Loan Prospector November 18 Release
October 31, 2012
As part of our ongoing technology enhancements to create greater efficiencies in your loan manufacturing process, we are updating Loan Prospector® on November 18, 2012. This release supports your continued use of Loan Prospector with the following updates:
- Adding new and updated feedback messages to reflect some of the changes in underwriting requirements for Relief Refinance MortgagesSM – Open Access, including reduced income and assets documentation requirements, as announced in the Single-Family Seller/Servicer Guide (Guide) Bulletin 2012-19.
- Adding a new feedback message to indicate Balloon/Reset Mortgages will no longer be eligible for sale to Freddie Mac as announced in Guide Bulletin 2012-19.
- Updated Area Median Income (AMI) estimates reflecting 2012 numbers.
- Revising the credit reporting company (CRC) technical affiliate drop-down list to update names of companies and remove companies no longer in business.
Adding New and Updated Feedback Messages to Align with Recent Guide Changes
We are updating Loan Prospector with new and updated feedback messages to reflect some of the changes in underwriting requirements for Relief Refinance Mortgages – Open Access, including reduced income and assets documentation requirements, as announced in the Guide Bulletin 2012-19.
On November 18, 2012, Loan Prospector will be updated with the following new and updated feedback messages for all new submissions and resubmissions of Relief Refinance Mortgages – Open Access to Loan Prospector regardless of the loan-to-value (LTV) ratio:
|Message Code||Feedback Messages|
|New Feedback Messages|
|DOC XV*||If any borrower is self-employed, obtain most recent 1 year signed complete individual federal tax return and third party verification of business within 30 calendar days prior to Note Date.|
|DOC XY*||If using alimony, child support or separate maintenance payments to qualify, obtain a copy of the signed court order and evidence of receipt of the total court ordered amount for most recent 1 month.|
|DOC YA*||For all income types, including, but not limited to income types such as rental income, temporary leave, military and military reserves, mortgage differentials and assets as a basis for mortgage qualification, refer to the Freddie Mac Single-Family Seller/Servicer Guide, Section B24.3 (f)(i). The guidance includes income types referenced within the existing LP messages as well as all other income types.|
|DOC YG*||For Borrowers who receive income from primary or secondary employment, bonuses, overtime, tips or an automobile allowance, obtain most recent YTD paystub, salary voucher or written verification of employment documenting 1 month of income, and a verbal VOE no more than 10 Business Days prior to the Note Date.|
|DOC XP*||For Borrowers who receive income from commissions, obtain a YTD paystub, salary voucher or written verification documenting at least 30 days of income OR signed complete individual federal tax returns for the most recent one-year period. Additionally, obtain a verbal VOE no more than 10 Business Days prior to the Note Date.|
|DOC XR*||For Borrowers who receive income from notes receivable, obtain copy of the note and proof of receipt of payments in accordance with the terms of the note for the most recent one-month period.|
|DOC XM*||For Borrowers who receive income from dividends and interest, capital gains, or royalty payments, obtain a signed complete individual federal tax return for the most recent one year period and evidence of sufficient assets remaining after closing to support the qualifying income for dividend/interest income and capital gains.|
|DOC XT*||Retirement Accounts: Obtain most recent monthly statement. 70% of the vested amount minus any outstanding loans may be used as funds for closing and reserves submitted to LP.|
|DOC YC*||Depository, Stock and/or Bond Accounts: Obtain most recent monthly or quarterly account statement for each account to verify sufficient funds for closing and for amount of reserves submitted to LP.|
|DOC YE*||Cash Value of Life Insurance: Obtain the most recent monthly or quarterly statement.|
|DOC-YJ*||If using retirement, survivor and dependent benefits, long-term disability, social security, public assistance, Section 8 assistance, foster care or supplemental security income to qualify, obtain a copy of the award letter, 1099 or other third-party documentation showing income type, source, and amount OR the most recent 1 month bank statement or other equivalent documentation evidencing receipt of the income.|
|Updated Feedback Message|
|DOC XE*||For Relief Refi-Open Access, regardless of the Documentation Level returned in this LP Feedback Certificate, income and asset documentation requirements in Guide section B24.3(f) apply.|
*The corresponding WEB feedback messages are also being added and will be displayed on the Loan Prospector Documentation Checklist.
