Loan Product Advisor FAQ
What is Loan Product Advisor® (LPA℠)?
Loan Product Advisor is our enhanced automated underwriting system. It helps simplify your origination processes and provides you with greater certainty that your loans meet Freddie Mac eligibility requirements.
Is training available for Loan Product Advisor?
Yes. You can learn more about Loan Product Advisor through live training, webinars, job aids, online help and an updated functionality guide. Find all our training opportunities on Freddie Mac Learning.
Is Loan Product Advisor free?
Yes. Loan Product Advisor is free. You should continue to handle your fees with third-party vendors, such as credit reporting agencies, through your existing vendor contracts.
What is automated collateral evaluation (ACE)?
ACE is a Loan Product Advisor capability that leverages proprietary models, 40-years of historical data, and public records to allow lenders to underwrite certain loans without a traditional appraisal. When an appraisal waiver is offered and accepted by the lender, the lender is relieved of the representations and warranties related to the value, condition, and marketability of the mortgaged premises.
It's important to note that when Freddie Mac offers an ACE appraisal waiver, Freddie Mac has not performed a property review or obtained a valuation of the mortgaged premises and the lender must not make any representations that Freddie Mac has performed a property review or obtained a valuation of the mortgaged premises.
For more information, please reference the ACE FAQs.
What will be considered in the credit risk assessment?
LPA will leverage account data in addition to performing its standard credit risk assessment.
If positive cash flow is identified and results in a Risk Class of Accept, what is the Seller required to do to keep the Accept result?
The cash flow assessment does not affect the debt-to-income (DTI) or documentation requirements for the loan. Consequently, the Seller must underwrite the loans as they normally would. Additionally, the Seller must adhere to the following specific requirements with respect to the verification report:
- Confirm that each asset in the verification report is owned by at least one borrower and such borrower has access to the funds.
- Confirm that the age of the verification report complies with the requirements of Guide Section 5102.4.
- Ensure that the most current version of the verification report is used by LPA. If the Seller obtains an updated report, the loan must be resubmitted to LPA to ensure assessment of the most current information.
- Maintain the verification report in the loan file if the Feedback Certificate includes a feedback message that positive borrower cash flow was identified and resulted in a Risk Class of Accept.
Can a loan receive benefit for both positive borrower cash flow and consistent rent payment history?
No. A loan may receive benefit from either positive cash flow or consistent rent payment history. LPA will use the benefit that provides the biggest lift for the loan.
What are some borrower cash flow assessment best practices?
Sellers should encourage borrowers who may benefit from the cash flow assessment to link as many bank accounts as they can. This includes what they consider to be their primary account (i.e., where the majority of income is deposited) as well as accounts used for:
- Direct deposit payments
- Monthly bill payments
- Day-to-day transactions
- Savings accounts
- Investment accounts
Is there any additional cost to take advantage of this offering?
There is no cost from Freddie Mac. However, talk to your service provider for costs associated with using and requesting the asset report.
Which service providers support borrower cash flow assessment?
Designated service providers ready to support borrower cash flow assessment include Blend, Finicity (a MasterCard company), AccountChek® by Informative Research and PointServ.
When using LPA to enter loans through direct access, where should I include flood insurance or special assessments as a monthly housing expense?
Monthly housing expenses that are not included in the listed options (such as flood insurance and special assessment) should be included under Other in the Proposed Monthly Payment for Property section.
Are there any additional tips for troubleshooting common scenarios?
Here are some troubleshooting tips that may help you:
- Common errors include:
- Previous Employment field is missing an employment end date.
- Present housing expenses are not provided (e.g. no container in the XML) and the borrower is not living rent-free.
- Housing Expense Payment Amount field may only be zero when a borrower is presently living rent-free.
- Subject property address errors. Sending incorrect abbreviations or incomplete address data may result in data quality or system messages. You must use standard U.S. Postal Service abbreviations for pre- and post-directional and street suffix abbreviations, routes and residence types. Refer to the Top 5 Tips for Entering Addresses job aid for more information.
- Review our job aids on how to enter data into LPA portal, paying close attention to "Notes" in red and making sure your system has implemented something similar. We recommend testing all these scenarios. We encourage you to read the "How to Enter Addresses" section, and more specifically the following sections:
- Common errors include:
How do I submit prequalifications into LPA?
Prequalifications may be submitted with or without a property address. If submitting with a property address, select “Prequalification” as the “Loan Status Identifier / Loan Processing Stage” and follow the Tips for Prequalification Transactions job aid for how to submit the address. If no address is submitted, the system will default to Prequalification.