Loan Prospector(R) Changes to Help Lenders Qualify More Low- and -Moderate Income Borrowers
June 26 2006 - 10:50AM
PR Newswire (US)
Fee for Loan Prospector 'Caution' Assessments Dropped; Home
Possible(R) Upgraded MCLEAN, Va., June 26 /PRNewswire/ -- Freddie
Mac today announced it is adjusting its Loan Prospector(R)
automated underwriting service and upgrading its Home Possible(R)
suite of affordable mortgage products to help more low- and
moderate-income borrowers qualify for mortgages that are eligible
for purchase by Freddie Mac. "Today's announcements are the latest
installment on the pledge we made to our lender customers to buy
more of the loans they originate and give them new ways to build
their market share with Loan Prospector," said Paul Mullings,
senior vice president of Single Family Sourcing at Freddie Mac. "We
believe the changes we are announcing today further demonstrate how
today's Freddie Mac is fulfilling its mission to expand
homeownership opportunities for America's families while delivering
a consistently superior business experience to its lender
customers." Specifically, Freddie Mac expects more mortgages
submitted to Loan Prospector will get an "accept" response as a
result of the changes. Freddie Mac also said it is waiving the Loan
Prospector assessment fee when a "caution" is returned on the first
submission of a conforming, conventional mortgage. Caution
responses are triggered by higher risk mortgages that Freddie Mac
purchases as well as by loans that do not meet the company's loan
purchase guidelines. "Simultaneously removing the fee and providing
more 'accept' responses will enable our lenders to expand their
business while discovering how many more of their customers qualify
for Freddie Mac's most affordable mortgage products," Mullings
added. Freddie Mac noted that it is not changing the way Loan
Prospector assesses risk, but is expanding its purchases of higher
risk mortgages submitted through Loan Prospector that will meet the
company's federal affordable housing goals. For example, one of
this year's subgoals requires low-and moderate-income borrowers to
account for 46 percent of the home purchase mortgages Freddie Mac
buys. Freddie Mac Reduces Home Possible Cash Contributions Freddie
Mac also said it is eliminating the $500 borrower cash contribution
and pre-purchase homeownership education requirement for borrowers
who use Home Possible(R) mortgages to finance a single-family home.
Freddie Mac's premier suite of affordable mortgage products, Home
Possible is designed to expand the home buying power of borrowers
with limited credit or downpayment savings. Freddie Mac is also
cutting the cash contribution from five to three percent of the
purchase price for Home Possible borrowers buying a three-to
four-unit property. The change is expected to help foster the
supply of affordable ownership and rental housing in many of
America's underserved neighborhoods and other communities. In a
separate effort to qualify more Home Possible borrowers, Loan
Prospector is also being changed to exclude Affordable Seconds(R)
when calculating total loan-to-value ratios. Affordable Seconds are
second mortgages that federal, state or local housing programs,
non-profit organizations or employers provide to borrowers who need
additional assistance to overcome financial hurdles posed by the
downpayment, closing costs, or home purchase price. In practice,
the change means lenders will enter Affordable Seconds into Loan
Prospector as gifts, which, in turn, is how Loan Prospector will
evaluate them. For more information on the latest Loan Prospector
and Home Possible changes, mortgage originators should contact
their Freddie Mac sales representative or call 1-800-FREDDIE.
Freddie Mac is a stockholder-owned corporation established by
Congress in 1970 to support homeownership and rental housing.
Freddie Mac purchases single-family and multifamily residential
mortgages and mortgage-related securities, which it finances
primarily by issuing mortgage passthrough securities and debt
instruments in the capital markets. Over the years, Freddie Mac has
made home possible for one in six homebuyers and more than two
million renters across America. For additional information about
Freddie Mac, see the Company's web site: http://www.freddiemac.com/
DATASOURCE: Freddie Mac CONTACT: Brad German of Freddie Mac,
+1-703-903-2437 Web site: http://www.freddiemac.com/
Copyright