Loan Product Advisor FAQ

LPA Choice offers unprecedented information about our purchase requirements on certain loans receiving a Caution risk class. With the information in the messages, loan originators can make faster, informed decisions about how to proceed and potentially resubmit loans that could then meet our requirements and become Accepts.

When more than one LPA Choice message is returned, it’s up to the loan originator to choose whether to take action with respect to any of the items and, if so, which one(s). If the loan originator chooses to act on the LPA Choice message(s), it’s not necessary to act on all messages as acting on only one message could be sufficient to help the loan get to Accept. 

Further, loan originators are not required to act on the feedback returned. Decisions to act on messages are at the loan originators discretion and they are solely responsible for determining which actions to take with respect to borrowers, for complying with Single-Family Seller Servicer Guide (Guide) requirements and adhering to all other applicable purchase documents.

No, LPA Choice messaging will be returned only for conventional loans that receive a Caution risk class and meet certain criteria. 

No.

No, AIM and ACE results are not affected by LPA Choice. AIM and ACE are not offered on loans receiving a Caution risk class.

No, the messaging will be available for direct entry users and users who leverage existing LPA integrations and will be returned on applicable loans on or after October 13, 2024.

Yes, the new messages will have new codes. The messages can be found here.

No, although the loan is more likely to get an Accept risk class, there is no guarantee of a change in risk class to Accept as other loan factors could have an impact.

If the borrower lacks sufficient income or assets to address the item identified in the LPA Choice message, the loan will remain at risk for a Caution risk class if resubmitted to LPA. However, it’s possible that changes to other loan factors or to a combination of loan factors could increase the chances of getting the loan to an Accept. Loan originators can review Caution Factor messages and look for rent payment history and cash flow opportunities. Check out our Run with Opportunity webpage for more tips and resources. 

Freddie Mac has identified instances when loans that receive a Caution risk class are “close” to meeting established underwriting guidelines for purchase. LPA Choice messages are received when a reasonable change to income, down payment or reserves could increase the likelihood of a loan receiving an Accept.

Additionally, Home Possible^® and Housing Finance Agency (HFA) loans which have income limits will be excluded from receiving LPA Choice messages for DTI.

LPA supports traditional appraisals, automated collateral evaluation (ACE), ACE+ PDR (ACE plus property data report) and desktop appraisals. For more information, check out our list of collateral policy FAQs. 

ACE is a Loan Product Advisor capability that leverages proprietary models, historical data and public records to allow lenders to sell certain loans to Freddie Mac 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.

ACE, or automated collateral evaluation, is our appraisal waiver offering; a PDR is a property data report. ACE+ PDR is an offering that allows lenders to sell eligible loans without an appraisal. With ACE+ PDR, additional property information is physically collected on-site by trained property data collectors using the Freddie Mac property dataset, in lieu of an appraisal.

For more information, please reference the ACE+ PDR FAQs.

AIM is a capability within Loan Product Advisor that automates the assessment of borrower assets, income and employment for lenders. By leveraging the expertise of third-party service providers, AIM helps deliver a simpler, more efficient loan origination process.

For more information, please visit the AIM webpage or AIM FAQs.

For first-time homebuyers, you can submit an asset verification report for LPA to assess the borrower’s account data to identify certain patterns in the rent payment history. If positive rent payment history is identified, it can only positively impact the LPA credit risk assessment, including the potential to turn a Caution to an Accept.

For LPA to consider rent payment history in its credit risk assessment, the borrower must:

• Have a usable credit score, as determined by LPA.
• Be a first-time homebuyer.
• Intend to occupy the property as their primary residence.
• Have been renting for a minimum of 12 months, with a monthly rent payment of at least $300 that’s paid from the account on the asset verification report.

For full details and eligibility requirements, see Single-Family Seller/Servicer Guide Section 5201.1.

You must submit an asset verification report that includes at least 12 months of the borrower’s account data for LPA to assess the transaction patterns in the borrower’s accounts. If positive cash flow is identified, it can only positively impact the credit risk assessment, including the potential to turn a Caution to an Accept.

Borrower cash flow assessment does not require a credit score for the assessment to run on your submissions. For full details and eligibility requirements, see Single-Family Seller/Servicer Guide Section 5201.1.

No. A loan’s assessment may benefit only from positive cash flow or consistent rent payment history and not both. LPA will use the benefit that it identifies as providing the biggest benefit to the loan.

No.

No.

Yes. All credit reports submitted to LPA, including soft credit pulls, must include trended credit data.

Note: For all loans sold to Freddie Mac, the credit report must generate an inquiry that will be identified on subsequent credit reports (i.e., hard credit pull) as required in Guide Section 5203.1.

LPA will not assess the loan and will return an error message.

No.

Information on the latest specification version can be found on the Loan Product Advisor Version Transition Resources webpage. To access the specification files, visit the Developer Portal.

If you access LPA directly through the Loan Advisor Portal, you will always be on the latest version.

Check out the Data Quality and System Messages – Cause and Resolution job aid for tips and best practices to troubleshoot data quality and system messaging.  

The Loan Product Advisor Functionality Training Resources document also contains a full list of additional resources to help troubleshoot data entry and submitting transactions directly to LPA through the Loan Advisor Portal.

Use the “How to Enter Data” section in the Loan Product Advisor Functionality Training Resources document to access a list of tips and best practices for entering data using direct access.

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.