You are reading key updates from Freddie Mac Today's News... In today’s special Single-Family Seller/Servicer Guide (Guide) Bulletin, we are announcing updates to our requirements for mortgages with maximum LTV, TLTV, and HTLTV ratios equal to or greater than 95 percent that are secured by properties located in areas where property values are declining. In addition, we are amending our requirements for Freddie Mac-owned no cash-out refinance mortgages and Streamlined Refinance Mortgages that are exempt from our maximum financing requirements.
We encourage you to review today’s Guide Bulletin, which details the updates described below. With this Bulletin, we are:
Announcing that for Loan Prospector® Accept purchase and no cash-out refinance mortgages with maximum LTV/TLTV/HTLTV ratios equal to or greater than 95 percent secured by properties located in a market with declining values, you are not required to reduce the maximum LTV/TLTV/HTLTV ratios below 95 percent provided that certain requirements are met. As a result of this change, for mortgages secured by properties located in a declining market that meet the criteria outlined in the Bulletin and have maximum financing of 95 percent LTV/TLTV/HTLTV, you do not need to reduce maximum financing. For mortgages with maximum financing of 97 percent LTV/TLTV/HTLTV, the maximum financing only needs to be reduced to 95 percent. This change is effective immediately.
Allowing closing costs, financing costs, and prepaids/escrows to be included in the new transaction for Freddie Mac-owned no cash-out refinance mortgages and Streamlined Refinance Mortgages that meet the requirements to be exempt from our declining markets requirements. This change is effective for mortgages with Freddie Mac settlement dates on or after February 21, 2008.
We are also reminding you that FHA/VA Mortgages, Section 184 Native American Mortgages and Section 502 Guaranteed Rural Housing Mortgages are exempt from our maximum financing requirements in declining markets, but they must meet the requirements of Chapter 35 of the Guide.
In addition to the updates announced in our Bulletin, we are also recommending use of OFHEO’s Indexes for Homes not in Metropolitan Statistical Areas (MSAs) to improve identification of declining markets and assist you in determining whether a reduction in maximum financing is necessary for properties located outside of an MSA. When using this Index, you must follow the same guidance we provided in our February 21 Guide Bulletin for using OFHEO’s House Price Index when identifying declining markets in an MSA.
Get More InformationFor additional details on these changes:
Read our May 2 Guide Bulletin.
See a summary of all of our recent pricing and credit changes.
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