amount and LTV limits apply.

Refer to the CMS VA Underwriting Guidelines for the maximum guaranty table values.

The VA Funding Fee > If Exempt Status Cannot Be Determined:

If the veteran’s exempt status cannot be verified prior to loan closing, the funding fee must be remitted as if the borrower was not exempt.

CMS must Indicate in the loan file that the veteran claims exempt status. VA will determine the borrower’s status and refund the funding fee if appropriate. If the veteran has a pending disability compensation claim at the time of loan closing, the funding fee must be remitted as if the borrower was not exempt.

Advise the veteran to contact the VA RLC to request a refund if it is later determined that the veteran is entitled to compensation retroactively to a date prior to loan closing.

The VA Funding Fee > If Exempt Status Cannot Be Determined:

If the veteran is not already verified as exempt on the VA Form 26-8937 or Certificate of Eligibility, a fully completed and executed Disability Questionnaire is required, which asks the veteran several questions that may indicate a Funding Fee exemption is warranted.

If the Veteran has a claim for compensation pending with VA, an updated COE must be obtained within three (3) days of the note date using the COE “Correct” function in WebLGY.

If an Active Duty Servicemember has a pre-discharge claim pending, CMS must contact the Regional Loan Center (RLC) immediately to request assistance in obtaining a proposed or memorandum rating in the event the Servicemember may be exempt from paying the funding fee as noted above. If a proposed or memorandum rating is not obtained and loan closing takes place, the Servicemember is not eligible for funding fee exemption.

If an Active Duty Servicemember is a Purple Heart recipient and the Funding Fee exemption is not already reflected on the Certificate of Eligibility, a Copy of Purple Heart Certificate or DD214 reflecting Purple Heart award is required to be forwarded to the RLC of jurisdiction for updating.

If the veteran’s exempt status cannot be verified prior to loan closing, the funding fee must be remitted as if the borrower was not exempt.

Advise the veteran to contact the VA RLC to request a refund if it is later determined that the veteran is entitled to compensation retroactively to a date prior to loan closing.

The VA Funding Fee

Refer to the CMS VA Underwriting Guidelines for updated loan rate fees which apply to Purchase and Cash-Out Refinance Loans closing on and after January 1, 2020 through December 31, 2021.

Cash Out Refinance Transactions > Loan-to-Value (LTV)

For Type I and Type II Cash Out Refinance Transactions, VA will not guaranty refinance loan transactions when the LTV exceeds 100 percent including the Funding Fee. CMS follows GNMA requirements and limits the maximum LTV for cash-out refinance transactions to 90%.

New LTV Calculation: Divide the total loan amount (including VA funding fee, if applicable) by the reasonable value on the Notice-of-Value (NOV) of the property determined by the appraiser.

Cash Out Refinance Transactions > Loan-to-Value (LTV)

New LTV Calculation: Divide the total loan amount (including VA funding fee, if applicable) by the reasonable value on the Notice-of-Value (NOV) of the property determined by the appraiser.

Converting to VA Appraisal after Completion

Appraisals ~~cannot~~ be converted from Conventional, FHA, or UDSA to VA. ~~Appraisals may be converted from FHA or USDA to VA if the appraiser is a VA approved appraiser~~.

Converting to VA Appraisal after Completion

Appraisals may not be converted from another agency (such as Conventional, FHA, or UDSA) to VA. All VA appraisal orders must be initiated through WebLGY where the VA will assign the eligible appraiser for the subject property’s case.

Assisted Appraisal Processing Program (AAPP)

AAPP Process

VA does not require fee panel appraisers to participate in the AAPP process; however, if they do participate then both appraisers must enter into an agreement for such services. Under AAPP, the initial appraisal report may be completed by a non-VA panel appraiser. The AAPP appraiser is required to be knowledgeable of all VA requirements and minimum property standards. All VA fee panel appraisers participating in the AAPP process must continue to follow all applicable VA statutes, regulations, and policies, as well as the policies and procedures outlined in VA Circular 26-19-31.

Both appraisers’ names are entered on the appraisal. The assisting appraiser is entered on the left side of the report under the “Appraiser” section. The VA fee panel appraiser must sign as the “Supervisory Appraiser” as they are ultimately responsible for the appraisal. The appraisal must contain the following statement:

“I participated in VA’s Assisted Appraisal Processing Program to complete this appraisal report. The final opinion of value for the subject property is based upon my supervisory status and analysis of all available information. The person who provided information to me to assist in the opinion of value is: Full name (First/Middle/Last), license number, date of expiration, state of issuance of the person. I take full responsibility for any errors in and/or omissions from this appraisal report.”

Please note: AAPP may not be utilized for the following:

· New Construction

· Sales price or value above $1 Million

· Complex appraisals

· Tidewater Initiative (Value will come in lower than the sales price)

The veteran is not permitted to pay an additional fee for the VA fee panel appraiser’s use of an AAPP appraiser. The VA fee panel appraiser is responsible for paying any fees charged by the AAPP appraiser as per their agreement. As a reminder, VA fee panel appraisers must comply with all USPAP standards, VA regulations and policies and any other federal, state, or local requirements.

Underwriting Requirements

CMS SARs will continue to review all VA appraisals in detail in addition to completing the Notice of Value (NOV) on WebLGY. When an AAPP appraisal is received, Underwriters are responsible for verifying:

· The VA fee panel appraiser’s and AAPP appraiser’s information and signatures are entered on the appraisal report form as required,

· AAPP has not been utilized on an ineligible transaction,

· The VA fee panel appraiser’s AAPP “final opinion of value” statement has been made,

· The “Supervisory Appraiser” checkbox has been selected in Encompass and Assisting Appraiser’s name, company name (if different), and license number have been entered in the “2nd Appraiser” fields.

USDA Underwriting Guidelines

Old Requirements

Updated Requirements

Refinance Mortgages

The maximum amount of financing is determined by the following:

· Occupancy

· Use of the loan proceeds

· How and when the property was purchased

CMS’ investors will purchase the following refinance transaction types:

· Streamline Refinance – A credit qualifying streamline refinance of existing USDA insured mortgages, with or without an appraisal. A full review and evaluation of the borrower’s income, assets and credit is performed.

· Rate Reduction Refinance – A no cash-out refinance of an existing USDA loan.

Refinance Mortgages

The maximum amount of financing is determined by the following:

· Occupancy

· Use of the loan proceeds

· How and when the property was purchased

CMS’ investors will purchase the following refinance transaction types:

· Streamlined Assist Refinance – A non-credit qualifying streamline refinance of existing USDA insured mortgages, with or without an appraisal.

· Rate Reduction Refinance – A no cash-out refinance of an existing USDA loan.

Net Tangible Benefit

It must be determined that there is a net tangible benefit to the borrower as a result of the refinance transaction. Encompass tests all rate/term and streamline refinances for net tangible benefit. Streamlined Assist refinances must meet the payment reduction NTB requirement.

Streamlined Assist Refinance

· A new appraisal is not required for existing guaranteed loan borrowers. A direct loan borrower will be required to obtain a new appraisal if they have received payment subsidy to determine the amount of subsidy recapture due. If subsidy recapture is due, the amount cannot be included in the newly refinanced loan. Subsidy recapture must be paid with other funds or subordinated to the new guaranteed loan. If an applicant elects to finance the subsidy recapture into the new refinance loan, refer to the non-streamlined refinance guidance.

· The maximum loan amount may include the principal and interest balance of the existing loan, eligible loan closing costs, funds necessary to establish a new tax and insurance escrow account, and the upfront guarantee fee.

· The borrower must receive a tangible benefit to refinance under this option. A tangible benefit is defined as a $50 or greater reduction in their principal, interest, and annual fee monthly payment compared to the existing principal, interest and annual fee monthly payment. The borrower is not required to meet repayment ratio provisions.

· The existing loan must have closed 12 months prior to request for a refinance.

· The borrower is not required to meet all the credit requirements as outlined in Chapter 10 of the USDA Handbook. The existing mortgage must be paid as agreed for the 12 months prior to application for a streamlined-assist refinance. Lenders may verify mortgage payment history through a Verification of Mortgage obtained directly from the servicing lender or a credit report. If a credit report is ordered to determine timely mortgage payments, other credit accounts will not be reviewed.

