On May 7, 2025, Fannie Mae recently issued Selling Guide Announcement SEL-2025-03 to announce changes to their Selling Guide regarding seller concessions, interested party contributions, and lender incentives, which are effective immediately.
Fannie Mae included the following updates:
Interested Party Contributions and Lender Incentives
Fannie Mae, in collaboration with Freddie Mac has updated its policies on interested party contributions (“IPCs”) and lender incentives. Updates for IPCs include clear definitions and a new list of items that are excluding from the maximum allowed financing concessions. Also, Fannie Mae clarified that a realtor rebate that is not used towards closing costs must be treated as a seller concession. Additionally, when a lender who is, or is affiliated with, an interested party, provides an incentive, it must be treated as a seller concession. Fannie also increased the limit on lender incentives from $500 to $2,500.
Prorated Real Estate Tax Credit
Fannie Mae added language to clarify that a prorated real estate tax credit may be considered in determining the amount of funds required from the borrower at closing only when an escrow account has been established and includes the portion of taxes owed by the property seller during the time they owned the property. In that instance, the prorated real estate tax credit from the seller may offset all or a portion of the funds needed for the escrow account.
Freddie Mac has issued Bulletin 2025-4 to announce several changes to their Seller/Servicing Guide. Notable selling updates include the following:
New Income Calculator Tool
Effective for submissions on or after May 11, 2025, a new income assessment tool will be available in Loan Product Advisor to help determine Borrower’s monthly income. Eligible income includes employed earnings using paystub(s) and W-2 data and self-employed income verified with tax returns or tax transcript data. Use of the tool will provide certain eligibility for income representation and warranty relief, which will be provided on the Freddie Mac Income Calculator Certificate and Feedback Certificate that is submitted to Loan Product Advisor.
Flood Risk Premium
In June 2024, Freddie Mac announced a new requirement for including the full flood insurance risk premium when calculating the housing expense-to-income and debt payment-to-income ratios for mortgages where a flood insurance policy on the subject property shows a full risk premium and a discounted premium. In September 2024, the effective date was extended to April 1, 2025. Now, Freddie Mac has announced that the effective date has been postponed until further notice, in response to industry feedback.
Update to West Virginia Deed of Trust
As previously announced here by DocMagic, Fannie Mae and Freddie Mac updated the West Virginia Deed of Trust model uniform instrument. Language was removed from Section 1 – Payment of Principal, Interest, Escrow Items, Prepayment Charges, and Late Charges; Section 2(a) – Application of Payments or Proceeds; and Section 26(c) – Notice of Sale, Sale of Property.
Click here to view Fannie Mae Selling Guide Announcement SEL-2025-03.
Click here to view Freddie Mac Bulletin 2025-4.