WASHINGTON, DC -- Fannie Mae (FNM/NYSE) today announced new Single-Family underwriting flexibilities for disaster relief that will help hurricane-impacted borrowers acquire new homes. Under certain conditions, the new provisions will allow lenders to disregard obligations on previously owner-occupied homes when calculating a hurricane-impacted borrower's debt-to-income ratio, and permit lenders to base decisions on a borrower's credit history prior to the hurricanes.

"Many homeowners in the impacted areas with destroyed or severely damaged homes are essentially in limbo as they work through satisfying their current obligations, settling insurance matters, and other considerations," said Ken Bacon, executive vice president of housing and community development for Fannie Mae. "These steps will help more families get into new homes faster while the issues and questions regarding their previous properties are being settled."

The company has provided its servicers and lenders with guidance on these new flexibilities, which include:

• When a borrower is purchasing a new home, yet still has an outstanding mortgage on a property located in a Federal Emergency Management Agency (FEMA) Disaster Area, the lender may exclude the mortgage payment on the previous residence from the qualifying ratio calculation provided: 1) the previous residence is either heavily damaged or destroyed and unlikely to be repaired; 2) the lender obtains a property inspection of the previous residence confirming its status; and 3) the borrower provides the lender with information indicating he or she is working with the servicer to appropriately address the prior mortgage obligation and agrees to apply any property insurance proceeds to the mortgage on the damaged home.
• Lenders may give primary consideration to the account and payment information prior to the hurricanes. Any adverse or derogatory credit information that directly resulted from the effects of the hurricanes, including a foreclosure or deed-in-lieu of foreclosure, may be disregarded.
• Lenders may allow a borrower to apply funds received from the government (e.g. FEMA), insurers, charitable organizations and family for a down payment on new property.
• Lenders are granted additional options for verifying a borrower's previous and current employment history, and lenders may take into account anticipated future employment and income that is documented by an employment contract when qualifying an impacted borrower.

The company also announced it is putting in place a dedicated loss mitigation and workout team on the ground in the impacted areas. The team will develop and implement strategies designed to help mitigate losses while helping individuals and communities with the greatest damage recover from the storm. As part of the loss mitigation efforts, the company will reimburse servicers for property inspections (up to $30 per inspection) on mortgages secured by properties most likely to have incurred damage. The company estimates it will spend about $1.5 million for the inspections.

"We hope these measures will help some of those impacted get back on their feet, and we will continue to work with our partners and all stakeholders to find additional solutions," Bacon said.