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Special Guide Bulletin provides guidance on new HUD area median income estimates
The U.S. Department of Housing and Urban Development has provided its area median income estimates for 2007. Because many of the 2007 estimates are lower than the area median income estimates for 2006, certain Freddie Mac Home Possible® Mortgages, as well as Alt 97® and Freddie Mac 100 Mortgages with secondary financing that is an Affordable Second®, underwritten using the 2006 area median income limits may no longer be eligible for sale. We published a special Single-Family Seller Servicer Guide (Guide) Bulletin on June 14
[PDF 184K]
to provide you with guidance regarding the 2007 area median income changes on mortgages sold to Freddie Mac.
2007 area median income limits guidance
In order to meet your needs, we are providing relief by temporarily allowing you to deliver mortgages underwritten using 2006 area median income limits that may no longer be eligible when 2007 area median income limits are applied. The June 14 Bulletin provided the guidance, as discussed below, for those loans that are affected by the 2007 area median income estimates.
- For Home Possible Mortgages submitted to Loan Prospector® before June 26, 2007, the 2006 area median income limits will be applied. Mortgages with eligibility based on the 2006 area median income limits must be delivered to Freddie Mac on or before August 31, 2007.
- For Home Possible Mortgages that were originally submitted to Loan Prospector prior to June 26, 2007, meet the 2006 area median income limits and, are resubmitted to Loan Prospector on and after June 26, 2007, Sellers may disregard a feedback message informing them that the mortgage does not meet the Home Possible income limits and may deliver such a mortgage to Freddie Mac if this is the only reason for ineligibility. These mortgages must also be delivered to Freddie Mac on or before August 31, 2007.
- Changes have been made to Loan Prospector to accommodate the new 2007 area median incomes.
Manually underwritten Alt 97 Mortgages and Non-Loan Prospector Freddie Mac 100 Mortgages with secondary financing that is an Affordable Second may be underwritten with the 2006 area median income limits, provided that the loan application is dated before June 26, 2007 and these mortgages are delivered to Freddie Mac on or before August 31, 2007.
- Alt 97 Mortgages and Freddie Mac 100 Mortgages with secondary financing that is an Affordable Second that are submitted to Loan Prospector prior to June 26, 2007, and meet the 2006 area median income limits, may be underwritten with the 2006 area median income limits provided they are delivered to Freddie Mac on or before August 31, 2007.
- For mortgages with area median income limit requirements delivered to Freddie Mac on and after September 1, 2007, Sellers must adhere to the 2007 area median income limits.
- Please note that there are no changes to delivery requirements related to implementation of the 2007 area median income limits.
About Home Possible Mortgages
Home Possible Mortgages have zero or very low down payments and flexible credit requirements designed to foster homeownership in underserved communities and among families at or below the median income. Home Possible Mortgages also offer higher loan-to-value ratios and other underwriting features to help critical community workers such as teachers, police, firefighters, health care workers, and military personnel afford homes.
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