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4/26/2017

New Fannie Mortgage Rules on Student Loans

 Student loan payment calculation – Fannie  simplified guidelines on student loans. If a payment amount is provided on the credit report, that amount can be used for qualifying. If the credit report does not identify a payment amount or reflects $0 the lender can use either 1% of the outstanding  balance or a calculated payment that will fully amortize the loan based upon documentation of loan repayment terms.

Revised Guide for Student Loan Obligations:. 
                                                                                                Student Loan Obligations mortgage rules
Student Loans in normal repayment status
Fannie Mae
Freddie Mac
FHA TOTAL SCORECARD/MANUAL
VA

 payment amount provided on the credit report

 If the credit report does not identify a payment amount or reflects $0 use either
  1% of the outstanding  balance or
 Calculated payment that  fully amortizes the loan based upon documentation of loan repayment terms.

Use the payment indicated on the credit report
    IF no monthly payment is reported on the credit report or no documentation in the credit file verifying the monthly payment, 1% of the outstanding loan balance is monthly amount for qualifying purposes.
Payment used is: 
 the greater of
·         1% x the outstanding balance, or
·         The monthly payment on the credit report

OR actual documented payment, provided the payment fully amortizes the loan over term. Obtain written documentation of actual monthly payment, the payment status, and outstanding balance and terms from the creditor.
Greater of credit
report payment or
5% x balance/12,
unless you can
prove the credit
report payment is the actual loan terms (fully amort. pmt).
Proof must come
from student loan servicer and be no more than 60 days old.



Student Loans in Deferred or Forbearance Status
Fannie Mae
Freddie Mac
FHA TOTAL SCORECARD/MANUAL
VA
Same as above
          Same as above

Same as above
No payment required if deferment period is
at least 12 months beyond date of closing.

If less than 12 months left of deferment calculate using greater of credit report payment or
5% x balance/12, unless you can prove the credit report payment is the actual loan terms (fully amort. pmt).
Proof must come from student loan servicer and be no more than 60 days old.




Student Loans under Income Based Repayment Plans

Fannie Mae
Freddie Mac
FHA TOTAL SCORECARD/MANUAL
VA
         Same as above
        Same as above

Same as above
Greater of credit report payment
or
5% x   balance/12, unless you can prove the credit
report payment is the actual loan terms (fully amort. pmt).
Proof must come from student loan servicer and be no more than 60 days old.




Excluding Debts Paid by Others – Other party isn't obligated on the debt. Non-mortgage debt if paid by another party for 12 months can be excluded from the borrower’s debt to income ratios Need: most recent 12 months’ cancelled checks (or bank statements) from the other party documenting a 12–month satisfactory payment history. No delinquent payments for that debt in order to exclude it from the borrower’s debt-to-income ratio.  Other party cannot be a party to the transaction. Non-mortgage debts include installment, revolving, lease payments, alimony, and child support.


Cash out refinance paying off off student loan(s) loan level price adjustment for out refinance transactions waived when all requirements have been met. At least 1 student loan must be paid off.  Loan proceeds must be paid directly to student loan servicer.   Lesser of 2% of $2000 cash back over and above the student loan payoff.  

Properties Listed for Sale – Fannie Mae eliminating the eligibility restriction for cash out refinances when the subject property was listed in the past 6 months. Property must be taken off the market on or before the disbursement date of the new mortgage.


Expiration of PERS – Final Project Approvals for streamline PERS submissions will be issued up to 24 months at Fannie’s discretion. Currently the term is 18 months.

Caroline Gerardo
NMLS 324982
https://carolinegerardo.eaglehm.com/ 

949  784-  9699   cell

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