Loan Advisor Updates to Assist in Supporting Changes for Qualified Mortgages
Freddie Mac recently published updated requirements in connection with the Amended Senior Preferred Stock Purchase Agreement (PSPA) and Revised General Qualified Mortgage (QM) Rule, which are effective for mortgages with application received dates on or after July 1, 2021, and all mortgages with settlement dates after August 31, 2021, with one exception:
Exception: Construction Conversion Mortgages that are documented using Integrated Documentation or Modification Documentation without a new note with application received dates prior to July 1, 2021, that meet the QM Patch (and do not meet Revised General QM Rule) can be purchased until February 28, 2022.
In support of these requirements, Freddie Mac Loan Advisor® tools have been updated to assist clients in real-time, as shown below.
The following critical messages will display when submitted loans fall outside the updated guidelines.
Scenario |
Tool |
Action |
Effective Date |
QM Price Threshold Spread |
Loan Selling Advisor® Loan Quality Advisor® Post-Fund Data Correction Tool |
Critical message will display. |
September 1, 2021
|
Freddie Mac Enhanced Relief Refinance® Mortgage is delivered after August 31, 2021. |
Loan Product Advisor® |
Critical message will display. DQE0446, “Enhanced Relief Refinance is temporarily paused until further notice. Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery.” |
July 1, 2021
|
Loan Selling Advisor |
Critical message will display. |
Application dates on or after July 1, 2021 |
|
Post-Fund Data Correction |
Settlement dates on or after September 1, 2021 |
||
The qualifying rate for a 3/6 SOFR ARM is Note Rate plus Life Cap (5%). |
Loan Quality Advisor
|
Critical message will display. DC5003, “SOFR ARM Qualifying Rate used by LQA for this DTI ratio comparison is the Note Rate plus life cap (five percentage points) |
September 1, 2021
|
Initial Fixed Period Short Term 5/6 SOFR ARM is less than 55 months |
Loan Quality Advisor Loan Selling Advisor Post-Fund Data Correction Tool |
Critical message will display.
|
September 1, 2021
|
As a reminder, requirement updates to support the Revised General QM Rule were published in Bulletins 2021-13, 2021-19, and Bulletin 2021-27, including, but not limited to, requirements pertaining to ARMs and Enhanced Relief Refinance mortgages.
REMINDER: Determination of regulatory compliance
Freddie Mac will not make the determination of whether a mortgage, including a mortgage assessed through Loan Product Advisor, complies with or is exempt from the Revised QM Rule or whether a Seller’s designation of the status of a mortgage under the Revised QM Rule is correct. These determinations of compliance with the Revised QM Rule and other applicable laws are the Seller’s responsibility.