Freddie Mac issued Bulletin 2024-10 (Bulletin) announcing revisions to the Single-Family Seller/Servicer Guide. Per the Bulletin, Freddie Mac:
- Updated self-employed income underwriting and documentation requirements for borrowers with a self-employed history of less than 2 years;
- Added guidance and requirements to address business structure changes (e.g., a change from a sole proprietorship to an S-corporation) related to a borrower’s self-employed income, including a requirement that there must be no change in the borrower’s percentage of ownership interest in order for the current and prior business structures to be considered the same business;
- Updated non-arm’s length employment income requirements;
- Updated the calculation of income from fluctuating hourly employment;
- Expanded documentation requirements for Social Security retirement and Social Security disability income types; and
- Announced that IRS Form 8821 is an acceptable alternative to using IRS Form 4506-C to obtain tax transcripts from the IRS with respect to in-house quality control reviews and lender reverifications (this change aligns with policy outlined in Guide section 5302.5, pertaining to income and asset qualification sources).
Revisions related to self-employed income and non-arm’s length employment income are effective for mortgages with note dates on or after November 8, 2024 (lenders are, however, encouraged to implement the revisions immediately). All other revisions went into effect August 7, 2024.
Click to view the Freddie Mac Guide Bulletin 2024-10: https://www.tenaco.com/wp-content/uploads/2024/08/Freddie-Mac-Guide-Bulletin-2024-10-08-07-24.pdf
