Freddie Mac advised its approved sellers and servicers of further fee increases and tighter guidelines.
For loans with settlement dates on or after June 1, a 30 basis points post-settlement delivery fee will be charged on loans with loan-to-values at 80 percent or higher and indicator scores under 740, a bulletin yesterday said. The fee applies to mortgage acquired by Freddie under flow purchases contracts.
"In response to the continued deterioration of credit quality and declining home values in most areas of the country, we are further expanding our use of risk-based pricing and increasing our post-settlement delivery fee rates for certain Mortgages with higher risk," Freddie said. "We are also announcing that certain higher-risk mortgages will no longer be eligible for purchase."
The LTV ratio delivery fee structure is being revised to include ranges for scores ranging from 680 to 699, 700 to 719 and at least 720, while LTV ranges will be expanded to include 60 percent and 70 percent. The fees -- which will range from 50 BPS to 75 BPS for loans that fall within a particular combination of LTV and scores -- won't apply to 15-year fixed rate, Home Possible and government-insured mortgages.
While A-minus mortgages are excluded from the LTV ratio delivery fees, they are subject to a fee increase of 125 BPS with a Loan Prospector feedback message level one and 275 BPS for a level three. Non-LP loans will see fees ranging from 125 BPS to 325 BPS.
The secondary lender noted that after June 1, it won't purchase conventional mortgages or home equity lines-of-credit with LTVs above 97 percent. The move does not impact FHA/VA Mortgages, Section 502 GRH Mortgages or Home Possible mortgages with indicator scores of at least 700.
It will also stop buying streamline purchase mortgages and Alt 97 mortgages with affordable seconds, according to the bulletin. And secondary financing won't be allowed on Home Possible loans except for Affordable Seconds or RHS Leveraged Seconds.
Home Possible loans will require indicator scores of at least 700 if the LTV or total LTV is above 97.
Some good news includes the McLean, Va.-based company's decision to exclude streamlined refinances and no cash-out refinances from declining market LTV reductions, effective Feb. 21. In addition, loans with LTVs no higher than 60 percent will receive a 25 BPS delivery credit if the score is at least 700.