ANNOUNCEMENT SENT ON 04/01/20
Attention: We no longer require verbal verification of employment to be done within two days of the note date. This overlay has returned to requiring verbal verification of employment to occur within ten days of the note date.
Attention: FHA has since extended this policy per FHA Info 20-79. Please review that policy update.
Attention: The temporary guidance of “48 hours” has been updated to “two business days.”
Attention: We noticed a typographical error in the original announcement sent out this afternoon. It has since been corrected.
Correction:
Re-verification of employment to occur within two business days of Note Date (Not prior to loan purchase). Please see below the corrected verbiage for the announcement on the re-verification.
Announcement:
During the current economic climate associated with COVID-19, CBC Mortgage Agency continues its mission to support qualified borrowers in the pursuit of sustainable homeownership. However, given the impact COVID-19 may have on employment and income, CBC Mortgage Agency recommends lenders practice additional due diligence to ensure the most recent employment information is obtained, as close as possible to the time of loan closing. Below are a few key things to be aware of:
· CBC Mortgage Agency will require re-verification of employment within two business days of the Note Date. (NOTE: This guidelines has since been rescinded.) Please refer to HUD Mortgagee Letter 2020-05 and Fannie Mae Lender Letter LL-2020-03 for specific guidance on acceptable documentation for Re-verification of Employment, Verbal Verification of Employment and Continuity of Income.
· Self-employed borrowers: Lenders should follow standard FHA and GSE guidelines for documenting self-employment income, including verifying the existence of the borrower’s business within 120 calendar days prior to the note date. Additional steps to confirm that the borrower’s business is open and operating must be confirmed within 10 business days of the note date.
Below are examples of methods the lender may use to confirm the borrower’s business is currently operating:
· Evidence of current work (executed contracts or signed invoices that indicate the business is operating on the day the lender verifies self-employment);
· Evidence of current business receipts within 10 days of the Note date (payment for services performed);
· Lender certification the business is open and operating (lender confirmed through a phone call or other means); or
· Business website demonstrating activity supporting current business operations (timely appointments for the estimate or service can be scheduled)
Note: Due to the challenges with obtaining IRS tax transcripts at this time, CBCMA is temporarily not requiring tax transcripts to verify self-employment income. Lenders must adhere to the requirements set forth above.
· Appraisal Flexibility – CBCMA will accept all options allowed by HUD and the GSEs.
· Title Insurance: The GSEs are reiterating that they accept the 2006 ALTA Loan Title Insurance or equivalent, and that this policy includes “gap coverage” for matters arising between the loan closing date and the mortgage recording date. This is not a change in policy.
Correspondent representations and warranties remain unchanged.
We are monitoring the situation closely and will continue to keep you informed.
Thank you,
CBC Mortgage Agency