Please note: For all new submissions of Relief Refinance Mortgages – Open Access with LTV ratios less than or equal to 80 percent on or after November 18, 2012, the following updated feedback message will be returned to support the change announced in the Guide Bulletin 2012-19. As a reminder, the change to our requirements for use of mortgage proceeds is effective for mortgages with Applications Received Dates on or after November 19, 2012.
|Message Code||Feedback Message|
|LPN ZX||For Relief Refi-Open Access, refinance proceeds limited to the following: Pay off the unpaid principal balance and interest accrued through the pay off date of the original mortgage; pay related Closing Costs, Financing Costs, Prepaids and Escrows not to exceed 4% of the current unpaid principal balance (UPB) of the Mortgage being refinanced or $5,000, whichever is less; and disburse cash to the Borrower not to exceed $250.00. The proceeds may not be used to pay off or pay down any junior liens.|
Submissions to Loan Prospector prior to November 18, 2012, will receive the following feedback message on resubmissions on or after November 18, 2012, to allow flexibility to apply the previous requirements to loans in your pipeline.
|Message Code||Feedback Message|
|LPN-X9||For Relief Refi-Open Access, refinance proceeds limited to the following: Pay off the unpaid principal balance and interest accrued through the pay off date of the original mortgage, pay related Closing Costs, Financing Costs, Prepaids and Escrows, and disburse cash out to the Borrower (or any other payee) not to exceed 2% of the new refinance Mortgage or $2,000, whichever is less. The proceeds may not be used to pay off or pay down any junior liens.|
New Feedback Message to Support the Retirement of Balloon Reset Mortgages in Loan Prospector
Loan Prospector will be updated with a new feedback message to support the retirement of Balloon/Reset Mortgages effective for mortgages with settlement dates on or after January 1, 2013, as announced in the Guide Bulletin 2012-19.
|Message Code||Feedback Message||Purpose|
|ELV 67||Balloon/Reset loan ineligible for delivery to Freddie Mac.||Indicates that Balloon/Reset Mortgage is ineligible for delivery to Freddie Mac.|
2012 Area Median Income Estimates
The Federal Housing Finance Agency (FHFA) has issued the AMI estimates for 2012. Loan Prospector will be updated on November 18, 2012, with the 2012 AMI estimates, which apply to new submissions and resubmissions on or after November 18, 2012. Sellers must use these estimates for Home Possible® Mortgages with an Application Received Date on or after November 18, 2012.
Freddie Mac uses the AMI estimates, among other things, to determine eligibility for our Home Possible Mortgages. Our pricing incentive for Home Possible Mortgages is based on AMI limits.
Both Loan Prospector and the Affordable Income & Property Eligibility tool on FreddieMac.com will be updated to reflect FHFA’s 2012 AMI estimates.
For More Information on Area Median Income Estimates
- Freddie Mac Sellers: Guidance regarding the 2012 AMI and delivery requirements will be outlined in Guide Bulletin 2012-21.
- Third-party originators: Check with your wholesale lender to determine how they plan to address these requirements.
Revising the CRC Technical Affiliate List
The CRC technical affiliate drop-down list will be updated to reflect existing technical affiliate company names and remove companies no longer in business. These changes include:
- Updating the company name for:
- CIC Mortgage Credit Inc. to CIC Credit Inc.
- United One Resource, Inc. via MeridianLink to United One Resource, Inc.
- MDA/DataQuick to DataQuick
- Removing the following companies that are no longer in business:
- Premium Credit Bureau/CCIS
- Premium Credit Bureau/CDC via Meridian Link
- United One Resource, Inc. via Sharper Lending
The technical affiliate field provides you with a more effective way to request new merged credit or use a previously obtained merged credit reference number (MCRN) from a sponsored technical affiliate. Currently, the only CRC supporting this enhancement is Equifax Mortgage Solutions (EMS). Contact your LOS vendors to determine when they will update the technical affiliate list in your system.
For More Information
- Review recent Guide Bulletins.
- Reference the Relief Refinance Mortgage – Open Access Web page.
- Visit the Affordable Income & Property Eligibility tool Web page.
- CRC technical affiliate list.
- Review training resources.
- Visit the Freddie Mac Learning Center’s Relief Refinance Mortgage Resources Web page.