Opportunities to Streamline Processes; Enhanced Executions for Relief Refinance Mortgages in Guide Bulletin 2012-11
May 15, 2012
As you seek more flexibility in doing business with Freddie Mac, Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-11 announces changes to our underwriting requirements that expand the use of electronic signatures and reduce duplicative borrower information verification. In aggregate, these changes will help provide additional operational ease for your business.
In addition, today's Bulletin includes enhancements to our Freddie Mac Relief Refinance MortgageSM offering. Whether you sell for cash or swap for securities, our expanded Relief Refinance Mortgage requirements will help you reach more borrowers and assist them through the Home Affordable Refinance Program (HARP).
Originate & Underwrite
- Allowing electronic signatures for certain loan application documents. You may begin using electronic versions of certain initial loan documents for your origination processes as outlined in the Guide. With this change, you'll be able to take advantage of the operational efficiencies and quicker processing that electronic transactions provide.
- Eliminating certain Social Security Number (SSN) validation requirements. To reduce redundancy in the post closing quality control (QC) review process, you are no longer required to validate each borrower's SSN if you validated it during loan origination or the pre closing QC review. However, if a mortgage broker or correspondent performed the SSN validations, you are still required to validate the SSN during the post closing QC review.
- Removing the list of third-party employment/income verification service providers. To provide you with more flexibility in verifying employment and/or income, we have removed the list of acceptable verification service providers from the Guide. Income and/or employment verifications obtained from third-party sources remain acceptable, provided these verifications meet the Guide requirements.
Sell & Deliver
- Updating our Cash and Guarantor execution requirements for Relief Refinance Mortgages. If you originate and sell HARP loans, you'll find expanded business opportunities with the changes we've made to the execution options for our Relief Refinance Mortgage offering. The changes include reducing the cash adjustor value to zero basis points effective immediately, applying the cash adjustor only to mortgages with LTV ratios greater than 125 percent, and beginning June 1, 2012, allowing the sale of Relief Refinance Mortgages with LTV ratios greater than 125 percent under a Guarantor execution.
Make sure to read our Single-Family News Center article and Guide Bulletin 2012-11 for complete details.
Other Important Guide Updates
Make sure to review today's Guide Bulletin to become familiar with other important requirement changes, including:
- Prohibiting the sale of mortgages on properties that have certain types of private transfer fee covenants. This new requirement is in compliance with the Federal Housing Finance Agency's final rule on private transfer fee covenants issued on March 16, 2012.
- Adding a provision to recapture premiums for loans that pay off early. At Freddie Mac's discretion, we may apply a remedy to address loans with unusually short prepayment periods.
- Revising the eligibility requirements for balloon/reset mortgages. Beginning September 1, 2012, we will no longer purchase balloon/reset mortgages originated using Fannie Mae balloon documents.
- Allowing ARMs with note rates that are not divisible by one-eighth percent. We are removing the requirement that ARMs must have an original note rate, marginal and lifetime ceiling in 0.125 percent increments.
- Counterparty Authorization (CPA) updates. We will request you to resubmit certain Guide forms to update your CPA information. We have also updated our CPA-related forms.
- An updated Uniform Appraisal Dataset (UAD) Appendix D. As a reminder, an updated version of Appendix D, Field-Specific Standardization Requirements, has been posted on FreddieMac.com.