GSE COVID-19 Update

April 6, 2020

Fannie Mae and Freddie Mac (the “GSE’s”) have issued additional guidance related to COVID-19 in an attempt to address lender’s concerns.

The newest guidance from Fannie Mae in an update to Lender Letter 2020-3 provides additional information in the following areas on loans with application dates on or after April 14, 2020 through May 17, 2020 unless otherwise noted:

Age of documentation – Age of documentation requirements for most income and asset documentation has been modified from four months to two months.

Verification of self-employment – When a borrower is using self-employment income to qualify, the lender must verify the existence of the borrower’s business within 120 calendar days prior to the note date. There is now an additional requirement that lenders confirm the borrower’s business is open and operating within 10 business days of the note.

Market-based assets – When the borrower is using stocks, stock options, or mutual funds for assets for down payment or closing costs, the lender must obtain documentation of the borrower’s actual receipt of funds received from the sale or liquidation. When such assets are used for reserves, only 70% of the value of the asset must be considered, and liquidation is not required.

Power of attorney – Additional flexibilities are now available for use of a Power of Attorney effective immediately for all loans in process and remain in place for loans with application dates on or before May 17, 2020. Currently, persons “connected to the transaction” may serve as an attorney-in-fact or agent in refinance transactions. This provision will also now apply to purchase transactions as well as limited cash-out refinances. Whenever an attorney-in-fact or agent is an employee of the insuring title insurer or is an employee of the policy-issuing agent of the insuring title insurer, the title insurer must have issued a closing protection letter (or similar contractual protection) for the transaction for such policy issuing agent. Additionally, the limitations requiring at least one borrower signature on the note and security instrument are suspended.
Remote Online Notarization – Lenders may sell loans with remotely notarized loan documents in the states in which such notarization is authorized by law as long as certain conditions are met. These policies are effective immediately for all loans and are intended to remain in effect until further notice.

Lender Quality Control Requirements – Lenders are given temporary flexibilities in regard to reverifications, field reviews of appraisals, and prefunding QC reviews. These temporary flexibilities are effective immediately for all loans in the process of a post-closing quality control (QC) review and all loans selected for a post-closing QC review until June 2020 QC selections.

Freddie Mac issued similar guidance in Bulletin 2020-8. To review the details of the guidance provided by both entities, please visit the following links:

Fannie Mae Lender Letter 2020-3, updated March 31, 2020

Freddie Mac Bulletin 2020-8


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This regulatory update is published jointly by Sandler Law Group (SLG) and Asurity Mortgage Group (AMG), an Asurity company doing business as AsurityDocs, to provide clients and friends with updates on new developments in the law. The content of this update is for informational purposes only. Nothing published herein is intended to constitute legal advice and the use of the information provided does not give rise to an attorney-client relationship with SLG. SLG and AMG expressly disclaim any representation of accuracy or reliability as to the content of this update, as well as any obligation to maintain such content over time or ensure it is free from errors. Diane Jenkins is the attorney responsible for the content of this update. Unless otherwise noted, the attorneys of SLG are not certified by the Texas Board of Legal Specialization.

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Diane Jenkins

Director, National Mortgage Compliance Practice Group, AsurityDocs Of Counsel, Sandler Law Group

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