Mortgage FAQs for loans during Covid-19 disruption
Mortgage FAQs for loans during Covid-19 disruption
  • Posted: April 6, 2020
  • By: Nations Lending
On Friday, March 27th FHA, USDA, and VA released guidance regarding flexibility for Appraisal Orders and Verifications of Employment during the global Covid-19 pandemic. Nations Lending recognizes that during this disruption, verifications of employment and appraisals may be harder to come by as certain businesses are intermittantly closed. Please see the guidelines below explaining these accommodations. 

Effective Dates:  
FHA: Effective 3/27/2020 For all inspections completed prior to 5/17/2020 and cases closed prior to 5/17/2020
USDA: Effective Immediately and for 60 days from 3/27/2020
VA: All loans closed on or after 3/27/2020 until rescission of circular

Income FAQ —​ for clients and real estate agents

Q. How will we calculate my income if I am still employed, but not presently working, and have OT or bonus income? 
A. Provided the borrowers are still employed and not laid off or terminated, we will follow standard requirements for the use of OT and Bonus. If the required documentation cannot be obtained, or the income is marked as not likely to continue due to the current economic conditions, the income will not be able to be used for qualification purposes.

Q. If I am laid off, can we still close a home loan? 
A. No. If a borrower is not still considered employed, the loan must wait to close until they have begun employment again.

Q. What documents can Nations use to verify my employment at this time, if my employer is currently closed?  
A. Yeou may obtain either a bank statement or a paystub dated for the pay period immediately prior to the note date. You MUST ALSO OBTAIN proof of two months PITI reserves for all government programs if using this alternative VOE option. Speak with your Nations Lending personal mortgage advisor about these details. ​

Q. If I am still technically employed, but on “furlough”, can I still close my loan? 
A. In this instance, we will follow agency guidelines for borrowers on “temporary leave”.

Appraisal FAQ ​— for real estate agents

Q. Are there exceptions for full appraisals, or any options for reduced report type options available for government loan transactions?
A. Yes. All agencies are allowing an exterior-only and/or a drive-by option depending on the transaction.
  • ​FHA:
    • PURCHASE: Exterior-only OR Desktop-Only. Not permitted on New construction,  C2P, BOOL, and 203(k) Purchase
    • RT REFINANCE: Exterior-Only allowed
    • CASH OUT REFI: FULL APPRAISAL required
  • ​USDA:
    • PURCHASE and NON-STREAMLINED: Exterior-Only Inspection allowed
  • ​VA:
  • VA indicates the instances below will require the appraiser to continue to gain access to the property and complete a full inspection in the instances below:
    • ​1. Purchase Transaction(vacant property). When the appraiser’s assigned geographic jurisdiction does not have restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or shelter-in-place. 
    • 2. Purchase or Refinance Transaction (property occupied). When the appraiser’s assigned geographic jurisdiction does not have restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or shelter-in-place. In addition, all parties must agree to the interior inspection and meet the following: 
      • (a) either party has not been instructed by health authorities to stay home or practice social distancing; or 
      • (b) does not have flu-like symptoms (such as fever, cough, or shortness of breath); or 
      • (c) has not been quarantined under direction of public health authorities; and 
      • (d) no parties are within the CDC guidance of high risk found here​. 
    • ​​3. If either party does not wish to move forward with the interior inspection or do not meet the criteria listed above, the appraiser may move forward with an Exterior-Only appraisal with enhanced assignment conditions. Lenders may not direct the appraiser to conduct an interior inspection.
  • In the event that one of the above conditions is not met, or either party chooses to limit exposure, an Exterior Only Report is allowed. Appraisers and the lenders must follow the guidance listed in circular 26-20-11. 
  • DESKTOP Appraisals will be allowed, HOWEVER; Loan amounts are LIMITED to the Maximum 2020 Freddie Mac Conforming Loan Limits.

​Please go to your Nations Lending personal mortgage advisor with any additional questions. 

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