Loan Prospector Provides New Feedback Messages
January 10, 2014
Please note: the Loan Prospector update scheduled for January 9, 2014 have been rescheduled to January 12, 2014.
Beginning January 12, 2014, Loan Prospector® will deliver new feedback messages to support the "on or after" January 10, 2014 Application Received Date for the final rule of the Consumer Financial Protection Bureau’s (CFPB) implementing the ability to repay (ATR) provisions under the Truth-in-Lending Act. Please review the information below for more details on the feedback messages, which address the following:
- Higher priced covered transaction as defined in Reg Z, 12 C.F.R. 1026.43(b) (HPCT) - specifically adjustable rate mortgages (ARMs) with Initial Periods of 7 or 10 years.
- Higher priced covered transaction as defined in Reg Z, 12 C.F.R. 1026.43(b) (HPCT) Relief Refinance Mortgages.
- Home Possible® Mortgages with terms greater than 30 years.
For full details on the new requirements, please read the August 20, 2013, Freddie Mac Single-Family Seller Servicer Guide (Guide) Bulletin 2013-16, the October 1, 2013, Single-Family News Center article, and the November 15, 2013 Guide Bulletin 2013-23. You can also visit our Web page, New Mortgage Eligibility Criteria.
New Loan Prospector Feedback Messages
The following new Loan Processing Information (LPN) feedback messages may be returned for all submissions and resubmissions to Loan Prospector on or after January 12, 2014, as applicable:
|Message Code||Feedback Messages|
|LB||The Seller must determine if the Relief Refi Mortgage-Open Access is a higher priced covered transaction as defined in Reg Z, 12 C.F.R. 1026.43(b) (HPCT). If the Relief Refi Mortgage-Open Access is a HPCT with an Application Received Date on or after 1/10/2014 the maximum DTI ratio is 45% and the minimum Indicator Score is 620, regardless of the Debt Ratio and Indicator Score on the LP Feedback Certificate. The Seller must manually apply these requirements.|
|LC||The Seller must determine if an ARM with an Initial Period of 7 or 10 years is a higher priced covered transaction as defined in Regulation Z, 12 C.F.R. 1026.43(b)(HPCT). If the ARM is an HPCT with an Application Received Date on or after 1/10/14 the Borrower must be qualified at the greater of the Note Rate or the fully-indexed rate; the greater of the Note Rate or the fully-indexed rate must be entered in the "Qualifying Rate" field.|
|LD||Mortgages with original maturities over 30 years must have Application Received Date prior to January 10, 2014 and Settlement Date on or before July 31, 2014.|
Please remember that Loan Prospector does not analyze compliance with laws, regulations or ordinances, or with any requirements imposed by a regulator. Sellers are responsible for determining whether a mortgage processed through Loan Prospector complies with applicable laws and regulations, including the CFPB final rule.
FHA Loan Limit Update
FHA's Office of Single Family Housing published Mortgagee Letter 2013-43, announcing that on January 12, 2014, FHA will implement new Single Family loan limits for Title II Forward Mortgages as detailed in the Housing and Economic Recovery Act of 2008.
For More Information:
- Visit our New Mortgage Eligibility Criteria Web page.
- Read the October 1, 2013 Single Family News Center article: Information Related to CFPB Final Rule on ATR and Our New Mortgage Eligibility Requirements in Today's Industry Letter.
- Review Guide Bulletin 2013-16 and Bulletin 2013-23.
- Visit HUD.gov for the FHA Mortgage Limits tool.
- Check out the Freddie Mac Learning Center for Loan Prospector resources and available training.
- Contact your Freddie Mac representative or 800-FREDDIE.