Flexibilities to Help You Reach Deeper Into New MarketsJuly 27, 2005
Loan Prospector to assess transactions where there are two or more borrowers and not all borrowers have a usable credit score
We've updated Loan Prospector to enable it to assess a transaction with two or more borrowers, if at least one borrower has a usable credit score, as determined by Loan Prospector. With this feature, Loan Prospector assesses a transaction that includes borrowers without a usable credit score if the following requirements are met:
- At least one borrower has a usable credit score, as determined by Loan Prospector
- The transaction is a purchase, "no cash-out" refinance or streamlined refinance mortgage
- The mortgage is secured by a 1-unit property and all borrowers occupy the property as their primary residence
- Borrower(s) with usable credit scores must contribute more than 50% of the total monthly income
- Borrower(s) without a usable credit score are not self-employed
If the conditions above are met, Loan Prospector will return an Evaluation Status of "Complete" on the Loan Prospector Feedback Certificate. For all transactions with an Evaluation Status of "Complete," you must document that for all borrowers without usable credit scores, any debt not reported on the credit report is being repaid in a satisfactory manner and the payment must be included in the total monthly debt-payment-to-income ratio.
If any of the requirements are not met, Freddie Mac approved Seller/Servicers must adhere to the requirements in their Purchase Documents for Manually Underwritten Mortgages.
With this feature Loan Prospector will help you streamline your process by reducing the number of loans you need to manually underwrite.
For Freddie Mac Seller/Servicers, it is important that you thoroughly review our July 26 Industry Letter for complete details on each of this change. Applicable Guide chapters, forms and exhibits will be updated to reflect our requirements in a future Guide Bulletin