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August 2007
In This Issue...
What's New Mortgage Products Underwrite and Process with Loan Prospector Sell & Deliver Loans Service Loans Training and Education

Loan Prospector changes to reflect new requirements for nontraditional mortgages

On August 12, we plan to implement changes to Loan Prospector® that will reflect our new requirements based on the Interagency Guidance as announced on July 13 in our special Single-Family Seller/Servicer Guide (Guide)Bulletin.

The Loan Prospector changes will apply the prescriptive risk-based standards outlined in the Guide for originating nontraditional mortgages, including our Initial InterestSM fixed-rate and adjustable-rate mortgages (ARMs), as well as other ARMs and fixed-rate mortgage products with an interest-only component. Changes to Loan Prospector will include:

  • Nontraditional Fixed-Rate Mortgages – Loan Prospector will be adjusted to assess Initial Interest fixed-rate mortgages and other Guide fixed-rate mortgage products with an interest-only feature using an automatically calculated full principal, interest, taxes, and insurance (PITI) amount.
  • Nontraditional ARMs – Loan Prospector will be adjusted to assess Initial Interest ARMs and other Guide ARM products with an interest-only feature using the higher of an automatically calculated note rate or fully indexed rate.

In addition, with our August 12 changes, the "Proposed Housing (PITI)" field on the Loan Prospector Feedback Certificate will be updated to reflect the following:

  • For Initial Interest fixed-rate mortgages and other Guide fixed-rate mortgage products with an interest-only feature, the "Proposed Housing (PITI)" field will reflect the full PITI amount used to assess the loan in Loan Prospector.
  • For Initial Interest ARMs and other Guide ARM products with an interest-only feature, the "Proposed Housing (PITI)" field will reflect the ARM Qualifying PITI amount used to assess the loan in Loan Prospector.

It is important to recognize that although the new requirements are effective for nontraditional mortgages with loan application dates on or after September 13, all loans submitted or resubmitted to Loan Prospector on or after the August 12 system update will be assessed based on the new requirements, potentially changing their risk class.

Be sure to review complete details on how these changes to Loan Prospector will impact you, including important guidance if you are accessing Loan Prospector directly through the web browser access method.

For more information


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