June 6, 2016
Summer is here but our Small Balance Loan (SBL) business is not taking a vacation. Thanks to our incredible Seller/Servicer network, we’re on track to achieve our funding goals—both in overall volume and affordable unit goals. And we are coming up on our 17th SBL securitization, which will bring us to nearly $2 billion in SB-Deals offered to the marketplace.
We have several program updates to share with you in this article:
- Rate-Hold Pricing
- ERLA Pricing
- Elimination of Origination Allowance and 5-50 Seller Incentive
- Seller/Servicer Premium Buy-Up Standards
- Switch to Loan Submission Template (LST) 2.6
- Single Package Delivery
- Regional Email Addresses
If you have questions about the items in this update, please contact us. Also, don’t forget to join us later this month in Chicago at our Loan Lab (June 21-22) and at the MBA’s SBL Summit (June 22-23).
Freddie Mac will hold the interest rate for Small Balance Loans (SBLs) based on the application date for 35 business days, excluding Freddie Mac holidays. Should the SBL Seller/Servicer submit the loan after 35 business days, the rate will be the greater of the posted rate at delivery or the rate at time of the Seller/Servicer application to the borrower.
The Seller/Servicer may select not to hold the rate, but must declare at time of application.
The interest rate for an SBL Early Rate Lock Application (ERLA) is set based on the grid at the submission of the ERLA to Freddie Mac. Should the grid-posted interest rate change once the application is received, the rate will be the lower of the rate at submission or the interest rate at Seller acceptance of the ERLA.
As we shared with you in May during our SBL Seller update call, we are discontinuing the use of the Seller Origination Allowance and the 5-50 Seller Incentive for SBL. This is effective for all underwriting packages or ERLAs submitted to Freddie Mac on or after July 1, 2016. There will be no grandfathering of loans under application.
We have updated our premium buy-up standards. Details can be found in the SBL Pricing Grid Explanation document. These apply to any loan taken under application as of June 6, 2016.
All SBL Sellers are strongly encouraged to download and begin using LST 2.6 immediately. This latest version of the LST is more intuitive and the legacy version—LST 2.5—will be retired in August.
We are consolidating the SBL delivery process into a single package delivery, effective for deliveries received on or after July 1, 2016. This will reduce processing time and costs, and allow package issues to be identified pre-funding so that Sellers and Borrowers are approached only once to clear issues.
Remember to submit all SBL transaction questions to the regional email addresses listed below to avoid delaying action on your transaction issues or submissions. We have discontinued use of the SBL Production or SBL Underwriting email address.
These new regional email addresses distribute information to the regional production and underwriting teams, and should be used for screening loans, pricing and exceptions requests, deal specific questions, and notification of the underwriting package/LST upload.
- Northeast Region: email@example.com
- Southeast Region: firstname.lastname@example.org
- North Central Region: email@example.com
- South Central Region: firstname.lastname@example.org
- West Region: email@example.com