Improvements to lending guidelines at the Federal Home Loan Mortgage Corp. include expanded loan-to-value ratios and more flexible condominium requirements.
On loans secured by second homes, the maximum LTV ratio, as well as the TLTV and HTLTV ratios, is being raised to 90 percent from 85 percent.
A new 25-basis-point credit fee in price will be charged by Freddie Mac for second-home transactions where the LTV ratio exceeds 85 percent.
The updates were outlined Wednesday by the secondary mortgage lender in Bulletin 2018-5.
LTV ratios on two-unit primary residences are expanding to 85 percent from 80 percent. Freddie noted that a number-of-units credit fee in price will now apply.
The increased LTV ratios for both two-unit properties and second homes apply only to purchase financing and no-cashout refinances.
The changes are immediately effective.
On two-to-four-unit condominium projects, Freddie is replacing its current project review requirements with the option of streamlined reviews, reciprocal project reviews or project reviews for established condominium projects or new condominiums.
As a result of the change, some new requirements are being added to the existing review types including a prohibition of 60-day delinquency on homeowners association assessments for any of the units and new owner-occupancy requirements on investment transactions.
Compliance with condo project-review-and-eligibility requirements will no longer be required on refinances of existing Freddie Mac loans as long as the LTV ratio doesn’t exceed 80 percent; the project is not a condominium hotel, houseboat project, timeshare project, or project with segmented ownership; the
project complies with all applicable property and title insurance requirements; and all other requirements in Section 5701.2(c) are met.
Additional changes to condominium lending include no need to to verify the adequacy of the project liability or fidelity or employee dishonesty insurance and updated ULDD Data Points.
McLean, Virginia-based Freddie will now begin accepting an attorney’s opinion of title on planned-unit developments in lieu of a title insurance policy.
Changes to condominium requirements take effect on June 28.
