Loan Prospector’s New Property Inspection Alternative Offers a Competitive, Cost-Effective Option for More of Your Loans

[October 27, 2005]

In November, Freddie Mac is bringing you new changes in Loan Prospector®; all focused on helping you streamline your appraisal and inspection process. We've heard from many of you regarding the need for a more robust model-based evaluation option for appraisals and inspection needs. We've taken this feedback and performed a considerable amount of analysis and market research to develop a competitive, easy-to-use option that is consistent with today's market. Based on this information, starting November 6, we're launching our powerful new Property Inspection Alternative option in Loan Prospector.

We’re also updating Loan Prospector’s feedback to reflect Freddie Mac’s revised appraisal report forms announced earlier this year. Our new feedback messages provide you additional guidance as you transition to the new forms. These enhancements are just one more way that we're continuing to improve Loan Prospector with more solutions to meet more of your changing business needs.

Loan Prospector’s Powerful New Property Inspection Alternative

• Expanded Eligibility. The Property Inspection Alternative expands on the options previously available through the No-appraisal MAF option, with a more competitive set of solutions. You can now use this option in Loan Prospector for loans that meet the following criteria:
  • In addition to Conventional Mortgages secured by 1-unit primary residences, including units in planned developments, you can now also use PIA for second homes and eligible condominium units. Manufactured homes and leasehold estates are not eligible.
  • In addition to purchase mortgages, PIA is available for no cash-out refinance mortgages with total loan-to-value (TLTV) ratios less than or equal to 90 percent
    
• More Options. We’re also making changes to Form 2070 (Condition and Marketability Report), to provide you with a no-cost alternative to the PIA option. If the loan is eligible for our PIA option, you can choose to either obtain a Form 2070 with an exterior-only inspection, or take advantage of the PIA option. Currently, Form 2070 requires an interior and exterior inspection. With our modified Form 2070 requirements, you’ll only be required to obtain an exterior inspection, saving your borrower time and money. To deliver a loan using the Form 2070 option, please use Special Characteristics Code (SCC) 903 on Form 11 or Form 13SF, as applicable. You will not be charged a delivery fee if use the Form 2070 option to originate a loan.
  
  
• Streamlined Pricing. Our PIA option is available for one, flat $50 delivery fee. There's no longer a tiered fee structure, streamlining the fee process for your operations. If the loan is eligible and you want to take advantage of the option and originate the loan with no appraisal or inspection, simply provide SCC 357 on Form 11 and Form 13SF, as applicable, when you sell the loan. If you use our Form 2070 option, there is no delivery fee.
  
  
• Greater Ease of Use. Taking advantage of our PIA option is simple. For every submission to Loan Prospector, the system will automatically check for PIA eligibility. If the submission is PIA-eligible, Loan Prospector will return the following feedback message:
  
  

Message Returned For	Message Code	Message Text
Freddie Mac Seller/Servicers	MS	Form 2070 or Property Inspection Alternative is the minimum assessment required for sale to Freddie Mac.
Third-Party Originators	MY	Form 2070 or Property Inspection Alternative is the minimum assessment required for sale to Freddie Mac; check with your lender for pricing and delivery requirements.




If you receive this feedback message, you can choose to obtain a Form 2070 with an exterior-only inspection, or take advantage of the PIA option:

To sell us a loan originated using the Form 2070 option, use SCC 903 on Form 11 or Form 13SF, as applicable. No delivery fee is required.



To sell us a loan originated using the no appraisal-no inspection option, use SCC 357 on Form 11 or Form 13SF, as applicable. A $50 delivery fee is required.

When you use the no appraisal-no inspection option, you’ll receive relief from representations and warranties regarding value, condition and marketability. When originating mortgages using the PIA option of Form 2070, you must provide Form 1149 (Notice to Mortgage Loan Applicant, Appraisal Alternatives) or equivalent, to the borrower.

If you’re a third-party originator using Loan Prospector, in order to use the Loan Prospector Property Inspection Alternative option, you’ll need to check with your wholesale lenders to determine its availability and if they are willing to accept loans with this form of collateral assessment.

The PIA option is available in LoanProspector.com and LP Classic^®. Our October 14 Single-Family Seller/Service Guide Bulletin [PDF 151K] contains all of the requirements for our new PIA option in Loan Prospector.

For More Information:

• Check out our October 14 Single-Family Seller/Service Guide Bulletin [PDF 151K] for complete requirements for our new PIA option in Loan Prospector.
• View our PIA factsheet [PDF 112K]

New Feedback Messages Help You Transition to Freddie Mac's Revised Appraisal Report Forms

Earlier this year, as a result of Freddie Mac's commitment to streamlining and enhancing the loan origination process, we announced our revised appraisal forms. These changes include revising and enhancing our appraisal report forms and adding one new form. With these revisions, our appraisal forms now address common needs and requests, as well as provide a standardized format that supports appraiser compliance with Uniform Standards of Professional Appraisal Practice (USPAP). The appraisal report forms are available for use immediately, and will be required for use for all mortgages sold to Freddie Mac with appraisal reports that have effective dates on and after January 1, 2006.

Beginning November 6, to make it even easier for you to transition to the revised forms, Loan Prospector feedback messages will be changed to reflect the revised appraisal report forms. In our new feedback messages, you'll find which appraisal form you need to use to comply with our changes. Below is a listing of the current feedback messages and their corresponding new messages.

If you’re a third-party originator using Loan Prospector, your wholesale lenders may have already communicated our appraisal changes to you. Please check with them to determine their timelines around implementing the new forms and make sure that you're using the appropriate forms when working with appraisers.

For More Information

• For complete details on our revised appraisal forms, please visit www.FreddieMac.com/sell/forms.
• Sign-up for training
  • Reviewing Appraisals and Inspection Reports
    Can't attend our classroom offering on Reviewing Appraisal and Inspection Reports? No problem. Attend this live web conference where we'll review Loan Prospector's Minimum Assessment Feedback results and your responsibilities when reviewing appraisal and inspection reports. Join us to learn about key information you'll need to review for appraisal or inspection reports you receive. We'll discuss common issues and additional resources - all to help you determine if a report is acceptable and the property is eligible for sale to Freddie Mac.