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March 2019 Page 1
Automated Income Assessment (Employer Data) with Loan Product Advisor®
Introduction
This reference is intended to assist you with using our automated income assessment (employer data) offering, a part of
asset and income modeler (AIM) – our solution for automating the manual processes of assessing borrower assets and
income, and provides information to help you understand:
▪ What Is the automated income assessment (employer data) with Loan Product Advisor?
▪ How the Assessment Works (high-level view)
▪ Eligibility Requirements
▪ Loan Product Advisor Results
▪ Income Representation and Warranty Relief
▪ Details on Using the Automated Income Assessment (Employer Data) with Loan Product Advisor
o Initial Setup
o Steps for Originating Loans
o Feedback Messages
▪ Additional Tips and Information
▪ Where to Get Help
▪ Appendix A: Summary of Automated Income Assessment Results and Examples
What Is the automated income assessment (employer data) with Loan Product Advisor?
The automated income assessment (employer data) with Loan Product Advisor uses the resources of a third-party
verification service provider – Equifax® Verification Services (The Work Number®) (the “service provider”) -- to access and
assess income data. The income data can help you automate your income calculations and determine if borrower income
verification requirements are met on conventional loans. Results from the automated income assessment are displayed
on the Loan Product Advisor Feedback Certificate.
This approach provides operational efficiencies through system-driven optimization of the collection and assessment of
data relating to borrower’s income. It also allows for potential relief from Freddie Mac’s enforcement of certain selling
representations and warranties related to the borrower’s income when there is sufficient employer data available through
Equifax Verification Services (The Work Number). Income that cannot be assessed using the automated income
assessment capability can still be used to qualify the borrower, provided it is verified and meets the requirements of
Freddie Mac Single-Family Seller/Servicer Guide (Guide).
How the Assessment Works
The following process flow provides a high-level view of how the automated income assessment works. Details are
provided under the Details on Participating in the Automated Income Assessment (Employer Data) with Loan Product
Advisor section.
.
March 2019 Page 2
Automated Income Assessment (Employer Data) with Loan Product Advisor
Loan Product Advisor automatically sends a request to the service provider for income information, however, an income
verification report is only returned when:
• An income verification report was ordered, and
• A match was made to identifying information on the request.
March 2019 Page 3
Automated Income Assessment (Employer Data) with Loan Product Advisor
Eligibility Requirements
To take advantage of the automated income assessment and potential relief from Freddie Mac’s enforcement of certain
selling reps and warranties related to the borrower’s income, the loan must be submitted to Loan Product Advisor Version
S4.7.00 or higher and meet the requirements summarized below. For complete requirements, refer to Guide Chapter
5901.
General Eligibility Requirements
Topic Requirement
Eligible Products Conventional mortgages
Loan Purpose ▪ Purchase
▪ Refinance, including Freddie Mac Relief RefinanceSM – Open Access Mortgages
and Enhanced Relief Refinance® Mortgages
Eligible Income Sources
(As described in the Guide)
The following income sources are eligible for automated income assessment:
▪ Base non-fluctuating employment earnings and fluctuating hourly employment
earnings
▪ Overtime income
▪ Bonus income
▪ Commission income
The following employment earnings are not eligible for automated income assessment:
▪ Military pay
▪ Earnings with the following characteristics:
o Earnings of a borrower employed by a family member, the property
seller, real estate broker or other interested party to the transaction
o Employed income from foreign sources
o Income reported on Internal Revenue Service (IRS) Form 1099
Note: Income ― such as self-employed income, rental income, alimony, child support,
etc. ― that cannot be assessed will not be eligible for income rep and warranty relief;
however, the income source may still be used as qualifying income provided it is
documented and verified in accordance with the Guide.
Income Verifications
Verifications must meet the following requirements:
March 2019 Page 4
Automated Income Assessment (Employer Data) with Loan Product Advisor
General Eligibility Requirements
Topic Requirement
▪ The method used to produce the income verification report must be an automated
process whereby the data for the report is accessed directly from the service
provider’s electronic database of employer-provided income information.
