Our generic “Buydown Agreement” (Cx25) is provided to fulfill various GSE and Federal agency requirements, including those promulgated under FNMA 2019 Single-Family Handbook B2-1.3-05.
Ibid. requires that “when the lender funds the buydown, the buydown agreement must require that the funds in the buydown account be transferred to the new servicer if the mortgage is included as part of a subsequent transfer of servicing.”
Currently, however, Cx25 provides that the buydown “funds shall be held in an escrow account with a financial institution which is not the original or servicing mortgagee and is supervised by a Federal or State agency” – thus making FNMA’s requirements unusual within the context, since it would require that buydown funds in an independent account need to be transferred to a new servicer.
To better accommodate FNMA’s requirements, as well as to provide more flexibility in the agreement for accounts which may be managed by a servicer (see FHLMC Single-Family Seller/Servicer Guide ch. 8302.3), we will be modifying the above referenced clause to state:
“. . . funds shall be held in an escrow account with a financial institution which is supervised by a Federal or State agency.”
Directly following this modified clause, we will also be adding an additional sentence that will be triggered to print dynamically when “Loan Type” (FI 1066) is equal to “0” (conventional loan) and “Lender Total Amount: Years 1-3” (FI 1027) is not equal to “0” (a value is sent):
“Funds in the buydown account will be transferred to the new servicer if the mortgage is included as part of a subsequent transfer of servicing.”
These changes will be in effect on February 27, 2019. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 283355