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Correspondent Lending COVID-19 Guideline Clarification and
Updates –March 25, 2020

COVID-19 Guideline Clarification and Updates

March 25, 2020

With so many questions related to the impact COVID-19 will have on our industry in the coming weeks and months; we’re providing some guidance on a variety of topics related to questions received by our Sales and Underwriting Teams.

This document should be considered a temporary amendment to the AIG Conforming Underwriting Guidelines and the AIG Jumbo Underwriting Guidelines. Further updates will be communicated in a timely manner. Please contact us with any questions or concerns.

These temporary changes are effective immediately for all loans not yet purchased.

AIG Conforming Underwriting Guidelines

Verification of Income & Employment Requirements

  • In order to assist Sellers AIG will follow Fannie Mae COVID-19 guidance issued on 3/23/2020, related to employment verification options. AIG will however be adding a suspense condition for an updated VOE prior to purchase. This condition should be the last suspense item that you address. Once the remedy has been accepted, the loan will be sent for pre-purchase review.
    • The updated VOE is acceptable in the form of a verbal verification of employment, a written verification of employment, or an email verification of employment. An email verification of employment must come directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment status.
  • All gaps in employment must be addressed.

The Seller must take every precaution necessary to ensure the borrower is currently employed at the time of loan closing. All income sources should be reviewed carefully to ensure that the income will continue at the same or similar levels when qualifying the borrower.

All other documentation requirements as detailed in our Conforming Underwriting Guidelines must be met in order to ensure compliance.

Electronic Notarizations

Electronic notarizations are not eligible for AIG Conforming transactions.

Appraisal Requirements for Conforming Mortgage Loans

We will follow the guidance provided by Fannie Mae in their COVID-19 release on 3/23/2020 as it relates to appraisal requirements.

AIG Jumbo Underwriting Guidelines

Verification of Income and Employment Requirements

  • Per our current guidelines, Verbal verifications of employment dated within 10 business days of the Note date will continue to be required; however, in order to temporarily assist Sellers during this challenging time, the verbal VOE (VVOE) may be substituted by a written VOE or Email VOE dated within the same time frame.
    • Email VOE – an email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment status 
  • An updated VOE (in any of the three formats) must be completed prior to AIG’s loan purchase. A suspense condition for a Verbal VOE prior to purchase will be added to each loan and should be the last suspense item that you address. Once the remedy has been accepted, the loan will be sent for pre-purchase review.
  • Self-employment income must continue to be documented in accordance with Ability-to-Repay requirements. A third party verification of employment must be provided.
  • All gaps in employment must be addressed in accordance with the AIG Jumbo Underwriting Guidelines.

The Seller must take every precaution necessary to ensure the borrower is currently employed at the time of loan closing. All income sources should be reviewed carefully to ensure that the income will continue at the same or similar levels when qualifying the borrower.

All other documentation requirements as detailed in our Jumbo Underwriting Guidelines must be met in order to ensure compliance with the Ability-to-Repay/QM requirements.

IRS Tax Filing Extension

We recognize the IRS tax deadline extension for filing 2019 returns. Jumbo Mortgage Loans must include Year-to-Date Profit and Loss Statement and Balance Sheet when self-employment income is present in the loan file.

Appraisal Requirements for Jumbo Mortgage Loans

  • Purchase and Rate & Term Refinance (1 unit primary and second homes)
    • Full 1004 Appraisal or Exterior-only Appraisal Report (2055/1075).
    • Desk Review (in accordance with AIG’s Jumbo Underwriting Guidelines). The desk review may not have a value of more than 10% below the value determined on the appraisal report.
  • Cash-out Refinance, Multi-Unit Properties and Investment Property
    • Full 1004 appraisal report
    • Desk review (in accordance with AIG’s Jumbo Underwriting Guidelines). The desk review may not have a value of more than 10% below the value determined on the appraisal report.
  • Two-Time-Close-Construction-to-Permanent Mortgages
    • Full appraisal
    • Final inspection (no exceptions)
    • Desk Review (in accordance with AIG’s Jumbo Underwriting Guidelines). The desk review may not have a value of more than 10% below the value determined on the appraisal report.

Electronic Notarizations

Electronic notarizations (including remote notarizations) may be used with ink-signed Jumbo transactions only. All the following requirements must be met:

  • The notarization is performed in accordance with and is legally valid under the laws and regulations of the state in which the notarization is performed, at the time it was performed; and
  • If the electronic notarization is a remote notarization, the following additional requirements must be met:
    • the notary public is licensed and physically located in the state where the notarial act occurred and, where required by law or regulation, is specifically licensed to perform electronic notarizations;
    • the laws and regulations of the state in which the mortgaged property is located either expressly permit the use of remote notarization (such as Virginia and Montana) or expressly accept remote notarizations performed out-of-state in accordance with the laws of the state in which the notarial act is performed;
      • loan must meet all eligibility requirements in the AIG Jumbo Underwriting Guidelines;
      • If the notarized document is a security instrument or an amendment to a security instrument, the remote notarization must be disclosed to the title company providing title insurance coverage and either:
        • An affirmative endorsement to the title insurance policy is obtained regarding Exclusion 3(b) in the standard ALTA terms and conditions; or
        • The title insurer has not taken an exception for the remote notarization in the title insurance policy and all related communications with the title insurer are kept in the mortgage loan file.

Jumbo & Conforming Mortgage Loans

Waiting Period Waivers

We are not currently purchasing loans with waived waiting periods related to TRID.

Note Endorsements/Allonges

All note endorsements or allonges must include a wet signature.

e-Recording

AIG will continue to accept electronically recorded (e-recorded) security instruments, where allowed within state and county guidelines. A copy of the e-recorded instrument with recording information, and the original security instrument, should be forwarded to our custodian, Bank of New York Mellon, as a trailing document.

Gap Insurance Related to Recording Delays

Gap coverage is acceptable for matters arising between the loan closing and the mortgage recording. All loans must contain the Preliminary Title commitment at the time of receipt of the closed loan package, with no exception under Schedule B for the gap coverage.