Loan Product Advisor FAQ
Loan Product Advisor®
Find answers and advice for Freddie Mac's enhanced underwriting tool.
General Loan Product Advisor Questions
Loan Product Advisor is our enhanced automated underwriting system. It helps simplify your origination processes and provides you with greater certainty that your loans meet Freddie Mac eligibility requirements.
Loan Product Advisor is the cornerstone of Freddie Mac Loan Advisor Suite®, and the new name better aligns with our suite of tools.
You'll notice a new look and feel that aligns with Loan Advisor Suite brand, along with other enhancements, such as:
Completely Redesigned Loan Product Advisor Feedback Certificate
A few of the redesigned Feedback Certificate features include feedback messages logically organized by category to enhance workflow, better functionality to easily move from section to section, and data displayed in a visual format to help you quickly identify and understand results.
New Cash-to-Close Feedback Messages
The new cash-to-close feedback messages improve your ability to more efficiently process and underwrite loans by providing specifics on the funds the borrower needs to close.
Yes. You can learn more about Loan Product Advisor through live training, webinars, job aids, online help and an updated functionality guide. Find all our training opportunities on our Learning Center.
Yes. Loan Product Advisor is free. You should continue to handle your fees with third-party vendors, such as credit reporting agencies, through your existing vendor contracts.
Automated Collateral Evaluation (ACE)
ACE is a Loan Product Advisor capability that leverages proprietary models, 40-years of historical data, and public records to allow lenders to underwrite certain loans without a traditional appraisal. When an appraisal waiver is offered and accepted by the lender, the lender is relieved of the representations and warranties related to the value, condition, and marketability of the mortgaged premises.
It’s important to note that when Freddie Mac offers ACE, Freddie Mac has not performed a property review or obtained a valuation of the mortgaged premises and the lender must not make any representations that Freddie Mac has performed a property review or obtained a valuation of the mortgaged premises.
The lender submits the loan to Loan Product Advisor, specifying the estimate of value or the sales price for the mortgaged premises. The ACE models determine the acceptability of the value (or sales price) as the basis for underwriting the loan, and use available data to assess the condition and marketability risks associated with the property. If the analysis determines the risk is acceptable, the Loan Product Advisor Feedback Certificate indicates the loan is eligible for collateral rep and warranty relief with an appraisal waiver and the lender can originate the loan without a traditional appraisal.
No. Eligibility will be assessed for all loans submitted through Loan Product Advisor.
No. There is no fee for ACE.
Yes. For a loan to be eligible for ACE, it must be submitted to Loan Product Advisor and receive a risk class of “Accept”. You must be using Loan Product Advisor 4.3 or higher.
You should input the estimated value in the estimated value of property field or the purchase price in the purchase price field. These fields should not be confused with the appraised value of property field, which should be used when an appraisal has been obtained. Keep in mind, you should be providing an estimated value or purchase price, not an appraised value. Once an appraisal is obtained, the loan is no longer eligible for ACE.
When delivering the loan to Loan Selling Advisor, you must use the following data points for us to identify that you accepted the ACE offer:
- Sort ID 89 (Property Valuation Method Type): “None”
- Sort ID 367 (Investor Collateral Program Identifier): “Property Inspection Alternative”
Yes. If the offer is accepted (i.e. delivered per Loan Selling Advisor instructions), the loan will receive collateral rep and warranty relief with respect to value, condition and marketability.
Yes. The loan’s path to collateral rep and warranty relief will be through a traditional appraisal submitted to the Uniform Collateral Data Portal® (UCDP®) and assessment by Loan Collateral Advisor®. NOTE: loans on condo units can only receive collateral rep and warranty relief with ACE.
Both situations provide immediate relief from the representations and warranties related to the property’s value, condition and marketability. However, if a traditional appraisal is used to underwrite the loan, the lender remains responsible for some representations and warranties that are not applicable when the lender does not obtain a traditional appraisal because they accepted the ACE offer. See Guide Section 5601.9: Seller representations and warranties regarding the mortgaged premises for a comprehensive list of requirements.
No. ACE is only available through Loan Product Advisor 4.3 or higher. If you haven’t updated your system yet, check with your vendor to learn its implementation timeline for updating Loan Product Advisor so that you can take advantage of this and other offerings, and have access to other enhancements that are coming soon.
