Freddie Mac Issues Bulletin 2023-18: Selling Updates

Freddie Mac issued Bulletin 2023-18 (Bulletin) announcing revisions to the Single-Family Seller/Servicer Guide. Per the Bulletin, Freddie Mac:

  • Specified that an amount greater than zero must be included in the monthly DTI ratio for all student loans (including loans in income-driven repayment plans);
  • Added DTI requirements for student loans in income-driven repayment plans when the borrower must recertify the borrower’s income and/or the borrower’s payment will increase prior to or on the first mortgage payment due date;
  • Specified that the payoff of an existing first mortgage in a “no cash-out” refinance may include a balance deferred under a loss mitigation plan and any costs associated with the satisfaction and release of the first mortgage, such as late fees and prepayment penalties;
  • Clarified that when the title is held by a limited liability company or limited partnership and is transferred into the borrower’s name under a cash-out refinance, the transfer must be completed on or before the Note date (rather than “prior to the Note date”);
  • Clarified that the 12-month seasoning requirement for a first lien mortgage being paid off with proceeds of a cash-out refinance mortgage does not apply to construction conversion and renovation mortgages, or manufactured homes being converted to legally classified real property under applicable State law; and
  • Reduced the title seasoning requirement for cash-out refinance mortgages secured by a manufactured home to only require a borrower to be on title for 6 months prior to the Note date if the property is owned free and clear (rather than requiring the borrower to have owned both the manufactured home and land for 12 months prior to the Note date).

The added DTI requirements for student loans in income-driven repayment plans are effective January 4, 2024. All other revisions are effective September 6, 2023.

Click to view the Freddie Mac Guide Bulletin 2023-18: https://www.tenaco.com/wp-content/uploads/2023/09/Freddie-Mac-Guide-Bulletin-2023-18-09-06-23.pdf

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