Freddie Makes Loans More Affordable

Home Possible Mortgages, those for borrowers looking for low down payments and flexible sources of funds, no longer require a minimum $500 borrower contribution if the loan is secured by 1-unit primary residence, and, for 3- and 4-unit primary residences only a 3% contribution is necessary rather than 5%, the secondary lender announced Monday.

Additionally, for 1-unit, owner-occupied Home Possible 97 Mortgages and Home Possible Neighborhood Solution 97 Mortgages, the post-settlement delivery fee is not necessary if the borrower provides personal funds of 3% toward the down payment. The delivery fee is also eliminated on “no cash-out” refinances that have 3% equity and, or, borrower personal funds, according to the announcement.

Freddie said it will also now buy Home Possible Mortgages with the affordable seconds’ amount entered in the Total Gift Fund field, subject to conditions.

The secondary lender eliminated the Home Possible requirement to have at least one single-family borrower complete the education program before the note date, the announcement said.

On all Home Possible Mortgages, lenders reportedly must provide the Loan Prospector AUS Key Number on the Form 11, Mortgage Submission Schedule, or Form 13SF, Mortgage Submission Voucher.

Freddie also said that it is retiring the Affordable Gold line, retaining only certain of its features within the Home Possible Mortgage suite.

As for enhancements to its automated underwriting system, Freddie said it removed the transaction fee for the submission of conventional conforming mortgages that receive a risk class of “caution” on their first submission.