Issue: Q&A – January 25, 2019

Fannie Mae – Rental Income – Partnership or S Corp: Do I need to count the entire payment for a rental property against a buyer if the rental property is reported through an S-Corp?

Answer: Fannie Mae allows you to offset the monthly obligations for rental properties reported through a S-Corp or Partnership. Following are the exact rules: Offsetting Monthly Obligations for Rental Property Reported through a Partnership or an S Corporation If the borrower is personally obligated on the mortgage debt (as evidenced by inclusion of the related […]

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Compliance – Lender Credit Incentives: Is it okay for a lender to offer a $500 credit to borrower, and/or also pay for appraisal?

Answer: A lender can pay for borrower’s closing costs/prepaids, and an appraisal would be considered a closing cost. The issue is not whether a lender can do this, it is whether or not it results in varying treatment of your clients. During an audit, regulatory bodies such as the CFPB will look to see if you […]

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Fannie Mae-Freddie Mac-FHA: Will FHA or any other agency allow a “kiddie condo” where a family member buys the home, no income is required of the occupant and the minimum down payment is acceptable? [Mortgage Talking Points™ How FHA Defines Family Members]

Answer: Kiddie Condos is slang terminology for a program that was designed to help young adults own their own home. Many times, this started during the college years when parents thought it might be better to buy a home where their adult child was attending college, versus paying the high rent in college towns. The […]

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Fannie Mae & Freddie Mac – Occupancy Rule: I have a married couple where one is relocating for work and the spouse will be renting in their current town where he is employed until he finds a job in their new hometown. Will this be an occupancy issue with a minimum 3% down file?

Answer: The short answer here is that you can do this loan either Fannie or Freddie and as long as the loan is done through DU or LPA and is not manually underwritten. Only one of the borrowers needs to occupy the property for it to be considered a Principal Residence.  (The whole non-occupant co-borrower […]

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Fannie Mae – Self-Employed Income: Can I use the personal returns of a self-employed borrower to document income, or do I also need business tax returns? [NEW Calculator – Fannie Mae Form 1088 – Business Income Comparative Analysis]

Answer: This really depends on whether or not your borrower meets the exception for waiving the requirement for business tax returns.  See the highlighted portion below.  If your borrower is not exempt, then the lender will need to evaluate the business income.  If the business income is required to be analyzed, Fannie Mae has a […]

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