Understanding Loan Product Advisor - Advanced Updates and ... · SM. In connection with GREENChoice Mortgages. SM, Freddie Mac will permit the following flexibilities provided in

Understanding Loan Product Advisor®

- Advanced Guidelines and Updates

June 17, 2020

©2019 Genworth Financial, Inc. All rights reserved.

Customer EducationBrought to you by: Genworth Customer Development and Process Consulting

Loan Product Advisor– Resources– Recent Updates– Data Integrity Reminders– Documentation Matrix– Help Tools and Training– Genworth Mortgage Insurance

Agenda

Today’s Session Covers Conventional Loans Only

1Advanced Loan Product Advisor

Freddie Mac Updates - Where To Get ThemFreddie Mac’s Website

– http://www.freddiemac.com/loanadvisorsuite/– Single Family News– Pending Loan Product Advisor Enhancements– Subscription Center– Links to www.freddiemac.com– Learning Center


http://www.freddiemac.com/loanadvisorsuite/

http://www.freddiemac.com/

www.FreddieMac.com


http://www.freddiemac.com/

Freddie Mac Seller Servicer Guide


Freddie Mac CommunicationsBulletins



https://www.fhfa.gov/Media/PublicAffairs/Pages/Fannie-Mae-and-Freddie-Mac-Publish-Joint-Enterprise-Credit-Score-Solicitation.aspx

https://www.fhfa.gov/Media/PublicAffairs/Pages/Fannie-Mae-and-Freddie-Mac-Publish-Joint-Enterprise-Credit-Score-Solicitation.aspx


https://sf.freddiemac.com/working-with-us/creditsmart/courses?utm_source=eloqua&utm_medium=email&utm_campaign=2020-02-16_AFFORD_INFO_

https://sf.freddiemac.com/working-with-us/creditsmart/courses?utm_source=eloqua&utm_medium=email&utm_campaign=2020-02-16_AFFORD_INFO_

8

https://sf.freddiemac.com/about/covid19

Freddie Mac COVID 19 Updates

https://sf.freddiemac.com/about/covid19

9Freddie Mac COVID 19 Updates

Bulletin 2020-14EXTENSION OF TEMPORARY CHANGES FROM PREVIOUS BULLETINSWe are extending the temporary requirements and flexibilities that were effective for Mortgages with Application Received Dates through May 17, 2020 to Mortgages with Application Received Dates through July 31, 2020 for the following:Credit underwriting requirements announced in Bulletins 2020-5 and 2020-8Appraisal and GreenCHOICE Mortgage® flexibilities announced in Bulletins 2020-5, 2020-8 and 2020-11Condominium Project flexibilities announced in Bulletin 2020-11Power of attorney flexibilities announced in Bulletin 2020-8

https://guide.freddiemac.com/app/guide/bulletin/2020-5







Bulletin 2020-5


Guidance Related to Covid-19

https://guide.freddiemac.com/app/guide/content/a_id/1003723

https://guide.freddiemac.com/app/guide/content/a_id/1003723

Bulletin 2020-5


The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.

Credit Underwriting:– Employed Income – 10-day pre-closing verification (PCV), Sellers may obtain

one of the following in lieu of the 10-day PCV:• An email directly from the employer’s work email address that identifies the name and title of the verifier and the Borrower’s name and current employment status

• Year-to-date (YTD) paystub from the pay period that immediately precedes the Note date

• An asset account statement evidencing the payroll deposit from the pay period that immediately precedes the Note date

Bulletin 2020-5


The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before May 17, 2020 to Mortgages with Application Received Dates through July 31, 2020.

Credit Underwriting:– Continuance of Income

• Freddie Mac recommends that Sellers practice additional due diligence to ensure that accurate Borrower information is obtained and that the Borrower’s ability to repay the Mortgage is not negatively impacted.

– An example of additional due diligence for a self-employed Borrower, Sellers are encouraged to attempt to verify that the Borrower’s business is operational closer to the note date than permitted under the current Guide requirements (e.g. within 15 days instead of 120 days)

Bulletin 2020-5The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:

– Temporary appraisal requirement flexibilities: Allowing exterior-only inspection appraisal or desktop appraisals for certain transactions, see Bulletin 2020-5 for full details

– Desktop appraisals: allowing for purchase transactions when an interior and exterior appraisal is not available

– Exterior only inspection appraisals: allowing for on purchases and limited or no cash-out refinances of Freddie Mac-owned loans

– Identification of a Freddie Mac loan: reminding lenders and Sellers about the Loan Lookup tool to identify a Freddie Mac-owned loan

– Cash-out loans and CTP and new construction require full appraisals– Revisions to the scope of work, statements of assumptions and limited conditions,

and appraiser’s certifications: requiring modified language to be used with exterior-only and desktop appraisals

13Freddie Mac

Bulletin 2020-5The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages Applications Received on or before May 17,2020 to Mortgages with Application Received Dates through July 31,2020Appraisal Flexibilities Include:

– Appraisal waivers: encouraging lenders to accept waiver offers when eligible– No changes to delivery at this time – Completion reports (Form 1004D/442) allowing alternatives when a Form

1004D/442 cannot be obtained– CHOICERenovationSM and GreenCHOICE MortgagesSM: no changes– For Freddie Mac loans submitted and resubmitted to Loan Product Advisor

on or after March 29, 2020, expanding ACE appraisal waivers to include certain cash-out and “no cash-out” refinances below:

14Freddie Mac

Bulletin 2020-5


The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.

