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New Mortgage Eligibility Criteria FAQs

  1. Will Freddie Mac provide any guidance on residual income?
  2. Does Freddie Mac have any current plans to update the Selling Guide to reflect QM general requirements such as a monthly debt-to-income ratio of 43 percent or verification of income, asset, and debt obligations in accordance with Appendix Q?
  3. Do Freddie Mac Guide requirements for investment property align with certain TILA exemptions for non-owner-occupied and owner-occupied rental property?
  4. Is Freddie Mac going to provide additional guidance on points and fees calculations?
  5. Freddie Mac’s Single-Family Seller/Servicer Guide allows a living trust to be a borrower on an investment property. Would these loans be exempt from the three percent points and fees limitation?
  6. If the CFPB decides to change the HOEPA points and fees thresholds in the future, will the new Freddie Mac five percent threshold for mortgages that are exempt from the ability to repay change?
  7. Once ULDD data requirements supporting Freddie Mac’s new mortgage eligibility requirements are developed and implemented, will Freddie Mac require Sellers to go back and populate the data for purchases beginning on and after January 10, 2014?
  1. Will Freddie Mac provide any guidance on residual income?

    Freddie Mac does not plan to issue guidance for residual income at this time. Determinations of compliance with the CFPB final rule and other applicable laws are the Seller’s responsibility. Sellers should refer to the CFPB final rule and/or the CFPB for additional guidance.

  2. Does Freddie Mac have any current plans to update the Selling Guide to reflect QM general requirements such as a monthly debt-to-income ratio of 43 percent or verification of income, asset, and debt obligations in accordance with Appendix Q?

    No. Freddie Mac will purchase mortgages that fall within the definition of Qualified Mortgages – Special rules. These mortgages must meet all requirements in the Single-Family Seller/Servicer Guide and the other Purchase Documents. Freddie Mac does not plan to issue guidance with respect to the QM general requirements at this time. Sellers should refer to the CFPB final rule and/or the CFPB for additional guidance concerning those requirements.

  3. Do Freddie Mac Guide requirements for investment property align with certain TILA exemptions for non-owner-occupied and owner-occupied rental property?

    No. The TILA exemptions do not always align with the Freddie Mac Guide requirements.

    The Seller is solely responsible for determining which loans meet the CFPB final rule exempt classification. Freddie Mac will not make the determination of whether a mortgage is exempt from the CFPB final rule or whether a Seller’s designation of the status of a mortgage under the CFPB final rule is correct.

  4. Is Freddie Mac going to provide additional guidance on points and fees calculations?

    Freddie Mac does not plan to provide additional guidance on how to calculate points and fees. To determine how to calculate points and fees, Sellers should rely upon the guidance issued by the CFPB in its final rules and compliance guides.

  5. Freddie Mac’s Single-Family Seller/Servicer Guide allows a living trust to be a borrower on an investment property. Would these loans be exempt from the three percent points and fees limitation?

    Freddie Mac will purchase an investment property mortgage where the borrower is a living trust. While living trust mortgages may be exempt from ATR under TILA and its implementing regulations, such mortgages will not be eligible for sale to Freddie Mac unless they meet all requirements in the Guide and other Purchase Documents, including the three percent total points and fees requirement. However, if the Seller determines that under TILA the mortgage is for a "business purpose,” that mortgage is entirely exempt from TILA and is therefore not subject to the three percent points and fees requirement. However, the mortgage must still meet Freddie Mac’s five percent points and fees requirement.

  6. If the CFPB decides to change the HOEPA points and fees thresholds in the future, will the new Freddie Mac five percent threshold for mortgages that are exempt from the ability to repay change?

    The Freddie Mac five percent points and fees threshold is a Freddie Mac requirement. If HOEPA statutory thresholds change in the future, Freddie Mac will evaluate whether to change the five percent points and fees threshold for exempt mortgages.

  7. Once ULDD data requirements supporting Freddie Mac’s new mortgage eligibility requirements are developed and implemented, will Freddie Mac require Sellers to go back and populate the data for purchases beginning on and after January 10, 2014?

    The final requirements associated with implementation of the new ULDD data elements are currently under discussion and review. While it is not anticipated that Sellers will be required to populate this data on previous deliveries, if this becomes a requirement Freddie Mac will issue a formal announcement providing Sellers with sufficient lead time to enable transmission of the data.

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