Like many of our lender partners, Virginia Housing (VH) has been evaluating the guidance received to date from Ginnie Mae, Fannie Mae and Freddie Mac (collectively, GSE) on COVID-19. Our goal is to continue supporting our lending partners during these challenging times by continuing to provide mortgage loan products that meet the needs of Virginia’s low- and moderate-income first-time home buyers.
We recognize that the COVID-19 forbearance guidance received from the GSEs to date creates an environment of uncertainty for us all. Over the past two weeks, we have received numerous inquiries from our lender partners requesting guidance clarifying if a forbearance will be considered an early payment default resulting in an obligation to repurchase the mortgage loan. After much discussion and consideration, VH has decided to provide relief to those lending partners that implement additional safeguards and processes. These additional requirements are intended to reduce risk associated with originating and purchasing loans in these uncertain economic times.
Accordingly, effective immediately VH will not consider a forbearance as an early payment default in cases where the following processes/procedures have been followed:
- Complete closed loan packages are delivered to VH within 7 business days of the closing date of the mortgage loan.
- The lender obtains a verbal verification of employment (VVOE) two days prior to closing in addition to documentation of employment income (e.g., most current pay stub and/or bank statement reflecting income) in accordance with GSE requirements. In cases where the borrower(s) have experienced a reduction of income, the lender must reevaluate the loan eligibility and provide documentation that the borrower(s) qualify based upon the reduced earnings.
- Borrower(s) COVID-19 Certification is executed at closing attesting that COVID-19 has not impacted the employment status of the borrower or the ability to make a mortgage loan payment in a timely manner. Lenders may continue utilizing Borrower COVID-19 Certifications that have been developed by their legal departments as long as they meet the intent noted above. VH has developed a Borrower COVID-19 Certification that may be utilized by those companies that have not developed their own. It is available here.
As this economic environment continues to unfold, VH may find it necessary to amend the above procedures. We appreciate your understanding and continued support as we, together, navigate these unprecedented times.
Should you have any questions or concerns, please feel free to contact Toni Ostrowski, Managing Director of Homeownership.