Fannie Mae Announces Guide Updates and TRID Disclosure Policy
By Anna DeSimone
June 30, 2015, Fannie Mae issued Ann. SEL-2015-07, Selling Guide and Other Updates. Key highlights of the Announcement are provided below.
The Selling Guide has been updated for the following:
- Conversion of Principal Residence Requirements No Longer Apply
- Stocks, Bonds, and Mutual Funds
- Unreimbursed Employee Business Expenses
- Tip Income
- Use of IRS W-2 Transcripts in Lieu of W-2s
- New Closing Disclosure and Loan Estimate Forms
- Permit Prepayment Penalties on Subordinate Liens
- RD Section 502 Leveraged (Blended) Programs Allowed as Community Seconds®
- Seller/Servicer Net Worth and Liquidity Requirements
- Optional Data Fields on the Verification of Employment (Form 1005 and 1005 (S))
- Loan-level Defect Reporting of Nonpublic Personal Information to Lenders
- Custodian Tracking of Fannie Mae Loan Numbers
New Closing Disclosure and Loan Estimate Forms
The Dodd-Frank Act authorizes the Consumer Financial Protection Bureau (CFPB) to ensure that the markets for consumer financial services are fair and transparent. To that end, the CFPB published new Closing Disclosure and Loan Estimate forms replacing the HUD-1 Settlement Statement, Good Faith Estimate, and Truth in Lending Act disclosures, with the goal of making these forms more consumer friendly and easier to understand. The Selling Guide has been updated to reflect the following with regard to the Closing Disclosure and Loan Estimate:
In acknowledgement of the transition to the new forms, and the fact that lenders will continue to deliver loans with the old and new forms to Fannie Mae for a period of time, a new glossary term for “settlement statement” has been added, defining it as the HUD-1 Settlement Statement or Closing Disclosure, as applicable. All references in the Guide to the “HUD-1 Settlement Statement” have been replaced with “settlement statement.”
A new glossary term for “loan estimate” has been added, defining it as the Good Faith Estimate or Loan Estimate, as applicable. All references to the “Good Faith Estimate” in the Guide have been replaced with “loan estimate.”
Lenders are required to maintain copies of the loan estimate and final settlement statement (including any redisclosures) in the mortgage loan file. In keeping with the form requirements of CFPB, Fannie Mae will not require that the borrower and seller (if applicable) sign the Closing Disclosure or Loan Estimate. Though these signatures are not required, lenders may obtain borrower and seller signatures, which Fannie Mae supports as a best practice, especially on the Closing Disclosure.
NOTE: This is a change in policy from what had been previously announced in communication related to the Uniform Closing Disclosure dataset. This policy change provides lenders with additional flexibility.
If there are separate Closing Disclosures for the borrower and seller, the lender must retain copies of each in the mortgage loan file.
Lenders must use the version of the Closing Disclosure that is applicable to the transaction; for example, the lender may not use the purchase version of the form for a refinance transaction.
The requirement for a separate escrow waiver disclosure has been removed from the Selling Guide because a similar disclosure is now part of the Closing Disclosure.
In a few topics in the Guide, references to items on the settlement statement itself were removed, in light of changes made to content of the Closing Disclosure. For example, there is no space on the updated form to note the reason for a principal curtailment, so that reference was removed from B2-1.4-05, Principal Curtailments. The reason for a principal curtailment must be documented elsewhere in the mortgage file.
The Post-Closing Loan File Document Checklist (Form 1032) will also be updated to reflect the Closing Disclosure and Loan Estimate forms. Lenders must use the new forms when required by CFPB’s Regulation.
Please refer to the Announcement for additional Updated Selling Guide Topics
About the Author
Anna DeSimone is President and Founder of Bankers Advisory and Principal of CliftonLarsonAllen LLP. She can be reached at anna@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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