· Borrowers may be added; however, only deceased borrowers may be removed from the loan.

· GUS is unavailable for this product and these loans must be manually underwritten.

Escrow Accounts

When proposed exterior development work cannot be completed due to weather related issues and the work remaining does not affect the livability of the home, an escrow account for exterior weather delayed repairs may be established by the approved lender per 1980.315.

~~Loan note guarantees will be issued post-closing for loans with eligible escrow accounts established per section 1980.360(2)(ii). Escrow accounts for interior repairs are not permitted.~~

Escrow Accounts

Repair escrows are not permitted.

Conventional Cash-Out Refinance Transactions Discontinued

April 27, 2020rashtonBulletin

Overview

Due to recent Fannie Mae/Freddie Mac guidance related to cash-out refinances where borrowers request forbearance assistance, effective immediately and until further notice, Carrington Mortgage Services, LLC (CMS) will no longer offer cash-out refinance transactions under the conventional loan program. As CMS cannot foresee when a borrower will request forbearance assistance for this loan program, there is substantial risk of not being able to sell the loan at a profitable price to Fannie Mae/Freddie Mac at this time.

CMS will not accept any new loan submissions for conventional cash-out refinance transactions. All loan submissions in the pipeline that are not currently locked will be withdrawn from the pipeline. All loans currently locked must close prior to the lock expiration date. No lock extensions will be granted.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

IRS 4506T Services Temporarily Suspended

April 20, 2020rashtonBulletin

Overview

The IRS has announced a temporary suspension of their Income Verification Express Service (IVES) due to their COVID-19 procedures. IVES is used by mortgage vendors to obtain IRS transcripts. It appears that orders placed on and prior to March 26, 2020 will continue to be processed by the IRS, albeit with significant delays, and it is unclear when orders placed on and after March 27, 2020 will be processed.

During this time, CMS will follow our Government shutdown policy for all loan products with the exception of USDA, Chase Jumbo and Non-Agency. Please note: This bulletin has been updated with additional FHA guidance. The changes are show in red font.

Internal Revenue Service (IRS)

In the event a shutdown impacts the IRS issuing tax return transcripts the following guidance is applicable:

The Underwriter must condition for the processed 4506T tax transcripts in order to close the loan
All loans with income discrepancies must be resolves prior to delivery
Completed and 4506T forms are required at closing

Refer to the product specific underwriting guidelines for detailed requirements.

Operational Requirements:

If product specific guidelines require processed 4506T tax transcripts or upon Underwriter discretion, condition as PTP.
USDA, Chase Jumbo and Non-Agency will require processed 4506T tax transcripts PTD.
Account Managers and Loan Processors will continue to order the transcripts when the condition is placed on the approval.

As a reminder, CMS has the following policies related to IRS transcripts:

USDA – Updated 04/03/2020

USDA requires the lender to independently obtain two years of transcripts for all adult household members prior to loan closing.

However, in the event transcripts are not available from the IRS, USDA will permit the loan to proceed to closing when the lender documents their correspondence to and from the IRS in the loan file. CMS will permit USDA loans to proceed to closing with the following documentation:

Proof transcripts were ordered for all adult household members, such as a screenshot of the IRS transcript vendor’s order page or confirmation,
A processor’s certification that the transcripts were not received by loan closing, and
Documentation supporting the IRS’s inability to provide the lender’s vendor with tax return transcripts as requested.

All supporting documentation must be contained in the loan file.

As a reminder, transcript results received with a “no record of return” or similar message are not acceptable if tax returns were required based on income type. The underwriter must review deposits on bank statements for all adult household members to verify all sources of income are considered in the annual income analysis.

Non-Agency

As a reminder, CMS is not currently accepting new submissions or locks of non-agency loans.

For existing locked loans, the following products require verification of all full doc and 1-year alt doc income types using IRS transcripts:

Carrington Flexible Advantage
Carrington Flexible Advantage Plus
Carrington Prime Advantage

IRS transcripts are not required for Carrington Investor Advantage and borrowers qualified using 12- or 24-months bank statements.

FHA, VA, Fannie Mae, & Freddie Mac

CMS does not require IRS transcripts to validate income for FHA, VA, Fannie Mae, or Freddie Mac loans.

Underwriters may request IRS transcripts under circumstances such verifying recently-filed tax returns used for qualifying, the filing of amended tax returns, or when inconsistencies are revealed with income documentation during the underwriting process. The following may be used as alternatives:

To evidence 2019 returns are filed:

Attempt obtaining a refund status printout from https://sa.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp for borrowers receiving an income tax refund
Obtain alternate proof of filing (such as an e-file receipt, stamped return, letter from CPA, etc.) along with proof of payment of taxes or updated installment agreement for borrowers with tax liability
Have the borrower provide transcripts using the IRS information and links below

To verify amended returns:

Obtain a stamped 1040X and verify payment of additional taxes owed, if any
Have the borrower provide transcripts using the IRS information and links below
As a reminder, tax returns may not be amended for qualifying purposes

When inconsistencies are revealed during the underwriting process, Underwriting Supervisors and Managers will continue to use the “Request Suspicious Activity Review” function in Encompass so that QC may review on a case-by-case basis.

FHA – Updated 4/20/20

FHA does not require tax transcripts directly from the IRS.

Lenders must obtain the borrower’s signature on the appropriate IRS form to obtain tax returns directly from the IRS for all credit-qualifying mortgages at the time the final Uniform Residential Loan Application (URLA) is executed.

If FHA requires tax returns as required documentation for any type of effective income, in lieu of signed individual or business tax returns from the borrower, the Lender may obtain a signed IRS Form 4506, Request for Copy of Tax Return, IRS Form 4506-T, Request for Transcript of Tax Return, or IRS Form 8821, Tax Information Authorization, and tax transcripts directly from the IRS.

Resources

The following resources and FAQ provided by the IRS may be helpful for borrowers when borrower-provided transcripts are requested to verify current tax return and amended tax return filings: https://www.irs.gov/individuals/get-transcript-faqs

Q9. How long must I wait before a transcript is available for my current year tax return?

If you filed your tax return electronically, IRS’s return processing takes from 2 to 4 weeks before a transcript becomes available. If you mailed your tax return, it takes about 6 weeks. If you didn’t pay all the tax you owe, your transcript may not be available until mid-May or a week after you pay the full amount owed. Refer to transcript availability for more information.

Once your transcript is available, you may use Get Transcript Online, you may order a tax return transcript and/or a tax account transcript using Get Transcript by Mail or call 800-908-9946. Please allow 5 to 10 calendar days for delivery. You may also request any transcript type listed below by faxing/mailing Form 4506-T, Request for Transcript of Tax Return as instructed on the form. The time frame for delivery is the same for all available tax years.

Agency Power of Attorney Requirements

April 20, 2020rashtonBulletin

Overview

Carrington Mortgage Services, LLC (CMS) is actively monitoring the spread of COVID-19 (coronavirus) throughout the United States and its potential impact to our borrowers and loan originations. Our ability to continue to serve our customers is a top priority and this bulletin will be updated as additional Agency guidance related to powers of attorney is received. This bulletin has been updated with FHA guidance. The changes are shown in red font.

FNMA Temporary Flexibilities for Powers of Attorney

Effective: Unless otherwise noted in this section below, these flexibilities are effective immediately for all loans in process and remain in place for loans with application dates on or before May 17, 2020.