▪ You must confirm that the information in the income verification report is for the
correct borrower and employer.
▪ If the borrower took a temporary leave of absence, as of the income verification
date, the borrower must have returned to work for at least 30 days following the
leave.
Age of Verifications All income verifications must be dated no more than 120 days before the Note Date, or
Effective Date of Permanent Financing for Construction Conversion and Renovation
Mortgages.
Automated Underwriting You must:
▪ Ensure that the most current version of the income verification report is used
by Loan Product Advisor. If you obtain an updated report, the loan must be
resubmitted to Loan Product Advisor to make sure the most current
information is being assessed.
▪ Evaluate the income verification report, the information contained in Form 65,
Uniform Residential Loan Application, including the borrower’s income and
employment representations, and any other documentation in the mortgage
file.
▪ Submit to Loan Product Advisor the income amount you used to underwrite
the loan.
▪ Have no knowledge, information or documentation that contradicts a
reasonable expectation of continuance of income or probability of consistent
receipt of income for at least the next three years.
▪ Investigate and resolve any inconsistent or contradictory information between
the income verification report and the mortgage file, and if necessary, you
must update information in Loan Product Advisor based on such information.
Delivery Loan must be delivered through Loan Selling Advisor® as a Loan Product Advisor
mortgage with an LP AUS Key Number.
March 2019 Page 5
Automated Income Assessment (Employer Data) with Loan Product Advisor
Documentation Requirements
If the feedback
message(s) indicate… And… Then…
Eligible for income rep and
warranty relief
Income source is an eligible
income source reported on the
income verification report
▪ The income verification report is acceptable
documentation for the income and must be
maintained in the mortgage file.
▪ Obtain and maintain in the mortgage file
verification of the borrower’s current
employment (10-day pre-closing verification) as
required by Guide section 5302.2(d).
Income source is an eligible
income source that was not
reported on the income
verification report, and/or or an
income source other than the
eligible sources, but used to
underwrite the loan
▪ Verify and document the income source in
accordance with the Guide and maintain the
documentation in the mortgage file,
OR
▪ Remove the income and resubmit the loan to
Loan Product Advisor.
Not eligible for income rep
and warranty relief or
Unavailable
N/A Verify and document the income source in
accordance with the Guide and maintain the
documentation in the mortgage file.
IRS Form 4506-T Notwithstanding the requirements of Guide Section 5302.5, for mortgages that receive
an income rep and warranty result of “Eligible” on the last Feedback Certificate, if all
the income of a borrower is from an eligible income source and is on the income
verification report, you do not need to obtain and maintain in the mortgage file the
following:
- IRS Form 4506-T signed by the borrower, or
- Commonwealth of Puerto Rico Form 2907 or Form 4506-T, as applicable, signed
by the borrower for income that is derived from sources in Puerto Rico, Guam, or
the U.S. Virgin Islands and is exempt from federal income taxation under the
Internal Revenue Code.
March 2019 Page 6
Automated Income Assessment (Employer Data) with Loan Product Advisor
Seller’s In-House Quality Control Program
Notwithstanding the requirements of Guide Sections 3402.5 and 3402.8, for mortgages selected for pre-closing and/or
post-closing quality control review that receive an income rep and warranty result of “Eligible” on the last Feedback
Certificate, you are not required to do the following for eligible income sources that are indicated on the income
verification report.
▪ Reverify or recalculate the income
▪ Obtain IRS income information using Form 4506-T or acceptable alternate form for the assessed income, or
▪ Obtain income information using Commonwealth of Puerto Rico Form 2907 or Form 4506-T or acceptable
alternate form for the assessed income
Loan Product Advisor Results
Loan Product Advisor assesses income on an individual borrower-level and income component-level basis (base salary,
bonus, commission and overtime). On a loan-level basis, Loan Product Advisor returns one of the following income rep
and warranty results on the Feedback Certificate:
Result Description
Eligible Loan Product Advisor assessed the borrower’s income and the Seller is eligible
for relief from enforcement of certain selling reps and warranties, described
below, related to the borrower’s income.
