Category Archives: Regulatory Updates

Fannie Mae Updates Selling Guide

advances in their origination and servicing processes.
We currently have policies describing our requirements for delivering an eMortgage to Fannie Mae, where the promissory note and other documents, such as the security instrument, are created, transferred, and stored electronically rather than on traditional paper documentation with pen and ink signatures. We have similar requirements with respect to servicing-related documentation.
Many states are beginning to consider the use of electronic notarization (“eNotarization”) as a means for expediting or facilitating the closing process. This next step in the process of moving deeper into electronic origination requires greater specificity in our current policies; therefore, we are taking this opportunity to clarify our requirements for eNotarization. The practice of electronic notarizations (including remote notarizations) is not limited to eNote/eMortgage transactions.
Many state laws expressly permit in-person eNotarization. Only Virginia and Montana, however, have adopted laws and regulations expressly permitting remote notarization for mortgage loan documents; that is, the use of real-time, two-way audio/video communication to notarize documents. eNotarization is addressed in the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act and the Uniform Electronic Transactions Act (UETA). However, the lack of specific state recognition of remote notarization has hampered its widespread adoption, particularly when accomplished by out-of-state notaries.
We accept delivery and servicing of mortgage loans with electronic documents, including security instruments or mortgage loan modification agreements that have been electronically notarized, either in person or remotely using real-time, two-way audio/video communication, provided certain requirements are met. The Selling Guide has been updated to reflect these requirements. Additionally, the Servicing Guide will be updated in June to reflect these requirements.
Effective Date
These requirements are effective immediately.

Medium of Recorded Mortgages
Currently, we require the lender to maintain a mortgage loan file that contains “originals” of the recorded mortgage or
deed of trust, riders, and loan modification agreements. Documents that are electronically recorded often appear the
same as those recorded on paper, which has led to confusion as to which documents are “originals” under our policy and
which are electronic copies.
As a result, we have updated this policy to allow for copies of the recorded documents that contain the recording
information from the recorder’s office. In addition, we have clarified that we require originals of any applicable unrecorded
rider and any other unrecorded document that changes the mortgage loan terms (or otherwise affects our legal or
contractual rights under the mortgage).
Effective Date
These updates are effective immediately.
ARM Pass-through Rate after Adjustment
Lenders may take down whole loan commitments to deliver ARMs to Fannie Mae. Currently, ARMs are committed using
the required net margin. We are changing the committing and delivery of whole loan ARMs to instead use the gross
mortgage margin that is on the security instrument. The Selling Guide has been updated to remove references to multiple
Glossary Terms that no longer apply. The Glossary Term yield differential adjustment has also been updated.
Using the gross mortgage margin will also impact how the pass-through rate is calculated when the ARM adjusts. This
change will be communicated in a future Servicing Guide update.
These changes will further align whole loan ARM execution with the process for ARM MBS.
Effective Date
These changes are effective for whole loan ARMs committed (and subsequently delivered) on or after September 1, 2017.
Over Deliveries of Whole Loan Commitments
We limit the amount by which a lender can deliver loans over the whole loan commitment amount, known as the “over
delivery” amount. The current maximum over delivery amount is 25% of the original commitment amount, up to a
maximum of the one unit single family conforming loan limit (currently $424,100). We are simplifying the over delivery
limit to only require that it not exceed 25% of the original commitment amount.
Effective Date
This change will be effective on whole loan commitments taken on or after June 12, 2017.
Whole Loan Cash Back Pair-offs
As part of the June 10, 2017 update to the PE-Whole Loan application, we are giving more flexibility to lenders in pairingoff
whole loan commitments. We are removing the following requirements when determining if a commitment is eligible
for a cash back pair-off:
• pair-off quotes requested after the expiration date of the original commitment (defined as no later than 5:00 p.m.
Eastern time on the expiration date);
• the lender accepts Fannie Mae’s offer of an overdelivery.
NOTE: Commitments paired off through the automatic pair-off process will continue to be ineligible for cash

