Fannie Mae Updates Selling Guide

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On October 22, Fannie Mae issued Selling Guide Announcement SEL-2013-08, which updates policies regarding (i) the use of a power of attorney, (ii) DU Refi Plus and Refi Plus eligibility, and (iii) master or blanket insurance for unaffiliated projects, among other miscellaneous updates. The Announcement updates provisions for use of a power of attorney in connection with the final loan application, restrictions on certain transaction types for which a power of attorney may be used, and requirements specifying who may not act as the attorney-in-fact or agent due to a potential financial connection to the transaction, except under limited circumstances. It also addresses the growing practice of lenders using powers of attorney as a matter of convenience or cost savings through a closing transaction facilitated by an online, interactive session between the borrower and a lender-chosen attorney-in-fact. In addition, the Announcement states that the eligibility date for DU Refi Plus or Refi Plus, which previously required the original loan to have been acquired by Fannie Mae on or before May 31, 2009, will now be based on the note date of the original loan. Finally, effective February 1, 2014, Fannie Mae will no longer permit master hazard insurance policies that provide coverage for multiple unaffiliated projects in a single insurance policy.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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