Fannie Mae and Freddie Mac Guidelines - Enact MI
嚜澤ssets as a Basis for Repayment of
Obligations
Fannie Mae and Freddie Mac Guidelines
October 2020
Customer Education
Brought to you by: Genworth Customer Development and Process Consulting
?2020 Genworth Financial, Inc. All rights reserved.
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Objective
Understand how to qualify a borrower using eligible assets as
qualifying income following Fannie Mae and Freddie Mac guidelines
Employment-Related Assets as Qualifying Income
1
Fannie Mae Guidelines
Asset Must Be Employment Related
每 Assets must be liquid and available to the borrower and must be sourced as:
? A non-self-employed severance package or non-self-employed lump sum retirement
package (lump sum distribution); these funds must be documented with a distribution
letter from the employer form 1099-R and deposited to a verified asset account; or
? For a 401k or IRA, SEP, KEOGH retirement accounts, the borrower must have
unrestricted access to the funds in the accounts and can only use the accounts if
distribution is not already set up or the distribution amount is not enough to qualify. The
account and its asset composition must be documented with the most recent monthly,
quarterly or annual statement
每 Assets used for the calculation of the monthly income stream must be owned
individually by the borrower, or the co-owner of the assets must be a coborrower of the mortgage loan.
每 If a penalty would apply to a distribution of funds from the account made at
calculation, then the amount of such penalty applicable to a complete distribution
from the account (after costs for the transaction) must be subtracted to
determine the income stream from these assets
The documentation must be in compliance with the Allowable Age of Credit Documents policy
Employment-Related Assets as Qualifying Income
2
Fannie Mae Guidelines
Asset Requirements
每 If the employment-related assets are in the form of stocks, bonds, and mutual
funds, 70% of the value (remaining after costs for the transaction and
consideration of any penalty) must be used to determine the income stream to
account for the volatile nature of these assets.
每 A borrower shall only be considered to have unrestricted access to a 401(k)or
IRA, SEP or Keogh retirement account if the borrower has, as of the time of
calculation, the unqualified and unlimited right to request a distribution of all
funds in the account (regardless of any possible tax withholding or applicable
penalty applied to such distribution)
每 Ineligible Assets: Are non-employment related assets such as stock options,
non-vested restricted stock, lawsuits, lottery winnings, sale of real estate,
inheritance, and divorce proceeds. Checking and savings accounts are
generally NOT eligible as employment-related assets unless the source of the
balance in the account was from an eligible employment-related asset (i.e a
severance package or lump sum retirement distribution)
Employment-Related Assets as Qualifying Income
3
Fannie Mae- Eligibility
Fannie Mae Loan Eligibility For Employment-Related Assets As Qualifying Income
Employment-Related Assets as Qualifying Income
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