Effective Date
This change will be effective for lender-requested pair-offs performed on or after June 12, 2017.
Lenders who have questions about this Announcement should contact their Account Team.
Carlos T. Perez
Senior Vice President and
Chief Credit Officer for Single-Family


Section of the Announcement Updated Selling Guide Topics
Use of Electronic Notarization
including Remote Notarization
 A2-5.1-03, Electronic Records, Signature, and Transactions
 A3-2-01, Compliance With Laws
 B7-2-04, Special Title Insurance Coverage Considerations
Medium of Recorded Mortgages  A2-5.1-02, Individual Mortgage Loan Files
ARM Pass-through Rate after
 C2-1.1-07, Standard ARM and Converted ARM Resale
 E-3-05, Glossary of Fannie Mae Terms: E
 E-3-13, Glossary of Fannie Mae Terms: M
 E-3-18, Glossary of Fannie Mae Terms: R
 E-3-25, Glossary of Fannie Mae Terms: Y
Over Deliveries of Whole Loan
 C2-2-01, General Requirements for Good Delivery of Whole Loans
Whole Loan Cash Back Pair-Offs  C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs



Freddie Mac Announces Guide Bulletin 2017-8

SUBJECT: SELLING UPDATES This Guide Bulletin announces: Collateral representation and warranty relief – new automated collateral evaluation  Automated collateral evaluation, including requirements for: – June 19, 2017 (New)  Eligibility  Age of automated collateral evaluation offer  Delivery Condominium Projects  Simplified requirements for Detached Condominium Projects  Additions to our list of ineligible projects – May 31, 2017 and August 31, 2017  Elimination of separate underwriting paths for streamlined project reviews Appraisal and property specific requirements  Addition of Uniform Appraisal Dataset (UAD) condition and quality ratings and level of updating definitions to the Guide as new Exhibit 36  Additional details about the sales contract provided to the appraiser  Updates to our eligibility and appraisal requirements for a 1-unit property with an accessory unit – August 31, 2017 Area median income estimates  Updates to Loan Product Advisor® and the Home Possible® Income & Property Eligibility tool to reflect the area median income estimates for 2017 – June 13, 2017 EFFECTIVE DATE All the changes announced in this Bulletin are effective immediately unless otherwise noted. COLLATERAL REPRESENTATION AND WARRANTY RELIEF – NEW AUTOMATED COLLATERAL EVALUATION Effective June 19, 2017 Building on the collateral representation and warranty relief announced in Bulletin 2017-3, this Bulletin announces our automated collateral evaluation, which provides the Seller with the option to waive the appraisal requirements for certain Loan Product Advisor Mortgages. Freddie Mac’s automated collateral evaluation leverages data and proprietary models to assess whether the estimate of value provided by the Seller to Loan Product Advisor may be used to underwrite the Mortgage in lieu of the appraised value. When the Seller accepts an automated collateral evaluation offer to waive the appraisal, the Seller will be relieved of its representations and warranties related to value, condition and marketability of the property.

