Introducing the Relief Refinance Mortgage^SM – Open Access

On June 26, we introduced the Relief Refinance Mortgage – Open Access, which permits Relief Refinance Mortgages to be originated by Freddie Mac Seller/Servicers who do not currently service the mortgage being refinanced.

With the addition of this new option under the Relief Refinance Mortgage offering, we are expanding support for the federal Making Home Affordable Program by making Relief Refinance Mortgages more broadly available in the market and providing borrowers with more choices when refinancing. To distinguish the two Relief Refinance Mortgage options we are now offering, we refer to our initial offering as the Relief Refinance Mortgage – Same Servicer.

Relief Refinance Mortgages – Open Access must have note dates on or after October 1, 2009, and on or before June 10, 2010. Additionally, these mortgages must have Freddie Mac settlement dates on or after October 1, 2009.

Requirements for Relief Refinance Mortgage – Open Access

To be eligible for the Relief Refinance Mortgage – Open Access, the mortgage being refinanced must be owned or securitized by Freddie Mac and the Relief Refinance Mortgage must improve the borrowers position in one of the following ways:

• A reduction in the interest rate of the first lien mortgage
• To replace an ARM, Initial Interest^SM Mortgage or any mortgage with an interest-only period, or a balloon/reset mortgage with a fixed-rate fully amortizing mortgage
• A reduction in the amortization term of the first lien mortgage

Relief Refinance Mortgage – Open Access permits expanded LTV ratios and provides relief from standard mortgage insurance requirements. Requirements include:

• Requiring the new Relief Refinance Mortgage to be fully underwritten and submitted to Loan Prospector®.

• Allowing the mortgage being refinanced and the Relief Refinance Mortgage – Open Access to have a different occupancy type. Relief Refinance Mortgages – Open Access may be secured by 1- to 4-unit primary residences, second homes, and 1- to 4-unit investment properties.

• Requiring a full interior/exterior appraisal of the mortgaged premises. Sellers are required to provide certain representations and warranties related to the appraisal, including representations and warranties on the value, condition and marketability of the property securing the refinance mortgage. Use of Home Value Explorer® or other automated valuation models in lieu of an appraisal is not permitted.

• Permitting junior liens currently serviced by the Seller originating the Relief Refinance Mortgage to be refinanced simultaneously with the Relief Refinance Mortgage subject to certain conditions. Existing junior liens must remain subordinate to the Relief Refinance Mortgage and no new or increased secondary financing is permitted.

• Allowing the lesser of 4 percent of the current unpaid principal balance of the mortgage being refinanced or $5,000 of closing costs, financing costs and prepaids/escrows to be rolled into the loan amount of the Relief Refinance Mortgage. Cash back to the borrower may not exceed $250.

• Requiring all postsettlement delivery fees from Guide Exhibit 19, Postsettlement Delivery Fees, including a new Mortgages With High LTV Ratios delivery fee for mortgages with LTV ratios greater than 95 percent, to be assessed as applicable.

The total of all delivery fees will be capped at 200 basis points, and any deductions will be reflected in your monthly invoice under the fee name Relief Refinance Cap Deduction. Please note that net delivery fees and credits will be reflected in the selling system's Net Price functionality for Relief Refinance Mortgages that are sold for cash.

Complete requirements for Relief Refinance Mortgage – Open Access can be found in Single-Family Seller/Servicer Guide (Guide) Chapter B24.

System updates

Loan Prospector will be updated on October 1, 2009, to reflect the Relief Refinance Mortgage – Open Access requirements. For eligible mortgages, the Loan Prospector Feedback Certificate will provide the following information:

• Freddie Mac loan number
• Mortgage insurance certificate number
• Percentage of mortgage insurance loss coverage
• Mortgage insurer name

Relief Refinance Mortgages – Open Access must be sold through the selling system and must be delivered with Special Characteristic Code (SCC) H08, Freddie Mac Relief Refinance Mortgage – Open Access, as well as all other applicable SCCs.

Relief Refinance Mortgage – Open Access resources

• Review our June 26 Guide Bulletin 2009-15.
• Review our July 1 Single-Family Advisory e-mail with information on Relief Refinance Mortgages with LTV ratios up to 125 percent.
• Learn more about Relief Refinance Mortgage – Open Access.