May 16th, 2008 7:59 PM by Lehel Szucs
Elimination of Freddie Mac's Declining Market Policy
Freddie Mac is committed to protecting borrowers in these challenging times and providing you with clarity of our loan purchase requirements. This includes our declining markets policy, which was intended to aid borrowers, lenders, and the industry in the current environment. However, through your feedback we understand the implementation of industry declining markets policies have created confusion. As a result, today Freddie Mac is announcing we are eliminating our declining markets policy.
Instead, we are providing a simplified way to address maximum financing in this market. Beginning June 1, 2008, we will allow maximum financing up to 95 percent loan-to-value (LTV) for most Freddie Mac mortgages in all markets; this applies to mortgages that are underwritten manually or through Loan Prospector®. Maximum financing requirements may vary depending on occupancy type, number of units, and transaction type.
For low-and moderate-income borrowers and borrowers in underserved areas, we will continue to provide 100 percent financing through our Home Possible® mortgages while positioning first-time homebuyers for long-term successful homeownership.
Although we are eliminating this policy, we continue to strongly maintain that it is still vital that borrowers, lenders, and investors are aware of market conditions and trends, and the importance appraisals play in the lending process. Our appraisal standards for mortgages originated in these markets will remain the same. We continue to monitor the market and maintain our dialogue with consumer and industry trade groups, and our customers to ensure our policies and guidelines meet the needs of current market challenges.
We will announce new requirements and effective dates in an upcoming Single-Family Seller/Servicer Guide Bulletin. We are sharing this information with you today because it is important to your business and your borrowers. Until we provide more detailed information regarding our new requirements, existing requirements apply.
Contact your Freddie Mac Account Manager or representative if you have any questions about our current maximum financing requirements for properties in declining markets.