Selling Guide, B8-5-05, Requirements for Use of a Power of Attorney, contains FNMA requirements for powers of attorney. For loans with application dates on or before May 17, 2020, the following additional requirements for using a power of attorney apply:

All powers of attorney must include the address of the mortgaged property.
The existing FNMA Selling Guide conditions allowing persons “connected to the transaction” to serve as an attorney-in-fact or agent in refinance transactions will also now apply to purchase transactions as well as limited cash-out refinances. This includes all the related current requirements applicable to limited cash-out refinance transactions involving these persons in the FNMA Selling Guide (that is, excluding lender employees, limiting by loan amount and property location, requiring a recorded Internet session after the borrower has received proposed loan documents, and mandating retention of the recording).
Unless a recorded Internet session described in the paragraph above is required, a power of attorney may only be used in a purchase transaction with a note date on or after Apr. 7, 2020, if, after the Closing Disclosure or other closing statement, as applicable, has been delivered to the borrower before closing, an employee of the lender or settlement agent explains the terms of the loan to the borrower(s) to confirm that each borrower understands them. This discussion must take place in person, telephonically, or using a video conference system, and must be memorialized by an acknowledgment by the borrowers of his or her understanding of the terms of the loan. The acknowledgment may be in writing or in a recording of the telephonic or video discussion.
Notwithstanding anything to the contrary in the Selling Guide or Lender Letter (LL-2020-03), for purchase transactions the attorney-in-fact or agent may not be the property seller, any relative of the property seller, or any direct or indirect employee or agent of the property seller, unless in any such instance such person is also a relative of the borrower.
Whenever an attorney-in-fact or agent is an employee of the insuring title insurer or is an employee of the policy-issuing agent of the insuring title insurer, such title insurer must have issued a closing protection letter (or similar contractual protection) for the transaction for such policy issuing agent.
Whenever a power of attorney is used at closing, whether authorized under the Selling Guide or under the standards in Lender Letter (LL-2020-03), the provisions of B1-1-01,Application Package Documentation requiring the borrower’s personal signature of the initial Form 1003 continue to apply if the initial Form 1003 can be signed personally (including through the United States Postal Service or commercial delivery service), or signed electronically as permitted by the Selling Guide. If the initial Form 1003 cannot be timely signed by the borrower in these ways, then it must be signed by the holder of such power of attorney.
Provided the power of attorney is not required to be notarized under applicable law (for example, the law governing the creation of the power of attorney, or the law of the location of the mortgaged property), the power of attorney is not required to be notarized if the transaction is a limited cash-out refinance unless

o the attorney-in-fact or agent named in the power of attorney is employed by, or otherwise represents or is affiliated with, the title insurance company that will issue the lender’s title insurance policy, and

o such title insurance company is affiliated with the lender.

If a power of attorney is required to be notarized, it may be remotely notarized in accordance with A2-5.1-03, Electronic Records, Signatures, and Transactions (as revised by Lender Letter (LL-2020-03)) with the additional flexibility that it may be remotely notarized in all jurisdictions, even if not expressly permitted by the Guide, as long as the power of attorney is not required to be recorded. If the power of attorney is required to be recorded, it may be remotely notarized only in the jurisdictions permitted by A2-5.1-03 (as revised by the table below).
The limitations in B8-5-05 requiring at least one borrower signature of the note and security instrument are suspended.
Under the Guide to Delivering eMortgages to Fannie Mae, powers of attorney are not permitted to be used in connection with loans with electronic notes (“eNotes”). Fannie Mae is revising the eMortgage Guide effective Apr. 20, 2020 to permit eNotes to be delivered in transactions in which a printed or electronic power of attorney is used on the same conditions as those applying to paper notes, except that the power of attorney must accompany the eNote through MERS® eDelivery. In anticipation of the change in the eMortgage Guide, lenders that are authorized to deliver eNotes may begin permitting the use of powers of attorney consistent with B8-5-05 and Lender Letter (LL-2020-03) immediately, provided that the eNote and related power of attorney may not be delivered to Fannie Mae through MERS eDelivery or submitted to Loan Delivery until after Apr. 20, 2020.

The following existing policies remain in effect for loans using powers of attorney authorized by the Selling Guide as revised by Lender Letter (LL-2020-03):

Lenders may not deliver loans to FNMA that have unacceptable title impediments. Accordingly, the lender must confirm that the title insurance policy does not take exception to the power of attorney, its manner of creation, the effectiveness of its notarization (if any) or to its use in relation to the transaction in accordance with B7-2-05, Title Exceptions and Impediments.
Lenders must comply with all federal, state and local laws in accordance with A3-2-01,Compliance with Laws. In addition, for Texas Section 50(a)(6) loans, lenders may only use a power of attorney to execute the note or security instrument if the power of attorney is signed at a location at which a Texas Section 50(a)(6) loan may be closed and in conformity with applicable requirements.

The current and revised provisions of B8-5-05 are always subject to the lender’s determination that applicable law requires the acceptance of a power of attorney in particular circumstances. This remains in place, as does the requirement that the lender document its determination in the loan file

FHLMC Temporary Flexibilities for Powers of Attorney

Effective immediately for Application Received Dates on or before May 17, 2020

Section 6301.4 currently permits use of a power of attorney (POA) to execute the Initial Loan Documents and Closing Documents on the Borrower’s behalf when there is a hardship or emergency. With this Bulletin Freddie Mac confirms that the COVID-19 pandemic constitutes an emergency for purposes of Section 6301.4.

Lenders may allow use of a POA to close a Mortgage or eMortgage, except for cash-out refinance Mortgages and Texas Equity Section 50(a)(6) Mortgages, in accordance with the temporary flexibilities listed in the following chart:

Previous Guide requirement (prior to this Bulletin)

Temporary flexibilities related to Powers of Attorney

POA may be used to execute Initial Loan Documents and Closing Documents

If the Borrower is unable to sign documents personally or by electronic signature (including by using the mail or delivery service) a POA may be used to execute any of the Initial Loan Documents and Closing Documents related to the origination of the Mortgage, including the initial Form 65, except that the Borrower must personally sign the initial Form 65 (including by means of an Electronic Signature) if at all possible. If an ink or electronic signature is not possible, then signature by an attorney-in-fact is permissible.

Only a person who has a familial, personal or fiduciary relationship with the Borrower may be the attorney-in-fact for the Borrower in a POA

In addition to those persons permitted by Section 6301.4 to be the attorney-in-fact, the following are also allowed:

· An individual employed by the title insurer underwriting the title insurance policy for the Mortgage; or

· An individual employed by the title agency issuing the title insurance policy for the Mortgage and closing the transaction but only if the title insurer has issued a closing protection letter relating to the transaction (or similar contractual indemnity) for such policy issuing agent

Neither the property seller of the property in a purchase transaction nor an employee of the originating lender is eligible to become an attorney-in-fact under a POA unless he or she otherwise meets an eligibility requirement herein.

	No cash-out refinance Mortgages	Purchase transaction Mortgages
POA must be notarized	POA does not have to be notarized unless required by applicable law, e.g., to record it with the Security Instrument. If a POA must be notarized, it may be remotely notarized in all jurisdictions, even if not expressly permitted by this Bulletin, as long as the power of attorney is not required to be recorded.	POA must be notarized.
Discussion with Borrower not needed	Discussion with Borrower not needed.	For Mortgages with Note Dates on and after April 7, 2020: After the Closing Disclosure has been delivered to the Borrower but prior to closing, an employee of the originating lender or settlement agent must explain and discuss the terms of the loan and use of the POA with the Borrower to confirm that the Borrower understands them. This discussion must take place in person, telephonically or using a video conference system and must be memorialized by an acknowledgment by the Borrower of his or her understanding of the terms of the loan. The acknowledgment may be in writing or in a recording of the telephonic or video discussion.
Discussion with Borrower not needed	However, whenever the attorney-in-fact under the POA is an individual employed by the title insurer or the title agent, then the discussion described above is always required, regardless of loan type.

Please Note: These temporary requirements do not apply to cash-out refinance Mortgages and Texas Equity Section 50(a)(6) Mortgages.

FHA Powers of Attorney – Updated 4/20/20

FHA permits a borrower to designate an attorney-in-fact to use a POA to sign documents on their behalf at closing, including:

page 4 of the final Form HUD-92900-A,
HUD/VA Addendum to Uniform Residential Loan Application (URLA), and
final Fannie Mae Form 1003/Freddie Mac Form 65, URLA.

Detailed requirements on the use of a POA to execute closing documents can be found in theSF Handbook, Section II.A.6.a(xiii). Included in this section are specific requirements for use of a POA, which has a connection to the transaction.

