Enhancements and System Edits Coming Soon to Loan Selling Advisor®
New Look and Feel for Online Help
On June 29, get ready for a new look and feel to our online help system and improved functionality. These enhancements will provide you with a better, more efficient experience, and include:
- Table of contents to provide quick access to information.
- Context-specific help for first-tier menu functions.
- Step-by step-instructions.
- Videos and reference tools.
It’s everything you told us you wanted.
Critical Edit for LIBOR- and CMT- -indexed ARMs
As the industry prepares to transition from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR), we’re doing our part to help our clients successfully move their plans forward.
We announced in our Single-Family Seller/Servicer Guide (Guide) Bulletin 2020-1 updated notes and riders required for all LIBOR and constant maturity treasury (CMT) -indexed adjustable rate mortgages (ARMs) with note dates on and after June 1, 2020. These updated instruments have more robust fallback language that clearly outlines when and how a replacement index will be chosen if the current index, such as LIBOR or CMT, is no longer available.
In addition, for tracking purposes, we announced that Sellers must deliver the valid value of “J23” for Uniform Loan Delivery Dataset (ULDD) data point Investor Feature Identifier (IFI) (Sort ID 368) for mortgages using the revised ARM notes and riders.
Beginning July 20, Sellers will receive a critical purchase edit on all LIBOR- and CMT -indexed ARMs with note dates on and after June 1, 2020, when the valid value “J23” is not delivered. These ARMs are ineligible for purchase by Freddie Mac if not originated using Uniform Instruments (rev. on 2/20).
As a reminder, and as announced in Guide Bulletin 2020-1, we are requiring that the Document Custodian verify that all ARMs with note dates on or after June 1, 2020 be originated using the revised ARM notes and riders (rev. on 2/20).
What Should I do if I receive a critical edit?
If you receive a critical purchase edit, here are your options:
- If you originated your loan using the updated ARM notes and riders and forgot to enter the IFI J23, please enter the IFI and re-evaluate the loan.
- If you did not originate your loan using the updated ARM notes and riders, your loan is ineligible for purchase by Freddie Mac.
New Edits for Due Date of Last Paid Installment (DDLPI) Delivery Requirements
Effective August 3, 2020, the delivery of the DDLPI ULDD data point Last Paid Installment Due Date (Sort ID 440), must comply with the following:
- The DDLPI day of month must match the Scheduled First Payment Date day of month.
- The DDLPI month must equal the month prior to the Scheduled First Payment Date month when the Settlement Date is prior to the Scheduled First Payment Date, and the Note Amount equals the Loan Acquisition Scheduled UPB Amount.
Beginning August 3, 2020, loans that do not meet these requirements will receive a warning edit, which will become a critical edit in mid-to-late September. We will remind you prior to this change.
DDLPI delivery requirements for loans sold through Cash-Released XChangeSM must follow the guidance provided in Chapter 2, Deliver a Scheduled UPB and Valid DDLPI of the Servicing Transfer Instructions User Guide, available through Loan Selling Advisor.
ARM Cash Program to get more streamlined, uniform pricing
Effective August 3, as announced in Guide Bulletin 2020-18, we’re enhancing Loan Selling Advisor to provide a more streamlined, uniform pricing methodology that will enable note rate contract pricing for adjustable rate mortgage cash contracts, consistent with fixed-rate pricing methodology.
The pricing methodology will not rely on weighted average coupon (WAC) pricing, weighted average contract level tolerances or the assessment of yield maintenance fees.
Look for more details in a future communication.