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Freddie Mac Issues Industry Letter on ATR/QM Rule Following FHFA Directive

May 6, 2013

Today we issued an Industry Letter announcing that, as directed by the Federal Housing Finance Agency (FHFA), we will be limiting our future purchases in support of the Consumer Financial Protection Bureau’s final rule implementing the ability to repay (ATR) provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Beginning January 10, 2014, we will only be purchasing the following mortgages:

  • Loans that are "qualified mortgages" (QM) under the rule, including those meeting the special or temporary qualified mortgage requirements
  • Loans that are exempt from the ATR requirements such as investor transactions

As such, effective for mortgages subject to the final rule with applications received on or after January 10, 2014, we will not be permitted to purchase the following:

  • Mortgages that are not fully amortizing (e.g., mortgages with a potential for negative amortizations or interest-only mortgages)
  • Mortgages with terms in excess of 30 years (e.g., 40-year fixed-rate mortgages)
  • Mortgages with points and fees in excess of 3 percent of the total loan amount or such other limits for low balance mortgages as set forth in the final rule

We will continue to purchase mortgages that meet our existing underwriting and delivery eligibility requirements (e.g., debt-to-income ratio, loan-to-value ratio and reserve requirements) as outlined in our Single-Family Seller/Servicer Guide (Guide) provided they do not fall into the three categories listed above. This includes mortgages that are evaluated through Loan Prospector®.

It is important that you review today's Industry Letter for more guidance on how Freddie Mac will be implementing this change.

We will publish a Guide Bulletin this summer to provide you more details about the policy updates and requirement changes that support the announcement in today’s Industry Letter.

Get More Information

  • Review the May 6, 2013 Industry Letter.
  • Contact your Freddie Mac representative or 800-FREDDIE.

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