Appraisal Flexibilities:

Bulletin 2020-8


Guidance Related to Covid-19



Bulletin 2020-8


The temporary credit underwriting requirements below are effective for Mortgages with Application Received Dates on or after April 14, 2020, and remain in place for Mortgages with Application Received Dates on or before July 31, 2020; however, Sellers are encouraged to apply these updates to existing loans in process.

Credit Underwriting:– All Income and Asset documentation must be dated no more than 60 days

prior to the Note Date, except • If an asset account is reported on a quarterly basis, the most recent quarterly statement

must be obtained.• Electronic income verifications obtained from 3rd party verification service provider must

have information from the electronic data base dated no more than 60 days prior to the Note Date

Bulletin 2020-8



Credit Underwriting:– Standard Guide requirements for age of documentation apply to the

following income types:• Military income documented on a LES• Retirement income• Survivor and dependent benefit income• Long-term disability income• SSI• Public assistance• Homeownership• Foster-Care• Trust Income• Royalty Payments• Mortgage Credit Certificates (MCC)

Bulletin 2020-8



Credit Underwriting:– Self-employed Borrowers: Verification of the current existence of the

business- business open and operating• Confirm that the Borrower’s business is open and operating within 10 Business Days

prior to the Note Date.

Bulletin 2020-8



Credit Underwriting:– Stocks, Stock Options and Mutual Funds: Evidence of liquidation, including

Borrower receipt of funds, is required when any of these funds are being used for Down Payment and/or Closing Costs. No more than 70% of the balance in these accounts may be used to meet the reserve requirements (see Guide Section 5501.2)

Bulletin 2020-8The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020Appraisal Flexibilities Include:

– For new construction properties, where the appraisal was completed “subject to completion per plans and specifications,” including properties that were fully completed after the effective date of the appraisal, and an interior and exterior inspection appraisal cannot be completed, Freddie Mac will permit a desktop appraisal on the forms identified in the following table:

21Freddie Mac

See bulletin for full list of documentation requirements

Bulletin 2020-8The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020Appraisal Flexibilities Include:

– For new construction properties, where the appraisal was completed “subject to completion per plans and specifications,” including properties that were fully completed after the effective date of the appraisal, and an interior and exterior inspection appraisal cannot be completed, Freddie Mac will permit a desktop appraisal on the forms identified in the following table:

22Freddie Mac

See bulletin for full list of documentation requirements

Freddie Mac Training


https://learn.freddiemaclearning.com/Saba/Web_spf/NA3P1PRD0123/guest/ledetail/cours000000000008862

https://learn.freddiemaclearning.com/Saba/Web_spf/NA3P1PRD0123/guest/ledetail/cours000000000008862

Bulletin 2020-8The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:CHOICERENOVATIONSM MORTGAGESIn the event a Seller has determined the construction cannot be completed in the required time frame due to COVID-19 concerns or a completion report cannot be obtained, the Seller may e-mail Freddie Mac at [email protected] to discuss an extension.

CHOICERenovationSM Mortgages require an interior and exterior inspection appraisal and a completion report on Form 442. The Seller may not use the appraisal flexibilities provided in Bulletins 2020-5 or 2020-8 with CHOICERenovation Mortgages.

24Freddie Mac

mailto:[email protected]

https://guide.freddiemac.com/app/guide/form/442

Bulletin 2020-8The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Flexibilities GREENCHOICE MORTGAGESSM

In connection with GREENChoice MortgagesSM, Freddie Mac will permit the following flexibilities provided inBulletin 2020-5:In lieu of Form 442, Freddie Mac will permit a signed letter from the Borrower confirming that the work was completed. Sellers must also provide further evidence of completion which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation. All completion documentation must be retained in the Mortgage file.

25Freddie Mac



Freddie Mac Bulletin 2020-8


– Additional Guidance Includes:

COVID-19 Update- Bulletin 2020-11

27

Additional Guidance Related to Covid-19 Highlights from the Bulletin will be

addressed- please review the Bulletin for complete communication




Bulletin 2020-11The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Condominium Project Reviews:Freddie Mac is offering temporary flexibilities and guidance to assist Sellers in Condominium Project reviews during the COVID-19 pandemic .

28


See Bulletin for additional guidance on Project Documentation



Bulletin 2020-11The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:Map reference field for desktop and exterior-only appraisals Freddie Mac is clarifying that the map reference field on the appraisal report may only contain the word “desktop” or “exterior.” No other words or phrases may be used or included. The map reference field should reflect the appraisal type agreed to with the acceptance of the assignment and the minimum scope of work required for the assignment. The appraiser is responsible for determining what is the adequate scope of work for any assignment and may choose to expand the scope of work beyond the minimum requirements.


Bulletin 2020-11The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:Property Valuations – appraisal flexibilities for new construction properties (purchase transactions)In response to Seller inquiries, Freddie Mac is clarifying that the “permissible appraisal requirements” eligibility chart described in Bulletin 2020-5 apply to the appraisal flexibilities for new construction properties including the requirement that second homes with LTV ratios above 85% require an interior and exterior inspection appraisal.



Bulletin 2020-11The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:Loan Product Advisor® – update to identify Freddie Mac-owned MortgagesLoan Product Advisor® will be enhanced at a future date to assist Sellers with identifying if a mortgage being refinanced is owned by Freddie Mac. This enhancement supports our COVID-19 related appraisal flexibilities for Freddie Mac owned no cash-out refinance Mortgages announced in Bulletin 2020-5. If a match is found based on property address and the Social Security number of one or more Borrowers on an existing loan, then informational feedback messages will be returned on both submissions and resubmissions indicating the Mortgage is Freddie Mac-owned.Loan Product Advisor feedback messages will be updated to reflect these changes.



