Freddie Mac Increasing Fees On Mortgages With Higher Risk

Selling requirements are amended in this Single-Family Seller/Servicer Guide (Guide) Bulletin.In response to the continued deterioration of credit quality and declining home values in most areas of the country, we are further expanding our use of risk-based pricing and increasing our postsettlement delivery fee rates for certain Mortgages with higher risk. We are also announcing that certain higher-risk Mortgages will no longer be eligible for purchase, making changes to our Home Possible® Mortgage offering and providing specific guidance regarding the use of the Office of Federal Housing Enterprise Oversight (OFHEO) House Price Index to improve the identification of declining markets in order to assist in determining whether a reduction in maximum financing is necessary as Sellers assess value for a given property.

Changes to Exhibit 19, Postsettlement Delivery Fees

Effective date: June 1, 2008

We are making the following changes to our postsettlement delivery fees (delivery fees), effective for all Mortgages sold under flow Purchase Contracts with Freddie Mac Settlement Dates on or after June 1, 2008:

• Announcing a new delivery fee of 30 basis points for all Mortgages with loan-to-value (LTV)/total LTV (TLTV) ratios greater than or equal to 80% and minimum Indicator Scores less than 740, including Mortgages sold with recourse and indemnification
• Revising our Indicator Score/Loan-to-Value ratio delivery fee rate structure to include new Indicator Score and LTV ratio ranges, as well as a delivery fee credit and increased delivery fee rates for Mortgages with certain Indicator Score/LTV ratio combinations
• Assessing the Home Possible delivery fees on Home Possible 3% Cash and Home Possible Neighborhood Solution® 3% Cash Mortgages
• Increasing Credit Score/Loan-to-Value delivery fee rates for A-minus Mortgages, other Caution Mortgages and Non-Loan Prospector® Mortgages

We are also correcting certain statements made in our special November 15, 2007 Bulletin with respect to delivery fee changes.

Credit Changes

Effective immediately

Effective for Mortgages with Freddie Mac Settlement Dates on or after February 21, 2008, we are exempting the following Mortgages secured by properties located in a market with declining values from the requirement to reduce the maximum LTV/TLTV ratio, with conditions:

• Freddie Mac-owned streamlined refinance Mortgages, as described in Guide Section 24.4
• “No cash-out” refinance Mortgages, as described in Section 24.5, when the Mortgage being refinanced is currently owned by Freddie Mac in whole or in part, or securitized by Freddie Mac

Effective June 1, 2008

We are making the following credit changes, effective for Mortgages with Freddie Mac Settlement Dates on or after June 1, 2008:

• Requiring a reduction in the maximum TLTV ratio when the property is located in a market with declining values (the Guide already requires a reduction in the maximum LTV in this instance)
• Announcing that we will no longer purchase:

1. Mortgages with LTV/TLTV/home equity line of credit TLTV (HTLTV) ratios greater than 97%, except for FHA/VA Mortgages, Section 502 GRH Mortgages and for Home Possible Mortgages with Indicator Scores equal to or greater than 700
2. Alt 97® Mortgages with Affordable Seconds
3. Streamlined Purchase for Homeowners Mortgages (streamlined purchase Mortgages)

• Announcing the following changes to Home Possible Mortgages:

1. For purchase transaction Home Possible Mortgages, requiring homeownership education for a qualifying Borrower when all of the Borrowers are First-Time Homebuyers
2. Revising our secondary financing requirements for Home Possible Mortgages
3. Revising Borrower eligibility requirements
   We are also providing specific guidance regarding the use of the OFHEO House Price Index, mentioned in our special November 15, 2007 Bulletin, as a tool Sellers can use to identify declining markets.

DELIVERY FEE RATE CHANGES

Effective June 1, 2008

New delivery fee

For Freddie Mac Settlements on or after June 1, 2008, all Mortgages with both LTV/TLTV ratios greater than or equal to 80% and minimum Indicator Scores less than 740, including Mortgages sold with recourse and indemnification, will be assessed a 30 basis point delivery fee. The delivery fee will be applied in addition to all other applicable delivery fees. For Mortgages with no secondary financing or home equity line of credit (HELOC), the Mortgage LTV ratio and TLTV ratio are the same.

For Sellers that sell fixed-rate Mortgages for cash through the Freddie Mac Selling System and participate in the net price option, the new delivery fee will not be netted out of the cash price when this fee becomes effective on June 1, 2008; instead, this delivery fee will appear on the Seller’s monthly invoice until further notice.

Changes to Indicator Score/Loan-to-Value ratio delivery fee structure, introduction of delivery fee credit and increase in delivery fee rates for Mortgages with certain Indicator Score and LTV ratio combinations

Effective June 1, 2008, we are modifying our Indicator Score/Loan-to-Value delivery fee table in Exhibit 19, Postsettlement Delivery Fees, by adding the following new Indicator Score ranges:

• Equal to or greater than 680 to less than 700
• Equal to or greater than 700 to less than 720
• Equal to or greater than 720

We are also adding the following LTV ratio ranges:

• Less than or equal to 60%
• Greater than 60% to less than or equal to 70%

Finally, we are:

• Adding a 25 basis point delivery fee credit for Mortgages with LTV ratios less than or equal to 60% with Indicator Scores equal to or greater than 700
• Increasing delivery fee rates by 50 or 75 basis points for Mortgages with certain Indicator Score and LTV ratio combinations

For the complete release from Freddie Mac may be downloaded here(PDF Download).

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