VA Powers of Attorney

No guidance issued as of 3/31/20

USDA Powers of Attorney

No guidance issued as of 3/31/20

Updated Wholesale Lock Restrictions

April 17, 2020rashtonBulletin

Overview

As a reminder, Carrington Mortgage Services, LLC (CMS) recently implemented revised lock policy requirements requiring the loan be approved prior to lock and an appraisal in file (when required). BrokerIQ has been updated to allow pricing even when the loan is not eligible for lock. The requirement to select a loan product and price prior to loan submission has been reactivated as well.

Summary of Changes

Under the revised lock policy requirements, loans do not become eligible to lock until reaching the “Approval” milestone with an appraisal in the loan file (streamline loans do not require an appraisal). Therefore you are not able to view the eligible products until the loan is far along in the loan process. This has caused several issues resulting from submissions of ineligible loan products.

The updated policy requirements have been causing the pricing engine to return all products at early loan milestones as ineligible as shown below:

With this BrokerIQ update, you will now be able to view eligible loan programs and pricing earlier in the loan process; however, the eligible loan programs will display with “Expired” pricing.

Please Note: you can now price loans at the earlier milestones; however, you will not be able to request a lock. If you attempt to click “Request Lock” you will receive the following error message.

Home and Pipeline Screen Updates

To assist you with identifying loans that are ineligible to lock, the Home and Pipeline screens have been enhanced to display an icon as shown below. When you hover over the icon, it states “Not Eligible for Lock”.

In addition, there is a warning message on the Product & Pricing step that will advise you that the loan is not eligible for a lock request and that you must float the lock in order to proceed.

BrokerIQ will require you to complete the Products & Pricing step to float the loan that was previously optional. To complete the step, you will need to price out your loan prior to submission as follows:

Click on the “Float Loan” button to ensure you are selecting an eligible product/rate.
After clicking the Float rate button, Encompass will update and display a message that says “Thank you, your request is being processed” as shown below:

Post Submission:

Once your loan submission is completed and once the loan meets the milestone requirements, you will no longer see “Expired” pricing and will be able to request a lock.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

Changes to CMS Submission Acceptance Process

April 16, 2020rashtonBulletin

Overview

Effective April 16, 2020, Carrington Mortgage Services, LLC (CMS) will implement the following temporary changes to our wholesale submission acceptance until further notice:

Suspending all skinny package loan submission options. All new submissions are required to submit all of the “submission to underwriting” requirements prior to the file being accepted and disclosed.
Allowing broker disclosed loan submissions

Lender Disclosed Loan Submissions:

Skinny packages (1003 w/ DI addendum, Fee Sheet, Credit Report) are no longer permitted until further notice. Brokers must submit a full “submission to underwriting” package (1003 w/ DI addendum, Fee Sheet, Credit Report, Income, Assets if applicable, Purchase Contract if applicable, and State Disclosures if applicable)

Please note: CMS will issue all state required disclosures with the exception of Loan Origination Agreements, Advanced Fee Agreements, and Pre-Application Agreements.

Broker Disclosed Loan Submissions:

Brokers must submit a full “submission to underwriting” package (1003 w/ DI Addendum, Full Initial Disclosure Package signed and dated by borrower(s), Credit Report, Income, Assets, Purchase Contract, Loan Origination Agreement, if applicable, Advanced Fee Agreement, if applicable, Pre-Application Agreement, if applicable and all Applicable State Required Disclosures)

Please note: CMS will issue state disclosures with the exception of Loan Origination Agreements, Advanced Fee Agreements, and Pre-Application Agreements.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

Agency Appraisal Requirements – Updated

April 14, 2020rashtonBulletin

Overview

Carrington Mortgage Services, LLC (CMS) is actively monitoring the spread of COVID-19 (coronavirus) throughout the United States and its potential impact to our borrowers and loan originations. Our ability to continue to serve our customers is a top priority and this bulletin will be updated as additional Agency guidance is received. This bulletin has updated VA guidance. Updates are shown in red.

FNMA Temporary Appraisal Requirement Flexibilities

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Effective immediately, Fannie Mae is allowing temporary flexibilities to their appraisal inspection and reporting requirements. As described below, FNMA will accept an alternative to the traditional appraisal required under Selling Guide Chapter B4-1, Appraisal Requirements, when an interior inspection is not feasible because of COVID-19 concerns. FNMA will allow either a desktop appraisal or an exterior-only inspection appraisal in lieu of the interior and exterior inspection appraisal (i.e., traditional appraisal).

If a traditional appraisal is not obtained and there is insufficient information about the property for an appraiser to be able to complete an appraisal assignment with a desktop or exterior-only inspection appraisal, the loan will not be eligible for delivery to FNMA.

Loan purpose	LTV ratio		Occupancy	Ownership of loan being refinanced	Permissible appraisals (in order of preference)
Purchase*	Per Eligibility Matrix		Principal residence	N/A	Traditional appraisal Desktop appraisal Exterior-only appraisal
	≤ 85%		Second home Investment		Traditional appraisal Desktop appraisal Exterior-only appraisal
	> 85%		Second home		Traditional appraisal
Loan purpose		LTV ratio	Occupancy	Ownership of loan being refinanced	Permissible appraisals (in order of preference)
Limited cash-out refinance		Per Eligibility Matrix	All	Fannie Mae-owned	Traditional appraisal Exterior-only appraisal
Limited cash-out refinance				Not Fannie Mae-owned	Traditional appraisal
Cash-out refinance				Fannie Mae or not Fannie Mae-owned	Traditional appraisal

*Excludes new construction and construction-to-permanent loans.

NOTE: For all loans with LTV ratios greater than 80%, FNMA require mortgage insurance in accordance with their standard Selling Guide policy. Lenders must consult with their mortgage insurance companies to confirm coverage for mortgages using one of the temporary appraisal flexibilities.

Desktop appraisals

For purchase money transactions when an interior and exterior appraisal is not available, lenders are encouraged to obtain a desktop appraisal rather than an exterior-only appraisal.

The minimum scope of work for a desktop appraisal does not include an inspection of the subject property or comparable sales. The appraiser relies on public records, multiple listing service (MLS) information, and other third-party data sources to identify the property characteristics.

When a desktop appraisal is performed, reported on Form 1004 or Form 1073, and submitted to FNMA through the Uniform Collateral Data Portal® (UCDP®), the appraisal will be scored by Collateral Underwriter® (CU®). All loans with a CU risk score of 2.5 or less will receive value representation and warranty relief under Day 1 Certainty. With desktop appraisals, lenders will have the added risk management and efficiency benefit of being able to use CU to aid in the appraisal review process.

The table below provides the appraisal report form that must be used to complete the desktop appraisal for each property type.

Property Type	Acceptable Appraisal Form
One-unit property, including a unit in a planned unit development (PUD) or a detached condominium unit	Uniform Residential Appraisal Report (Form 1004)
Condominium unit	Individual Condominium Unit Appraisal Report (Form 1073)
2-4 Unit Property	Small Residential Income Property Appraisal Report (Form 1025)
Manufactured Home	Manufactured Home Appraisal Report (Form 1004C)

Exhibits for Desktop Appraisals

Each desktop appraisal report must include the following exhibits:

a location map indicating the location of the subject and comparables, and
photographs of the subject property. FNMA recognizes that it may be challenging in some instances to obtain photographs; however, it is expected that the appraiser utilize available means to obtain relevant pictures of the subject property.

Exterior-only Inspection Appraisals

An exterior-only inspection appraisal may be obtained in lieu of an interior and exterior inspection appraisal for the following transactions:

Purchase money loans
Limited cash-out refinances where the loan being refinanced is owned by Fannie Mae

Lenders will not receive value representation and warranty relief under Day 1 Certainty® for loans with exterior-only appraisals.

The table below shows the appraisal report form that must be used to complete an exterior-only inspection appraisal for each property type. Because there are not appropriate exterior-only appraisal report forms available for two-four unit properties and manufactured homes, FNMA will accept an exterior appraisal scope of work completed using the applicable forms listed below.

