Freddie Mac recently announced, in Bulletin 2021-11 and Bulletin 2021-12 (the Bulletins), changes to certain of its single-family mortgage acquisitions. The Bulletins implement the portion of the recently amended Senior Preferred Stock Purchase Agreement, between Freddie Mac and the U.S. Department of the Treasury (Treasury), which requires Freddie Mac to limit its purchases of single-family mortgages secured by investment properties and second homes to 7%, in aggregate, of total single-family mortgage acquisitions.
Beginning on April 15, 2021, Freddie Mac will apply a “Yellow – High Likelihood of Caution” risk assessment to all non-loan Product Advisor Mortgages secured by investment properties or second homes submitted to loan Quality Advisor. The “Yellow” risk assessment will also result for such mortgages resubmitted to loan Quality Advisor’s Risk Assessment service on or after April 15, 2021 (regardless of the result of the previous submission), and these loans will be ineligible for sale to Freddie Mac.
Effective for mortgages with settlement dates on or after May 1, 2021, Freddie Mac will require that mortgages secured by investment properties or second homes must: (i) receive a loan Product Advisor Risk Class of Accept, and (ii) may not be manually underwritten. That is, for such loans, Freddie Mac will no longer purchase them if they are manually underwritten and if they do not have that proper risk class. Freddie Mac further clarified that, on May 1, 2021, it also will no longer consider Seller-Owned Converted and Seller-Owned Modified Mortgages secured by investment properties or second homes to be eligible for delivery, regardless of the loan’s risk class or underwriting.
Note that Enhanced Relief Refinance Mortgages secured by investment properties and second homes are not impacted by the above changes and must continue to be manually underwritten if currently required.
WBK’s prior coverage of the Treasury and FHFA agreements to amend the Preferred Stock Purchase Agreements between the Treasury and each of the GSEs is available here.