In Mortgagee Letter 2023-01, the U.S. Department of Housing and Urban Development (HUD) addressed the use of the revised Fannie Mae and Freddie Mac single-family loan documents with FHA Title II forward mortgage loans. As previously reported, in July 2021 Fannie Mae and Freddie Mac released revised versions of their notes and security instruments for single-family loans. For loans sold to Fannie Mae and Freddie Mac, lenders were able to begin using the revised documents immediately and required to use the revised documents for loans with note dates on or after January 1, 2023.
HUD explains in the Mortgagee Letter that its guidelines require FHA lenders to use a form of note and security instrument that “conforms generally to [Fannie Mae and Freddie Mac] forms in both form and content, but which includes specific modifications required by FHA as set forth in the applicable FHA Forward Model Note and Mortgage and related instructions provided by FHA.” The model Note and Mortgage, and instructions regarding the specific modifications to Fannie Mae and Freddie Mac documents that are required, may be found here.
HUD advises that the revised Fannie Mae and Freddie Mac loan documents no longer align with the FHA instructions on modifications that were issued in 2015, which instructions were based on the prior versions of the loan documents. As a result, FHA has published instructions for modifications required to be made to the revised Fannie Mae and Freddie Mac loan documents, which instructions may be found at the link provided above. However, FHA is not requiring that lenders use the revised Fannie Mae and Freddie Mac loan documents. Lenders may continue to use the prior versions of the loan documents, with the modifications that are required for such versions of the documents.
HUD reminds lenders that that they must ensure that the note and security instrument comply with all applicable state and local requirements for creating a recordable and enforceable security instrument and an enforceable note.