Property Type	Acceptable Appraisal Form
One-unit property, including a unit in a planned unit development (PUD) or a detached condominium unit	Exterior-Only Inspection Residential Appraisal Report (Form 2055)
Condominium unit	Exterior-Only Inspection Individual Condominium Unit Appraisal Report (Form 1075)
2-4 Unit Property	Small Residential Income Property Appraisal Report (Form 1025)
Manufactured Home	Manufactured Home Appraisal Report (Form 1004C)

Exhibits for Exterior-only Inspection Appraisals

Lenders are reminded that the following exhibits to the appraisal report are required for an exterior-only inspection appraisal:

a street map that shows the location of the subject property and of all comparable sales that the appraiser used;
clear, descriptive photographs (either in black and white or color) that show the front of the subject property, and that are appropriately identified (photographs must be originals that are produced either by photography or electronic imaging); and
any other data−as an attachment or addendum to the appraisal report form−that are necessary to provide an adequately supported opinion of market value.

FNMA Temporary Flexibilities for New Construction Loans

For new construction properties where the appraisal is “subject to completion per plans and specifications,” and also when the property is 100% complete but an interior and exterior inspection appraisal cannot be completed, FNMA will permit a desktop appraisal on the forms identified in the following table. These requirements apply to purchase transactions only and exclude all construction-to-permanent loans.

Property Type	Acceptable Appraisal Form
One-unit property, including a unit in a planned unit development (PUD) or a detachedcondominium unit	Uniform Residential Appraisal Report (Form 1004)
Condominium unit	Individual Condominium Unit Appraisal Report(Form 1073)
Two- to four-unit property	Small Residential Income Property Appraisal Report (Form 1025)
Manufactured home	Manufactured Home Appraisal Report (Form 1004C)

To accommodate the desktop appraisal on the existing Fannie Mae forms, the revised scope of work, statement of assumptions and limiting conditions, and certifications must accompany the form. Additionally, as noted below, the appraiser must identify a desktop appraisal was performed by populating the Map Reference field on the appraisal with “desktop.”

Documentation Requirements for New Construction Loans

If construction of the property has not yet begun or is partially complete, and the appraisal report will be completed “subject to completion per plans and specifications,” the Lender must provide the appraiser with, or ensure that the builder has provided the appraiser with the following:

Plans and specifications
Survey and/or plot plan
Current photos of the subject property

o If construction has not yet begun, a photograph of the site and down the street inboth directions

o If construction is partially complete, a photograph is required of the following:

A front view of the subject property
A rear view of the subject property
A street scene (i.e., a photograph down the street in both directions)
The following interior photos are required when construction is at a stage inwhich they are available

o The kitchen of the subject property

o All bathrooms of the subject property

o The main living area of the subject property

o Basement, including all finished rooms

A copy of the complete, ratified sales contract, and all addenda

If construction of the property is 100% complete, and the appraisal report will be completed “as is,” the Lender must provide the appraiser with, or ensure that the builder has provided the appraiser with the following:

Plans and specifications
Survey and/or plot plan
Current photos of the subject property

o A front view of the subject property

o A rear view of the subject property

o A street scene (i.e., a photograph down the street in both directions)

o The kitchen of the subject property

o All bathrooms of the subject property

o The main living area of the subject property

o Basement, including all finished rooms

A copy of the complete, ratified sales contract, and all addenda

Builder Certification

The Lender must obtain a signed Builder Certification attesting that the information provided is true and correct. This certification must be included in the loan file.

Completion Reports for New Construction Properties

For new construction properties where the appraisal report was completed “subject to completion per plans and specifications,” if the Lender is unable to obtain a completed Appraisal Update and/or Completion Report (Form 1004D) as a result of COVID-19 related issues, FNMA will accept the Completion of Construction Certification.

FHLMC Temporary Appraisal Requirement Flexibilities

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Freddie Mac understands that due to the COVID-19 pandemic there may be instances where a Lender is unable to obtain an interior inspection of the subject property. As a result, Freddie Mac is allowing temporary exceptions to their property eligibility and appraisal requirements.

Freddie Mac is revising its appraisal inspection and reporting requirements. As described in detail below, for certain Mortgages, when a Lender cannot obtain an appraisal with an interior inspection as a result of the COVID-19 pandemic, Freddie Mac will accept either an appraisal with an exterior-only inspection or a desktop appraisal (as described below) in lieu of the interior and exterior inspection appraisal required under Section 5601.5(a).

There may be instances where there is insufficient information about the property for an appraiser to complete an appraisal assignment with a desktop appraisal or an appraisal with an exterior-only inspection. In these instances, the Mortgage will not be eligible for sale to Freddie Mac until the appraiser has sufficient information to complete the desktop appraisal or an appraisal with an exterior-only inspection, or an appraisal with an interior and exterior inspection is obtained.

The following table provides appraisal requirements based on Mortgage purpose, loan-to-value (LTV) ratio, occupancy type and Mortgage ownership.

Permissible appraisal requirements
Mortgage purpose	LTV ratio	Occupancy type	Ownership of Mortgage being refinanced	Permissible appraisals
Purchase transaction*	Up to 97%	Primary Residence	N/A	Interior and exterior inspection appraisal, desktop appraisal or exterior-only appraisal
	≤85%	Second homes and Investment Properties	N/A	Interior and exterior inspection appraisal, desktop appraisal or exterior-only appraisal
	˃85%	Second homes	N/A	Interior and exterior inspection appraisal
No cash-out refinance	As permitted in the Guide	All	Mortgage being refinanced owned by Freddie Mac	Interior and exterior inspection appraisal or exterior-only inspection
No cash-out refinance	As permitted in the Guide	All	Mortgage being refinanced not owned by Freddie Mac	Interior and exterior inspection appraisal
Cash-out refinance	As permitted in the Guide	All	Mortgage being refinanced owned or not owned by Freddie Mac	Interior and exterior inspection appraisal

*These flexibilities are not permitted for Construction Conversion, Renovation or new construction properties.

Note: For all Mortgages with LTV ratios greater than 80%, FHLMC will require mortgage insurance in accordance with Guide requirements. Lenders must consult with their mortgage insurance companies to confirm coverage for Mortgages using one of the temporary appraisal flexibilities.

Appraisals with Exterior-only Inspections

The table below provides the appraisal report form that must be used to complete an appraisal with an exterior-only inspection for each property type. Because there are not appropriate exterior-only appraisal report forms available for 2- to 4-unit properties and Manufactured Homes, FHLMC will accept an exterior-only appraisal scope of work completed using the applicable forms listed below.

Property type	Acceptable appraisal form
1-unit property, including a unit in a Planned Unit Development (PUD) or a Detached Condominium Unit	Guide Form 2055, Exterior-Only Inspection Residential Appraisal Report
Attached Condominium Unit	Form 466, Exterior-Only Inspection Individual Condominium Unit Appraisal Report
2- to 4-unit property	Form 72, Small Residential Income Property Appraisal Report
Manufactured Home	Form 70B, Manufactured Home Appraisal Report

Mortgages with appraisals with exterior-only inspections will not receive the appraised value representation and warranty relief described in Section 5601.9(b).

Exhibits for Exterior-only Inspection Appraisals

Lenders are reminded that the following are required in connection with an appraisal with an exterior-only inspection:

A street map that shows the location of the subject property and of all comparables thatthe appraiser used
Clear, descriptive photographs (either in black and white or color) that show the front of the subject property, and that are appropriately identified. (Photographs must be originals that are produced either by photography or electronic imaging); and
Any other data (as an attachment or addendum to the appraisal report form) that are necessary to provide an adequately supported opinion of market value

For Purchase Transaction Desktop Appraisals

Lenders are encouraged to obtain a desktop appraisal in lieu of an appraisal with an exterior-only inspection when an interior and exterior inspection is not available.

The minimum scope of work for a desktop appraisal does not include an inspection of the subject property or comparable sales. The appraiser relies on public records, multiple listing service (MLS) information or other third party data sources to identify the property characteristics.

When a desktop appraisal is obtained using Form 70, Uniform Residential Appraisal Report, or Form 465, Individual Condominium Unit Appraisal Report, and submitted to the Uniform Collateral Data Portal® (UCDP®), the appraisal will be assessed for valuation representation and warranty relief in Loan Collateral Advisor®. All appraisals with a risk score of 2.5 or less that meet the requirements in Section 5601.9(b) will receive valuation representation and warranty relief and Lenders will have the added risk management and efficiency benefit of being able to use Loan Collateral Advisor to aid in the appraisal review process

The table below provides the appraisal report form that must be used to complete the desktop appraisal for each property type.