Bulletin 2020-11The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:Delivery InstructionsBeginning on April 13, 2020, for Mortgages with property valuations completed in accordance with the appraisal flexibilities in Bulletin 2020-5, Loan Selling Advisor® will be updated to accept “Desktop Appraisal” and “Drive By” as valid values for ULDD Data Point, Property Valuation Method Type (Sort ID 89). Starting on this date, Sellers should use their best efforts to provide “Drive By” or “Desktop Appraisal,” as applicable, in lieu of “Full Appraisal” for Sort ID 89.

32

See Bulletin contains a Table with delivery instructions when an exterior-only inspection appraisal or a desktop appraisal report was used in accordance with the flexibilities in Bulletin 2020-5



Bulletin 2020-11The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:Virtual Inspections for AppraisalsAppraisers may use virtual inspection methods to augment the data and imagery that is used for either a desktop appraisal or an exterior-only inspection appraisal. All interior and exterior inspection appraisals require the appraiser to perform a complete onsite interior and exterior inspection of the property. A virtual inspection is not a substitute for an on-site interior and exterior inspection.


Bulletin 2020-11The temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Appraisal Flexibilities Include:CHOICERenovation℠ MortgagesIn connection with CHOICERenovation℠ Mortgages with Borrowers who enter into forbearance plans after the Freddie Mac Settlement Date but prior to completion of the renovations, continuation of draw distributions is permitted during the forbearance period. All other program requirements continue to apply.Additionally, when an appraiser is confirming completion of renovations for a CHOICERenovation Mortgage, an on-site interior and exterior inspection is required for Form 442, Appraisal Update and/or Completion Report. Although virtual inspections using video and photographs provided by the Borrower or contractor may be used to evidence renovation progress to disburse additional renovation funds, a virtual inspection may not be used to complete Form 442.




Bulletin 2020-14

35

This Bulletin provides:Temporary requirements related to:

– Mortgage purchase eligibility– Self reporting requirements for

mortgages in COVID 19 related forbearance

Extension of certain previously announced temporary requirementsAdditional guidance and reminders including those related to:• Furloughs and layoffs• Unemployment Compensation• Automated Income Assessment with

Loan Product Advisor® using tax return data




Bulletin 2020-14TEMPORARY CHANGES- Mortgage purchase eligibilityThe temporary requirements below are effective immediately and will remain in place until further notice.We are temporarily revising our Mortgage eligibility requirements to limit our purchase of Mortgages to those with Settlement Dates no more than six months after the Note Date or, for Construction Conversion and Renovation Mortgages, the Effective Date of Permanent Financing. Additionally, we are temporarily suspending Mortgage purchases through our bulk sales unit.Self-reporting requirements for Mortgages in forbearanceIn Bulletin 2020-12, Freddie Mac announced certain requirements for the purchase of Mortgages in COVID-19 related forbearance. If a Seller discovers that it has sold to Freddie Mac a “Mortgage in forbearance” as defined in Bulletin 2020-12 prior to its eligibility for purchase or has delivered such Mortgage without the required ULDD Data Point, Investor Feature Identifier (Sort ID 368) of “J76” or “J77,” the Seller must report such finding to Freddie Mac within 30 days of discovery through either the Post-Fund Data Correction process or the quality control processes set forth in Section 3402.10 or Quality Control Advisor®.




https://guide.freddiemac.com/app/guide/section/3402.10

Bulletin 2020-14EXTENSION OF TEMPORARY CHANGES FROM PREVIOUS BULLETINSWe are extending the temporary requirements and flexibilities that were effective for Mortgages with Application Received Dates through May 17, 2020 to Mortgages with Application Received Dates through June 30, 2020 for the following:Credit underwriting requirements announced in Bulletins 2020-5 and 2020-8Appraisal and GreenCHOICE Mortgage® flexibilities announced in Bulletins 2020-5, 2020-8 and 2020-11Condominium Project flexibilities announced in Bulletin 2020-11Power of attorney flexibilities announced in Bulletin 2020-8


Now July 31, 2020








Bulletin 2020-14

38

The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.GUIDANCE AND REMINDERSFurloughs and layoffsFreddie Mac provides requirements for income while on temporary leave in Section 5303.5. These requirements do not extend to employer-initiated actions such as furloughs and layoffs, regardless of whether there is a projected “return to work” date.



Bulletin 2020-14

39

The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Unemployment compensationWhile we recognize that many individuals have become eligible for assistance and compensation available through the Unemployment Insurance Provisions provided in the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), the assistance and compensation are temporary in nature and therefore do not represent a stable or continuous source of income.As such, unemployment compensation continues to be eligible for use in qualifying only when it is associated with seasonal employment and all other requirements in Section 5303.3 are met.



Bulletin 2020-14

40

The temporary flexibilities are in effect for all Mortgages in process and remain in place for Mortgages with Applications Received on or before July 31, 2020.Automated income assessment with Loan Product Advisor® using tax return dataTo align with the IRS federal tax filing extension, we are revising our requirements applicable to automated income assessment with Loan Product Advisor® using tax return data (i.e., AIM for self-employed). For Mortgages with Loan Product Advisor initial submission dates on or after August 1, 2020, the Borrower’s most recent tax returns filed with the IRS must be the 2019 tax return. This is an extension of the May 1, 2020 deadline.


