TIP OF THE DAY - FANNIE RENTAL INCOME

TIP OF THE DAY-FANNIE  RENTAL INCOME

Reporting of Gross Monthly Rent

Eligible rents on the subject property (gross monthly rent) must be reported to Fannie Mae in the loan delivery data for all investment properties and two- to four-unit principal residence properties, regardless of whether the borrower is using rental income to qualify for the mortgage loan. If the borrower is using rental income from the subject property to qualify for the mortgage loan, the Selling Guide provides a list of acceptable documentation and calculation methods for determining the rental income amounts for qualifying purposes. These sources may also be used to obtain the gross monthly rental amount for reporting purposes.

If the borrower is not using any rental income from the subject property to qualify, gross monthly rent must be documented only for lender reporting purposes. The borrower can provide one of the sources listed in this topic, or may provide one of the following sources (listed in order of preference):

·         the appraisal report for a one-unit investment property or two- to four-unit property, or Single-Family Comparable Rent Schedule (Form 1007), provided neither the applicable appraisal nor Form 1007 is dated 12 months or more prior to the date of the note;

·         if the property is not currently rented, the lender may use the opinion of market rents provided by the appraiser; or

·         if an appraisal or Form 1007 is not required for the transaction, the lender may rely upon either a signed lease from the borrower or may obtain a statement from the borrower of the gross monthly rent being charged (or to be charged) for the property. The monthly rental amounts must be stated separately for each unit in a two- to four-unit property. The disclosure from the borrower must be in the form of one of the following:

o    a written statement from the borrower, or

o    an addition to the Uniform Residential Loan Application (Form 1003).

The lender must retain in the loan file the documentation that was relied upon to determine the amount of eligible rent reported

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