When accepted, this appraisal waiver will help shorten origination timelines and reduce costs for Sellers and Borrowers while providing greater certainty through collateral representation and warranty relief. Eligibility Loan Product Advisor offer The Seller will receive a feedback message indicating that a Mortgage is eligible for an appraisal waiver on the Loan Product Advisor Feedback Certificate. If the Mortgage is not eligible for an appraisal waiver, the Feedback Certificate will specify that an appraisal is required. If the Mortgage meets the eligibility requirements in this Bulletin and the Seller receives the feedback message indicating the Mortgage is eligible for the appraisal waiver, the Seller may accept the offer by delivering the Mortgage with the ULDD Data Points described in the “Delivery requirements” section below. Mortgage eligibility The following requirements apply for a Mortgage to be eligible for the appraisal waiver:  The Mortgage must be secured by a 1-unit Primary Residence or second home  The Mortgage must have a loan-to-value (LTV)/total LTV (TLTV) ratio less than or equal to 80%  The Mortgage must be a no cash-out refinance  Upon assessment by Loan Product Advisor, the Feedback Certificate must indicate the Mortgage is eligible for collateral representation and warranty relief with an appraisal waiver  The final submission to the Selling System® must indicate the collateral representation and warranty relief status is “Y” or “Yes” Ineligible Mortgages The following Mortgages are not eligible for an appraisal waiver:  Mortgages for which an appraisal has been obtained in connection with the Mortgage  Mortgages secured by one of the following:  A Condominium Unit  A Manufactured Home, or  A leasehold estate  Mortgages secured by Mortgaged Premises subject to resale restrictions  Construction Conversion and Renovation Mortgages  Freddie Mac Relief Refinance Mortgages SM – Same Servicer or Open Access  Mortgages with Freddie Mac Settlement Dates more than 120 days from the Note Date In addition, Sellers may not accept an appraisal waiver offer through Loan Product Advisor if any of the following apply:  The Seller is required by law or regulation to obtain an appraisal  The Seller is aware of conditions it believes warrant an appraisal being obtained. Examples include but are not limited to:  The property is located in an area recently impacted by a disaster  A contaminated site or hazardous substance exists affecting the property or the neighborhood in which the property is located Page 3 For Mortgages with appraisal waivers, the Seller must not make any representation that Freddie Mac has performed a property review or obtained a valuation of the Mortgaged Premises. Guide impacts: Guide Sections 4203.1, 4501.6, 4603.5 and 5601.9 Age of automated collateral evaluation offer The appraisal waiver offer is valid for 120 days. If the offer is more than 120 days old as of the Note Date, a resubmission to Loan Product Advisor is required to determine ongoing appraisal waiver eligibility. Note: If the Seller changes loan data (e.g., address of the property, loan amount, estimate of value, loan type, property type, occupancy of the property) in a subsequent Loan Product Advisor submission, the original offer may be invalidated and a different automated collateral evaluation eligibility determination may be provided. Guide impacts: Sections 5601.8 and 5601.9 Delivery requirements Once the Seller has accepted the appraisal waiver offer for a Mortgage, the Seller must deliver the following ULDD Data Points for the Mortgage:  Property Valuation Method Type (Sort ID 89) and enter a valid value of “None”  Investor Collateral Program Identifier (Sort ID 376) and enter a valid value of “Property Inspection Alternative” Guide impact: Section 6302.10 Additional resources We encourage Sellers to visit the Collateral Representation and Warranty Relief page on the Freddie Mac Learning Center for available training and resources. CONDOMINIUM PROJECTS Detached Condominium Projects As a result of recent Mortgage performance trends, we are simplifying the project eligibility requirements for Detached Condominium Projects: Detached Condominium Project Requirements Previous requirements Revised requirements The Seller was required to determine compliance with:  The Condominium Project review requirements in Section 5701.2(a), and  The Condominium Project eligibility requirements, which have two components:  General Condominium Projects in Section 5701.2(b), and  The Detached Condominium Project review type in Section 5701.7(b) The Seller was required to determine compliance with Section 5701.2(b), including determining that the project is not an ineligible project as specified in Section 5701.3. The Seller is required to determine compliance with:  The Condominium Project review requirements in Section 5701.2(a), and  The Detached Condominium Project eligibility requirements in Section 5701.7(b) The Seller is no longer required to determine compliance with Section 5701.2(b), including determining that the project is not an ineligible project as specified in Section 5701.3


