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Guide Bulletin 2012-19 Aligns Relief Refinance Mortgage Requirements for all LTV Ratios and Expands Refinance Opportunities

September 14, 2012

As you look for more ways to make refinancing more accessible to more borrowers, Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-19 announces changes to our Freddie Mac Relief Refinance MortgagesSM – Same Servicer offering that are intended to reduce operational complexities. The changes also offer the same flexibilities for Home Affordable Refinance Program (HARP) mortgages, regardless of the loan-to-value (LTV) ratio of the mortgage. In addition, we are announcing enhancements to our requirements for our Relief Refinance Mortgages – Open Access offering to increase its reach to eligible borrowers.

In aggregate, these changes streamline our offering and help you reach more borrowers looking to refinance their home loans. 

Today’s Guide Bulletin also announces the retirement of our Balloon/Reset Mortgages and updates to our Seller requirements for the servicing-released sales process.

Originate & Underwrite

Relief Refinance Mortgages – Same Servicer

Effective for Relief Refinance Mortgages – Same Servicer with Application Received Dates on or after November 19, 2012, you will need to reference only one set of eligibility requirements regardless of the mortgage’s LTV ratio.

  • Alignment in requirements. We are aligning the eligibility requirements for Relief Refinance Mortgages – Same Servicer with LTV ratios less than or equal to 80 percent with the requirements for mortgages with LTV ratios greater than 80 percent. This means that requirements related to representations and warranties applicable to the mortgage being refinanced, use of mortgage proceeds, occupancy type, and verification of funds for closing will be the same for all Relief Refinance Mortgages – Same Servicer.
  • Retirement of Guide Chapter C24. As a result of these changes, Guide Chapter C24, Relief Refinance Mortgages – Same Servicer with LTV ratios less than or equal to 80%, will be retired effective for mortgages with Application Received Dates on or after November 19, 2012.   

Effective immediately, take advantage of additional flexibilities for Relief Refinance Mortgages – Same Servicer.

  • The changes to the requirements for Relief Refinance Mortgages – Same Servicer, include:
    • Reducing the required borrower income and asset documentation and evaluation requirements.
    • Allowing the verification of reserves equal to 12 monthly principal, interest, tax, and insurance (PITI) payments in lieu of verifying a source of income.
    • Updating our requirements for when a borrower is being removed from the new refinance mortgage.
    • Providing representation and warranty relief for the value, condition, and marketability of the property when an appraisal is obtained.

Relief Refinance Mortgages – Open Access

  • Additional flexibilities. Effective immediately, you can take advantage of the revised requirements, including but not limited to:
    • Reduced income and asset documentation and evaluation requirements.
    • Reduced condominium project evaluation requirements.
  • Use of mortgage proceeds. For Application Received Dates on or after November 19, 2012, the current requirements for use of mortgage proceeds for mortgages with LTV ratios greater than 80 percent will apply to all Relief Refinance Mortgages – Open Access mortgages regardless of LTV ratio.
  • Loan Prospector® updates
    • Loan Prospector feedback messages needed to support changes to Relief Refinance Mortgages – Open Access will be updated at a later date. We will notify you when the changes are implemented. You may apply the additional flexibilities prior to Loan Prospector being updated by doing manual overlays and disregarding the related Loan Prospector feedback messages to the contrary.
    • In addition, enhancements to Loan Prospector, scheduled to go into effect shortly, are expected to help more eligible borrowers refinance through Relief Refinance Mortgages – Open Access.

We encourage you to carefully review Guide Chapters A24, Freddie Mac Relief Refinance Mortgages – Same Servicer with LTV Ratios Greater than 80%,B24, Freddie Mac Relief Refinance Mortgages – Open Access, and C24, Freddie Mac Relief Refinance Mortgages – Same Servicer with LTV Ratios Less than or Equal to 80% to ensure you have an understanding of the revised requirements described above.

Important Relief Refinance Mortgage Reminders

  • When delivering Relief Refinance Mortgages, include the nine-digit Associated Loan Number from the original Freddie Mac mortgage. Using the Seller loan number or any other number may result in the loan being pulled for quality control review. 
  • Please read Guide Bulletin 2012-18 for details on how the new representation and warranty framework will affect certain selling representation and warranties for Relief Refinance Mortgages.

Other Guide Requirement Changes and Reminders

Please review today’s Guide Bulletin for other important updates and reminders, including:

  • Retirement of Balloon/Reset Mortgages for mortgages with settlement dates on or after January 1, 2013.
  • An update to general refinance requirements.
  • Updates to our servicing-released sales process.
  • Reminder on mortgages bound by private transfer fee covenants.

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