Greater Flexibility to Assess Freddie Mac's Mortgages for Newly Constructed Homes in Loan Prospector
[March 1, 2007]
With our November 20 Guide Bulletin, we introduced a new set of options with our new Mortgages for Newly Constructed Homes offering that enhances our current construction to permanent mortgage requirements.
Learn more about:
Assessing Mortgages for Newly Constructed Homes in Loan Prospector
To make it simple for you to assess these mortgages in Loan Prospector, we have updated the options available in the "New Construction Field" on the "Loan Application Data" page in Loan Prospector. Depending on which option you select, you'll need to choose one of the following options from the drop-down menu:
| Option |
For Use With: |
| Newly Built |
Our Newly Built Home Mortgage offerings |
| Construction Conversion |
Our Construction Conversion and Renovation Mortgage offerings |
For additional details on these new options, it's important that you make sure to review our November 20 Guide Bulletin that includes the full requirements for our new and expanded Mortgages for Newly Constructed Homes offering.
Update Your Loan Origination System to Get the Advantages of Our Enhanced Offering
If you're using a loan origination system (LOS), in order to get all of the benefits of an expanded Mortgages for Newly Constructed Homes offering, you need to:
- Update your LOS to the latest version of Loan Prospector.
- Check with your LOS provider to determine when they will have these new Mortgages for Newly Constructed Homes options available.
Until you are able to update your LOS to include these new options, you may:
| Option 1: |
Submit your loans for Loan Prospector assessment via our web browser access method using the new values. |
| Option 2: |
Continue to assess your construction to permanent mortgages. You can continue to assess your construction to permanent (1-close, 2-close and construction completed after application) mortgages in Loan Prospector via your LOS and deliver these loans under our new delivery requirements to take advantage of the 18-month period, provided you can represent and warrant that the mortgages meet our new underwriting and documentation requirements. To do this, you should use the selling system's new special characteristics code (SCC) identifiers for Mortgages for Newly Constructed Homes. |
Reminder: If you use old values in Loan Prospector, resubmissions must fall in the construction to permanent (1-close, 2-close and construction completed after application) mortgage timelines. If the terms of the construction to permanent mortgage change outside the resubmission requirements and you need to resubmit to Loan Prospector after 180-days, new credit will be pulled.
Managing Your Pipeline Loans
To help you manage loans in your pipeline, please keep in mind the following information:
- May 1 Retirement of Construction to Permanent Values in Loan Prospector: On May 1, we will retire the one closing, two closing and construction completed after application) construction to permanent mortgage values in Loan Prospector. As of May 1, you can no longer submit or resubmit a loan using the construction to permanent mortgage values in Loan Prospector. Due to our technical implementation schedule, beginning May 20, you will receive the following "Invalid" message when you attempt to submit or resubmit a loan using these values.
| |
Message Code |
New Messages |
| Newly Constructed Homes Message |
Code: CG |
Const to Perm loans ineligible for LP, please resubmit. |
- To help you manage the transition to the new Mortgages for Newly Constructed Homes options in Loan Prospector, please review these helpful hints, based on how you access Loan Prospector, on how to handle new submissions, as well as resubmissions of loans previously submitted using our older construction to permanent values in Loan Prospector:
- Managing Pipeline Loans Originated Using Previous Construction to Permanent Values in Loan Prospector: After May 1, you can deliver loans in your pipeline assessed using our previous construction to permanent values under our new Mortgages for Newly Constructed Homes offering, provided those mortgages meet the requirements for the new offering and that you deliver them in accordance with the requirements for the new offering, including use of the new special characteristics code (SCC) identifiers.
Important Information on Credit Usage in Loan Prospector for Mortgages for Newly Constructed Homes
With our new requirements, we're adding a new 18 months of credit usage for Mortgages for Newly
Constructed Home Mortgages. With this offering:
- Freddie Mac Seller/Servicers have 18 months to originate, process and underwrite the loan, construct the home and deliver Mortgages for Newly Constructed Homes to Freddie Mac. The 18-month period begins with the oldest date of the borrower’s credit, capacity or collateral documents. This enhancement is a critical component of this offering and is already generating interest from lenders.
- Your borrower will receive the benefit of 18 months of credit usage instead of the current credit period used with construction to permanent mortgages. With the 18 months credit usage you’ll only have to order credit once for your borrower; eliminating the cost of reordering credit, during the construction process, as long as there are no changes outside the requirements.
With this new requirement, if you are using merged credit reports in Loan Prospector, you may need to change the way you use merged credit reports with Mortgages for Newly Constructed Homes.
Using Merged Credit with Mortgages for Newly Constructed Homes
Because merged credit reports in Loan Prospector are only valid for 120 days, in order to take advantage of the extended 18-month credit period with Mortgages for Newly Constructed Homes using Loan Prospector's Merged Credit Report Options, please follow these steps:
| If you are using Loan Prospector's Merged Credit Report Options with our Mortgages for Newly Constructed Homes: |
You will need to... |
| |
Only request merged credit on your first loan submission.
If you choose to resubmit, do not request merged credit because the credit reporting companies will order new credit (after 120 days) and the risk classification of the loan may be affected. In addition, the 18-month credit period benefit will not be available, if new credit is ordered.
For any resubmissions, remember to unselect merged credit before submitting the loan.
Also, please keep in mind that if you reorder merged credit from the credit reporting company using a Reference Number it must be within 120 days from the original credit origination date. If you use the Reference Number to reorder a merged credit report after 120 days you will receive the following error message: DTE ME: MERGED CREDIT 'reference number is invalid - credit has expired'.
If you unselect the merged credit option and delete the reference number, Loan Prospector can use the underlying credit infiles from your original credit report and your resubmission will continue to be eligible for the 18-month period.
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Please keep in mind that, the credit expiration date on the Full Loan Prospector Feedback Certificate will display 18 months due to our extended credit period for Mortgages for Newly Constructed Homes, but the merged credit will only be effective for 120 days.
If you're a third-party originator, in order to take advantage of Freddie Mac's Mortgages for Newly Constructed Homes offering, you'll need to check with your wholesale lender to determine if they are currently offering these mortgages.
For More Information
- Sign-up for Mortgages for Newly Constructed Homes Training
- Freddie Mac's recently announced 'Mortgages for Newly Constructed Homes' could enable you to originate more loans to borrowers with newly built homes, preparing for construction conversion, and those in need of home renovation funds. Attend this 90-minute interactive web conference to get the details you need to get started now.
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