More solutions to help you make home possible every step of the way with the June 22 Guide Bulletin

With the June 22 Single-Family Seller/Servicer Guide (Guide) Bulletin [PDF 169K], we implemented several changes that offer you more solutions to help you make home possible every step of the way. With new temporary subsidy buydown benefits for Home Possible® 5/1 ARMs and enhanced requirements for Streamlined Refinance Mortgages, you'll realize new possibilities for your business. We've also enhanced a number of our servicing requirements in this Bulletin, including allowing the use of automated valuations for certain workout options to help you preserve the dream of homeownership for your borrowers, and streamlining the transfer-of-servicing billing process to make your business more efficient.

Review the June 22 Guide Bulletin to become familiar with all Guide changes that will help you create opportunities, realize possibilities, and preserve dreams every step of the way.

Home Possible® 5/1 ARM temporary subsidy buydown enhancement

We've enhanced our Home Possible Mortgages to include temporary subsidy buydown benefits for 5/1 ARMs with 2/2/5 cap structures, helping you attract more borrowers and generate new Community Reinvestment Act (CRA) eligible volume. This change continues our commitment to enhancing our Home Possible Mortgages to help you realize more possibilities for your business and create more opportunities for your borrowers.

Maximize the options for your borrowers with a Home Possible 5/1 ARM (with a 2/2/5 cap structure), now eligible for either an extended or a limited temporary subsidy buydown, depending on the Home Possible mortgage product and the property being financed. The temporary subsidy buydown benefit is not available for Home Possible Mortgages secured by manufactured homes.
Increase your market potential and expand your borrower's options. By leveraging temporary subsidy buydown plans with Home Possible, you can offer your borrowers lower, initial payments with the stability of predictable payment increases over time. This prudent option is an ideal fit for borrowers who have the capacity for higher earnings within a few years of obtaining a mortgage.

Revised and enhanced requirements for Streamlined Refinance Mortgages

We've enhanced our Streamlined Refinance Mortgages to offer you more ways to retain your current customers. With our new enhancements, your borrowers can now pay off a purchase money junior lien with mortgage proceeds; reduce upfront costs with the removal of the 2.5% cap for closing costs, financing costs, and prepaids/escrows; and remove a borrower from the mortgage due to death or divorce.

Retain existing borrowers looking to refinance from an ARM to the stability of a fixed-rate mortgage. As interest rates on ARMs rise, retain existing customers by offering them an opportunity to refinance their current home loan using an enhanced Streamlined Refinance Mortgage option. Plus, you can reduce or eliminate upfront costs your existing borrowers need to pay to refinance their mortgage because we've removed the 2.5% cap on the amount of closing costs, financing costs, and prepaids/escrows that can be rolled into the refinance mortgage. Sellers can roll in closing costs, financing costs, and prepaids/escrows up to the loan amount of the mortgage being refinanced.
Give your borrowers more ways to realize cost savings. Allow current borrowers to refinance and reduce their mortgage payment. With our enhanced Streamlined Refinance Mortgages, borrowers can pay off a purchase money junior lien – used to purchase their home – with mortgage proceeds from the refinancing.
Other Guide-related changes that are important to originating and delivering Streamlined Refinance Mortgages. When originating Streamlined Refinance Mortgages, refer to revised Guide Section 23.4 where we've provided additional guidance on LTV/TLTV/HTLV ratio requirements for these mortgages. We've also made it easier for you to locate all special delivery requirements related to borrower monthly income for Streamlined Refinance Mortgages by moving them to Guide Section 17.18, where our special delivery requirements for Freddie Mac refinance mortgages can be found. Finally, we've revised the Guide to provide that the mortgage being refinanced cannot be an Initial Interest^SM Mortgage.

Read more about the benefits of this mortgage solution in the Streamlined Refinance Mortgages article in this newsletter.

Revised Guide sections to include requirements for Mortgages for Newly Constructed Homes and deleted/modified sections with references to previous construction/renovation offerings

With our Mortgages for Newly Constructed Homes offering, introduced in November 2006, you can realize more possibilities by offering your borrowers permanent financing solutions for newly built homes, construction conversions, and renovations, with an expanded 18-month time period to originate and underwrite; construct or renovate; and sell your loans to Freddie Mac.

Find complete origination, underwriting, and sale requirements for Mortgages for Newly Constructed Homes in the Guide. We've updated the Guide to delete terms and conditions of our previous construction/renovation offerings, which were retired on April 30, 2007, and replace them with our more comprehensive Mortgages for Newly Constructed Homes offering. You may continue to deliver mortgages originated under our previous offering, provided those mortgages have Note Dates prior to May 1, 2007.
Underwrite and document your seasoned mortgages for Newly Constructed Homes. With additional Guide instructions on the types of loans that can be sold to Freddie Mac as seasoned Mortgages for Newly Constructed Homes, you'll be better prepared to sell Mortgages for Newly Constructed Homes with delivery dates or settlement dates, as applicable, that occur more than 18 months after the oldest date of the borrower's credit, capacity or collateral documentation.
Expand your options to drive more loan volume in a challenging origination market. Whether your borrower is seeking permanent financing to build a new home or to renovate an existing one, you'll find expanded options in our Guide to originate more Mortgages for Newly Constructed Homes to drive more loan volume and maintain competitive sale options.

