Primary Changes

Updated:

• Part I, Chapter 1: Overview to:
  • require documentation of all due diligence findings in the Transaction Approval Memo; and
  • confirm Loan Documents govern if any inconsistency with the Guide exists.
• Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals to:
  • revise Section 301: Generally, requiring you to document all of your due diligence findings in the Transaction Approval Memo;
  • revise Section 302: Borrower Organizational Structure, requiring your review of 
    • the Borrower's formation documents, and
    • all amendments and restatements;
  • revise Section 303: Key Principals, Principals, and Guarantors, adding requirements for reviewing Principals' direct and indirect ownership interests; 
  • add Section 304: Limited Experience Owner, outlining compliance and documentation information for Limited Experience Owners; 
  • add Section 306: Schedule of Real Estate Owned, requiring collection of a detailed SREO from any Key Principal and Guarantor; and
  • revise Section 309: Applicant Experience Check, providing: 
    • detailed timing for performing an ACheck^TM on any Sponsor, Key Principal, or Guarantor that is a Limited Experienced Owner both
      • before accepting a signed application, and
      • within 3 days before Rate Lock; and
    • Frequently Asked Questions related to the ACheck application and process. 
• Part II, Chapter 1: Attributes and Characteristics to revise:
  • Section 101: Eligible Properties, requiring Property internet searches and documentation in the Transaction Approval Memo; and
  • Section 112: Property Management, requiring additional oversight of the Property's management team. 
• Part II, Chapter 4: Lease Audits, Inspections, and Reserves to: 
  • modify Section 401: Lease Audit, outlining requirements for:
    • reviews;
    • notifications; and
    • validating
      • rent collections,
      • bad debt, and
      • secondary income; 
  • add Section 402: Site Inspections, outlining requirements for:
    • physical inspections; 
    • notifications; 
    • selecting units; and
    • capital item replacements; and
  • update Section 405: Completion/Repairs. 
• The Glossary, to add new definitions and align existing terms.
• Form 4636.TA, to add a Delegation Determination Question for Potential Red Flags for Mortgage Fraud and Other Suspicious Activity. 

Superseded Publication

This publication supersedes Supplement 24-05R: Revised Fraud Prevention Underwriting Due Diligence.

Questions

Please contact the Fannie Mae Deal Team with any questions.