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Information Related to CFPB Final Rule on ATR and Our New Mortgage Eligibility Requirements in Today’s Industry Letter

October 1, 2013

Today Freddie Mac is issuing an Industry Letter to support you as you prepare for our upcoming purchase eligibility requirement changes, announced in Freddie Mac Single-Family Seller/Servicer Guide (Guide) Bulletin 2013-16. Guide Bulletin 2013-16 is part of our response to the Consumer Financial Protection Bureau’s (CFPB) final rule implementing the ability to repay (ATR) provisions under the Truth-in-Lending Act. At the direction of the Federal Housing Finance Agency, Freddie Mac and Fannie Mae are aligning on the following topics as they relate to the new purchase eligibility requirements:

  • Quality control (QC) practices
  • Points and fees
  • Documentation and record retention

QC Practices

We understand the challenges that come with implementing a wide range of new regulatory requirements including implementation of the points and fees thresholds described in the CFPB final rule. Accordingly, during an initial transitional period (the duration is uncertain), we:

  • Will not make changes to our QC sampling methodology, review scope, documentation requirements, or repurchase processes.
  • Will not issue repurchase requests related to the new points and fees eligibility requirements outlined in Bulletin 2013-16, except in certain cases as outlined in the Industry Letter.
  • May require evidence of origination and process controls designed to support compliance with the new points and fees eligibility requirements.

Following this initial transitional period, we may implement additional QC measures relating to our new purchase eligibility requirements. As always, to provide you with adequate time to prepare and adjust your processes, any changes will be announced in advance of their effective date.

Points and Fees

We are providing reminders on:

  • Staying up-to-date on CFPB updates and information, including its definition and calculation of points and fees, by visiting their Regulatory Implementation Web page.
  • The continuing requirement to comply with any applicable state rules and regulations that may be more restrictive than the CFPB final rule and to comply with the Home Ownership and Equity Protection Act of 1994, as amended.  
  • How your treatment of delivery fees, including passing the fees on to borrowers, may impact whether a mortgage is a higher-priced mortgage loan and/or whether it meets the applicable points and fees threshold.

In addition, we are withdrawing some of the guidance provided in our February 12, 2009, Industry Letter on "Excessive Points and Fees" and "Pass-Through of Freddie Mac Delivery Fees."

Documentation and Record Retention

While we are not making changes to our documentation and record retention requirements, we recommend you retain documentation related to the new eligibility requirements for cases where a borrower asserts the lender's noncompliance with the ATR provisions of the CFPB final rule as a defense to a foreclosure action.

Correction to Guide Bulletin 2013-16

In addition to today's Industry Letter, we also are re-issuing Guide Bulletin 2013-16 to reflect a correction in the Government Mortgages section. The re-issued Bulletin clarifies that ATR exempt government mortgages (inadvertently omitted before) as well as existing ATR covered mortgages are eligible for our purchase if they meet Chapter 35, Eligibility Requirements for Special Housing Initiatives, and the requirements outlined in the Bulletin.

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