Compliance with Sections 5701.2(a), 5701.2(b) and 5701.3 and one of the project review types in Guide Chapter 5701 is still required for all other Condominium Projects. Guide impacts: Sections 5701.2, 5701.3 and 5701.7 Ineligible Condominium Projects As a result of our research and analysis, we are updating our list of ineligible Condominium Projects in Section 5701.3 as follows:  Projects with names that include the words “hotel,” “motel,” “inn,” or “lodge” or a branded hotel chain or name remain ineligible unless the project does not have the characteristics of a hotel or similar type of transient housing  Projects with pending litigation involving minor matters that do not affect the safety, structural soundness, functional use or habitability of the project and in which the litigation amount is unknown may be eligible if the requirements in Section 5701.3(i) are met Additionally, effective August 31, 2017, we are updating our list of ineligible projects as follows:  A project or an investment in a project, including Condominium Unit ownership that is characterized or promoted as an investment opportunity, that could be deemed to be an investment security is an ineligible project  A project with mandatory dues or similar membership fees for the use of Amenities, such as clubhouses or recreational facilities, is ineligible with certain exceptions Guide impacts: Sections 1301.11, 5601.2 and 5701.3 Streamlined project review We are aligning and consolidating the maximum LTV/TLTV/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio requirements for “LP Accept Mortgages” and “All Other Mortgages” underwriting paths. The maximum LTV/TLTV/HTLTV ratio requirements are now indicated solely by occupancy type. As a result, the maximum LTV/TLTV/HTLTV ratio for streamlined project review of non-LP Accept Mortgages for Condominium Units in Established Condominium Projects not located in Florida is increasing from 80% to 90% for primary residences. Guide impact: Section 5701.4 APPRAISAL AND PROPERTY SPECIFIC REQUIREMENTS Uniform Appraisal Dataset (UAD) condition and quality ratings and level of updating definitions For ease of Seller use and efficiency in the appraisal underwriting process, we are incorporating the UAD condition and quality ratings and level of updating definitions into the Guide as new Guide Exhibit 36. These ratings and definitions were previously only published in UAD Specification Appendix D: Field-Specific Standardization Requirements, which is posted on our UAD web page. Guide impacts: Section 5601.12 and Exhibit 36 Information supplied to the appraiser – changes to the sales contract In response to Seller inquiries, we are specifying that Sellers are not required to provide the appraiser with an updated sales contract unless the updated terms impact the physical description or condition of the property. In such cases, the Seller must obtain an updated appraisal of the property. Changes to the sales contract that are not required to be provided to the appraiser include, but are not limited to:  Changes to the transaction terms such as sales price, financing or sale concessions, and  Date revisions, corrections to typographical errors, etc. Guide impact: Section 5601.3 Page 5 Property with an accessory unit Effective August 31, 2017 Currently, Freddie Mac will purchase a Mortgage secured by a 1-unit property with only one accessory unit. To assist Sellers in identifying an accessory unit, we are updating our requirements and guidance as follows:  Requiring that the accessory unit have a kitchen and a bathroom  Providing examples of characteristics that may indicate a 2-unit property rather than a 1-unit property with an accessory unit, such as the zoning and land use requirements, covenants or homeowners association requirements, the existence of separate meters, ingress/egress or separate addresses for the units We are updating our comparable selection requirements for a 1-unit property with an accessory unit that complies with the zoning and land use requirements (legal or legal non-conforming zoning compliance) to require that the appraisal must include at least one comparable sale with only one accessory unit. The accessory unit of the comparable sale must also comply with the zoning and land use requirements to demonstrate the conformity and marketability of the subject property to its market area. Additionally, to allow Sellers to deliver a Mortgage secured by a 1-unit property with an accessory unit that does not comply with the zoning and land use requirements (illegal zoning compliance), we are adding the following requirements:  The “Site” section of the appraisal report must indicate that the accessory unit does not comply with zoning and land use requirements (illegal zoning compliance)  At least two comparable sales with each having only one accessory unit must be included in the appraisal report. The accessory unit of each comparable sale must also be non-compliant with the zoning and land use requirements to demonstrate the conformity and marketability of the subject property to its market area  The Seller must confirm that the existence of the accessory unit will not jeopardize future hazard insurance claims Guide impacts: Sections 5601.2 and 5601.12 AREA MEDIAN INCOME ESTIMATES The FHFA has issued the area median income estimates for 2017. Loan Product Advisor and the Home Possible Income & Property Eligibility tool will be updated by start of business on June 13, 2017 to reflect the 2017 area median income estimates. Because some 2017 estimates are lower than the area median income estimates for 2016, Home Possible Mortgages underwritten using the 2016 area median income limits may no longer be eligible for sale. If a Home Possible Mortgage received an “AcceptEligible” evaluation prior to June 13, 2017, but receives an “Accept-Ineligible” when resubmitted to Loan Product Advisor on or after June 13, 2017 due only to the new area median income estimates (that is, no other purchase restriction/reason for ineligibility applies), we will honor the original Feedback Certificate for the “eligibility” and purchase the Mortgage as long as there is no change to the Borrower’s income and/or the address of the Mortgaged Premises. In these instances, the original Feedback Certificate (pre-June 13, 2017) must have been returned by Loan Product Advisor no more than 120 days before the Note Date and both Feedback Certificates must be retained in the Mortgage file. GUIDE UPDATES SPREADSHEET For a detailed list of the Guide updates associated with this Bulletin and the topics with which they correspond, refer to the Bulletin 2017-8 (Selling) Guide Updates Spreadsheet available at CONCLUSION If you have any questions about the changes announced in this Bulletin, please contact your Freddie Mac representative or call Customer Support at (800) FREDDIE. Sincerely,

