|Freddie Mac is cutting delivery fees, implementing a new appraisal form and restricting debt-to-income ratios, loan-to-values and credit scores. The secondary lender did ease up, however, on bankruptcy requirements.
Freddie will begin a requiring a new appraisal market conditions addendum, Guide Form 71, on all appraisals with effective dates of April 1, 2009, or later, a bulletin issued today indicated. The new form provides more details about market trends and neighborhood conditions.
"This new addendum gives direction to appraisers concerning our expected scope of work for appraisals," the letter said.
Secondary rival Fannie Mae this month implemented Form 1004MC, its own market conditions addendum to the appraisal report. That form includes improvements to market trends, comparable properties and absorption rate. It also includes details about seller concessions and what the property might have sold for without the concessions.
Freddie is also requiring that appraisals dated 120 days prior to the permanent financing date be updated using a Form 442. However, if the market value has declined, the update cannot be used.
Delivery fees on fixed-rate purchase transactions and no-cashout super-conforming mortgages will be eliminated, while delivery fees on other super-conforming loans are being reduced by between 25 and 50 basis points, Freddie said in the letter. On no-cashout, fully amortizing and initial-interest ARMs with LTVs higher than 75 percent, the delivery fee is being reduced to 50 BPS.
The government-sponsored enterprise will no longer purchase stated-income and stated-assets loans, including under Loan Prospector Accept Plus Mortgages, that fund on or after March 1, 2009, regardless of whether an Accept Plus Documentation Level was received from Loan Prospector. Loan Prospector will reflect this change on submissions and re-submissions on or after Dec. 7, 2008.
Also being booted from its menu are 40-year loans, except on some affordable programs.
Loans purchased after March 1, 2009, will require Freddie's approval if the lender pays mortgage insurance premiums annually or monthly to Freddie.
Debt-to-income ratios will be capped at 45 percent on all manually underwritten mortgages closed on or after March 1, 2009. The limited debt ratio will only apply to super conforming loans that are manually underwritten. Streamlined refinance transactions are limited even further on ratios.
On borrowers whose debt-to-income ratios exceed 36 percent, the lender must document justification for the higher ratio.
The minimum indicator score has been raised to 620 on all loans unless a specific program indicates otherwise. On manually underwritten owner-occupied loans, the minimum indicator score is 640 for a fixed-rate loan on a single-family property or 680 for borrowers that have ARMs, 40-year loans or no-cashout refinances. The minimum will apply to all loans with settlement dates on or after March 1, 2008.
Freddie reduced to 24 months from 48 months the number of months prior to a new loan that a borrower must have been discharged from Chapter13 bankruptcy.
On home possible mortgages, the maximum LTV on single-family purchase or no-cash-out refinance transactions will be 97 percent through Loan Prospector and 95 percent if manually underwritten. If the total LTV exceeds 97 percent, the borrower's indicator score must be at least 700.
Fannie Updates Appraisal Procedures
Fannie Mae has updated its policies and procedures on appraisal procedures. Among the updates is a new appraisal form.