HomeBridge is pleased to announce enhancements to the Freddie Mac Conforming and Super Conforming guidelines to align with the updates announced by Freddie Mac in Bulletins 2015-12 and 2015-16.
The following enhancements are eligible with loan applications dated on or after October 7, 2015. Loans in the pipeline and/or with applications dated prior to October 7, 2015 are not eligible for these enhancements.
Rate/Term Refinance Seasoning Requirement
The 120 day seasoning requirement is no longer required on a rate/term refinance of a purchase money transaction.
Ownership Requirement on Cash-out Refinance Transactions
The requirement that at least one borrower must have been on title for a minimum of 6 months prior to the Note date to be eligible for a cash-out refinance has been updated to include the following exception:
- The 6 months on title prior to the Note date requirement does not apply when at least one borrower on the cash-out transaction inherited or was legally awarded the subject property (e.g. in the case of divorce, separation, or dissolution of a domestic partnership)
Reduction of LTV for Loans with Subordinate Financing
A 5% reduction of the LTV is no longer required when a loan has subordinate financing.
A 5% borrower personal funds contribution is no longer required on LTVs > 80% where a gift or a gift of equity from an acceptable source was given and the property is a primary residence.
Multiple Financed Properties
The number of properties a borrower may own and/or have financed when purchasing a second home or investment property is being increased to 6 (previously limited to 4).
The requirement for a 2-year history of managing investment properties is being removed. Borrowers without a 2-year history of managing investment properties may now use the rental income from a subject investment or other investment properties owned for qualifying subject to rental income requirements.
Rent Loss Insurance
Six months’ rent loss insurance is no longer required when using rental income from the subject investment property for qualification.
Credit Cards, Cash Advances as Sources of Borrower Funds
When a credit card, cash advance, and/or unsecured line of credit is used by the borrower to pay fees associated with the mortgage (appraisal, credit report, etc.) one of the following is now required (previously both were required):
- Verify the borrower has sufficient funds to pay the charges or advances, or
- Include the payment for the amount charged/advanced in the monthly DTI.
Transactions where the borrower previously experienced a short sale are now eligible subject to the LP Feedback Certificate.
Sale or Conversion of Primary Residence
The requirements when the borrower’s current primary residence is pending sale or is being converted to a second home or investment property have been updated as follows:
- The additional reserve requirements have been removed (6 months for subject and 6 months for property pending sale/being converted or 2 months for each property if the borrower had documented 30% equity). Properties pending sale or being converted are now subject to Freddie Mac’s standard reserve requirements as determined by LP.
- The additional requirements for the use of rental income have also been removed. Standard rental income requirements apply.
Additionally, the requirements to exclude the monthly payment from the borrowers DTI calculation on a pending sale property has been updated. The monthly payment amount of the property pending sale may be excluded from the DTI calculation when one of the following is provided:
- An executed sales contract for the property pending sale (removed “non-contingent