Mortgage financing giant Fannie Mae announced it would be extending some of its flexible lending standards into 2021 due to the COVID-19 pandemic. The extensions include allowing verbal verification of employment and power of attorney flexibilities, as well as some appraisal alternatives to ensure that transactions don’t get delayed. The extensions also require more checks on payment histories of self-employed borrowers.
The temporary measures were originally set to expire Dec. 31. Fannie Mae will now allow these measures to be extended until at least Jan. 31. “We are actively monitoring the spread of COVID-19 in the United States and understand there are concerns about its potential impact on borrowers, businesses, and loan originations,” Fannie wrote in a letter to lenders.
The temporary appraisal alternatives include reducing the need in some situations for appraisers to inspect a home’s interior. At the beginning of the pandemic, the Federal Housing Finance Agency directed Fannie and Freddie Mac to use drive-by appraisals and, in some situations, desktop appraisals.
Employment verification also has become more challenging, since many businesses have either shut down or instituted remote work policies. The FHFA then allowed the GSEs to begin accepting other forms of employment verification, such as recent pay stubs, to help prevent delays in transactions.