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Wednesday, March 12, 2008

Freddie Mac Jumbo-Conforming Guidelines

by Tanta on 3/12/2008 11:45:00 AM

Well, this is interesting. The GSEs have decided to compete with each other.

I summarized Fannie Mae's conforming jumbo guidelines here. The Freddie guidelines just published have some substantial differences:

1. Freddie is accepting 40-year fixed as well as 30-year fixed with a 10-year IO (Interest Only) term. Fannie is 30-year only and no fixed-rate IO.

2. Freddie is allowing cash-out refis on principal residences only, with a maximum LTV of 75%, a minimum FICO of 720, and a maximum disbursed cash limit of $100,000. All cash-outs get a 1.00% fee hit.

3. Freddie is allowing a maximum LTV/CLTV for purchases of 90% on an ARM; Fannie allows 90% only on FRMs. Freddie's FICO requirements are slightly tighter.

4. Freddie will allow loans to be approved through Loan Prospector (its automated underwriting system), and will therefore allow "Accept Plus" documentation. (If the loan is underwritten without LP, it requires standard full doc.) "Accept Plus" allows partially-verified income for salaried borrowers and stated income for self-employed borrowers. Loans receive "Accept Plus" eligibility based on LP's internal evaluation of the entire loan file; it cannot be used with non-LP loans. Fannie is not allowing AUS and requiring full doc on all loans (so far).

5. Freddie's base fee adjustments are like Fannie's, .25 for a fixed and .75 for an ARM. Besides the cash-out adjustments, Freddie is also charging an additional .50 for no-cash-out refinances.

6. Otherwise the guidelines are essentially similar.

I know I promised to make some estimates of origination volume of the LFKAJ, but every damned time I think I've got all the data, it just gets more interesting.