Bulletin 2020-14

41

Loan Product Advisor update to identify Freddie Mac-owned MortgagesLoan Product Advisor has been enhanced to assist Sellers with identifying if a Mortgage being refinanced is owned by Freddie Mac, effective for submissions to Loan Product Advisor on and after April 27, 2020. This enhancement supports COVID-19 related appraisal flexibilities for Freddie Mac owned “no cash-out” refinance Mortgages announced in Bulletin 2020-05. If a match is found based on property address and the Social Security number of one or more Borrowers on an existing loan, then informational feedback messages will be returned on both submissions and resubmissions indicating the Mortgage is Freddie Mac owned.


Bulletin 2020-17

Bulletin Highlights include: Temporary purchase and refinance

eligibility requirements for borrowers with existing mortgages

Update to the representation and warranty framework requirements related to mortgages subject to forbearance agreements

Extension of temporary requirements for purchase of mortgages in COVID-19 forbearance


https://sf.freddiemac.com/articles/news/guide-bulletin-2020-17-selling-guidance-and-temporary-requirements-related-to-covid-19

https://sf.freddiemac.com/articles/news/guide-bulletin-2020-17-selling-guidance-and-temporary-requirements-related-to-covid-19

Bulletin 2020-17

43

TEMPORARY PURCHASE AND REFINANCE ELIGIBILITY REQUIREMENTS FOR BORROWERS WITH EXISTING MORTGAGESThese temporary requirements are effective for Mortgages with Application Received on and after June 2, 2020 and until further notice. It is encouraged to implement these requirements to loans in process.


In addition to meeting all other requirements of the Purchase Documents and regardless of the Loan Product Advisor® Risk Class, as of the Note Date of the new Mortgage, each existing Mortgage on which the Borrower is Bulletin 2 obligated that is secured by either the subject property or any other 1- to 4-unit residential property, must meet the requirements described in the table

See Additional Documentation Requirements and Guidance

Bulletin 2020-17

44

TEMPORARY PURCHASE AND REFINANCE ELIGIBILITY REQUIREMENTS FOR BORROWERS WITH EXISTING MORTGAGESThese temporary requirements are effective for Mortgages with Application Received on and after June 2, 2020 and until further notice. It is encouraged to implement these requirements to loans in process.


In addition to meeting all other requirements of the Purchase Documents and regardless of the Loan Product Advisor® Risk Class, as of the Note Date of the new Mortgage, each existing Mortgage on which the Borrower is Bulletin 2 obligated that is secured by either the subject property or any other 1-to 4-unit residential property, must meet the requirements described in the table

See Additional Documentation Requirements and Guidance

Bulletin 2020-17

45

TEMPORARY PURCHASE AND REFINANCE ELIGIBILITY REQUIREMENTS FOR BORROWERS WITH EXISTING MORTGAGESThese temporary requirements are effective for Mortgages with Application Received on and after June 2, 2020 and until further notice. It is encouraged to implement these requirements to loans in process.In addition to reviewing the Borrower’s credit report, Sellers must exercise additional due diligence to verify whether or not each Mortgage is current (as defined above), has been reinstated after the Application Received Dates, or is in a repayment plan, loan modification Trial Period Plan, Payment Deferral or is subject to another loss mitigation program, as well as whether the additional requirements in the table are met, if applicable. The Seller must include any related documentation in the Mortgage file. Examples of ways the Seller may confirm compliance with the above requirements include: Reviewing the payment history provided by the servicer(s) for each existing Mortgage Reviewing the Borrower-provided Mortgage statements or electronic Mortgage history for

each existing Mortgage Using a third-party verification service to confirm Mortgage payment history For Mortgages being refinanced, reviewing the pay-off statement


Bulletin 2020-19

Updates to COVID-19 impact on originations: Temporary requirements and

guidance for self-employed income Temporary flexibilities

for CHOICERenovation® Mortgages Delivery requirements for “no cash-out”

refinance mortgages Data requirements for mortgages that

are in COVID-19 forbearance and are delinquent


https://sf.freddiemac.com/articles/news/guide-bulletin-2020-19-new-temporary-requirements-for-self-employed-income-choicerenovation-mortgages-and-more

https://sf.freddiemac.com/articles/news/guide-bulletin-2020-19-new-temporary-requirements-for-self-employed-income-choicerenovation-mortgages-and-more

Bulletin 2020-19

47

These temporary requirements are effective for Mortgages with Application Received on and after June 11, 2020 and until further notice. It is encouraged to implement these requirements to loans in process.


Due to the pandemic’s continuing impact on businesses throughout the country, lenders are now required to obtain the following additional documentation:

– An unaudited YTD profit and loss statement (P & L) reporting business revenue, expenses, and net income up to and including the most recent month preceding the loan application date and be dated no more than 60 days prior to the Note Date. It must be signed by the borrower. And

• Two months business account statements no older than the latest two months represented on the YTD P & L statement. Or

– An audited YTD P & L reporting business revenue, expenses, and net income up to and including the most recent month preceding the loan application date and be dated no more than 60 days prior to the Note Date.

Additional documentation may be needed to supplement the minimum required documentation in order to effectively assess the impact of the pandemic on the business.



Bulletin 2020-19

48



Reviewing YTD P&L statements, business account statements and other documentation The Seller must determine if the business revenue, expenses and net income documented in

the unaudited YTD profit and loss statement are reasonably consistent with the revenue and expense cash flow documented on the business account statements

If the information on the YTD profit and loss statement is not reasonably consistent with the information on the business account statements, additional documentation (e.g., month-to-month or quarterly trending for YTD profit and loss, additional months and/or more recent bank statements) must be obtained to support the information and resolve the discrepancy

If the unaudited YTD profit and loss statement cannot be supported by business account statements and/or other documentation, the self-employment income is not eligible for use in qualifying

If the unaudited YTD profit and loss statement is supported, or if an audited YTD profit and loss statement is used, proceed to determining the current level of stable monthly income as outlined by Freddie Mac. See next slide.



