Fannie Mae’s Recent Change: Gift Donors and Trusts/Estates

Did you know that Fannie Mae has recently made a significant change regarding gift donors? In their recent bulletin, Fannie Mae now allows trusts or estates to be eligible gift donors, including for the gift of equities. This change aligns Fannie Mae with Freddie Mac, which has always allowed this practice. However, it’s important to note that a gift of equity is only permitted in primary or secondary home transactions. Let’s delve deeper into this exciting development and understand its implications.

Fannie Mae’s decision to include trusts and estates as eligible gift donors is a game-changer for many homebuyers. Previously, these entities were not recognized as potential gift donors, limiting the options available to borrowers. With this change, individuals who have assets held in trusts or estates can now utilize them as a source of gift funds, making homeownership more accessible.

The inclusion of trusts and estates as gift donors is a significant step towards providing more flexibility in the mortgage industry. It allows borrowers to tap into a wider range of resources when seeking financing for their dream homes. Whether it’s a primary residence or a second home, this change opens up new possibilities for buyers.

It’s worth noting that a gift of equity, which involves the transfer of ownership from one party to another at a reduced price, is only permitted in primary or secondary home transactions. This means that borrowers can receive a gift of equity from a family member or other eligible donor, allowing them to purchase a home at a lower price. This can be particularly beneficial for first-time homebuyers who may struggle with down payment requirements.

Freddie Mac has long allowed trusts and estates to serve as gift donors, and Fannie Mae’s alignment with this policy brings consistency to the industry. This change ensures that borrowers have equal opportunities, regardless of the mortgage lender they choose. It also simplifies the process for borrowers who may have assets held in trusts or estates, as they no longer need to navigate complex regulations or seek alternative sources of gift funds.

Fannie Mae’s recent change regarding gift donors is a positive development for the mortgage industry. By allowing trusts and estates to serve as eligible gift donors, Fannie Mae has expanded the options available to borrowers. This change aligns Fannie Mae with Freddie Mac and ensures consistency across the industry. Whether it’s a gift of equity or other forms of gift funds, this change empowers homebuyers and makes homeownership more achievable for many.

As a mortgage broker who utilizes lenders that are Fannie Mae and Freddie Mac approved, allows us to offer flexible financing options. Contact our office for more information about gift funds.