Freddie Mac Issues Bulletin 2017-20: Selling Updates

Freddie Mac issued Bulletin 2017-20 (Bulletin), announcing revisions to the Single-Family Seller/Servicer Guide. As outlined in the Bulletin, Freddie Mac amended requirements with respect to credit underwriting. The amended credit underwriting requirements: add depository accounts and securities as eligible asset types when assets are used as a basis for repayment (provided one of the applicants is at least 62 years of age and other requirements are met); eliminates the requirement that no more than 70% of the balance of an eligible asset be used as a basis for the debt-to-income ratio (now mandates that gift funds, borrowed funds and assets otherwise encumbered be subtracted from the total amount of eligible assets); add additional guidance with respect to calculating, analyzing and documenting restricted stock and restricted stock unit income types; and specify that any stock with limitations on its accessibility is not an eligible source of funds to qualify the borrower for the mortgage loan. Freddie Mac also revised appraisal requirements. The revised appraisal requirements: eliminate the requirement for a field review in connection with a super conforming mortgage if the LTV is greater than 75% and the value is $1 million or greater; allow copies of MLS photographs to be used for comparable sales (even if original photographs are available); and specify that an unlicensed or trainee appraiser may perform an appraisal and sign the appraisal report under certain circumstances. In addition, the Bulletin announces: updated eligibility requirements for super conforming mortgages to add 5-year ARMs as eligible for purchase; revised owner-occupancy requirements for new condominium projects; and amended condominium unit insurance requirements. The revisions went into effect September 14, 2017.

Click here to view the Freddie Mac Guide Bulletin 2017-20