Not Eligible Loan Product Advisor assessed the borrower’s income and the Seller is not
eligible for relief from enforcement of selling reps and warranties related to the
borrower’s income.
Unavailable Loan Product Advisor was unable to assess the borrower’s income. This could
be due to missing or incomplete information from the service provider or a
system being down. The Seller is not eligible for relief from enforcement of
selling reps and warranties related to the borrower’s income.
The Feedback Certificate also provides additional messages associated with the income rep and warranty relief result.
The messages provide income eligibility information for all or part of the borrower income assessed by Loan Product
Advisor, together with instructions regarding verification documentation.
March 2019 Page 7
Automated Income Assessment (Employer Data) with Loan Product Advisor
Using the Loan Product Advisor feedback messages, you can determine whether income rep and warranty relief applies
to the loan (loan-level relief). To obtain relief, the data on the last Feedback Certificate must be consistent with the data
delivered to Freddie Mac.
Note: An Income R&W shield on the Feedback Certificate will be available in a future Loan Product Advisor release so you can quickly identify if the loan is eligible for income rep and warranty relief.
Income that cannot be assessed using the income verification report may still be used to qualify the borrower, provided it
meets the requirements of the Guide.
Income Representation and Warranty Relief
For mortgages that receive a Loan Product Advisor Risk Class of “Accept” and an income rep and warranty result of
“Eligible” on the last Feedback Certificate, the Seller is relieved from Freddie Mac’s enforcement of the following selling
reps and warranties upon delivery of the loan to Freddie Mac:
Income Representation and Warranty
Relief is granted for …
Which means…
Income calculation The accuracy of the income calculations related to eligible income sources
that are on the income verification report.
Income verification report information The accuracy and integrity of the data represented on the income
verification report.
Keep in mind, eligibility for income rep and warranty relief applies only to eligible income sources whereby the method
used to produce the income verification report (verify the income) is an automated process in which the data for the report
is accessed directly from Equifax Verification Services (The Work Number) electronic database of employer-provided
income information. Income verified through a manual process is not eligible for automated income assessment.
If the loan is not eligible for income rep and warranty relief, it may still be eligible for relief offered through Freddie Mac's
selling rep and warranty framework as described in Guide section 1301.11.
Note: Refer to Appendix A for a summary of Loan Product Advisor income assessment results and income assessment
feedback certificate examples.
Details on Using Automated Income Assessment (Employer Data) with Loan Product Advisor
The next several sub-sections cover details to use the automated income assessment, including the initial setup process
and steps for using Loan Product Advisor’s automated income assessment.
Initial Setup
To benefit from the automated income assessment offered through Loan Product Advisor, you must first have an
agreement for verification services with the service provider -- Equifax Verification Services (The Work Number) or an
authorized Equifax reseller -- that authorizes the service provider to share the employment data with Freddie Mac. You
are not required to use the automated income assessment.
March 2019 Page 8
Automated Income Assessment (Employer Data) with Loan Product Advisor
The service provider must produce the income verification report using an automated process whereby the data for the
report is accessed directly from the service providers electronic database of employer-provided income information.
You must also be enrolled in Audit by Loan Number (ABLN) with Equifax. To enroll in ABLN, you will need to sign an
ABLN addendum for Equifax to release their audit copies of their completed verifications to Freddie Mac. Your account
representative from Equifax will be able to provide this required addendum. If you do not know your account
representative, send an email to [email protected] to request ABLN.
Note: If using an authorized Equifax reseller, you will need to follow the process outlined by that reseller.
