When a mortgage loan applicant will be using money or equity conveyed to them as a gift to help pay for mortgage loan fees or the down-payment, the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC), Mortgage Partnership Finance (MPF), Federal Housing Administration (FHA), and Rural Housing Development (RHS) all require the donor to complete a “gift letter,” in which the donor discloses (inter alia) the dollar amount of the gift, when it was transferred, and his relationship to the applicants. He also certifies that he is not expecting his gift to be repaid.
In the past, we have assigned gift letters to clients who have wished to generate them in their packages. We will now be providing a generic gift letter, which will print when the indicator “Gift Letter” equals “Yes.”
This Gift Letter is given pursuant to the following requirements:
FNMA 2013 Selling Guide B3-4.3-04
FHLMC Single-Family Seller/Servicer Guide, Vol. 1, ch. 37.22 & 37.23
Mortgage Partnership Finance Underwriting Guide ch. 4.7.4
FHA Single Family Handbook 4155.1 ch. 5.B.5.a
RD AN No. 4451 (1980-D)
The format of the document will largely be uniform for all loan types, except for loans in which the loan will be sold to an investor who follows FHLMC’s requirements. Under such circumstance, additional text will be added to Section 12 in which the donor states that he is a relative of the applicant(s). Also, additional text concerning the Privacy Act will print for FHA, Department of Veterans’ Affairs (VA), and RD loans, as required by 5 USCA § 552a(e)(3) (West 2013).
This document will begin printing in Processing and Verification packages on April 3, 2013. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
March 27, 2013