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November 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® updated to reflect higher of 2006 or 2007 AMI estimates

On October 21, we updated Loan Prospector to use the higher of the 2006 or 2007 area median income (AMI) estimates for all mortgages with AMI requirements.

The Department of Housing and Urban Development (HUD) issues AMI estimates annually. Because of a change in HUD's methodology in calculating the AMI, many AMI estimates for 2007 are lower than the AMI estimates for 2006. The change to Loan Prospector will ease the transition to HUD's new methodology and help you realize more business possibilities.

More lending options for you and your borrowers

With the expanded eligibility opportunities afforded by this change, you'll be able to increase your origination volume and serve more low- to moderate-income borrowers with the following affordable lending offerings:

  • Home Possible® Mortgages
  • Alt 97® Mortgages with Affordable Seconds®
  • Freddie Mac 100 Mortgages with Affordable Seconds

In addition to originating more of these loans through Loan Prospector, Alt 97 Mortgages and Freddie Mac 100 Mortgages with an Affordable Second, and Home Possible Mortgages that are manually underwritten mortgages or non-Loan Prospector mortgages may be underwritten using the higher of the 2006 or 2007 AMI estimates.

What this means for you

With this Loan Prospector update, more of your borrowers will be eligible for our affordable lending options because:

  • All mortgages submitted to Loan Prospector on and after October 21, 2007, will be assessed using the higher of the 2006 or 2007 AMI estimates.
  • Borrowers that previously did not qualify for a Home Possible Mortgage or other offering with an AMI limit may now be eligible for one of these affordable lending options upon resubmission.
  • More of your loans may be eligible for the lower Home Possible delivery fee rate, which applies to purchase transaction Home Possible Mortgages with Freddie Mac settlement date is on or after November 1, 2007where the income used to qualify the borrower is 80 percent or less than the applicable AMI.

Determining eligibility for the lower Home Possible delivery fee rate

In our August 1 Single Family Seller/Servicer Guide Bulletin [PDF 90K] we announced a delivery fee rate increase for some Home Possible® Mortgages. However, this increase will not apply to purchase transaction Home Possible Mortgages when the income used to qualify the borrower, converted to an annual basis, does not exceed 80 percent of the applicable area AMI.

Currently, in order to determine if a Home Possible Mortgage is eligible for the lower delivery fee rate, you must manually calculate whether or not your borrower's income is at or below 80 percent of the applicable AMI using our Affordable Income & Property Eligibility lookup tool. The lookup tool has been updated to reflect the higher AMI estimate.

On November 18, Loan Prospector will be updated with a new feedback message that eliminates the manual calculation by automatically notifying you if your borrower's income is at or below 80 percent of the AMI, and if the loan is eligible for the lower Home Possible delivery fee rate. With the November 18 message implementation, we encourage you to begin using the new LPR K8 message code that indicates eligibility for the lower delivery fee rate in your processing.

For more information

We encourage you to review the following information for complete details on the AMI changes, other upcoming Loan Prospector updates, and how these impact your business:


© 2008 Freddie Mac