Bulletin 2020-19

49



Establishing Stable Monthly IncomeThe Seller must review the YTD profit and loss statement (unaudited or audited), business account statements, and all other relevant factors and documentation to determine the extent to which a business has been impacted by COVID-19. Refer to



Bulletin 2020-19

50



Establishing Stable Monthly Income- continued The Seller must establish the current level of stable monthly self-

employment income using details from the YTD profit and loss statement, business account statements, and supplemental documentation, as applicable

The Seller must determine whether the income level has declined by comparing the information on the YTD profit and loss statement to the business revenue (i.e., gross receipts or sales) and expenses reported on the most recent year’s business tax return(s), and the net monthly income as calculated in accordance with requirements and guidance in Chapter 5304, including use of Guide Form 91, Income Calculations, or a similar alternative form

See examples on next slidehttps://guide.freddiemac.com/app/guide/bulletin/2020-19


Bulletin 2020-19

51



Establishing Stable Monthly Income- continued



Bulletin 2020-19

52



Business AssetsLoan proceeds from the SBA Payroll Protection Plan (PPP) and/or any other similar COVID-19-related program(s) (e.g., federal, State or local level business loans and grants) are not considered business assets (as described in Section 5501.3(b)(iv)) for the purposes of eligible funds to qualify the Borrower for the Mortgage transaction, including, but not limited to, funds for Down Payment, Closing Costs and reserves.



Bulletin 2020-19

53



CHOICERENOVATION MORTGAGES Mortgages sold with recourse and in forbearance

SM

Bulletin 2020-19

54



CHOICERENOVATIONS MORTGAGES

Mortgages with Settlement Dates after completion of renovations In Bulletin 2020-14, Freddie Mac temporarily revised our Mortgage eligibility requirements to limit our purchase of Mortgages to those with Settlement Dates no more than six months after the Note Date or, for Construction Conversion and Renovation Mortgages, the Effective Date of Permanent Financing.

Effective immediately, we are offering flexibility to these temporary requirements for CHOICERenovationMortgages with Settlement Dates after completion of renovations. After completion of renovations, the Seller may sell the CHOICERenovation Mortgage to Freddie Mac provided the Settlement Date is no more than 12 months after the Note Date. (Note: Pursuant to Section 4607.4(a), all renovations must be completed within 365 days of the Note Date for a CHOICERenovation Mortgage.)

Bulletin 2020-23


This Bulletin provides updates regarding certain temporary COVID-19-related requirements and flexibilities announced in previous Bulletins, including: The extension of the effective dates

for previously announced temporary requirements and flexibilities

The extension of the effective dates for the purchase of Mortgages in forbearance

The extension of the effective date for Sellers’ post-funding quality control requirements

Automated income assessment with Loan Product Advisor®

https://guide.freddiemac.com/ci/okcsFattach/get/1003909_7

https://guide.freddiemac.com/euf/generated/optimized/1587730423/themes/standard/#previous-bulletins

https://guide.freddiemac.com/euf/generated/optimized/1587730423/themes/standard/#purchase-forbearance

https://guide.freddiemac.com/euf/generated/optimized/1587730423/themes/standard/#postfuncing-qc

https://guide.freddiemac.com/euf/generated/optimized/1587730423/themes/standard/#aim-assessment


Mortgages in forbearance Credit Fees in Price


https://sf.freddiemac.com/articles/news/fee-assessments-for-selling-mortgages-in-covid-19-related-forbearance

https://sf.freddiemac.com/articles/news/fee-assessments-for-selling-mortgages-in-covid-19-related-forbearance

COVID 19 FAQ’s


https://sf.freddiemac.com/content/_assets/resources/pdf/faq/covid-19-selling-related-frequently-asked-questions.pdf

https://sf.freddiemac.com/content/_assets/resources/pdf/faq/covid-19-selling-related-frequently-asked-questions.pdf

Bulletin 2020-13Selling UpdatesHighlights include the following: Updates to previously announced

changes to income requirements SOFR ARM underwriting

requirement changes Updates to eMortgage eligibility

requirements for eClosing an eNote vault systems

Other miscellaneous updates




Bulletin 2020-12Selling UpdatesThis Guide Bulletin provides requirements for Mortgages in forbearance as defined below, including: Reminder of general ineligibility of

Mortgages in forbearance Temporary requirements for the

purchase of Mortgages in forbearance

Reminders related to Seller representations and warranties



https://guide.freddiemac.com/euf/generated/optimized/1587730423/themes/standard/#ineligibility-reminder

https://guide.freddiemac.com/euf/generated/optimized/1587730423/themes/standard/#temporary-requirements

https://guide.freddiemac.com/euf/generated/optimized/1587730423/themes/standard/#representations-warranties


Bulletin 2020-09Selling UpdatesFreddie Mac released the attached Bulletin supporting the LIBOR transition to SOFR. In summary, the Bulleting covers:

Eligibility, underwriting and delivery requirements for SOFR-indexed ARMs

Availability of new ARM Notes and riders specific to the SOFR ARM offering

Updating the Guide to reflect the retirement of LIBOR-indexed ARM




Bulletin 2020-01

61

Selling UpdatesHighlights include the following:

Updated ARM Notes and Riders LIBOR ARMs will be retired by the end of

202 Anticipate delivery of SOFR ARMs to begin

in second half of 2020 Future retirement of CMT (constant

maturity Treasury securities) at some point in 2020

Eligibility requirements for Co-op Share Loans and Co-op Projects (Effective for deliveries on 5/4/2020 and after)