After setup is complete with the service provider, effective January 27, 2019, Loan Product Advisor will offer additional request methods to receive the income verification data from the service provider by adding the unique loan identifier (Report Number) in the request file. You may choose to1:
1. Opt-in to the automated income assessment with Loan Product Advisor, which authorizes Loan Product Advisor to automatically obtain income verification reports you have ordered from the service provider for each loan submission using the loan number; or,
2. Opt-in, as described above, and provide Loan Product Advisor with the service provider’s unique loan identifier (Report Number) in the Report ID data field to ensure that the report obtained is for that Report Number provided, or,
3. Not opt-in*, provide Loan Product Advisor with the service provider’s Report Number in the Report ID data field to automatically obtain the income verification report you have ordered from the service provider for that Report Number provided.
1Automated Income Assessment with Loan Product Advisor Request Methods
Effective: January 27, 2019
If, and, then,
Opt-in Report Number is not provided
Loan Product Advisor will automatically request
the income verification report(s) using the
lender loan number (Loan Number) and
borrower(s) social security number (SSN).
Opt-in Report Number is provided
Loan Product Advisor will request the income
verification report(s) using the Report Number
and borrower(s) SSN.
Note: The loan number will not be used.
Did not opt-in* Report Number is provided
Loan Product Advisor will request the income
verification report(s) using the Report Number
and the borrower(s) SSN(s).
Note: This will allow lead numbers, TPO loan
numbers, or the Loan Product Advisor ID to be
used rather than the lender loan number.
Did not opt-in* Report Number is not provided Loan Product Advisor will not request any
income verification report(s) for that submission.
*As a Seller/Servicer, even though you did not initially complete and submit the Loan Product Advisor Automated Income Assessment-Equifax Opt-in Form, your subsequent provision of the Report Number, like the earlier formal opt-in process, will constitute your authorization for Loan Product Advisor to automatically obtain income assessment reports from Equifax as part of the automated income assessment capability.
March 2019 Page 9
Automated Income Assessment (Employer Data) with Loan Product Advisor
Steps for Originating Loans Using Automated Income Assessment
To originate loans that may be eligible for income rep and warranty relief, you must complete the steps outlined below.
Based on your organization’s business processes, the order in which you complete the steps may vary.
Step 1: Order the Income Verification Report from the Service Provider
As part of your process for gathering loan application data and authorizations, also obtain the borrower’s authorization
to receive the borrower’s income information from the service provider and to share the information with Freddie Mac.
After you have obtained the borrower’s authorization, order the income verification report from the service provider.
Step 2: Reconcile the Income Verification Report(s)
Using an automated process, the service provider generates the income verification report from their database if the
data is available. The automated process can be used to verify income employers who currently provide information
to The Work Number database. If income data is not available from The Work Number database, the service provider
will notify you.
After you receive the report(s), review the information and address any inconsistent or contradictory information
between the report(s) and the mortgage file. For example:
▪ Does the borrower’s identifying information match the loan application (employee name, SSN, address)?
▪ Do the employer and dates of employment match the loan application?
▪ Does the borrower’s income type match the loan application?
▪ Does the borrower’s payment frequency match the loan application?
▪ Is the borrower’s income amount consistent with the amount disclosed on the loan application?
Note: All income verifications must be dated no more than 120 days before the Note Date, or Effective Date of
Permanent Financing for Construction Conversion and Renovation Mortgages, and may contain up to three years of
data.
March 2019 Page 10
Automated Income Assessment (Employer Data) with Loan Product Advisor
The following is an example of an income verification report that will be provided to you from the service provider:
Reference Number: The Report Number for Equifax Verification Services
March 2019 Page 11
Automated Income Assessment (Employer Data) with Loan Product Advisor
Step 3: Complete Loan Product Advisor Loan Data Entry and Submit
Once you have reviewed the report(s) and addressed inconsistencies, complete loan data entry in Loan Product
Advisor. Keep the following in mind when entering data:
1. Income must be entered in Loan Product Advisor by income type for each borrower for Loan Product Advisor
to make an accurate assessment. Enter the borrower’s gross monthly income amount that was used to
underwrite the loan.
