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Increased Interest in Renovation Mortgages Leads to Fannie Mae Product Enhancement

Posted by Lori Rezac on Feb 13, 2018 2:54:05 PM

lori_2-13-18.jpgIn the Desktop Underwriter/Desktop Originator Release Notes for version 10.2, Fannie Mae has announced an enhancement to the HomeStyle Renovation Mortgage. The maximum LTV on 1-unit, primary residence properties will increase from 95 percent to 97 percent with the implementation of the updates the weekend of March 17, 2018. This applies to purchase and limited cashout refinance transactions. For LTVs over 95 percent on purchase transactions, at least one borrower must be a first-time homebuyer. Refinance transactions will require the existing loan be Fannie Mae-owned, similar to the requirements of the HomeReady product.


Additional changes to the renovation option include an increase on eligible renovation funds to 75 percent of the purchase price plus renovation costs.  Also, manufactured homes will now be allowed with eligible renovation funds capped at the lesser of $50,000 or 50% of the "as-completed" value.


Other changes we can expect with the new version include an adjustment to the DU credit risk assessment, updates to property inspection waiver messaging, and the retirement of DU version 10.0.



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