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Guide Bulletin 2013-16 Provides New Mortgage Eligibility Requirements in Response to CFPB’s Final Rule on ATR

August 20, 2013

To help you prepare for the Consumer Financial Protection Bureau’s (CFPB) final rule implementing the ability to repay (ATR) provisions under the Truth-in-Lending Act, we are announcing updated mortgage eligibility requirements in today’s Single-Family Seller/Servicer Guide (Guide) Bulletin
2013-16. The Guide Bulletin supports the announcements we made in our May 6, 2013, and
July 2, 2013, Industry Letters.

With these changes we are supporting your success in today’s housing market by providing further clarity of Freddie Mac’s mortgage eligibility criteria.

Review today’s Guide Bulletin and the applicable Guide chapters for complete details on our revised requirements summarized below. Effective for mortgages with Application Received Dates on or after January 10, 2014:

  • Mortgages with original maturities exceeding 30 years will not be eligible for sale to Freddie Mac.
  • Prepayment Penalty Mortgages will not be eligible for sale to Freddie Mac.
  • We are introducing new points and fees thresholds for mortgages to replace the existing Freddie Mac five percent points and fees threshold.
  • For higher-priced mortgage loans, we are updating our requirements for Freddie Mac Relief Refinance MortgagesSM and adjustable rate mortgages that have initial periods of seven or 10 years.

Mortgages with original maturities in excess of 30 years and Prepayment Penalty Mortgages must have a Freddie Mac Settlement Date on or before July 31, 2014.

It is important to note that while Freddie Mac has established our own mortgage eligibility requirements in response to the CFPB’s final rule, Freddie Mac will not make the determination if a mortgage is exempt from, or complies with, the CFPB final rule or whether a Seller’s designation of the status of a mortgage under the CFPB final rule is correct.These determinations of compliance with the CFPB final rule and other applicable laws are the Seller’s responsibility.

Important Reminders

Please review today’s Guide Bulletin for other important information and reminders, including, but not limited to:

  • ATR covered and ATR exempt mortgages.
  • Treatment of Freddie Mac delivery fees.
  • Mortgages evaluated through Loan Prospector®.
  • Application of the representation and warranty framework on the new mortgage eligibility requirements.
  • Purchase of government mortgages.
  • Uniform Loan Delivery Dataset requirements.
  • Changes to negotiated provisions.

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