2. Loan Product Advisor cannot assess income entered under secondary employment income when assessing
the borrower’s income. Secondary employment income must be added to the borrower’s primary income
earnings to be included in the income calculations. Applicable primary and secondary income must be
included in the following primary income fields to be assessed:
- Base employment income (include both fluctuating and non-fluctuating employment earnings)
- Bonuses
- Overtime
- Commission
For example,
If Borrower Earns… Enter…
$5,000 from primary employment (base earnings)
$1,000 from secondary employment (base earnings)
$6,000 in the primary Base Employment Income
field
$6,000 from primary employment (base earnings)
$1,000 from secondary employment (commission)
$6,000 in the primary Base Employment Income
field
$1,000 in the primary Commission field
$8,000 from primary employment (base earnings)
$1,000 from primary employment (bonus)
$2,000 from secondary employment (base earnings)
$10,000 in the primary Base Employment Income
field
$1,000 in the primary Bonuses field
3. For direct access Loan Product Advisor users when providing the Report Number:
- On the Request Services page in Loan Product Advisor, select the Request an Automated
Underwriting Assessment check box.
- Select the Request Verification Report checkbox, the borrower, verification type, and verification
company and enter the Reissue ID/Report ID located on the service provider’s income verification report.
- Click Add Request, Submit and then Confirm Submit.
March 2019 Page 12
Automated Income Assessment (Employer Data) with Loan Product Advisor
Select the applicable borrower from the drop down.
Select Income.
Select the applicable Service Provider
To delete a request from the Order Summary, click on the trash can.
Select Request Verification Report.
The Order Summary section displays the order history, including prior Reissue Key(s).
Enter the Report Number provided in the Income Verification Report from the Service Provider.
After you have entered all the information, click Submit.
Select Add Request to add the request information to
the Order Summary.
March 2019 Page 13
Automated Income Assessment (Employer Data) with Loan Product Advisor
When you click Confirm Submit, Loan Product Advisor sends the request to the service provider’s system.
System-to-system integration users:
From your system, submit the loan to Loan Product Advisor to begin the assessment. Loan Product
Advisor sends a request based on the applicable information provided in the Automated Income
Assessment with Loan Product Advisor Request Methods.
The service provider must match the information provided in the request to release the report data to Loan Product
Advisor.
If a match is made, Loan Product Advisor receives the report and completes an analysis on the income as a part of its
assessment. Income is derived on an income component-level (base, bonus, commission and overtime) basis. If a
match is not made, you will receive a message indicating Loan Product Advisor was unable to process the report for
an individual borrower.
Step 4: Review the Loan Product Advisor Results
Messages from the automated income assessment are returned in the Employment & Income section of the Loan
Product Advisor Feedback Certificate regarding:
▪ An indication of eligibility for income rep and warranty relief (loan-level relief)
▪ The income amount derived by Loan Product Advisor
Refer to Appendix A for a summarized assessment and documentation chart with Feedback Certificate examples.
Step 5: Deliver the Loan to Freddie Mac
When you are ready to deliver the loan to Freddie Mac, you must deliver it through Loan Selling Advisor with the LP
AUS Key Number. Loan Selling Advisor confirms that the data from the last Loan Product Advisor Feedback
Certificate is consistent with the data delivered in Loan Selling Advisor, and when applicable, provides rep and
warranty relief from certain selling reps and warranties related to the borrower’s income.
March 2019 Page 14
Automated Income Assessment (Employer Data) with Loan Product Advisor
Prior to delivery, Loan Quality Advisor may be used as a supportive tool for managing the income rep and warranty
relief eligibility that was determined in Loan Product Advisor. After delivery, Loan Coverage Advisor may be used to
track income rep and warranty relief.
Feedback Messages
For a list of feedback messages associated with the automated income assessment, refer to Loan Product Advisor
automated income and asset Feedback Messages.