Documentation of payments made via third-party money transfer applications for manually underwritten loans

Advanced Loan Product Advisor



Bulletin 2020-01

62

Selling UpdatesHighlights include the following:

Evidence of Gift Funds (Effective 5/4) Extending mandatory date for previously

announced income requirements updates to 7/2/2020

Updates to manufacturer’s specifications for ChoiceHome (Effective 3/1/2020)

Taxpayer First Act and taxpayer consent GreenCHOICE special delivery

requirements for no cash-out refis (Effective for deliveries on and after 2/4/2020)

Retirement of biweekly mortgages due to lack of demand




Loan Product Advisor Documentation Matrix


Tool to help document files

https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf

https://sf.freddiemac.com/content/_assets/resources/pdf/update/docmatrix.pdf

Freddie Mac Rental Income MatrixTool to help document files

https://sf.freddiemac.com/content/_assets/resources/pdf/update/rental.pdf

Advanced Loan Product Advisor 64

https://sf.freddiemac.com/content/_assets/resources/pdf/update/rental.pdf

Loan Product Advisor Feedback Certificate


Validate Mortgage Information


Feedback Certificate


http://www.freddiemac.com/help/lpa_tool/feedback_certificate_page.html










Income And Ratio Information


Validate Liabilities From Your LOS To Loan Product Advisor; Do Ratios Match? What Liabilities Must Be Included?

Number of Submissions


You Must Always Validate/Underwrite To The Most Recent Loan Product Advisor Submission

Feedback Summary - # of Messages


Let’s Start With The Employment And Income Messages

Income/Employment Messages


•Documentation “Level” determines the documentation required

– Note: Many messages say “if”, so they apply only “if”….

See temporary COVID 19 guidelines for age of documents

Capacity: Freddie MacEmployed Income TypesPrimary

– Borrower’s primary source of employed incomeSecondary

– Second job, part-time job or multiple jobsAdditional

– Commissions– Bonus– Overtime– Tips– Auto allowance– Mortgage differential– Military entitlements– Military Reserves & National Guard– Unemployment with seasonal employment


Primary

Secondary

Additional

Freddie Mac’s Single-Family Seller/Servicer Guide Topic 5300

Income


Capacity: Self-Employed IncomeFreddie Mac Income Calculations

– Updated Form 91 Income Calculations Form• Genworth posted updated Form 91 at mi.genworth.com

– Revised documentation requirements• Two years tax returns for businesses in existence less than five years• One year tax return for businesses in *existence more than five years• Verification of existence of the business required and must be completed prior to

delivery date but not more than 120 days prior to the Note date.


*And the borrower has affiliation with the business for more than 5 years

*

* Temporary guidelines

https://new.mi.genworth.com/


*See temporary COVID 19 guidelines



Assets and Reserves


•Read All Messages

Asset Documentation RequirementsFreddie Mac Documentation Requirements. Asset account statements must:

– Identify the financial institution– Identify the account owner– Identify the account number, which at a minimum must include the last four digits– Identify the account type – Show all transactions– Show the period covered– Show the ending balance– Show any loans secured by the asset


The source of funds must be documented when an account is opened within 90 days of the verification and/or when the current balance in the account is significantly greater than the average balance.

Asset Documentation RequirementsFreddie Mac Documentation Requirements. Direct verification sources must:

– Identify the financial institution– Identify the account owner– Identify the account number, which at a minimum must include the last four digits– Identify the account type – Identify the current account balance– Identify the average balance for the last two months– Identify any outstanding loans against the account– Identify the title, signature and phone number of the representative who

completed the form


The source of funds must be documented when an account is opened within 90 days of the verification and/or when the current balance in the account is significantly greater than the average balance.

See temporary COVID 19 guidelines for age of documents

Proof of Liquidation Example


Applicable for loans submitted to Loan Product Advisorand manually underwritten loans; Applies to

– Stocks, Bonds, Mutual funds, U.S. government Securities, retirement accounts and other securities needed for closing

Answer is proof of liquidation of the non-liquid asset is required only if their value is less than $6,000. The requirement reads “at least 20% greater than the amount from these assets needed for closing” (not the entire amount needed for closing), and according to the described scenario only $5000 is needed for closing from the non-liquid assets

*See temporary COVID 19 guidelines Bulletin 2020-8

*

Gift Funds - Documentation Requirement

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Gifts must be evidenced by a letter signed by the donor, called a gift letter. The gift letter must:

– specify the dollar amount of the gift;– specify the date the funds were transferred;– include the donor’s statement that no repayment is expected; and– indicate the donor’s name, address, telephone number, and relationship to the

borrower.When a gift from a relative or domestic partner is being pooled with the borrower’s funds to make up the required minimum cash down payment, the following items must also be included:

– A certification from the donor stating that he or she has lived with the borrower for the past 12 months and will continue to do so in the new residence.

– Documents that demonstrate a history of borrower and donor shared residency. The donor’s address must be the same as the borrower’s address. Examples include but are not limited to a copy of a driver’s license, a bill, or a bank statement.