Property type	Acceptable appraisal form
1-unit property, including a unit in a Planned Unit Development (PUD) or a Detached Condominium Unit	Form 70, Uniform Residential Appraisal Report
Condominium Unit	Form 465, Individual Condominium Unit Appraisal Report
2- to 4-unit property	Form 72, Small Residential Income Property Appraisal Report
Manufactured Home	Form 70B, Manufactured Home Appraisal Report

Exhibits for Desktop Appraisals

Each desktop appraisal must include the following exhibits:

Photographs of the subject property. Freddie Mac recognizes it may be challenging in some instances to obtain photographs; however, it is expected that the appraiser utilize available means to obtain relevant pictures of the subject property.
A location map indicating the location of the subject and comparables.

FHLMC Temporary Appraisal Flexibilities for New Construction Properties (Purchase Transactions)

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

For new construction properties, where the appraisal was completed “subject to completion per plans and specifications,” including properties that were fully completed after the effective date of the appraisal, and an interior and exterior inspection appraisal cannot be completed, Freddie Mac will permit a desktop appraisal on the forms identified in the following table:

Property type	Acceptable appraisal form
1-unit property, including a unit in a Planned Unit Development (PUD) or a Detached Condominium Unit	Guide Form 70, Uniform Residential Appraisal Report
Condominium Unit	Form 465, Individual Condominium Unit Appraisal Report
2- to 4-unit property	Form 72, Small Residential Income Property Appraisal Report
Manufactured Home	Form 70B, Manufactured Home Appraisal Report

To accommodate the desktop appraisal using the existing Freddie Mac forms, the revised scope of work, statements of assumptions and limiting conditions provided as Attachment Ato Bulletin 2020-5 must accompany the form. Additionally, as stated in Bulletin 2020-5, the appraiser must identify that a desktop appraisal was performed by populating the Map Reference field on the appraisal with “desktop.”

Documentation requirements

If construction of the property has not yet begun or is partially completed, and as a result the appraisal report will be completed “subject to completion per plans and specifications,” the Lender must provide the appraiser with, or ensure that the builder has provided the appraiser with the following:

Plans and specifications
Survey and/or plot plan
Current photos of the subject property

- If construction has not yet begun a photograph of the site and street scene (i.e., a photograph of the street view in both directions) are required
- If construction is partially complete, the Lender must provide, or ensure that the builder has provided, the appraiser with all of the following photographs:

A front view of the subject property
A rear view of the subject property
A street scene (i.e., a photograph of the street view in both directions)
The following interior photos are required when construction is at a stage in which they are available
The kitchen of the subject property
All bathrooms of the subject property
The main living area of the subject property
Basement, including all finished rooms

Fully executed sales contract, including any addenda

If the property is fully completed, and as a result the appraisal report will be completed “as is,” the Lender must provide the appraiser with, or ensure that the builder has provided the appraiser with the following:

Plans and specifications
Survey and/or plot plan
Current photos of the subject property, including:

- A front view of the subject property
- A rear view of the subject property
- A street scene (i.e., a photograph of the street view in both directions)
- The kitchen of the subject property
- All bathrooms of the subject property
- The main living area of the subject property
- Basement, including all finished rooms

Fully executed sales contract including any addenda

Builder certification

The Lender must obtain a builder signed certification, Attachment A, Builder/Contractor Certification, attesting that the information provided is true and correct. This certification must be included in the Mortgage file.

Completion reports for new construction properties

For new construction properties where the appraisal report was completed “subject to completion per plans and specifications,” if the Lender is unable to obtain a completion report on Form 442, Appraisal Update and/or Completion Report, as a result of COVID-19 related issues, Freddie Mac will accept the warranty of completion form, which is provided as Attachment B, Completion of Construction Certification.

FHA Guidance for Property inspections – Updated 03/30/20

Effective Date

The FHA Appraisal guidance in Mortgagee Letter 2020-05 is effective immediately for appraisal inspections completed on or before May 17, 2020.

Please note: The policy changes in the Mortgagee Letter are temporary and will not be incorporated into the HUD Single-Family Housing Policy Handbook 4000.1.

HUD Single Family Housing Appraisal Policy

When applicable, as described below, the appraiser may amend the scope of work to perform an Exterior-Only (viewing from the street) or Desktop-Only. The Appraiser may rely on supplemental information from other reliable sources such as Multiple Listing Service (MLS), and Tax Assessor’s Property Record to prepare an appraisal report. The Appraiser may rely on information from an interested party to the transaction (borrower, real estate agent, property contact, etc.) with clear appraisal report disclosure when additional verification is not feasible. The appraisal report must contain adequate information to enable the intended users to understand the extent of the inspection that was performed.

The Exterior-Only and Desktop-Only Appraisal options must continue to be reported on the current FHA approved appraisal forms with amended certifications and scope of work disclosures.

Appraisal Forms and Amended Certifications

The optional Exterior-Only and Desktop-Only appraisals must be reported on the existing Acceptable Appraisal Reporting Forms by Property and Assignment Type. These forms will require amended certifications and clear scope of work disclosures. Lenders are reminded that Exterior Appraisal forms Fannie Mae 2055 and Fannie Mae 1075 are not FHA approved forms and are not compatible with FHA’s Electronic Appraisal Delivery (EAD) portal.

The appraisal report must include a signed certification indicating whether the Appraiser did or did not personally inspect the subject property and the extent of the inspection. FHA has provided model certifications for the Exterior-Only and Desktop-Only scope of work.

Exterior-Only Option

The required protocols and exhibits under the Exterior-Only Option are:

Appraiser will observe the Property and Improvements from the street.
The Appraisal will be completed “AS IS” unless Minimum Property Requirements (MPR) related deficiencies are observed from the street or otherwise known.
The Appraiser may utilize extraordinary assumptions when necessary.
No sketch, interior photos or rear exterior photographs are required.

Desktop-Only Option

The required protocols and exhibits under the Desktop-Only Option are:

Appraiser will not physically observe the Property and Improvements.
The Appraisal will be completed “AS IS” unless MPR related deficiencies are known.
The Appraiser may utilize extraordinary assumptions when necessary.
No sketch, interior photos, exterior photographs are required.
No comparable viewing nor photos are required.

FHA Purchase Transactions

FHA will accept appraisals for Purchase transactions with an optional Exterior-Only or Desktop-Only scope of work by the Appraiser. These flexibilities are not permitted on New Construction, Construction to Permanent, and 203(k) purchases.

FHA Refinance

FHA will accept appraisals for Rate and Term Refinance and Simple Refinance with an optional Exterior-Only scope of work by the Appraiser. These flexibilities are not permitted on Cash out Refinances and 203(k) refinances.

Form 1004D Part B Completion Report

When an Appraisal Update and/or Completion Report (Form 1004D) Part B is required to evidence the completion of required repairs, FHA will permit a letter signed by the borrower affirming that the work was completed with further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation. All completion documentation must be retained in the case binder. These flexibilities are not permitted on New Construction, Construction to Permanent, and 203(k) transactions.

VA Guidance for Property inspections – Updated 04/13/20

Effective Date

The VA policy outlined below is effective for all loans with an application date on or after 4/10/2020 and until further notice or the rescission of the VA 20-26-13 Circular.

Valuations may come in a form of an Exterior-Only appraisal with enhanced assignment conditions or in limited instances, a Desktop appraisal.

On page 1 of the Uniform Residential Appraisal Report (URAR), Subject section, “Map Reference” appraisers are to state “Exterior-Only” or “Desktop.” These procedures are temporary in nature and VA will return to normal operations after the national emergency

The report will be completed “AS IS” unless there are MPR requirements the appraiser observed in the review of the property. Without an interior review of the property, the appraiser can make an Extraordinary Assumption (EA) concerning MPRs with the information available.

The appraiser will continue to gain access to view the interior property for a Purchase Transaction (vacant property). The interior inspection is allowed, when the appraiser poses no harm to themselves or others.

