Changes to Home Possible Delivery Fees, Form 16SF, and Other Updates Announced in Guide Bulletin 2014-2
February 14, 2014
In response to your feedback and the increased interest in the purchase mortgage market, Freddie Mac Single-Family Seller/Servicer Guide (Guide) Bulletin 2014-2 announced we are reducing the Home Possible® Mortgages postsettlement delivery fee rate for purchase transactions.
In addition, the Bulletin also announced:
- Updated Seller/Servicer Form 16SF, Annual Eligibility Certification Report.
- Updated reserves requirements.
- Updated property and appraisal requirements.
- Revised Loan Prospector® resubmission requirements.
- Addition of Uniform Loan Delivery Dataset (ULDD) Phase 2 Data Point requirements and clarifications on existing ULDD Data Points.
- Revised Servicing requirements for condominium, HOA, and PUD regular assessment reimbursements.
Sell & Deliver and Servicing
- Made Form 16SF easier to use. Form 16SF will provide clearer language, more options for certain questions, and the ability for multiple users to access the form. We encourage you to review the Bulletin for information on how these updates could affect your current drafts of the form. As a reminder, Form 16SF must be completed within 90 days after the end of your fiscal year. We anticipate the form will be updated by the end of February and will notify you when that happens.
Originate & Underwrite
- Updated reserves requirements.
- We will base reserves calculations on a property’s full monthly payment amount – not only principal, interest, taxes, and insurance – to help ensure borrowers have adequate reserves.
- We removed the requirement that a borrower must have an additional six months of reserves when a borrower converts a 2- to 4-unit primary residence to an investment property, and rental income from units not previously occupied by the borrower is used to qualify.
- We removed the requirement that the appraisal must be dated no more than 60 days prior to the note date when used to document the value of a primary residence pending sale or being converted to a second home or an investment property for the purposes of establishing a minimum required reserves. The property valuation must meet Freddie Mac’s existing requirements in Guide Chapter 44, including the age of valuation requirements.
For ease of reference, our minimum reserves requirements have been consolidated into tables in one section of the Guide, with the exception of Home Possible Mortgages and Relief Refinance MortgagesSM – Same Servicer, which will remain in their respective Guide chapters.
These requirements are effective for mortgages with settlement dates on or after June 1, 2014, but Sellers are encouraged to implement them as soon as possible.
- Updated property and appraisal requirements. We updated our property eligibility and appraisal requirements, and simplified certain sections of Chapter 44, Property and Appraisal Requirements. We also are updating the Guide to align with current Loan Prospector offerings.
Sell & Deliver
- Reduced delivery fee rate for Home Possible Mortgages. To help make it easier for first-time buyers to afford a home, the delivery fee rate for Home Possible purchase transactions has been reduced to 75 basis points. The reduction applies to all purchase loans eligible under Home Possible.
- Delayed implementation of postsettlement delivery fee change. As announced in our Single-Family Update email on January 8, 2014, the Federal Housing Finance Agency (FHFA) directed Freddie Mac to delay implementation of the:
- Changes to the market condition delivery fee.
- Increase in indicator score/loan-to-value delivery fee rates.
- Increase in guarantee fee of 10 basis points for all single-family mortgages.
- Incorporated new ULDD Phase 2 data points. To make sure you have time to become familiar with the new requirements before the May 19 to August 25, 2014, transition period, we have incorporated the new ULDD data points and clarified existing ULDD data points in the Guide.
- Extended the time to resubmit mortgages to Loan Prospector after the note date. You will have up to 120 days after the “Loan Prospector Assessment Expiration Date” that is in effect as of the note date to resubmit a mortgage to Loan Prospector.
- Revised reimbursement policy for condominium, HOA, and PUD regular assessments.
For mortgages originated on or after February 14, 2014, Freddie Mac will reimburse up to a total of six months for condominium, homeowners association (HOA), and planned unit development (PUD) regular assessments except in the following super lien states:
- Florida – Servicers will be reimbursed up to a total of 12 months.
- Connecticut – Servicers will be reimbursed up to a total of nine months.
For More Information
- Review Guide Bulletin 2014-2 for complete details and effective dates on these and other Guide revisions and updates.
- Contact your Freddie Mac representative.