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Updates at Freddie Impact Fees, Appraisals

Mortgage News

The latest updates to Freddie Mac’s underwriting guidelines impact requirements for appraisals, borrower assets and manufactured housing loans. Changes are also being made to rules for fees and registration requirements for Mortgage Electronic Registration System loans.

Borrowers will now be allowed to use credit cards, cash advances and unsecured lines of credit to pay up to the greater of $1,500 or 2 percent in mortgage application processing fees, according to Bulletin No. 2011-10 issued Wednesday by Freddie. The prior limit was 1 percent.

The secondary lender also said that a provision limiting the maximum charge for appraisal and credit reports has been eliminated.

Freddie is now allowing borrowers to use eligible assets that don’t impact income calculations in qualifying for a loan. Loans that use the assets as a basis for qualification require a special characteristics code of “H31” on the mortgage submission schedule or voucher.

The updated policies are immediately effective.

Sellers will be able to utilize the Uniform Collateral Data Portal requirements as of June 27, though that doesn’t relieve them of complying with Freddie’s appraisal requirements nor does it impact representations and warranties.

On Sept. 1, property underwriting and appraisal review requirements will be aligned to match current appraisal forms. In addition, Section 44.15(c ), Neighborhood Section, is being revised “to reinforce Freddie Mac’s commitment to purchase eligible mortgages in all neighborhoods and market areas, and in particular, to provide additional guidance on underwriting properties in rural locations.”

Freddie is additionally updating Section 44.15(e), Property Description and Analysis, to specify that properties with a UAD quality rating of Q6 or a UAD condition ratings of C5 or C6 are only eligible for delivery after the property issues are cured.

As of March 19, 2012, all loans delivered to the McLean, Va.-based lender will require color photographs in the appraisal. Faxed photos will no longer be acceptable.

Freddie said manufactured homes that have been moved from permanent foundations are ineligible for purchase. The government-controlled enterprise said that if any portion of a property is a manufactured home, then Chapter H33 requirements apply.

The bulletin addressed MERS, noting that sellers must promptly notify Freddie if their MERS membership is terminated. Assignments from MERS to the servicer must be prepared and executed. Freddie wants sellers to make a good-faith effort to register loans with MERS before delivery. Deactivated mortgages with MERS require an assignment.

“A seller-servicer must provide its document custodian with sufficient information to enable a transferor servicer and Freddie Mac to determine whether a mortgage that is included in a subsequent transfer of servicing is registered with MERS at the time of the transfer of servicing,” Freddie explained.

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