Exterior-Only Appraisal

This report option with enhanced assignment conditions will be completed on the FNMA 2055/1075 URAR form. For manufactured homes and multi-unit (2- to-4 unit) properties, appraisers will use the 1004C or 1025 form. Appraisers must boldly and inconspicuously state “Per Department of Veterans Affairs, no interior inspection was provided due to COVID-19.” Exterior-Only Appraisal with enhanced assignment conditions will be limited to one and a half times the maximum 2020 Freddie Mac Conforming Loan Limit for a one-unit limit for the county or county-equivalent area. The lender should not request an Exterior-Only appraisal if the loan amount will be more than one and a half times the maximum 2020 CCL limit. The appraiser is in control of the Scope of Work and they type of report will be used based upon safety. 2020 CCL limits (PDF)

Purchase or Refinance transactions

The appraiser is to provide an Exterior Only appraisal with enhanced assignment conditions when the appraiser’s assigned geographic jurisdiction does not have restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine. Appraisers should refer to their state or local authorities to determine if they are deemed an essential part of the financial transaction for mortgage lending. The appraiser must make every effort to complete the enhanced assignment conditions listed below or document in the narrative why one or more conditions could not be met:

(1) The appraiser will review the full exterior of the property and provide photos of all sides of the property with detailed notes of the exterior and any visible MPRs. In instances of obstructed or restricted view and access is unable to be granted or allowed, Multiple Listing Service (MLS) photos of these areas may be utilized. If MLS photos are utilized, it must be explained in the appraisal report.

(2) A measurement of the footprint of the home should be provided if accessible. This is not to determine the gross living area (GLA) but for the appraiser to reconcile with public records.

(3) The appraiser will conduct a detailed interview over the phone with the occupant, Veteran, or real estate professional regarding the property. It is the appraiser’s responsibility to obtain sufficient information to provide a creditable report. Interview questions should be noted and kept in the appraisers work file. Key items that may impact market value should be noted in the appraisal report with details about what was provided and by whom.

(4) The appraiser may utilize any and all photos available from MLS, provided by the occupant, Veteran, or real estate professional. Comparables will still be viewed and photos provided when possible.

Desktop Appraisal Valuations

This report option will be completed on the FNMA 1004, 1073, 1004C, 2025 and the appraiser will be required to attach a copy of the provided Scope of Work (SOW) Exhibit A,certifications, and assumptions in all reports. Appraisers must boldly and inconspicuously state “Per Department of Veterans Affairs, no interior inspection was provided due to COVID-19”.

Desktop valuations will be limited to the maximum 2020 Freddie Mac Conforming Loan Limit for a one-unit limit for the county or county-equivalent area. The lender should not request a Desktop Appraisal if the loan amount will be more than the maximum 2020 CCL limit.
Desktop appraisals will be conducted when the appraiser’s assigned geographic jurisdiction has restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or not deemed an essential part of the financial transaction for mortgage lending. Lenders must state in both in “public” notes in WebLGY and by e-mail to the appraiser if they will accept a Desktop appraisal. If the lender will not accept a Desktop appraisal, the appraiser will advise the Regional Loan Center (RLC) to place the assignment on hold for 30 days and then subsequently cancel, if the status has not changed. The appraiser will annotate “public” notes in WebLGY updates on all communication between parties.

Purchase transactions: The appraiser defines the scope of the work and will annotate in the appraisal report concerning the source of information provided.

Cash-Out Refinance Transactions: The appraiser will prioritize assignments based on purchase transactions first and determine if sufficient information is publicly available and verifiable. Appraisers are not required to proceed on the assignment if information is not available to provide a credible report. In the event the appraiser is not able to complete the assignment, the lender may choose to cancel the request or have the VA Regional Loan Center (RLC) suspend the assignment until the national emergency is lifted and a more detailed report can be produced.

Additional Notes

VA understands that there may be insufficient data available to produce a creditable report. Appraisers are not required to accept a Desktop valuation order. In addition, the use of Assisted Appraisal Processing Program (AAPP) is not authorized for Desktop appraisals. When an appraiser believes the scope of work required to develop a credible report is not capable in a Desktop appraisal, the appraiser must contact the RLC to place the assignment on hold.

Reconsideration of Value

In times of uncertainty, the housing market strengths may be less predictable to report. Appraisers will have comparable sales that took place prior to the President declaring a national emergency and active and pending sales can be less predictable. During this time, it is important to ensure that Veterans continue to be able to purchase a home. VA, the lender, and the appraiser will work together during this time to assist in the best possible outcome for the Veteran.

Purchase Transactions: Reconsideration of Values (ROV) for purchase transactions will be restricted to no greater than 7 percent from the appraiser’s opinion of value or $10,000 whichever is greater. An ROV may be requested when the value requested is greater than stated but the ROV amount must fall within the range of adjusted values in the sales grid of the appraisal or overwhelming evidence of appraisal error that impacts value. The same criteria is required as outlined in VA Pamphlet 26-7, Chapter 10 Appraisal Process (NEW), Section 22. In addition, a field review by RLC staff will not be a completed in conjunction with the ROV request.

Cash-Out Refinance Transactions: VA will suspend ROV requests for cash-out refinance loans until further notice.

Memorandum of Values

In extreme cases when an appraiser is not available to complete an appraisal assignment for a purchase, VA has the authority and ability to issue a Memorandum of Value (MOV). This will be completed on a case-by-case basis.

Repair Inspections

Due to the lack of verification of completion by the appraiser or inspector that repair items have been completed, lenders have one of the two following options to supply to VA. This section applies to any and all loans regardless of the loan application date.

Lenders have the authority and are encouraged to certify repairs, especially repairs performed by licensed personnel, instead of an appraiser certification as outlined in the VA Pamphlet 26-7, Chapter 10 Appraisal Process (NEW), Section 23, Topic b. Repair certifications which may involve lead-based paint must still be completed by a fee appraiser; however, the lender can escrow for future inspection and costs with a third-party. Lenders may hold funds in escrow for repairs to be completed after closing.

All repairs must be completed and escrowed funds distributed before the loan may be guaranteed by VA as outlined in the VA Pamphlet 26-7, Chapter 12 Minimum Property Requirements (NEW), Section 44, Topic e. In addition, there must be adequate assurance that the work will be completed timely and satisfactorily (up to 180 days).

When a purchase transaction appraisal has found repairs, the lender has the option to close the loan when the Veteran accepts responsibility to complete the repairs within 180 days of the closing of the loan. This time may be extended if warranted. The home must be habitable by conventional standards. Re-inspection will be required at that time at the posted fees.

Termite Inspections

VA Pamphlet 26-7, Chapter 12 Minimum Property Requirements (NEW), Section 33, Topic b, requires a wood inspection report if the property is located in an area on the Termite Infestation Probability Map where the probability of termite infestation is “very heavy” or “moderate to heavy”.

Purchase Transactions: If there is no known or visible evidence of termite infestation present, the seller and realtor must provide a certification to that fact and the Veteran must acknowledge that no inspection was completed. VA recommends the Veteran to complete an inspection once the national emergency has ended. If there is known or visible evidence of termite infestation, a clear termite report must be provided within one year of close of escrow.

Cash-Out Refinance Transactions: The Veteran can provide a certificate of fact if there is no known or visible evidence of termite infestation present. If there is known or visible evidence of termite infestation, a clear termite report must be provided within one year of close of escrow.

Any Additional NOV Conditions

Any additional items that need to be met on the Notice of Value (NOV) to comply with VA requirements will have to be met in 180 days from the date of the NOV issuance. All conditions must be completed before the loan will be guaranteed by VA. Any clear and obvious minimum property requirement (MPR) related issues that would render the home uninhabitable will not be able to be issued a guaranty till all repairs are completed. The Veteran must acknowledge and accept any and all conditions not met prior to closing

Appraisers should continue to conduct business as outlined in Chapter 10 of the Lender’s Handbook.

Appraisers should contact the RLC of jurisdiction if they have been impacted by COVID-19 and are unable to complete an appraisal assignment. The email addresses for each of the RLCs are available at: https://www.benefits.va.gov/HOMELOANS/contact_rlc_info.asp.

USDA Guidance for Property inspections – Updated 03/30/20

The USDA Single Family Housing Guaranteed Loan Program (SFHGLP) temporary exceptions pertaining to appraisals and repair inspections in relation to COVID-19 Pandemic are as follows:

Effective immediately, the following exceptions to HB-1-3555 are in effect for a period of 60-days.

