Updated SBL Commitments/ERLAs and Representations and Warranties
December 4, 2015
Commitment and ERLA Forms
We have simplified the Small Balance Loan (SBL) Commitment and early rate-lock application (ERLA) forms to streamline them and align with the new SBL loan documents (revised November 2, 2015).
- The revised forms are more than 50 percent shorter than the previous versions.
- They align with the tables/schedules format of the new SBL loan documents.
- Many Seller-only boilerplate provisions are no longer located in the Commitment/ERLA. Now you can find them in the new Chapter 18 of the SBL Guide Addendum, published today.
- Borrower and Seller terms are in separate sections so that Sellers can peel the first section away (titled “Mortgage Terms”) and insert it directly into their Commitments with Borrowers.
- Corrections to the spelling of a Borrower or Guarantor name or a non-material change to a property address can be documented on a form signed solely by the Seller which will upload the form to DMS as part of the Commitment file as a Commitment Amendment. Sellers will not need to obtain Freddie Mac’s countersignature on this document.
Freddie Mac underwriters will begin preparing new Commitments/ERLAs using these forms; if the new SBL Commitment/ERLA form is used, you must prepare the deal using the new SBL loan documents. You may request a waiver to prepare a loan closing in December on the old SBL loan documents; please contact your Freddie Mac underwriter with this request when you submit your underwriting package.
Copies of the SBL Commitments have been provided to SBL Single Counsel and the legal contacts for each SBL Seller.
Representations and Warranties
The Seller/Servicer Representations and Warranties for SBLs have been substantially revised. These are the additional warranties described in Chapter 5 (Section 5.15) of the SBL Guide Addendum.
We launched SBL with six basic securitization-related additional representations and warranties; over the evolution of the early securitization process, that list has become a more robust 38 securitization-related representations and warranties. These are the additional representations and warranties that each Seller makes to Freddie Mac on a loan-by-loan basis; Freddie Mac makes parallel representations and warranties to the Trustee for each SBL securitization.
If you have questions about the new Commitment and ERLA Forms or the new Representations and Warranties, please contact Filicia Davenport on our Legal team.