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Enhancements to the Representation and Warranty Framework Announced in Guide Bulletin 2014-8

May 12, 2014

Today, we are announcing enhancements to the selling representation and warranty framework with Single-Family Seller/Servicer Guide (Guide) Bulletin 2014-8. These enhancements were developed with Fannie Mae, and at the direction of the Federal Housing Finance Agency.

What's Changing

The framework enhancements include:

  • Relaxing the definition of acceptable payment history for determining when a mortgage is eligible for relief from certain selling representations and warranties.
  • Granting relief from certain selling representations and warranties after a satisfactory conclusion of a quality control (QC) review of the mortgage.
  • Providing Sellers with written notification of mortgages that have met the eligibility requirements for relief.

Framework Versions 1 and 2

  • The current framework is referred to as "Version 1" and its requirements will continue to apply to mortgages with Freddie Mac settlement dates on and after January 1, 2013, and before July 1, 2014.

  • The framework, as modified by the enhancements, is referred to as "Version 2" and will be effective for mortgages with Freddie Mac settlement dates on and after July 1, 2014.

Review the following tables to see the difference in the requirements for Version 1 and Version 2 of the framework.

For Mortgages Other than Freddie Mac Relief Refinance MortgagesSM
Relief CriteriaVersion 1Version 2
Effective dates Effective for mortgages sold on and after January 1, 2013, and before July 1, 2014 Effective for mortgages sold on and after July 1, 2014
Number of required consecutive monthly payments after the Freddie Mac settlement date 36 36
Number of delinquencies permitted during first 36 monthly payments after the Freddie Mac settlement date in order to be eligible for relief after the 36th monthly payment 0 x 30 2 x 30 and 36th monthly payment is not delinquent
Opportunity to re-establish acceptable payment history if there were delinquencies in the first 36 monthly payments after the Freddie Mac settlement date Yes, as of the 60th monthly payment, provided no more than 2 x 30 delinquencies in first 36 monthly payments and 60th monthly payment is not delinquent Not applicable
Eligible for relief after satisfactory conclusion of quality control review No Yes
Notification of relief available beginning 3rd quarter of 2014 Yes Yes
Freddie Mac Relief Refinance Mortgages
Relief CriteriaVersion 1Version 2
Effective dates Effective for mortgages sold on and after January 1, 2013, and before July 1, 2014 Effective for mortgages sold on and after July 1, 2014
Number of required consecutive monthly payments after the Freddie Mac settlement date 12 12
Number of delinquencies permitted during first 12 monthly payments after the Freddie Mac settlement date in order to be eligible for relief after the 12th monthly payment 0 x 30 0 x 30
Opportunity to re-establish acceptable payment history if there were delinquencies in the first 12 monthly payments after the Freddie Mac settlement date Yes, as of the 60th monthly payment, provided no more than 2 x 30 delinquencies in first 36 monthly payments and 60th monthly payment is not delinquent Yes, as of the 36th monthly payment, provided no more than 2 x 30 delinquencies in first 36 monthly payments and 36th monthly payment is not delinquent
Eligible for relief after satisfactory conclusion of quality control review No Yes
Notification of relief available beginning 3rd quarter of 2014 Yes Yes

NOTE: Other provisions of the selling representation and warranty framework described in Guide Section 6.14, Enforcement of Representations and Warranties Related to Underwriting of the Borrower, Mortgaged Premises and Project, have not changed and remain applicable under both versions of the framework.

New Repurchase Alternative

In today's Bulletin, we are also announcing that if the primary mortgage insurance (MI) on a mortgage is rescinded:

  • A repurchase will not automatically be required.
  • The mortgage file will be called in for a QC review. Freddie Mac may offer an alternative to repurchase, if the mortgage is determined to be eligible for a repurchase alternative.
  • A Seller/Servicer may be allowed to "stand-in" and pay the full MI claim payable under the original policy if the mortgage and the Seller/Servicer meet certain eligibility requirements.
  • The MI stand-in option is effective for mortgages with Freddie Mac settlement dates on or after July 1, 2014.

For More Information

  • Read Guide Bulletin 2014-8 to learn more about the enhancements being made to selling representation and warranty framework.
  • Review Guide Section 6.14 for the complete eligibility requirements and the exceptions under the framework.
  • Visit our Freddie Mac Representation and Warranty Framework Web page.
  • Visit the Learning Center for updated reference tools in support of the framework.

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