Q&A with Leadership: First-Generation Homebuyer Certification Form and ROV Disclosures

There have been a couple of interesting developments in recent publications from Fannie Mae (FNMA), Freddie Mac (FHLMC), and the Department of Housing and Urban Development (HUD). They specify the use of new forms for identifying first-generation homebuyers and new policies for reconsideration of value requests related to appraisals.  -- Fred Gooch, Chief Legal & Compliance Officer, Docutech 

Q: What can you tell us about the First-Generation Homebuyer Certification Form? 

A: As part of its Equitable Housing Finance Plan, FNMA announced in SEL-2024-3 a definition of a first-generation homebuyer loan to support programs that offer assistance for eligible “first-generation homebuyer” borrowers. As part of the implementation, FNMA introduced a First-Generation Homebuyer certification form (Form 1109) which must be completed by each borrower that is applying for the loan. As identification of first-generation homebuyer loans is currently optional, Docutech is planning to make this document available upon request.

Q: What about Reconsideration of Value (ROV) Disclosures?

A: In SEL-2024-03, Fannie Mae announced a new policy and framework to review and respond to borrower-initiated reconsideration of value (ROV). The revised policy includes a requirement for a borrower disclosure that must be provided at the time of application and again when the appraisal report is delivered to the borrower. Lenders are encouraged to implement the new policy immediately but must comply for loans with applications dated on or after August 29, 2024. Similarly, FHA ML 2024-07 contains similar requirements for an “easy-to-understand” disclosure that must be provided at mortgage loan application and upon delivery of an appraisal report to the borrower. Their requirement may be implemented immediately but must be implemented for FHA case numbers assigned on or after September 2, 2024. Also, FHLMC Bulletin 2024-06 specifies a new ROV policy in collaboration with FNMA and HUD to require a disclosure of the ROV process to the borrowers and instructions for initiating an ROV request. These requirements are effective on August 29, 2024.

Docutech is currently reviewing the requirements for these disclosures to determine if there is a way to provide a streamlined form, but the requirements for lender specific details may make it difficult to draft a form that will not require considerable client customization.