Extension for the mandatory use of the ALTA 2006 Loan Policy

Due to delays in operational system development to accommodate the American Land Title Association (ALTA) 2006 Loan Policy in both mortgage banking and title insurance distribution systems, and as previously announced via e-mail to Sellers, we are extending the date for the mandatory use of the ALTA 2006 Loan Policy, as referenced in the April 25, 2007 Guide Bulletin, from June 17, 2007 to January 1, 2008.

If your loan origination system and your title insurance agency can accommodate the ALTA 2006 Loan Policy, we strongly encourage you to begin using the new policy now to take advantage of its expanded covered risks, fewer exclusions from coverage, and ease of interpretation.

Automated valuations provided by BPOdirect® for the evaluation of workout options

As the market and servicing landscape continue to change, we're committed to helping you preserve the dreams of a strong nation of homeowners. To better assist you in evaluating alternatives for borrowers to avoid foreclosure, you may now utilize our automated values from BPOdirect, when available, for certain workouts.

To ensure alternatives to foreclosure are evaluated as quickly and cost effectively as possible, effective immediately, Servicers are no longer required to order exterior broker's price opinions (BPOs) when a Freddie Mac automated value is available for the evaluation of long-term forbearances, loan modifications, and workout mortgage assumptions for mortgages secured by 1-unit properties. There is no charge for the automated valuation.
This policy does not apply to manufactured homes and 2- to 4-unit properties.

Change in payoff reporting deadlines for Servicers

To ensure consistency in the payoff reporting process, effective September 1, 2007, we are changing our payoff reporting requirements so that all types of payoffs are reported within the same timeframe. Depending on the payoff type, this is either within two business days after receiving the proceeds or within two business days of receiving Freddie Mac's charge-off approval.

Currently, prepaid and matured mortgage payoffs are reported to us within two business days of a Servicer receiving the proceeds. Effective September 1, short payoffs, make wholes and third-party foreclosure sales must also be reported within two business days of receiving the proceeds.
Effective September 1, a charge-off must be reported within two business days of a Servicer receiving Freddie Mac's approval.

Change in remitting payment for Transfer of Servicing processing fee

To streamline the subsequent transfer of servicing billing process, effective July 1, 2007, Servicers submitting Form 981, Agreement for Subsequent Transfer of Servicing of Single-Family Mortgages, will be billed for the transfer of servicing processing fee on the monthly Servicer Billing Statement. With this change, this processing fee may no longer be paid by check. Payment for this fee must be remitted in the same way other fees in the monthly Servicer Billing Statement are paid, facilitating a more efficient transfer of funds.

Other key Guide changes and updates

As you continue to implement Freddie Mac offerings and solutions, it's important that you're familiar with all changes announced in our June 22 Guide Bulletin [PDF 169K], including the following:

Selling changes

Reorganized and provided additional guidance to several appraisal-related sections of the Guide
Revised Guide Additional Supplement Forms (Exhibits 22 and 22A) that now include a reference to FreddieMac.com where the most current PC Offering Circular can be found instead of a specific PC Offering Circular Date
Updated contact information on Form 483, Wire Transfer Authorization, and Guide Directories 3 and 8 to reflect Freddie Mac departmental changes
Revised the time period for Sellers to make special warranties regarding mortgage lending or investing activities that assist low- and very low-income families for Seller-owned Modified and Seller-owned Converted Mortgages
Announced that ARMs adjusting based on the one-year weekly Constant Maturity Treasury-index using a first business day lookback are not eligible for sale to Freddie Mac

Selling and servicing changes

Provided additional guidance regarding flood zone determination (FZD) requirements and consolidation of all flood-insurance requirements in Chapter 58 of the Guide, for easier customer access

Servicing changes

Added requirements for reimbursable utility expenses and provided further guidance regarding various expense reimbursements
Specified that Servicers must send the borrower an adverse action notice when Freddie Mac denies a mortgage assumption request, regardless of whether the borrower is delinquent or not at the time, and reminded Servicers of the obligation to comply with applicable law regarding notices and disclosure to applicants
Reminded Servicers that we removed one firm and added three new firms to our Designated Counsel Program in Texas effective June 1, 2007. A complete list of Designated Counsel/Trustee, formerly Guide Exhibit 79, can be found at http://www.freddiemac.com/service/msp/desig_counsel.html
Redesigned Form 104SF, Statement of Loan, Workout, REO Expenses and Income, to add new data elements, and removed redundancies, for more efficient claim processing
Changed the contact information in Guide Directory 5 for FHA, VA and RHS mortgages and changes to the Mortgaged Premises

For more information

Review the June 22 Guide Bulletin [PDF 169K] for complete details on all the changes and enhancements.

Check out our At-a-Glance table [DOC 165K] of June 22 Bulletin changes.