COVID-19 FAQs Selling - Closing & Title
Last Updated: Jan. 14, 2021
In response to the COVID-19 national emergency, Fannie Mae and Freddie Mac have provided temporary guidance to lenders on several policy areas to support mortgage originations. These FAQs provide additional information on the temporary policies. We will be adding more FAQs, therefore we encourage you to check in frequently for updates - refer to the "NEW" or "UPDATED" notations after the question.
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Can a borrower waive the right to rescind on a refinance transaction?
Fannie Mae does not set requirements around rescission periods. If a lender chooses to allow a borrower to waive the rescission period, they must follow and comply with applicable regulatory requirements.
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Do lenders still need to have each borrower whose income (regardless of income source) is used to qualify for the loan to complete and sign a separate IRS Form 4506-C at or before closing?
Yes, lenders are still required to have each borrower whose income (regardless of income source) is used to qualify for the loan to complete and sign a separate IRS Form 4506-C at or before closing. Refer to B3-3.1-06, Requirements and Uses of IRS IVES Request for Transcript of Tax Return Form 4506-C.
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Are there any changes to the signature requirements for the promissory note?
No. In accordance with A2-5.1-03 Electronic Records, Signatures, and Transactions, unless the lender is approved to deliver eNotes, we require that the original wet-ink signed promissory note be in the possession of the document custodian when the loan is certified for our purchase.
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Does Fannie Mae permit an electronic signature by a borrower on a promissory note that is not an eMortgage?
No, a wet-ink signature is required for all promissory notes, unless the promissory note is an electronic note sold in accordance with A2-5.1-03, Electronic Records, Signatures, and Transactions. Lenders that are approved to deliver eMortgages may refer to the Guide to Delivering eMortgages to Fannie Mae for additional information.
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What are Fannie Mae’s requirements concerning “gap coverage” in lenders’ title insurance policies?
The Selling Guide Chapter B7-2 requires a loan title insurance policy that satisfies Fannie Mae’s requirements, written on the 2006 ALTA loan title insurance form or local equivalent, be obtained by a lender before a mortgage loan is sold to Fannie Mae.
The 2006 ALTA form includes “gap coverage” in Covered Risk 14 for matters arising between the date a mortgage loan is closed and when the mortgage is recorded. Similarly, if title insurance is obtained on an alternate form, the Selling Guide requires coverage be provided for the period between the closing date of the loan and the date when the mortgage is recorded.
Lenders must continue to ensure that no unacceptable title impediments or policy exceptions exist in accordance with B7-2-05, Title Exceptions and Impediments.