For single-family lenders and mortgage servicers wondering how the ongoing partial government shutdown impacts agency lending, Fannie Mae issued an explainer Tuesday that outlines just that.
On Feb. 14, the Department of Homeland Security (DHS) experienced a partial shutdown due to a funding lapse after lawmakers failed to reach an accord following Democrats’ demands for restrictions on Immigration and Customs Enforcement (ICE) operations.
Besides ICE, the DHS oversees the Coast Guard, Customs and Border Protection, Federal Emergency Management Agency and Transportation Security Administration, among other agencies. More than 90% of employees under the DHS’s purview have continued working during the shutdown, though some have received partial paychecks or delayed pay.
“For borrowers employed by the federal government or other individuals whose employment is directly impacted by the shutdown, a loan is not rendered ineligible for purchase or securitization by Fannie Mae solely based upon the shutdown,” the lender letter reads, noting that it applies to all loans in process or impacted by the shutdown.
While the Fannie guidelines note that lenders should continue to attempt to obtain verbal verification of employment for impacted borrowers, the verbal VOE requirement will be waived if the lender documents the loan file with a written statement describing the steps taken to obtain verification, and that the requirement could not be met due to the shutdown.
Fannie is also temporarily waiving the requirement that paystubs be dated no earlier than 30 days prior to the initial loan application date for borrowers impacted by the federal government shutdown.
Additionally, the government-sponsored enterprise acknowledged that the shutdown may impact a borrower’s ability to make loan payments, noting that servicers can evaluate a borrower for a forbearance plan per the guidelines laid out in the Fannie Mae Servicing Guide.
The lender letter notes that the temporary guidelines do not impact lenders’ and servicers’ requirements to comply with “ability to repay” standards in the Truth in Lending Act and other applicable laws.
Other Fannie Mae shutdown-related guidance for sellers and servicers can be found here.
