Freddie Mac issued Bulletin 2020-31: Selling Updates (Bulletin). The Bulletin announces several revisions and clarifications with respect to evaluation of a borrower’s monthly debt obligations. The changes include:
- Revisions to requirements for including rental housing payments in the calculation of the monthly housing expense-to-income ratio;
- Revisions to requirements for documenting liabilities included in the debt payment-to-income (DTI) ratio;
- Updates to requirements for loans secured by assets other than real property;
- Clarification regarding the allowable age of documentation used to support excluding contingent liabilities from the DTI ratio; and
- Clarification regarding the use of estimated real estate taxes in calculating the monthly housing expense-to-income ratio.
Freddie Mac also updated property eligibility and appraisal requirements related to building sketches and subsequent appraisals.
In addition, Freddie Mac announced additional Guide updates related to document custody, insurance coverage, and representation and warranty framework relief for mortgages subject to forbearance agreements.
The revisions related to evaluation of a borrower’s monthly obligations are effective for mortgages with settlement dates on or after November 5, 2020 (however, sellers are encouraged to implement the revisions as soon as possible). The updates related to insurance coverage are effective November 1, 2020. The updates regarding representation and warranty framework relief for mortgages subject to forbearance agreements were effective May 19, 2020. All other updates are effective immediately.
View the Freddie Mac Bulletin 2020-31 here: https://www.tenaco.com/wp-content/uploads/2020/08/Freddie-Mac-Bulletin_2020-31.pdf
