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Enhanced Execution Opportunities for Relief Refinance Mortgages

May 15, 2012

To offer you additional business opportunities for your Home Affordable Refinance Program (HARP) production, today's Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-11 announces updates to our Cash and Guarantor executions for Freddie Mac Relief Refinance MortgagesSM. A portion of our Relief Refinance Mortgage offering, mortgages with loan-to-value (LTV) ratios greater than 80 percent, represents our business implementation of HARP.

Whether you sell for cash or swap for securities, you'll have an expanded secondary market outlet for the Relief Refinance Mortgages you originate, making it easier for you to help eligible borrowers refinance under HARP, even if they have little or no equity in their homes.

Cash Execution: Reducing the Cash Adjustor Value and Modifying Its Application

To lower the cost of your Cash executions for high LTV Relief Refinance Mortgages, we've made the following changes to the application of the cash adjustor.

  • Effective immediately and until further notice, the cash adjustor value will be reduced to zero basis points (bps) for Relief Refinance Mortgages with LTV ratios greater than 125 percent sold under fixed-rate Cash. As announced in our May 9, 2012 Single-Family Update, this is a reduction from the previous 50 basis point value. We encourage you, to the maximum extent possible, to pass on the benefit of this reduction in the cash adjustor to your borrowers.

    The cash adjustor value may change from time to time at Freddie Mac's discretion. We will provide you with written notification in advance of any future changes to the cash adjustor value. In addition, the option to contact 800-FREDDIE to check the current value still is available to you.
  • As announced in our March 30, 2012 Single-Family Update, the cash adjustor will no longer apply to fixed-rate Relief Refinance Mortgages with LTV ratios greater than 105 percent and less than or equal to 125 percent for Cash commitments taken out on or after April 1, 2012. This improves your overall Cash executions for mortgages with LTV ratios less than 125 percent.

You have a full range of Cash execution options for fixed-rate Relief Refinance Mortgages with high LTV ratios, including servicing-retained, concurrent transfer of servicing and the servicing-released sales process. As a reminder, mortgages with LTV ratios greater than 105 percent are not eligible for a Cash sale using the servicing-released sales process. Fixed-rate Relief Refinance Mortgages with LTV ratios greater than 105 percent may be sold under Cash using the servicing-retained or concurrent transfer of servicing options only.

Guarantor Execution: Providing a Securities Outlet for Your Higher LTV Relief Refinance Mortgages

You now have a securities option and pooling guidance to deliver Relief Refinance Mortgages with LTV ratios greater than 125 percent.

  • As announced in Guide Bulletin 2011-22, beginning June 1, 2012, you will be able to sell fixed-rate Relief Refinance Mortgages with LTV ratios above 125 percent using our Guarantor execution. With this enhancement, you can now choose between a Guarantor or Cash sales path when delivering Relief Refinance Mortgages with higher LTV ratios.
  • In addition, you will be able to pool these high LTV mortgages in high LTV Gold Participating Certificates (PC) pools. You have the flexibility of including both Relief Refinance Mortgages – Same Servicer and Relief Refinance Mortgages – Open Access in these PC pools, provided that all mortgages have LTV ratios greater than 125 percent.

In addition to the Relief Refinance Mortgage requirement changes highlighted above, make sure to read Guide Bulletin 2012-11 for other important requirement changes that make it easier for you to do business with Freddie Mac.

For More Information About the Updates to Our Relief Refinance Mortgage Offering

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