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COVID-19 Temporary Overlays Conforming Underwriting Guideline Update—March
18, 2021

AIG continues to align with the majority of the temporary COVID overlays provided by the Agencies. It is important to closely observe overlay expiration dates issued by Fannie Mae and Freddie Mac.

Please see additional guidance below which highlights topics where AIG has taken a more conservative approach; with dates provided for those items where AIG has added updated information. As always please review AIG’s Conforming Underwriting Guidelines for all conforming loan eligibility requirements. Please contact Shane Larscheid, Vice President of Sales with any questions.

Verification of Self-Employment (VOE)-Overlay to Agency and Chapter Six

The Seller must ensure that the borrower is currently employed at the time of the loan closing, and all income sources must be reviewed carefully to ensure that the income will continue at the same or similar levels when qualifying the borrower.

AIG will follow Fannie Mae LL-2021-03 (formerly LL-2020-03) related to self-employment verification requirements, with the following exceptions noted:

  • A third-party verification of self-employment must be completed by the Seller within 10 business days of the Note date.
  • If the lender opts to provide a lender certification that the business is open and operating (lender confirmed through a phone call or other means); The certification must be provided by an arm’s length third-party source, must include contact information and is ineligible when provided by the borrower(s).
Tax Transcripts and Form 4506C  

Form 4506C should now be included in the closed loan files delivered to AIG.  

Powers of Attorney

AIG has not aligned with Fannie Mae LL-2021-03 (formerly LL-2020-03) temporary policies for the use of a power of attorney.

Waiting Period Waivers

AIG will not purchase loans with waived waiting periods related to TRID.

Note Endorsements/Allonges

All Note endorsements or allonges must include a wet signature.

Escrow Holdbacks

Escrow holdbacks for any purpose other than weather related items are ineligible for purchase.

e-Recording

AIG will continue to accept electronically recorded (e-recorded) security instruments, where allowed within state and county guidelines. A copy of the e-recorded instrument with recording information, and the original security instrument, should be forwarded to our custodian, Bank of New York Mellon, as a trailing document.

Mortgage History-Overlay to Agency (updated 1/20/2021)

In addition to the specifications outlined in LL-2021-03 (formerly LL-2020-03) Fannie Mae’s temporary Purchase and Refinance eligibility requirements, AIG requires the following:

  • No mortgage loans for which the borrower is obligated may be in forbearance, including co-signed mortgage loans.
  • Loans to borrowers who have exited forbearance on a mortgage which is current, must document the following:
    • Borrower has exited forbearance
    • The mortgage is not in a repayment plan or loss mitigation program and the mortgage is current.
  • Loans to borrowers that have exited forbearance on a mortgage which is not current (borrower missed payments during the forbearance period), are eligible for purchase with the following documentation:
    • Borrower has exited forbearance
    • Missed payments were resolved through the following:
      • Borrower reinstated the mortgage by making all missed payment prior to the date printed on the Note.
        1. If reinstatement occurs after the application date, the source of funds must be documented.
        2. New loan proceeds cannot be used for reinstatement.
    • Borrower made at least three consecutive timely payments under or completed a loss mitigation program prior to the date printed on the Note.
      • Payments or completion may occur during origination.
      • Loan proceeds may be used to pay off the remaining payments of a repayment plan, deferral amount or a modified mortgage.

 

Gap Insurance Related to Recording Delays

Gap coverage is acceptable for matters arising between the loan closing and the mortgage recording if the:  

  • County recorder’s office is closed due to COVID-19 related disruptions.
  • Closed loan package includes an affidavit signed and dated by all borrowers, providing indemnification against intervening liens.
  • Effective date of the title policy is the same as the Note date in non-escrow states or notary date on the Security Instrument for escrow states.
  • Coverage complies with FNMA requirements, as well as federal, state and local laws.

All loans must contain the Preliminary Title commitment at the time of receipt of the closed loan package, with no exception under Schedule B for the gap coverage.

Electronic Notarizations and Notes

Loans with e-Notes and e-notarizations (including RIN/RON) are ineligible for purchase by AIG.