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December 2008 Selling System Enhancements

Selling system to be updated to allow delivery of super conforming mortgages

On December 15, 2008, we updated the selling system to allow the delivery of:

• Super conforming mortgages.
• New Special Characteristics Code (SCC) D99 for certain no cash-out refinance mortgages.

Delivering Super Conforming Mortgages

As announced in our October 17, 2008 Single-Family Seller/Servicer Guide (Guide) Bulletin, super conforming mortgages with note dates on and after October 1, 2008 are eligible for Freddie Mac settlements on and after January 2, 2009.

Enhance your sale options with super conforming mortgages

Whether you're seeking a servicing-retained or servicing-released cash or securities execution, you'll have more opportunities to expand your sale options when you sell the following products as super conforming mortgages:

• Purchase transaction, no cash-out and cash-out refinance mortgages
• Mortgages secured by 1- to 4-unit primary residences, second homes, and 1- to 4-unit investment properties
• 15-, 20-, and 30-year fixed-rate mortgages and 5/1, 7/1, and 10/1 adjustable-rate mortgages (ARMs)
• Initial Interest® fixed-rate mortgages with an interest-only period of 10 years or greater
• Initial Interest 5/1, 7/1, and 10/1 ARMs with an interest-only period of 10 years or greater

For information on products that are not eligible for sale as super conforming mortgages, see Guide Chapter L33.

Streamlined selling system capabilities make it easy and convenient to deliver your loans

When selling super conforming mortgages, the product in the selling system for these mortgages will be the same product used for conforming mortgages that comply with our base conforming loan limits. For example, if you sell a base conforming 30-year fixed-rate loan and a super conforming 30-year fixed-rate loan, you will select the same '30-year Fixed Conventional' product you do today.

In addition, if you are selling a super conforming mortgage that was not submitted to Loan Prospector®, you must represent and warrant that the loan you are selling meets our Guide requirements for these types of mortgages, including:

• As announced in the November 24, 2008 Guide Bulletin, a maximum debt-to-income ratio of 45 percent applies to manually underwritten mortgages, including super conforming mortgages.
• Super conforming mortgages must not exceed the maximum original loan limit amount allowed for the county. Federal Housing Finance Agency (FHFA) resources provide information to help you determine high-cost area loan limits. For details, view:
  • FHFA's 2009 High-Cost Area Loan Limits
  • FHFA's 2009 Loan Limits for All Counties

Sell your TBA eligible super conforming mortgages using a Guarantor or MultiLender Swap execution, or through a Fixed-rate Cash sale

• Choose a Guarantor or MultiLender Swap execution. If you're pooling fixed-rate super conforming mortgages to be traded as TBA, based on the 10 percent de minimus rule, the aggregate unpaid principal balance (UPB) of these loans must make up no more than 10 percent of the total pool amount. If your loans exceed the 10 percent de minimus rule, you'll receive a critical edit when validating the pool in the selling system.
  • (The 10 percent de minimus rule applies only to pools that are eligible to be traded as TBA. In addition, if you want to combine super conforming loans that you are selling through a Guarantor or MultiLender Swap execution in a TBA pool with relocation mortgages, extended buydown mortgages, and/or cooperative share mortgages, then both the 10 percent de minimus rule for loans above $417, 000 and the 10 percent/15 percent de minimus rule for relocation mortgages, extended buydown mortgages, and/or cooperative share mortgages applies.)

There are no special pooling requirements for super conforming adjustable-rate mortgages.

• Receive TBA-level pricing when you pool 15-, 20-, and 30-year fixed-rate mortgages for a Fixed-rate Cash sale. You can pool these loans to be traded as TBA and receive the same TBA-level pricing you get for a Guarantor or MultiLender Swap execution. The aggregate UPB of all fixed-rate super conforming mortgages delivered by a Seller during any month must be less than the greater of (i) $2 million or (ii) 10 percent of the aggregate UPB of all fixed-rate Cash loans delivered by the Seller in that month.

Please note: The best efforts commitment option is not available for super conforming mortgages at this time.

Updates to Net Price capability

If you participate in our Net Price option and take out loan commitments for super conforming mortgages between December 15 and December 31, 2008, the Net Price fee detail for these mortgages will be available. However, the super conforming mortgage delivery fee will not be included in the Net Price detail you receive. On and after January 2, 2009, to view Net Price fee detail for these loans, including the super conforming mortgage delivery fee, you will have to re-price your mortgages.

Here's how to re-price your loans:

1. Go to the ‘Contract Details' screen and select ‘Price Loan(s) Against Contract.'
2. Click on the hyperlink for ‘Net Price' to see your Net Price fee detail.
3. You can also view your Net Price fee detail by selecting the ‘Delivery Fee' hyperlink on the ‘Advanced' tab of the ‘Loan Pipeline.'

Additional details about super conforming mortgages:

• Delivery fees. With super conforming mortgages, you will have unique super conforming mortgage postsettlement delivery fees. You'll also have the standard guarantee fee that applies to conforming loan products, plus current Guide Exhibit 19 delivery fees, as applicable.
• Refer to Guide Chapter L33 for requirements published in the October 17, 2008 Guide Bulletin.
• Refer to the November 24, 2008 Guide Bulletin, for additional requirements for a maximum debt-to-income ratio of 45 percent for manually underwritten mortgages, including super conforming mortgages.

New delivery requirements for certain no cash-out refinance mortgages

We also updated the selling system to allow the delivery of new Special Characteristics Code (SCC) D99 for certain Freddie Mac-owned no cash-out refinance mortgages. In our October 17, 2008 Guide Bulletin we announced effective for Freddie Mac settlements on or after January 2, 2009, we're reducing maximum LTV/TLTV/HTLTV ratios for certain mortgages secured by:

• Second homes
• 2-unit properties
• Investment properties

Freddie Mac-owned no cash-out refinance mortgages secured by second homes and 2-unit properties are exempt from the maximum LTV/TLTV/HTLTV ratio reductions when the new mortgage is not paying off subordinate financing.

Effective January 2, 2009, you'll be required to use SCC D99 for delivery of all Freddie Mac-owned no cash-out refinance mortgages with these higher LTV/TLTV/HTLTV ratios.

In addition to delivering SCC D99, you must also comply with all other delivery requirements for refinance mortgages. For complete details on this new requirement, review the October 17, 2008 Guide Bulletin.