Yes. A Home Possible mortgage may be eligible if the loan meets all ACE eligibility requirements, including the max 80% LTV/TLTV limit.
Yes. Loans on condo units, that are run through Loan Product Advisor on or after July 16, 2018, will be assessed for ACE eligibility and eligibility to receive collateral rep and warranty relief. However, please note that collateral rep and warranty relief will only be extended to condo unit loans that are delivered with ACE. Where condo unit loans still require a traditional appraisal, they will not be eligible for collateral rep and warranty relief.
Yes. The expansion of ACE to condo units applies to both new submissions and resubmissions on and after the July 16, 2018 effective date.
Yes, a condo project review is still required to determine project eligibility.
Yes. There is a $1M maximum for estimated value or sales price for a property to be eligible for ACE.
The Loan Product Advisor Feedback Certificate provides eligibility messaging. If the loan is not eligible, the feedback message will note that a traditional appraisal is required. If you use Loan Quality Advisor®, you’ll receive the same eligibility feedback message. Loan Selling Advisor also validates the loan’s ACE eligibility.
No. If an appraisal is obtained, it must be used to underwrite the loan and you may not accept the ACE offer.
We recognize the difficulties that would arise if a loan loses its ACE appraisal waiver eligibility, so we have made every effort to minimize that chance. The ACE offer may only change if you change one of the fields in Loan Product Advisor that impact eligibility. Those include:
- Property address.
- Loan amount (if loan amount decreases by no more than 1%, resubmission is not required).
- Estimate of value.
- Sales Price
- Property type.
- Loan type.
- Occupancy of the property.
Loan Quality Advisor and Loan Selling Advisor provide feedback messages alerting you to the loss of the ACE offer and the reason why the loan is no longer eligible.
Credit-related changes (asset or income changes) will not result in the loss of an ACE offer as long as the Loan Product Advisor risk class remains “Accept”.
Yes. If you have information about the property that leads you to believe an appraisal is necessary, you should obtain an appraisal. Examples include, but are not limited to: a contaminated site or hazardous substance exists affecting the property or the neighborhood in which the property is located; and the property is located in an area recently impacted by a disaster; and adverse physical property conditions that are apparent based on a review of the sales contract, property inspection, disclosure from the borrower, etc. Additionally, you must not accept the ACE offer if an appraisal has already been obtained or an appraisal is required by law.
Freddie Mac requirements state the seller may not accept the ACE offer if adverse physical property conditions are apparent based on a review of the sales contract, property inspection, disclosure from the borrower, etc. Does this mean the seller is expected to perform additional due diligence outside the typical underwriting process?
No. This requirement is not meant to imply a property inspection is required, or that the seller is required to ask additional property related questions of the borrower. However, if during the normal course of business, the seller becomes aware of property related concerns, it may be prudent to decline the ACE offer and obtain an interior and exterior inspection appraisal.
You are relieved of the quality control component related to the appraisal review, since a traditional appraisal was not obtained. However, you should continue to perform quality control to ensure that the eligibility requirements for ACE have been met. Additionally, you must continue to perform quality control on the loan for data accuracy and consistency related to borrower credit and capacity.
The seller remains responsible for all project-related requirements. The acceptance of an ACE offer provides no project-related rep and warranty relief.
Yes, as the originator of the loan, a correspondent lender may receive an ACE offer. However, the seller that delivers the loan to Freddie Mac will determine whether the origination of a correspondent loan without a traditional appraisal is acceptable.
Freddie Mac has developed numerous algorithms that assess valuation and condition risk that leverage a wide variety of data, including existing appraisal data, Multiple Listing Service data and public records to mitigate valuation and condition risk.
Overall, there is minimal impact to our ability to assess value and/or condition risk. The majority of loans we buy continue to be delivered with traditional appraisals so the impact to the data available is minimal. Additionally, we use multiple sources outside of appraisal data received from the UCDP to help mitigate valuation and condition risk.
A significant majority of mortgage loans continue to require traditional appraisals so there is minimal impact to the approximately 50,000 real estate appraisers performing appraisals on Freddie Mac loans. ACE uses big data and advanced analytics to offer the option to originate a loan without a traditional appraisal on certain properties where ACE has determined the valuation and condition risk is low. This results in appraisers focusing on the appraisal of more complex properties.
If lenders have questions related to required disclosures, they should contact their legal counsel and/or regulator.