Additional Tips and Information
▪ Employment Verifications – The lender must obtain the 10-day pre-closing employment verification outside of the
automated income assessment capability offered by Loan Product Advisor. Rep and warranty relief is not granted for
the required employment verification.
▪ Verification Report – Loan Product Advisor submits a request to the service provider on every submission, however,
new data will not be returned unless you order a new report. For example, if the borrower received a raise and you
want Loan Product Advisor to consider the raise in its assessment, you need to order a new income verification report
and resubmit the loan to Loan Product Advisor.
Where to Get Help
For questions related to the automated income assessment, please contact your Freddie Mac representative or Freddie
Mac’s Customer Support Center (800-FREDDIE). Also, visit the Asset & Income Modeler (AIM) web page. For questions
related to your service provider’s system, contact your respective representative(s).
This document is not a replacement or substitute for the information found in the Freddie Mac Single-Family
Seller/Servicer Guide and/or terms of your other Purchase Documents.
© 2019 Freddie Mac
March 2019 Page 15
Appendix A: Automated Income Assessment Results and Examples
Summary of Automated Income Assessment Results (Employer Data Income)
The following chart provides a summary of automated income assessment results and the messages returned to confirm income rep and warranty relief eligibility and documentation requirements.
Income
Rep and
Warranty
Result
Loan Product Advisor Feedback Messages Income Documentation
Overall Assessment Borrower Income
Assessment
Eligible Income Sources
Reported on the Income
Verification Report
Income Not Reported
on the Income
Verification Report
and/or Other Income
Sources1
Eligible
“Based on Loan Product
Advisor’s overall
assessment, the loan is
eligible for income
representation and
warranty relief. The loan
does not have to be
resubmitted with the
derived income amount
to maintain income
representation and
warranty relief.”
(Message 24)
At the borrower/employment
level, Loan Product Advisor
returns:
▪ The total derived
income amount
(Message 8D)
▪ The income amount
derived by income
type (base, overtime,
bonus, etc.)
(Message 8G)
Document with the following:
▪ The third-party report
received from the service
provider (Message 8V)
▪ 10-day pre-closing
verification of borrower’s
current employment
(Message CZ)
▪ IRS Form 4506-T (or an
acceptable alternative
form), however not
required for a borrower if
all of that borrower’s
income is from an
eligible source and is on
the income verification
report (Message 1K)
Verify and document the
income per the Guide for
the applicable income
type (various messages)
Not
Eligible
“Based on Loan Product
Advisor’s overall
assessment, the loan is
not eligible for income
representation and
warranty relief; however,
it may be eligible for
relief offered through
Freddie Mac's selling
representation and
warranty framework.”
(Message 23)
At the borrower/employment
level, Loan Product Advisor
returns:
▪ The total derived
income amount
(Message 8D)
▪ The income amount
derived by income
type (base, overtime,
bonus, etc.)
(Message 8G)
Verify and document the
income per the Guide for the
applicable income type
(various messages)
Verify and document the
income per the Guide for
the applicable income
type (various messages)
1 Any eligible income sources not reported on the income verification report and/or an income source not listed as an eligible source
for assessment (e.g., alimony, child support, earning of a Borrower employed by a family member or by the property seller, real
estate agent or other interested party to the transaction, employed income from foreign sources, income reported on IRS Form
1099, military pay, etc.).
March 2019 Page 16
Appendix A: Automated Income Assessment Results and Examples
Income Assessment Feedback Certificate Examples
The following Feedback Certificate Employment & Income section examples display messages you may see in your
results. For a complete list of feedback messages associated with the automated income assessment, refer to Loan
Product Advisor automated income and asset Feedback Messages.
