August Enhancements Make Loan Prospector an Even Better Place to Start for More of Your Loans
[August 10, 2006]
On August 20, we'll update Loan Prospector® to make it even easier for you to assess more loans, of more types, for more borrowers. With our latest enhancements, we're adding the option for you to assess Freddie Mac's upcoming 40-year fixed-rate mortgages*, as well as updating Loan Prospector to incorporate our recent enhancements to Freddie Mac's Home Possiblesm Mortgages included in our June 26 Single-Family Seller/Servicer Guide (Guide) Bulletin. You'll also find more options for assessing Initial Interestsm and Federal Housing Administration (FHA) Mortgages in Loan Prospector. These new enhancements, combined with the elimination of the Loan Prospector transaction fee for Caution submissions (on first submission) as of August 1, make today's Loan Prospector your place to start for more of your business.
* Full requirements for 40-year fixed-rate mortgages will be announced in an upcoming Single-Family Seller/Servicer Guide Bulletin
Learn more about:
New Enhancements to Home Possible Mortgages
On June 26, we announced sweeping enhancements to Freddie Mac's Home Possible Mortgages to take you deeper into new markets. We've now updated Loan Prospector to include the following enhancements:
- New Home Possible 3% Cash and Home Possible Neighborhood Solution 3% Cash Mortgages. Effective September 1, for Home Possible 97 and Home Possible Neighborhood Solution 97 Mortgages, we will not assess the Home Possible postsettlement delivery fee when a borrower puts down three percent cash from personal borrower funds, or has three percent equity for a no cash-out refinance. These new offerings mirror features previously available with Affordable Gold products. To assess these new products in Loan Prospector, you'll need to select the following Offering Identifiers in Loan Prospector:
- Home Possible 3% Cash – 244
- Home Possible Neighborhood Solution 3% Cash – 245
- Affordable Gold Mortgages Retiring in Loan Prospector on August 20. The transition of Affordable Gold Mortgage features to Home Possible Mortgages simplifies our affordable lending offerings, while adding the key Affordable Gold features you've come to rely on into Home Possible. As part of this transition, beginning August 20, you will no longer be able to assess Affordable Gold products in Loan Prospector. Please keep in mind the following items regarding the retirement of the Affordable Gold Mortgages in Loan Prospector:
- Prepare your pipeline for the retirement of Affordable Gold Mortgages. In order to prepare for the retirement of the Affordable Gold product line, we strongly suggest you clear these loans in your Loan Prospector pipeline before August 19. As of August 20, you will be unable to resubmit any loans previously assessed as Affordable Gold Mortgages.
For Affordable Gold Mortgages currently in your pipeline that are resubmitted, or new Affordable Gold mortgages that are submitted on or after August 20, will receive an "Invalid" message and the following error message:
Message Code |
Message Text |
| INV CA |
Conventional: Affordable Gold loans ineligible for Loan Prospector, please resubmit as Home Possible |
If you receive this message, your loan will be considered a Non-Loan Prospector Mortgage. In addition, for loans that receive this error message, you will be unable to deliver these mortgages as Affordable Gold Mortgages to Freddie Mac. Only Affordable Gold Mortgages that are submitted to Loan Prospector before August 20 will be eligible for delivery as Affordable Gold Mortgages through December 31, 2006.
- Resubmitting Affordable Gold Mortgages in Loan Prospector after August 19. It's suggested that you clear your pipeline loans before August 19. In order to resubmit an Affordable Gold loan for assessment after August 19, you must remove the Affordable Gold Offering Identifier and resubmit the loan using one of the Home Possible Offering Identifiers.
Additional Home Possible Enhancements in Loan Prospector
For our additional Home Possible enhancements announced in the June 26 Guide Bulletin, please continue to follow the guidance we provided in June. These enhancements include:
- Eliminating the borrower contribution requirements for 1-unit Primary Residences (excluding Manufactured Homes)
- Eliminating the homeownership education requirements for 1-unit purchase transactions
- Providing temporary requirements for all eligible Disaster Areas affected by Hurricanes Katrina and Rita areas to eliminate the median income limits for Home Possible Mortgages with note dates of December 31, 2007 or earlier. These mortgages must be delivered by March 31, 2008.
- Allowing Affordable Seconds® to be entered in the Loan Prospector "Total Gift Fund" field instead of entering it in the "Subordinate Amount field" for assessment purposes, subject to certain conditions.
- Reducing the requirement for borrower contribution for 3-4 unit Home Possible mortgages from 5% to 3%.
If you're a third-party originator, in order to take advantage of Freddie Mac's Home Possible Mortgages, you'll need to check with your wholesale lender to determine if they are currently offering Home Possible Mortgages. You can find a list of wholesale lenders originating Home Possible Mortgages at www.FreddieMac.com/homepossible/lenders.html. Please keep in mind that these lenders may promote Freddie Mac's Home Possible Mortgages under a brand name of their own.
Upcoming 40-year Fixed-rate Mortgages Available for Assessment in Loan Prospector
Starting September 1, 2006, you can begin assessing Freddie Mac's new 40-year fixed-rate mortgages in Loan Prospector. In addition, for Freddie Mac Seller/Servicers, 40-year fixed-rate mortgages will be eligible for commitment and delivery through the selling system beginning September 1.
Our 40-year fixed-rate mortgages will help you compete for more business, expand your reach to more borrowers, and enhance opportunities when used with a majority of our mortgage products, including Home Possible and A-minus Mortgages.
To assess these new 40-year products in Loan Prospector:
- You will need to enter "480" in the "Amortization Months" field on the "Loan Application Data" screen.
- If you enter a number between 360 and 480, Loan Prospector will automatically select the 40-year term.
Look for full requirements for Freddie Mac's new 40-year fixed-rate mortgages in an upcoming Guide Bulletin.
Please note: If you're a third-party originator, in order to take advantage of Freddie Mac's new 40-year fixed-rate mortgages, you'll need to check with your wholesale lender to determine if they are currently offering these mortgages.
Additional Loan Prospector Enhancements
Our updates to Loan Prospector will allow you to do all of the following as of August 20:
- Increase Initial Interest Mortgage LTV/TLTV/HTLTV maximums. In our February 17 Guide Bulletin, we increased the maximum LTV/TLTV/HTLTV ratios for all Initial Interest adjustable-rate mortgages (ARMs) by five percent. Since February, all Initial Interest ARMs assessed with the new LTV/TLTV/HTLTV ratios in Loan Prospector have received a purchase restriction that we've asked you to ignore. Loan Prospector now reflects the increased LTV/TLTV/HTLTV ratios, and you will no longer receive a purchase restriction.
- Assess additional Initial Interest Mortgage products. In addition, based on customer feedback, we are also updating Loan Prospector to allow you to assess the following Initial Interest products in Loan Prospector:
- 2- to 4-unit properties
- Investment properties
Please note, while these products will be available for assessment in Loan Prospector, Freddie Mac does not purchase Initial Interest 2- to 4-unit or investment properties. As a result, Loan Prospector will return a purchase restriction indicating these mortgages are ineligible for sale. You may submit pipeline loans for assessment; however, these will also receive a purchase restriction.
- Increase the Federal Housing Administration (FHA) TLTV maximum. On October 31, 2005, the Federal Housing Administration (FHA) raised the total-loan-to-value (TLTV) maximum limit on FHA cash-out refinance loans to 95% from 85%. Until now if you attempted to assess a FHA loan with a TLTV above 85%, you may have received a purchase restriction in Loan Prospector. We're now updating Loan Prospector to allow FHA cash-out refinance loans with a TLTV up to 95% without receiving a purchase restriction.
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