Quote & Underwriting Process
Freddie Mac uses a prior approval underwriting approach, managed by our own team of underwriters with local market insight and experience, bringing valuable knowledge to the process.
Local market expertise
We have regional staff for Production and Underwriting with local market expertise. That expertise provides borrowers with a better experience through our collaboration with the Lenders during the quote and underwriting process to structure the deal.
Prior approval model
We have a prior approval underwriting process, managed by our underwriting team whose experience brings valuable knowledge to the process.
Meeting borrower needs
Our underwriting process has a flexible range of options to meet a variety of borrower needs. We are able to offer an Early Rate-Lock when locking the interest rate is a priority for the borrower. Additionally, we offer a Standard Delivery option to rate-lock at the completion of the underwriting evaluation.
Clearly defined requirements
We define our underwriting package requirements in our underwriting checklist. Underwriters work with our Seller/Servicers to review the underwriting package, determine its completeness and provide feedback as well as information on any additional information required.
Strong investor & capital markets interest
We have expertise in processes and standards for underwriting, credit and servicing. Investors and the capital markets have recognized this expertise and our loan performance with strong interest in our Multifamily securities, providing us with a highly competitive funding advantage.
We begin by having one of our producers provide a quote. Our underwriters then work with our Lenders to review a set of clearly defined underwriting package components and provide feedback on any additional information required.
Seller/Servicers start the quote process
In the initial quoting stage, the loan originator from our Seller/Servicer network meets with the borrower to explore financing opportunities. The Production & Sales (Conventional) or Affordable Sales & Investments (Targeted Affordable Housing) team reviews transactions to make a preliminary quote.
Request for quote
When requesting a quote, the Seller provides information including:
- Nature of the financing request
- Borrower experience and capability
- Property condition, location, and operations
- Pricing the transaction
- Status of the property in relation to other assets in its market
Components of the quote
The Production & Sales department or Affordable Sales & Investment department provides a quote to the Seller/Servicer that includes the following information:
- The terms of the loan
- The net spread and estimated note rate
- The loan amount
We have a flexible range of options to meet a variety of borrower needs; including Early Rate-lock when locking the interest rate is a priority for the borrower.
Starting the underwriting process
After the borrower accepts Freddie Mac’s quote, the Underwriting department prepares the loan for credit approval by analyzing information the borrower provided through the Seller/Servicer to develop a recommendation for the approval of the loan.
Early Rate-Lock option
Our Early Rate-Lock option allows the borrower to fix the interest rate/spread of the loan early in the underwriting process with a limited amount of paperwork. Full due diligence is provided after rate-lock and some aspects of the transaction can be modified as needed, to provide flexibility.
Underwriting package submission
Sellers work with borrowers to develop and submit the required underwriting package items. The timing for the delivery of the package items depends on whether the deal is for Early Rate-Lock or Standard Delivery.
Underwriter due diligence reviews
Underwriting also visits the subject property, reviews third-party reports, and performs other required due diligence, including developing the initial Freddie Mac pro forma NOI.
Investment brief and approval process
Underwriting prepares an investment brief to document its recommendation of a transaction. The investment brief is then reviewed and approved by a member of the Underwriting department with the authority to approve the loan amount.
Issuing a letter of commitment
Once the investment brief has been approved, Underwriting issues a letter of commitment to the Seller/Servicer, stating that Freddie Mac will purchase the loan from the Seller/Servicer provided the loan is originated with the borrower and meets the terms and conditions set forth in the letter of commitment.
Rate-lock for Standard Delivery deals
With our Standard Delivery process, once the Seller/Servicer accepts the commitment, the deal may be rate-locked.
Transfer to purchase marks completion
After the Seller/Servicer accepts the commitment and completes the rate-lock, the underwriting process is completed and the loan is transitioned to the Multifamily Purchase department.