Example 1 – Loan Eligible for Loan-Level Income Rep and Warranty Relief (One Borrower)
The loan was submitted with the following income:
▪ Base Employment Income - $12,501
▪ Commissions - $1,000
The Feedback Certificate indicates the loan received an “Accept” Risk Class. The feedback messages in the Employment
& Income section (below) indicate:
a) Based on the overall assessment, the loan is eligible for income rep and warranty relief (Message 24).
b) Documentation requirements:
▪ The third-party report (income verification report) is sufficient documentation to support the income (Message
8V).
▪ A 10-day pre-closing verification from the employer (Message CZ) and signed IRS 4506-T (Message 1K) are
required, however, the signed IRS 4506-T is not required for a borrower if all the income of that borrower is
from an eligible income source and is on the income verification report.
c) The total amount of derived income is $10,706 (Message 8D).
Note: The derived income is less than the submitted income. Because the derived income supports the loan, no
further action is needed.
d) The source and amount of the borrower’s derived income: base income and commission (Message 8G).
March 2019 Page 17
Appendix A: Automated Income Assessment Results and Examples
Example 1, continued
a)
b)
c)
d)
b)
March 2019 Page 18
Appendix A: Automated Income Assessment Results and Examples
Example 2 – Loan Not Eligible for Loan-Level Income Rep and Warranty Relief (One Borrower)
The loan was submitted with the following income:
▪ Base Employment Income - $22,501
▪ Overtime - $1,500
▪ Commissions - $1,000
The Feedback Certificate indicates the loan received an “Accept” Risk Class. The feedback messages in the Employment
& Income section (below) indicate:
a) Based on the overall assessment, the loan is not eligible for income rep and warranty relief (Message 23).
b) The total amount of derived income is $10,706 (Message 8D).
c) The source and amount of the borrower’s derived income: base income and commission (Messages 8G).
d) Reason certain income was not assessed: Overtime income was not assessed due to missing or insufficient
years of income on the income verification report (Message 78).
e) Informational message on submitted income: Submitted income is not within a reasonable tolerance, thus the
income was not eligible for income rep and warranty relief (Message GD). Consider reviewing income information
in the loan file, then adjusting the income and resubmitting the loan, if applicable.
f) Documentation requirements: The traditional documentation requirements apply to this loan.
March 2019 Page 19
Appendix A: Automated Income Assessment Results and Examples
Example 2, continued
a)
b)
c)
d)
f)
e)
March 2019 Page 20
Appendix A: Automated Income Assessment Results and Examples
Example 3 – Loan Eligible for Loan-Level Income Rep and Warranty Relief (Three Borrowers)
The loan was submitted with the following income:
▪ Base Employment Income - $1,200 (Alice)
▪ Base Employment Income - $1,200 (Dad)
▪ Base Employment Income - $1,200 (Mom)
The Feedback Certificate indicates the loan received an “Accept” Risk Class. The feedback messages in the Employment
& Income section (below) indicate:
a) Based on the overall assessment, the loan is eligible for income rep and warranty relief (Message 24).
b) Documentation requirements:
▪ The third-party report (income verification report) is sufficient documentation to support the income (Message
8V).
▪ A 10-day pre-closing verification from the employer (Message CZ) and signed IRS 4506-T (Message 1K) are
required for each borrower, however, the signed IRS 4506-T is not required for a borrower if all the income of
that borrower is from an eligible income source and is on the income verification report. In this example, no
income was derived for Mom Freddie. You can document her submitted income, or alternatively, you do not
need to document her income if you remove her income and resubmit.
c) The total amount of derived income for each borrower (Message 8D). In this example, no income was derived for
Mom Freddie, but the derived income from the other two borrowers was sufficient.
d) The source and amount of the borrowers’ derived income: base income (Message 8G).
March 2019 Page 21
Appendix A: Automated Income Assessment Results and Examples
Example 3, continued
This document is not a replacement or substitute for the information found in the Freddie Mac Single-Family
Seller/Servicer Guide or terms of your Master Agreement or other Pricing Identifier Terms. © 2019 Freddie Mac
a)
b)
c)
d)
b)