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Announcement 2019-105: Conventional Conforming Freddie Mac Product Updates

NewRez will align with Freddie Mac Bulletin 2019-20 effective immediately.

Employer assisted homeownership benefit (eah)

Employer Assisted Benefits are being revised as follows:

  • Removing the requirement that the EAH Benefit must permit the borrower to continue making payments on the loan in the event the borrower no longer works for the employer.
  • For EAH Benefits that are unsecured loans, specifying that those funds may be used only for down payment and closing costs.
  • For EAH Benefits that are secured loans with regular monthly payments, clarifying that those payments must be included in the monthly housing expense to income ratio.

 

purchase transactions

Freddie Mac has added a new chapter that specifies acceptable uses of the proceeds from a purchase transaction mortgage as well as the circumstances under which the borrower may receive cash back or a principal curtailment.

 

student loans

Freddie Mac has updated the requirements for when a monthly student loan payment may be excluded from the DTI. Currently a borrower's monthly student loan payment from the DTI may be excluded if the student loan has ten (10) or fewer monthly payments remaining until the full balance is forgiven, canceled, discharged or paid by an employment-contingent repayment program, or the monthly payment of the student loan is deferred or in forbearance and the full balance will be forgiven, cancelled, discharged, or paid by an employment-contingent repayment program at the end of the deferment or forbearance period.

 

Freddie Mac will continue to allow the monthly student loan payment to be excluded from the DTI ratio per guidelines above with documentation that the borrower is eligible or approved for the student loan forgiveness, cancellation, discharge or employment-contingent repayment program.

 

Evidence of eligibility or approval must come from the student loan program or the employer, as applicable. 

 

Monthly housing and dti ratios

Freddie Mac updated their Guide to require that flood insurance and special assessments with more than ten (10) monthly payments remaining be included in the monthly housing expense-to-income ratio for the subject property and in the monthly DTI ratio for any other property owned.

 

environmental hazard disclosure to borrower

For purchase transactions, the borrower must be provided with information regarding environmental hazards directly impacting the subject property that have not been mitigated or remediated, provided the borrower does not already have notice of such hazards, such as through the purchase contract or property inspection. Such hazards must be disclosed to the borrower when they are uncovered during the underwriting process prior to the note date and the hazard adversely affects the market value, condition or marketability of the subject property. This includes, but is not limited to, the presence of any contaminated site, hazardous substance or other environmental conditions, not yet mitigated or remediated, which adversely affects the subject property.