Fannie Mae Selling Guide Announcement (SEL-2022-01) provides changes to the requirements for HomeStyle Renovation mortgage loans. Specifically, the update states that renovation work must be completed within 15 months from the date the loan is closed. Also, extensions to the 15-month timeframe will only be permitted due to extenuating circumstances beyond the borrower’s control. Previously, renovation work was required to be completed no later than 12 months after the loan closing.
Additionally, the announcement states that a renovation loan agreement must meet the following conditions:
- Be fully executed by both the lender and the borrower at closing and dated the same date as the note
- State the original principal amount of the related promissory note payable to the lender
- Include the property address
- Be kept in the loan file and the original document sent to the document custodian as part of the delivery package
Fannie Mae’s model Renovation Loan Agreement, Form 3731, has been updated to include these changes. The revised loan agreement must be implemented by May 1, 2022.
DocMagic will provide the updated renovation loan agreement as of the required May 1, 2022 effective date.
If you have any question regarding this update, please contact DocMagic’s Compliance Department.