Residential Appraisal Reports of Existing Dwellings

For purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic, an Exterior-Only Inspection Residential Appraisal Report (FHLMC 2055/FNMA 2055) will be accepted. In such cases, appraisers are not required to certify that the property meets HUD HB 4000.1 standards. The appraisal must be completed in accordance with the Uniform Standards of Professional Practice (USPAP) and the Uniform Appraisal Dataset (UAD).

This exception is not applicable to new construction properties or construction to permanent loans. As a reminder, appraisals are not required for streamlined and streamlined-assist refinance transactions.

Repair Inspections of Existing Dwellings

Loans for which a completion certification is not available due to issues related to the COVID-19 pandemic, a letter signed by the borrower confirming that the work was completed is permitted. Lenders must also provide further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation. All completion documentation must be retained in the loan file.

Simplified Agency Appraisal Requirements

April 10, 2020rashtonBulletin

Overview

Here is a simplified guide to help evaluate the permissible Agency appraisal and form requirements during the COVID-19 crisis. Effective immediately, and until further notice, all loans submitted to Carrington Mortgage Services, LLC (CMS) must follow these new procedures.

Permissible Appraisal Requirements

Loan Type	Other Criteria	Exterior-Only Allowed	Desktop Allowed
CONV	Purchase, Primary Residence	Yes	Yes
	Purchase, 2nd Home / Investment LTV <= 85%	Yes	Yes
	Purchase, 2nd Home LTV > 85%	No	No
	No Cash-out Refinance Fannie/Freddie Owned	Yes⁶	No
	No Cash-out Refinance NOT Fannie/Freddie Owned	No	No
	Cash-out Refinance	No	No
	New Construction^4,5	No	Yes
FHA³	Purchase	Yes	Yes
	Rate/Term and Simple Refinances	Yes	No
	Cash-out Refinance	No	No
	203(k) Purchase and 203(k) Refinance	No	No
VA	Purchase	Yes¹	Yes²
VA	Cash-out Refi	Yes¹	Yes²
USDA	All	Yes	No
All Gov’t	New Construction	No	No

1 Appraisers must boldly and inconspicuously state “Per Department of Veterans Affairs, no interior inspection was provided due to COVID-19.”

2 Use of Assisted Appraisal Processing Program (AAPP) is not authorized for Desktop appraisals. Value must not exceed the 2020 Freddie Mac Conforming Loan Limit for a one-unit limit for the subject’s county.

3 FHA 1004D Part B Completion Report: FHA will permit a letter signed by the borrower affirming that the work was completed with further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation.

4 Builder Certification: The Lender must obtain a builder signed certification, Attachment A, Builder/Contractor Certification, attesting that the information provided is true and correct. This certification must be included in the Mortgage file.

5 Completion Reports for New Construction Properties: For new construction properties where the appraisal report was completed “subject to completion per plans and specifications,” if the Lender is unable to obtain a completed Appraisal Update and/or Completion Report (Form 1004D) as a result of COVID-19 related issues, FNMA will accept the Completion of Construction Certification.

6 The subject must be refinanced with the same agency that owns the current mortgage

Appraisal Valuations Form Requirements

Loan Type	Exterior Only Appraisal Form	Desktop Appraisal Form
VA Conventional	Use Exterior-Only form for: · Form 2055/466 – SFR or PUD · Form 1075/72 – Condo Use Traditional form for: · Form 1025/72 – 2-4 Units · Form 1004C/70B – Manufactured	Use traditional form for all types: · Form 1004/70 – SFR or PUD · Form 1073/465 – Condo · Form 1025/72 – 2-4 Units · Form 1004C/70B – Manufactured
FHA	Use traditional form for all types: · Form 1004/70 – SFR or PUD · Form 1073/465 – Condo · Form 1025/72 – 2-4 Units · Form 1004C/70B – Manufactured	Use traditional form for all types: · Form 1004/70 – SFR or PUD · Form 1073/465 – Condo · Form 1025/72 – 2-4 Units · Form 1004C/70B – Manufactured
USDA	Use Exterior-Only form for: · Form 2055/466 – SFR or PUD · Form 1075/72 – Condo	Use traditional form for all types: · Form 1004/70 – SFR or PUD · Form 1073/465 – Condo

Loan Type

Exterior Only Appraisal Form

Desktop Appraisal Form

All Types

Exhibits Required

1. a street map that shows the location of the subject property and of all comparable sales that the appraiser used;

2. clear, descriptive photographs (either in black and white or color) that show the front of the subject property, and that are appropriately identified (photographs must be originals that are produced either by photography or electronic imaging); and

3. any other data−as an attachment or addendum to the appraisal report form−that are necessary to provide an adequately supported opinion of market value

Exhibits Required

1. a location map indicating the location of the subject property and comparable sales, and

2. photographs of the subject property. It may be challenging in some instances to obtain photographs; however, it is expected that the appraiser utilize available means to obtain relevant pictures of the subject property.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

FHA Case Transfers

April 9, 2020rashtonBulletin

Overview

Effective immediately, Carrington Mortgage Services, LLC (CMS) will require Brokers to transfer all FHA Cases to CMS prior to submission to Underwriting. The Broker must request the case transfer from the Prior Lender currently holding the case number to the CMS Lender ID (FHA Sponsor Number: 24751-0000-5). The Prior Lender must initiate the transfer in FHA Connection. The Case transfer process can take 1-3 business days.

In order to proceed with the submission to underwriting, the Broker must obtain and submit to CMS a screenshot of the completed Case transfer request from the transferring Lender. Upon receipt the screenshot, CMS will confirm transfer status in FHA Connection. CMS will then move the file to underwriting once the transfer has been completed by HUD and all applicable Prior to Approval (PTA) conditions have been provided.

Please Note: CMS will still disclose the loan submission without the transfer being completed.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

Maximum DTI for Credit Qualifying Loan Products

April 9, 2020rashtonBulletin

Overview

This temporary guidance is effective for all loans submitted on or after April 13, 2020.

Carrington Mortgage Services, LLC (CMS) is temporarily updating the debt to income (DTI) guidelines for all credit qualifying loan products. This includes FHA, VA, USDA and Conventional products for both Manual and AUS Underwritten loans.

As of the effective date and until further notice, the maximum DTI permitted is 55% for all credit qualifying loan products regardless of AUS approval. Where max debt ratio limits are more conservative, standard guidelines still apply.

Please Note: This is temporary guidance only and CMS will not be updating the program guidelines.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

← Older Posts

Newer Posts →

Bulletin

Overview

Contacts

Overview

Overview

Overview

Overview

Contacts

Overview

FNMA Temporary Appraisal Requirement Flexibilities

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Desktop appraisals

Exhibits for Desktop Appraisals

Exterior-only Inspection Appraisals

Exhibits for Exterior-only Inspection Appraisals

FNMA Temporary Flexibilities for New Construction Loans

Documentation Requirements for New Construction Loans

Builder Certification

Completion Reports for New Construction Properties

FHLMC Temporary Appraisal Requirement Flexibilities

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Appraisals with Exterior-only Inspections

Exhibits for Exterior-only Inspection Appraisals

For Purchase Transaction Desktop Appraisals

Exhibits for Desktop Appraisals

FHLMC Temporary Appraisal Flexibilities for New Construction Properties (Purchase Transactions)

Documentation requirements

Builder certification

Completion reports for new construction properties

FHA Guidance for Property inspections – Updated 03/30/20

Exterior-Only Option

Desktop-Only Option

Form 1004D Part B Completion Report

VA Guidance for Property inspections – Updated 04/13/20

Exterior-Only Appraisal

Purchase or Refinance transactions

Desktop Appraisal Valuations

Reconsideration of Value

Repair Inspections

Termite Inspections

Any Additional NOV Conditions

USDA Guidance for Property inspections – Updated 03/30/20

Residential Appraisal Reports of Existing Dwellings

Repair Inspections of Existing Dwellings

Overview

Contacts

Overview

Contacts

Overview

Contacts

Government Agency Approvals

Industry Links

Company news

Bulletins