If the borrower receives a gift from an acceptable donor who has lived with the borrower for the last 12 months, the gift is considered the borrower’s own funds and may be used to satisfy the minimum borrower contribution requirement as long as both individuals will use the home being purchased as their principal residence.įor minimum borrower contribution requirements for transactions that contain grant funds, employer assistance, and Community Seconds, refer to B3-4.3-06, Grants and Lender Contributions B3-4.3-08, Employer Assistance and B5-5.1-02, Community Seconds Loan Eligibility.įor additional information, see B3-4.3-04, Personal Gifts. See B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements, for HomeReady mortgage minimum borrower contribution and down payment requirements. 1 After the minimum borrower contribution has been met, gifts can be used to supplement the down payment, closing costs, and reserves. The borrower must make a 5% minimum borrower contribution from his or her own funds. All funds needed to complete the transaction can come from a gift.Ī minimum borrower contribution from the borrower's own funds is not required. All funds needed to complete the transaction can come from a gift. Minimum Borrower Contribution Requirement from Borrower’s Own FundsĪ minimum borrower contribution from the borrower’s own funds is not required. The following table describes the minimum borrower contribution requirements for transactions that contain gifts. This article came from the October 2014-Vol45-2 edition of the bulletin.Minimum Borrower Contribution Requirements Licensees should be well aware and well versed in the risks posed to their clients, whether buyer or seller, before engaging in a short sale transaction. But they do not make the pit-falls and problems inherent in short sale transactions any less significant. The changes implemented by Fannie Mae are designed to stream-line the short sale process. Non-arms length transactions require full documentation including 2 years federal tax returns and Fannie 1004. Non-arms length and Conflict of Interest transactions are transactions in which there is a relationship or business affiliation between the borrower, seller, and/or lender. Fannie Mae, as lienholder, is an interested third party and must approve the short sale therefore Fannie Mae is owed a duty of honesty and fair dealing in the transaction. Fannie Mae HomeReady Product Description. Licensees should also keep in mind that in a short sale transaction, once an offer has been submitted to the lender, all subsequent offers must also be submitted to the lender, even after an offer has been accepted by the seller. While the attestation is new, the requirement to deliver all offers to a seller is not.Ĭommission Rule 58A.0106(a) requires that all agency agreements, contracts, offers, leases, or options affecting real property be delivered immediately, but in no event more than five (5) days after execution. The affidavit has now been updated to include an attestation from the listing broker affirming that all purchase offers have been presented to the seller/borrower and that no offers have been held or concealed. Since 2012 Fannie Mae has required that all parties involved in a short sale, including real estate brokers, sign that affidavit at the time of closing to confirm that the transaction was conducted at arm’s-length. Practically, this change means that all short sale properties now must be listed with a licensed real estate professional who is not the borrower before Fannie Mae will approve an offer.įannie Mae has also announced a change to its Short Sale Affidavit (Fannie Mae Form 191). With the release of Servicing Guide Announcement SVC-2014-09, the mortgage giant announced changes to some short sale servicing requirements which took effect on August 1, 2014.įor all new short sales in which Fannie Mae is the lender, borrowers will be prohibited from listing their own property. Upgrades to the Fannie Mae web portal aren’t the only changes that will affect brokers in North Carolina. Potential clients considering selling property through the short sale process should be directed to consult with a licensed attorney. While this may appear to be a welcome change to the process, licensees should bear in mind that in North Carolina negotiating the settlement of a debt and counseling a seller or buyer on the legal or tax implications that may result from a short sale are both considered the practice of law. Other features rolling out soon will allow brokers to negotiate and receive first lien approval directly from Fannie Mae. With the recent upgrades to its web portal, Fannie Mae now allows real estate professionals to submit problems in short sale transactions directly to a representative.
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