Christina K. Boyle

Senior Vice President

Single-Family Sales and Relationship Management


The MPF Program Reminds Servicers of MI Cancellation Requirements for Conventional Loans

Reminder of MI Cancellation Requirements for Conventional Loans Servicers are reminded of their obligation to comply with the Homeowners Protection Act (HPA), the Guides, and all other Applicable Laws when cancelling mortgage insurance (MI) on conventional loans. Servicers must have policies and procedures in place to ensure MI is cancelled in accordance with HPA requirements based on borrower-requested cancellation, automatic termination, or final termination requirements. The MPF Program has reviewed the MI cancellation requirements in the Guides and clarified the guidelines. Each cancellation option now has its own section in the Guide, so that the requirements for each option are clear. See MPF Traditional Servicing Guide chapter 4.7.2. All eligibility requirements as specified in the HPA are incorporated into and are a pre-condition of the MPF Program’s MI cancellation policy.

Servicers of MPF Traditional and MPF Xtra loans are required to report all MI cancellations and terminations on conventional loans to the Master Servicer within five (5) Business Days of termination using the MI Cancellation Notice (Form SG343). See the updated form for additional information. MPF Traditional Servicing Guide chapter and MPF Xtra Servicing Guide section 4.6 have been updated with the revised reporting requirements.



CFPB Issues Notice Regarding ATR/QM Rule Assessment

The Bureau of Consumer Financial Protection (Bureau) is conducting an assessment of the ATR/QM Rule under the Truth in Lending Act (Regulation Z), in accordance with section 1022(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The Bureau is requesting public comment on its plans for assessing this rule as well as certain recommendations and information that may be useful in conducting the planned assessment.


Notice of assessment of Ability-to-Repay/Qualified Mortgage rule and request for public comment

SUBMIT A FORMAL COMMENT comment form for this notice


Read comments received 



FHA Multifamily Delays Implementation of CNA e Tool Date

With this Mortgagee Letter, the Department of Housing and Urban Development (HUD) amends Mortgagee Letter 2016-26, published December 30, 2016, by delaying the implementation date for the new Capital Needs Assessment tools (CNA e Tool). The updated CNA e Tool is being released concurrent with this Mortgagee Letter. To ensure adequate time for users to familiarize themselves with the tools, the required use of the CNA e Tool for all CNAs submitted under covered programs is delayed from July 1, 2017, as stated in Mortgagee Letter 2016-26, to October 1, 2017. Use of the CNA e Tool will be voluntary for all CNAs submitted through September 30, 2017. All CNAs submitted to HUD on or after October 1, 2017 must be submitted through the CNA e Tool to fulfill program requirements. All other provisions of Mortgagee Letter 2016-26 remain in effect, including programs covered. Questions regarding this Mortgagee Letter may be directed to David Wilderman at (202) 402-2803. For technical questions concerning the system tools or system access call your designated help desk or contact Sean Cortopassi at 202 402 4087. Persons with hearing or speech impairments may access assistance via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

