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 new Loan Product Advisor capability that leverages proprietary models, 40-years of historical data, and public records to provide an automated alternative to an appraisal for certain mortgages. When the lender receives a Loan Product Advisor Feedback Certificate message indicating the mortgage is eligible for collateral rep and warranty relief with an appraisal waiver, Freddie Mac accepts the purchase price or estimated value submitted by the lender for the purposes of underwriting the mortgage and 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 alternative to a traditional appraisal through 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 for ACE. Once an appraisal is obtained, the loan is no longer eligible for ACE.
When delivering the loan to the Selling System, you must use the following data points in order 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"
No. ACE is only available through Loan Product Advisor 4.3 or higher. We encourage customers to use Loan Product Advisor to get the most benefit in their underwriting process and the integration of our tools. If you haven’t updated your system yet, check with your vendor to learn its implementation timeline for updating to 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. It is possible that a Home Possible mortgage may be eligible for an automated alternative to a traditional appraisal if the loan meets all ACE eligibility requirements, including the max 80% LTV/TLTV limit.
Yes. In consultation with our regulator, effective September 1, 2017, there is a $1M maximum for estimated value or sales price for a property to be eligible for ACE. This maximum does not apply to no cash-out refinance loans that were submitted to Loan Product Advisor prior to September 1, even if they are resubmitted after that date. This will ensure that eligible refinance loans over this new limit that were submitted prior to September 1 and received the ACE offer, do not lose the offer based on the limit.
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. The Selling System 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 ACE offer.
Yes. As long as a traditional appraisal has not been obtained, purchase loans may be resubmitted to Loan Product Advisor after September 1 and be assessed for ACE eligibility. However, if a traditional appraisal has been obtained, the loan must be originated using the appraised value and the loan is ineligible for the ACE appraisal waiver.
Yes. The offer is valid for 120 days. If the offer is more than 120 days old on the Note Date, you must resubmit the loan to Loan Product Advisor to maintain eligibility.
Additionally, the loan must be delivered through the Selling System within 120 days of the Note Date.
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 the Selling System 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.
Yes. If the offer is accepted (i.e. delivered per the Selling System 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®.
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.
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 should be minimal impact to our ability to assess value and/or condition risk. The majority of loans we buy will continue to be delivered with traditional appraisals so the impact to the data available should be minimal. Additionally, we use multiple sources outside of appraisal data received from the UCDP to help mitigate valuation and condition risk.
We expect a significant majority of mortgage loans will continue to require traditional appraisals so there should be 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 seller 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 will result 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.