Fannie Mae Announcement 2012-14 dated December 18, 2012 clarified the eligibility of a refinance transaction when the borrower finances real estate taxes into the new loan.
Loans with real estate taxes more than 60 days delinquent will require an escrow account unless an escrow account is not permitted by state law. As a reminder, HomeBridge does not allow partial impounds.
HomeBridge will apply Fannie Mae’s guidance effective with loan applications dated on or after March 1, 2013. These guidelines do not apply to DU Refi Plus transactions.
Limited Cash-Out Transactions
A loan is ineligible as a limited cash-out (rate/term) transaction and must be considered cash-out when:
- The borrower finances the payment of real estate taxes for the subject property in the loan amount, but does not establish an escrow account.
- The borrower finances the payment of real estate taxes that are more than 60 days delinquent for the subject property in the loan amount.Sixty days is counted from the tax delinquent date on the tax bill, not from the tax due date.
Example:
- Property tax due date: November 10th, 2012
- Property tax delinquent date: December 10th, 2012
- The December 10th date is the date used to calculate if the taxes are more than 60 days delinquent.
Cash-Out Transactions
Eligible
A loan with financed real estate taxes that are more than 60 days delinquent is eligible when an escrow account is established.
Ineligible for Purchase
A loan with financed real estate taxes that are more than 60 days delinquent without an escrow account is ineligible unless requiring an escrow account is not permitted by applicable state law or regulation (i.e. if a particular state law does not allow a lender to require an escrow account, then the loan would be eligible
without the escrow account).