Gift Funds - Availability & Transfer of FundsThe lender must verify that sufficient funds to cover the gift are either in the donor’s account or have been transferred to the borrower’s account. Acceptable documentation includes the following:

– a copy of the donor’s check and the borrower’s deposit slip, – a copy of the donor’s withdrawal slip and the borrower’s deposit slip, – a copy of the donor’s check to the closing agent, or– a settlement statement showing receipt of the donor’s check (Fannie Mae Only)

Freddie Mac: See next slide


In What Loan Situation Can A Gift NEVER Be Used?INVESTMENT PROPERTY

Gift Funds


https://guide.freddiemac.com/app/guide/bulletin/2020-1?utm_source=eloqua&utm_medium=email&utm_campaign=2020-02-05_POLICY_INFO

https://guide.freddiemac.com/app/guide/bulletin/2020-1?utm_source=eloqua&utm_medium=email&utm_campaign=2020-02-05_POLICY_INFO

Freddie Mac Required Reserves


http://www.freddiemac.com/learn/pdfs/uw/reserves.pdf


Freddie Mac Required Reserves




Credit and Liabilities Messages


Read! Guidance when no payment is listed or liability is not on the credit report; option to verify funds to pay off open ended accounts

PITI


Effective for Mortgages with Settlement Dates on and after January 2, 2020

We are updating the Guide to require that flood insurance and special assessments with more than 10 monthly payments remaining be included in the monthly housing expense-to-income ratio for the subject property and in the monthly DTI ratio for any other property owned, as these items can have a significant impact on the Borrower’s ability to meet his or her monthly obligations.

Guide impacts: Sections 5401.1 and 5401.2

https://guide.freddiemac.com/app/guide/content/a_id/1003437?utm_source=eloqua&utm_medium=email&utm_campaign=2020-02-05_POLICY_INFO

https://guide.freddiemac.com/app/guide/content/a_id/1003437?utm_source=eloqua&utm_medium=email&utm_campaign=2020-02-05_POLICY_INFO

Liabilities

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Revolving: Indicate both the balance and monthly payment on all revolving accounts. Do not “omit” the debt even when 10 or fewer payments remain. These payments should always be included in the applicant’s debt ratio. 30-Day Charge: Monthly payments on open-end accounts are not required to be included in the monthly debt payment if the borrower has sufficient verified funds to pay off the outstanding account balance.Installment: Indicate both the balance and monthly payment on all installment accounts. If less than 10 payments remain, the payment will not be included in the applicant’s debt ratio.


Liabilities

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Student Loans: Indicate both the balance and monthly payment on all student loans.

– All student loans in repayment, forbearance or deferment• If the payment amount is greater than zero, use the payment reported on the credit

report or other documentation, or• If the monthly payment amount reported on the credit report is zero, use 0.5% of the

outstanding loan balance as reported on the credit report


Liabilities

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Effective for Mortgages with Settlement Dates on and after January 2, 2020 Currently, Sellers may exclude a Borrower’s monthly student loan payment from the DTI ratio if:

– The monthly payment may be excluded from the DTI provided the documentation in the file indicates

• The loan has 10 or less monthly payments remaining until the balance of the forgiven, canceled, discharged or paid or

• The monthly payment is deferred or is in forbearance and the full balance of the loan will be forgiven, cancelled, discharged or paid at the end of the deferment or forbearance period

AND• The borrower currently meets the requirements for the student loan forgiveness, cancellation,

discharge or employment-contingent repayment program, as applicable, and the Seller is not aware of any circumstances that will make the borrower ineligible in the future

Additionally, the Seller must document in the Mortgage file that the Borrower currently meets the requirements for the student loan forgiveness, cancelation, discharge or employment-contingent repayment program. In response to Seller inquiries, we are requiring that for the monthly student loan payment to be excluded from the DTI ratio asstated above, the Mortgage file must contain documentation indicating that the Borrower is eligible or approved for the student loan forgiveness, cancelation, discharge or employment-contingent repayment program. Evidence of eligibility or approval must come from the student loan program or the employer, as applicable. Guide impact: Section 5401.2


Liabilities

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Leases: Indicate both the balance and monthly payment on all leases. Do not “omit” the debt even when 10 or fewer payments remain. Lease payments should always be included in the applicant’s debt ratio.


Other Liabilities

Child Support: Indicate both the balance and monthly payment on all support accounts. If less than 10 payments remain, the payment should not be included in the applicant’s debt ratio.

Alimony: Must be deducted from the monthly income.


Excluding Contingent Liabilities From DTI


Page 29 of Matrix http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf

http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf

Total Monthly Debt


https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/conv_lp_liabilities.pdf

https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/conv_lp_liabilities.pdf

Property and Appraisal


See temporary COVID 19 guidelines for appraisal flexibilities


Property Eligibility Requirements

https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/crwr_prod.pdf

https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/crwr_prod.pdf

Loan Collateral Advisor®


https://sf.freddiemac.com/faqs/loan-collateral-advisor-faq

https://sf.freddiemac.com/faqs/loan-collateral-advisor-faq

Loan Collateral Advisor

100

Simplified Risk Scoring System– Scale of 1-5 provided in .5

increments, with one representing the lowest valuation risk score. This score is found in Loan Collateral Advisor and does not print on the feedback certificate

– Eligible Mortgages with LTV/TLTV/HTLTV ratios < or = to 95% that have an appraisal with a Loan Collateral Advisor risk score of 2.5 or less will receive representation and warranty relief.

