A number of selling updates to Freddie Mac's
Single-Family Seller/Servicer Guide are slated to go into effect over the next
several months. The largest number of updates
concern credit and underwriting
The first of these changes effect the
calculation of debt payment-to-income ratios (DTI) where a borrower is
obligated by student loans. Effective
for mortgages with settlement dates on or after August 1 the minimum payment
that must be used in lieu of a verified monthly payment, i.e. when a loan is in
forbearance or deferred, will drop to 1 percent from 2 percent of the
outstanding loan balance. This could change
the required imputed minimum payment on a 2014 graduate's average student loan
balance of $33,000 from $660 a month to $330.
The new Seller letter will also allow the
substitution of a percentage based payment on student loans, revolving and
open-end accounts only when there is no verification of an actual required
payment. Also, monthly payments can be
excluded from the DTI calculation if the borrower is self-employed and the
payment is made by his or her business.
In analyzing other real estate financed by
a borrower who is applying for a mortgage for a second home or investment
property the number off allowable other properties for which the borrower is
financially obligated will be increased from four to six. The change will also
remove the requirements that a borrower must have a two-year history of
managing investment properties and that he/she maintain six months of rent loss
insurance in order to use income from an investment property (whether the
subject property or another) for qualifying purposes. These changes will be effective
for settlement dates on or after October 26, 2015.
Another change involves mortgages with abatements. Loans with funds provided to a lender or
third party by an interested party to pay or reimburse in whole or in part a
certain number of the Borrower's Mortgage payments in excess of the Prepaids/Escrows
are not eligible for sale to Freddie Mac. This is being revised to exclude
payment of up to 12 months of homeowners' association dues by an interested
party from definition as an abatement considering it instead as an interested
party contribution subject to those requirements and other conditions.
Other changes include:
-
Where
gift funds are used for Borrower Funds or reserves a gift letter is still
required, however for settlement dates on or after August 1 that letter need no
longer identify the mortgaged premises.
- When
conducted verbal verifications of employment the borrowers employment status
must be verified but not whether the borrower is employed or on leave.
The
letter also extends the time for changes announced earlier to requirements for
comparable sales for properties located in new subdivisions, Planned Unit
Developments and new and recently converted condo projects and Updates the New
Mexico and Kentucky Security instruments and the Texas Home Equity Affidavit
Agreement.
The company also announced a change
affecting loan origination companies in three states, Delaware, Maine, and
Missouri. Those states did not require
such companies to register and obtain identification numbers from the National
Mortgage Loan System (NMLS) so Freddie Mac issued special delivery codes to those
originations. All three states now
require NMLS registration so effective August 24, 2015 use of the special
delivery codes will be ended.