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Fannie Mae Updates Selling Guide

Selling Guide Updates The Selling Guide has been updated to include changes to the following:  Student Loan Solutions  Project Eligibility Review Waiver for Fannie Mae to Fannie Mae Limited Cash-Out Refinances  Properties Listed for Sale in the Previous Six Months  PERS Expiration Dates  Truncated Asset Account Numbers  Flash Settlement for Mortgage-Backed Securities  Servicing Execution Tool Bifurcation Option Terms and Conditions  Miscellaneous Selling Guide Update Each of the updates is described below. The affected topics for each policy change are listed on the Attachment. Lenders should review each topic to gain a full understanding of the policy changes. The updated topics are dated April 25, 2017. Student Loan Solutions Student Loan Payment Calculation We are simplifying the options available to calculate the monthly payment amount for student loans. The resulting policy will be easier for lenders to apply, and may result in a lower qualifying payment for borrowers with student loans. If a payment amount is provided on the credit report, that amount can be used for qualifying purposes. If the credit report does not identify a payment amount (or reflects $0), the lender can use either 1% of the outstanding student loan balance, or a calculated payment that will fully amortize the loan based on the documented loan repayment terms. The current Desktop Underwriter® (DU®) message issued when an installment debt on the loan application does not include a monthly payment will be updated in a future release to reflect this new policy. Until then, lenders may disregard the statement in the message specifying the previous policy and follow the requirements in the Selling Guide. Effective Date This policy change is effective immediately. Debts Paid by Others We are simplifying our requirements for excluding non-mortgage debts from the debt-to-income ratio. Non-mortgage debts include debt such as installment loans, student loans, and other monthly debts as defined in the Guide. If the lender obtains documentation that a non-mortgage debt has been satisfactorily paid by another party for the past 12 months, then the debt can be excluded from the debt-to-income ratio. This policy applies regardless of whether the other party is obligated on the debt.

Effective Date Lenders may implement this flexibility immediately. The DU message on omitted debts will require documentation to support the omission of the debt, but will not reference the documentation requirements specified above as DU is not able to identify if the debt was omitted as a result of this policy. Student Loan Cash-out Refinance With this update, we are introducing the student loan cash-out refinance feature, a cost-effective alternative to use existing home equity to pay off student loan debt. This feature provides the opportunity for borrowers to payoff one or more student loans through the refinance transaction, potentially reducing their monthly debt payments. The loan-level price adjustment that applies to cash-out refinance transactions will be waived when all requirements have been met. The student loan cash-out refinance feature contains elements of both a cash-out refinance and a limited cash-out refinance transaction as described in the table below.


Fannie Mae Updates Standard Modification Interest Rate Adjustment Exhibit

The Fannie Mae Standard Modification Interest Rate is subject to periodic adjustments based on an evaluation of prevailing market rates. The servicer must use the current Fannie Mae Standard Modification Interest Rate indicated below when evaluating a borrower for a conventional mortgage loan modification, excluding Fannie Mae HAMP Modifications. NOTE: As a reminder, the interest rate used to determine the final modification terms must be the same fixed interest rate that was used when determining eligibility for the Trial Period Plan and calculating the Trial Period Plan payment.

