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More Certainty: We’re Enhancing Index Lock and Holding Spreads

February 9, 2015

Updated: February 25, 2015

Effective immediately, we have increased the maximum UPB balance for Index Lock loans from $100 million to $150 million.

Index Lock Further Mitigates Coupon Volatility

Since its introduction, Index Lock has reduced coupon volatility during underwriting by allowing borrowers to lock the Treasury index at any point in the origination process.

Starting February 17, we are enhancing Index Lock to include a quoted spread that will not be subject to market grid movements during underwriting. This significant addition will go further to help reduce the volatility of debt service and, ultimately, proceeds. Along with this enhancement, we also are updating Index Lock by:

  • Increasing the maximum UPB from $75 million to $100 million
  • Extending the Index Lock window an additional two hours, now 10 a.m. – 4 p.m. ET
  • Reducing the allowable proceeds variance from +/- 10% to +/-5% 
  • Clarifying the expiration date of 90 days, which may be extended at Freddie Mac’s discretion for a possible fee

For additional information, we have updated the following resources:

Beyond Index Lock: Holding Spreads

Starting February 17, the quoted spread for loans under application will no longer be subject to market grid movements so long as a loan progresses within normal timeframes and the key assumptions remain constant.  For the spread to be held in this manner, the loan:

  • Needs to be under application
  • Does not need to be locked
  • Cannot be a forward

Learn More by Joining Our Upcoming Webinars

For more details about these updates, approved Seller/Servicers may register for one of the following webinars:

Index Lock and Holding Spread Update
Date
: Friday, February 13, 2015
Time: 1:00 p.m. ET

Index Lock and Holding Spread Update
Date
: Tuesday, February 17, 2015
Time: 11:00 a.m. ET

Or for more information, contact your Freddie Mac production or underwriting representative.


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