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New Automated Collateral Evaluation and Other Updates Announced in Guide Bulletin 2017-8

May 31, 2017

Today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2017-8 introduces our new automated collateral evaluation and other updates. The updates we’re announcing include:

New automated collateral evaluation

Building on the collateral representation and warranty relief announced in Bulletin 2017-3, we’re permitting certain Loan Product Advisor® mortgages to be underwritten without an appraisal. Sellers who accept this offer on eligible mortgages will be relieved of representation and warranties related to value, condition and marketability of the property. Effective June 19, 2017.

 

Changes to condominium project requirements, including: 

  • Detached condominium projects. We’re simplifying requirements to require Sellers to determine compliance only with condominium project review requirements in Section 5701.2(a) and the detached condominium project eligibility requirements in Section 5701.7(b). Sellers are no longer required to determine that the project complies with the general condominium project eligibility requirements in Section 5701.2(b) and that the project is not ineligible under the ineligible project requirements in Section 5701.3. Effective immediately.
  • Ineligible condominium projects. We’re updating the project eligibility requirements to state that projects with names that include “hotel”, “motel”, “inn” or “lodge” or a branded hotel chain or name are ineligible unless the project does not have the characteristics of a hotel or transient housing. We’re also making updates related to condominium projects with pending litigation. Effective immediately.
    We’re updating the list of ineligible condominium projects to include a project or investment in a project (including condominium unit ownership that is characterized or promoted as an investment opportunity) that could be deemed to be an investment security. We’re also updating the list to include projects with mandatory dues or similar membership fees for use of amenities such as clubhouses or recreational facilities, with certain exceptions. Effective August 31, 2017.
  • Streamlined project reviews. We’re aligning and consolidating the maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio requirements for “LP Accept Mortgages” and “All Other Mortgages” underwriting paths. Effective immediately.

Updates to appraisal and property specific requirements, including:

  • Uniform Appraisal Dataset (UAD) condition and quality ratings and level of updating definitions. We’re incorporating the UAD condition and quality ratings and level of updating definitions into the Guide as Exhibit 36. Effective immediately.
  • Property with an accessory unit. We’re updating our requirements relating to the eligibility and appraisal of a 1-unit property with an accessory unit. Effective August 31, 2017.
  • Information supplied to the appraiser (changes to the sales contract). We’re specifying that Sellers are not required to provide the appraiser with an updated sales contract unless the updates impact the physical description or condition of the property. Effective immediately.

Updates to area median income estimates

We’re updating Loan Product Advisor and the Home Possible Income & Property Eligibility tool with the 2017 area median income (AMI) estimates issued by the Federal Housing Finance Agency. Because some 2017 estimates are lower than the AMI for 2016, Home Possible Mortgages underwritten using the 2016 AMI limits may no longer be eligible for sale. Be sure to check the 2017 estimates. Loan Product Advisor and the Home Possible Income & Property Eligibility tool will be updated on June 13, 2017.  

For More Information

  • Read today’s Guide Bulletin 2017-8
  • View the automated collateral evaluation Learning Center video
  • Contact your Freddie Mac representative