– Review your Loan Product Advisor Feedback certificate for eligibility


Automated Collateral Evaluation (ACE)

101


– Must receive “feedback message transaction is eligible for appraisal waiver” and be “Accept/Eligible” for LPA

– Transaction must be:

– 1 unit primary or second home including condos

– LTV/TLTV 80% or less

– No cash-out refinance

– Feedback must indicate eligible for appraisal waiver

– Final submission to Selling System® must indicate collateral representation and warranty relief status is “Y” or “Yes”

– Waiver is good for 120 days

– Visit Collateral Representation and Warranty Relief page on the Freddie Mac Learning Center for resources

https://sf.freddiemac.com/content/_assets/resources/pdf/requirements/ace.pdf

https://sf.freddiemac.com/content/_assets/resources/pdf/requirements/ace.pdf

General Messages

102


103

Home Possible Overview and Benefits


http://www.freddiemac.com/singlefamily/factsheets/sell/pdf/home_possible_factsheet.pdf

http://www.freddiemac.com/singlefamily/factsheets/sell/pdf/home_possible_factsheet.pdf

Current Home Possible Quick Facts– Owner Occupied (Program does allow for non-occupying co-

borrowers)– Purchase and no cash out refinancing– Maximum 97% LTV and 105% TLTV ratios for Home Possible with

Affordable Seconds®

– Single Family, 2-4 unit properties, condos, manufactured homes– Borrowers may own other properties at closing– Borrowers do NOT need to be a first time home buyer– Reduced Mortgage insurance coverage for LTV ratios > than 90%– 100% gift funds and No reserves required for 1-unit properties– Follow Loan Product Advisor for DTI and reserves – Homebuyer education required for first time home buyers**

– Genworth education can be used to fulfil– Credit fee cap of 0.0% or 1.5%– Simple income eligibility

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**First time buyer definition is no borrower who has had homeownership in the most recent three years

Home Possible Quick FactsSimple income eligibility

– Low Income where median income at or below 80% of the AMI • No income limit

– Low Income property locations• 100% of area median income

– Easy to Use Income Eligibility Tool• Home Possible Income and Property Eligibility Tool


http://www.freddiemac.com/homepossible/AMI-eligibility/

Freddie Mac Credit Fees in Price




107


Mortgage Insurance Requirements

The Checklist - Use It!

108


Read ALL Messages and Validate; Resubmit if Necessary

109


Common ErrorsDouble Check Your Data

– Address information wrong– Property Type entered incorrectly (condo, but entered as single family)– HOA, Condo or PUD dues not included in DTI– Liabilities omitted without supporting documentation– Inquires not cleared as either a new account opened or no credit granted– Credit report or credit documents expired– Funds required for closing/reserves changed, but not resubmitted– MI required but MI guidelines not followed

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Data Submitted Must Be True, Correct And Accurate And Supported By Proper Documentation Or Explanations


*

Always RememberA Few Reminders:

– Use FULL vested value of the borrower’s 401k, IRA, KEOGH, 403b or other IRS qualified plan as reserves IF borrower has access to the funds currently without restriction; Ensure loans taken are subtracted from the value of the asset account and that applicant is fully vested.

– Loan Product Advisor does not validate if the maximum seller paid fees have been exceeded. You must validate this based off the TLTV.

– Address items that Loan Product Advisor cannot see, such as missing pages to bank statement or unrealistic commute.

– All assets should be entered based on type i.e. CD, 401k, checking, gifts.– Collections are not required to be paid off by Freddie Mac, but may be a

requirement of the lender.– Tax Liens and judgments must be paid and funds must be verified, in addition to

the funds required to close.

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*

*See temporary COVID 19 guidelinesSee Loan Product Advisor Documentation Matrix Dated April 2020

Always RememberA Few Reminders:

– If a revolving debt, open-ended accounts or deferred non-student loan do not show a payment on the credit report, you are required to use 5% of the balance, or obtain a copy of a statement evidencing lower payment.

– For open-ended debt (AmEx O type accounts), verify funds to pay the current balance over and above funds needed for closing + reserves, or include the full payment in ratios.• Evidence borrower is reimbursed by employer is also acceptable

– For all properties owned free and clear, evidence of tax and insurance payments and amounts should be included in the DTI ratio.

– Investment transactions/rental income - refer to the Freddie Mac Rental Income guidelines

– Follow the updated student loan policies for payment amounts

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See Loan Product Advisor Documentation Matrix Dated April 2020

FAQ’s

113


http://www.freddiemac.com/loanadvisorsuite/faq/loanproductadvisor.html

http://www.freddiemac.com/loanadvisorsuite/faq/loanproductadvisor.html

Genworth Underwriting Guidelines

Genworth Rate Express®

LOS Connections

Training Tools and Information

Training Tools and Information

118

Additional MI Site Information

ActionCenter®: 800 444.5664

Your Local Genworth Regional Underwriter

Your Genworth Sales Representative

Your Genworth Resources

Legal Disclaimer Genworth Mortgage Insurance is happy to provide you with these training materials. While we strive for‏accuracy, we also know that any discussion of laws and their application to particular facts is subject to individual interpretation, change, and other uncertainties. Our training is not intended as legal advice, and is not a substitute for advice of counsel. You should always check with your own legal advisors for interpretations of legal and compliance principles applicable to your business.

,GENWORTH EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED‏INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THESE MATERIALS AND THE RELATED TRAINING. IN NO EVENT SHALL GENWORTH BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER WITH RESPECT TO THE TRAINING AND THE MATERIALS.

Genworth Mortgage Insurance Offers A Comprehensive Suite Of Training Opportunities To Boost Your Know-How, Benefit Your Bottom Line, And Serve Your

Borrowers Better. Visit mi.genworth.com To Learn More.

Collateral Underwriter®, Home Ready® and Desktop Underwriter® or DU® are registered trademarks of Fannie MaeLoan Product Advisor®, Home Possible®, Loan Collateral Advisor® and Home Value Explorer® (HVE®) are registered trademarks of Freddie MacActionCenter®, Homebuyer Privileges® and Rate Express® are registered trademarks of Genworth Mortgage InsuranceSimply UnderwriteSM is a registered service mark of Genworth Mortgage Insurance