On May 6, Fannie Mae issued a Selling Guide announcement, updating requirements in four areas:

(i) Remote Online Notarization (RON): Fannie Mae removed the requirement for sellers and servicers to retain a video recording of the remote notarial ceremony for RON closings, while requiring that RON platforms comply with “MISMO Remote Online Notarization Standards Version 2.0 (Draft)” (except for the requirements provided in the Identification and Authentication section), and that lenders retain the RON audit trail in the electronic loan file. For identity verification, lenders may do so using either technical methods (such as credential analysis and knowledge-based authentication) or non-technical methods (such as a credible witness) consistent with industry standards.

(ii) Single-Closing Construction-to-Permanent Loan Modifications: The announcement clarifies that single-closing construction-to-permanent loans may be sold with modified terms, including loan amount and interest rate, without requiring resubmission to Desktop Underwriter (DU), provided that the eligible modifications fall within allowable DU resubmission tolerances. Lenders may take advantage of these clarifications immediately.

(iii) Consideration of IRS Tax Installment Agreement Payments as a Debt Obligation: For borrowers with IRS installment agreements to repay delinquent federal taxes, lenders must now include the monthly payment as part of the borrower’s monthly debt obligations, so long as no federal tax lien has been filed against the subject property and the lender obtains a copy of the approved agreement with the IRS showing the monthly payment and total amount owed and evidence that the borrower is current on such payments.

(iv) Co-Op Project Eligibility: The announcement provides eligibility guidance for all loan deliveries secured by co-op shares in “condop” developments (i.e., co-op projects within a condo/co-op development), and clarification on project eligibility standards and documentation requirements that apply specifically to condop projects. Lenders may choose to incorporate these new standards immediately but are required to do so for new loan applications starting August 6.