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CFPB Issues Final Rule Officially Delaying Effective Date of Prepaid Accounts under Regulations E and Z Rule

The Bureau of Consumer Financial Protection (Bureau or CFPB) is issuing this final rule to create comprehensive consumer protections for prepaid accounts under Regulation E, which implements the Electronic Fund Transfer Act; Regulation Z, which implements the Truth in Lending Act; and the official interpretations to those regulations. The final rule modifies general Regulation E requirements to create tailored provisions governing disclosures, limited liability and error resolution, and periodic statements, and adds new requirements regarding the posting of account agreements. Additionally, the final rule regulates overdraft credit features that may be offered in conjunction with prepaid accounts. Subject to certain exceptions, such credit features will be covered under Regulation Z where the credit feature is offered by the prepaid account issuer, its affiliate, or its business partner and credit can be accessed in the course of a transaction conducted with a prepaid card. DATES: This rule is effective on October 1, 2017. The requirement in § 1005.19(b) to submit prepaid account agreements to the Bureau is delayed until October 1, 2018.

I. Summary of the Final Rule Regulation E implements the Electronic Fund Transfer Act (EFTA), and Regulation Z implements the Truth in Lending Act (TILA). On November 13, 2014, the Bureau issued a proposed rule to amend Regulations E and Z, which was published in the Federal Register on December 23, 2014 (the proposal or the proposed rule).1 The Bureau is publishing herein final amendments to extend Regulation E coverage to prepaid accounts and to adopt provisions specific to such accounts, and to generally expand Regulation Z’s coverage to overdraft credit features that may be offered in conjunction with prepaid accounts. The Bureau is generally adopting the rule as proposed, with certain modifications based on public comments and other considerations as discussed in detail in part IV below. This final rule represents the culmination of several years of research and analysis by the Bureau regarding prepaid products. Scope. The final rule’s definition of prepaid accounts specifically includes payroll card accounts and government benefit accounts that are currently subject to Regulation E. In addition, it covers accounts that are marketed or labeled as “prepaid” that are redeemable upon presentation at multiple, unaffiliated merchants for goods or services, or that are usable at automated teller machines (ATMs). It also covers accounts that are issued on a prepaid basis or

capable of being loaded with funds, whose primary function is to conduct transactions with multiple, unaffiliated merchants for goods or services, or at ATMs, or to conduct person-toperson (P2P) transfers, and that are not checking accounts, share draft accounts, or negotiable order of withdrawal (NOW) accounts. The final rule adopts a number of exclusions from the definition of prepaid account, including for gift cards and gift certificates; accounts used for savings or reimbursements related to certain health, dependent care, and transit or parking expenses; accounts used to distribute qualified disaster relief payments; and the P2P functionality of accounts established by or through the United States government whose primary function is to conduct closed-loop transactions on U.S. military installations or vessels, or similar government facilities. Pre-acquisition disclosures. The final rule establishes pre-acquisition disclosure requirements specific to prepaid accounts. Under the final rule, financial institutions must generally provide both a “short form” disclosure and a “long form” disclosure before a consumer acquires a prepaid account. The final rule provides guidance as to what constitutes acquisition for purposes of disclosure delivery; in general, a consumer acquires a prepaid account by purchasing, opening, or choosing to be paid via a prepaid account. The final rule offers an alternative timing regime for the delivery of the long form disclosure for prepaid accounts acquired at retail locations and by telephone, provided certain conditions are met. For this purpose, a retail location is a store or other physical site where a consumer can purchase a prepaid account in person and that is operated by an entity other than the financial institution that issues the prepaid account. The short form disclosure sets forth the prepaid account’s most important fees and certain other information to facilitate consumer understanding of the account’s key terms and



Fannie Mae Selling Guide Updates SEL-2017-03

In response to requests from a number of our customers, we are clarifying that lenders may obtain a verification report for use with the Desktop Underwriter® (DU®) validation service directly from a “report supplier” that generates the report and sends the data electronically to DU, or from a “report distributor” that obtains the report from an authorized report supplier. Continue reading Fannie Mae Selling Guide Updates SEL-2017-03

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