4303.3: Requirements for Freddie Mac Relief Refinance MortgagesSM – Open Access (11/19/18)

The requirements below are effective for Mortgages with Application Received Dates on or after November 19, 2012.

(a) Maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit TLTV (HTLTV) ratios

Except as set forth below in this section and regardless of any maximum LTV, TLTV and HTLTV ratios identified for specific offerings in the Guide or Seller's other Purchase Documents:

There is no maximum LTV ratio for fixed-rate Relief Refinance Mortgages – Open Access
The maximum LTV ratio for adjustable-rate Relief Refinance Mortgages – Open Access is 105%
There are no maximum TLTV and HTLTV ratios

The LTV and TLTV ratios for Texas Equity Section 50(a)(6) Mortgages must not exceed 80%.

(b) Mortgage proceeds

The proceeds of the Relief Refinance Mortgage – Open Access must be used only to:

Pay off the first Mortgage (amount including only the UPB and interest accrued through the date the Mortgage being refinanced is paid off)
Pay related Closing Costs not to exceed $5,000
Disburse cash to the Borrower not to exceed $250

For Relief Refinance Mortgages – Open Access, in the event there are remaining proceeds from the Mortgage after the proceeds are applied as described above:

The Mortgage amount must be reduced, or
The excess amount must be applied as a principal curtailment to the Relief Refinance Mortgage – Open Access at closing and must be clearly reflected on the Settlement/Closing Disclosure Statement

Under no circumstances may cash disbursed to the Borrower (or any other payee) exceed $250.

The proceeds may not be used to pay off or pay down any junior liens.

(c) Secondary financing

An existing junior lien:

Must be subordinate to the Relief Refinance Mortgage – Open Access and must meet requirements for secondary financing set forth in Chapter 4204. An increase in the current unpaid principal amount of any junior lien is prohibited to curtail the Relief Refinance Mortgage – Open Access or to pay related Closing Costs and no new secondary financing is permitted.Existing secondary financing may be an Affordable Second® meeting the requirements of the Seller's Purchase Documents. The Affordable Second must be subordinate to the Relief Refinance Mortgage – Open Access. Refer to Section 4303.4 for special delivery requirements for Relief Refinance Mortgage – Open Access with an Affordable Second.
May be refinanced simultaneously with the First Lien Mortgage being refinanced if the junior lien is being refinanced for one of the following purposes:
- A reduction in the interest rate of the junior lien
- To replace an ARM, an interest-only junior lien, or a junior lien with a balloon or call option with a fixed-rate, fully amortizing junior lien
- A reduction in the amortization term of the junior lien
- A reduction in the monthly payment of the junior lien
The UPB of the new junior lien may not be more than the UPB, at the time of payoff, of the junior lien being refinanced.
If the junior lien being refinanced is a fixed-rate junior lien, the new junior lien may not be an ARM.

(d) Borrower creditworthiness and minimum Indicator Score

Except as modified by this chapter, the Relief Refinance Mortgage – Open Access must meet all of the underwriting requirements in the Guide as of the Note Date of the new refinance Mortgage.All Relief Refinance Mortgage – Open Access must be submitted to Loan Product Advisor® in accordance with the requirements of Chapter 5101.If the Mortgage receives a Loan Product Advisor evaluation status of invalid, ineligible or incomplete, the Seller must take all steps possible in accordance with Chapter 5101 to correct the information and resubmit the Mortgage to Loan Product Advisor.A Relief Refinance Mortgage – Open Access receiving an evaluation status of invalid, ineligible or incomplete is ineligible for sale to Freddie Mac.For each Loan Product Advisor Mortgage delivered to Freddie Mac, the Seller is required to include the Key Number in the ULDD Data Point Automated Underwriting Case Identifier. A Mortgage delivered without a Key Number will be considered a Non-Loan Product Advisor Mortgage.

(i) Accept and A-minus Mortgages

Except for Relief Refinance Mortgages – Open Access that are Higher-Priced Covered Transactions (HPCTs) or Higher-Priced Mortgage Loans (HPMLs) with Application Received Dates on or after January 10, 2014, the Borrower's credit reputation is acceptable if:

The Mortgage receives a Risk Class of Accept, or
The Mortgage receives a Risk Class of Caution, with an evaluation status of eligible for A-minus. For all A Minus Mortgages, the requirements in Section 5101.9 must be met.

For Relief Refinance Mortgages – Open Access that are HPCTs or HPMLs with Application Received Dates on or after January 10, 2014, the Borrower's credit reputation is acceptable if:

The Mortgage receives a Risk Class of Accept and has a minimum Indicator Score of 620, or
The Mortgage receives a Risk Class of Caution, with an evaluation status of eligible for A-minus and has a minimum Indicator Score of 620. For all A-Minus Mortgages, the requirements in Section 5101.9 must be met.

Regardless of the Risk Class, for HPCTs or HPMLs with Application Received Dates on or after January 10, 2014, the Seller must ensure that the minimum Indicator Score requirement is met.

(ii) Risk Class of Caution Manually Underwritten Mortgages

Relief Refinance Mortgages – Open Access with a Risk Class of Caution and no A-minus eligible purchase eligibility message must be manually underwritten in accordance with Topics 5100 through 5500 and this chapter. The Seller is not relieved of any warranties regarding Borrower creditworthiness.Noncredit Payment References are prohibited and may not be used to establish an acceptable credit reputation for a Relief Refinance Mortgage – Open Access.To be eligible for sale to Freddie Mac, the Manually Underwritten Relief Refinance Mortgage – Open Access must comply with the minimum Indicator Score requirements in the following chart:

Minimum Indicator Scores Manually Underwritten Relief Refinance Mortgage – Open Access
Property Type	LTV	Minimum Indicator Score
1- to 4-unit Primary Residence	>75%	660
1- to 4-unit Primary Residence	<75%	620
Second home	>75%	720
Second home	<75%	620
1-unit Investment Property	>75%	720
1-unit Investment Property	<75%	620
2- to 4-unit Investment Property	>75%	720
2- to 4-unit Investment Property	<75%	660

The Seller must identify and deliver an Indicator Score for all Relief Refinance Mortgages – Open Access in accordance with the requirements of Section 5203.2(e). If the Seller determines that there is no usable Credit Score due to insufficient information or inaccurate information, the Mortgage is not eligible for sale to Freddie Mac.Manually Underwritten Relief Refinance Mortgages – Open Access must, at a minimum, meet the income and asset documentation requirements of this chapter.Refer to Section 5203.2(f) for Indicator Score delivery requirements.

(e) Stable monthly income and asset qualification sources and monthly debt payment-to-income ratio

Notwithstanding the requirements in Topic 5300, the Seller is not required to establish a minimum history of receiving income or make a determination that the income can be expected to continue for at least the next three years in order to use the income for qualifying, provided the Seller documents and calculates the income using, at a minimum, documentation required in Section 4303.3(f). The requirements of Chapters 5301 and 5303 through 5306 do not apply to Relief Refinance Mortgages – Open Access.When assets are used as a basis for repayment of obligations, the Seller must comply with the requirements of Section 5307.1.When restricted stock and/or restricted stock units are used to qualify, the Seller must comply with the applicable requirements in Topic 5300.For Loan Product Advisor Mortgages, Loan Product Advisor calculates and assesses the Borrower's qualifying ratios.

For Accept Mortgages and A-minus Mortgages, Loan Product Advisor has determined that the Borrower's qualifying ratios are acceptable, provided the Mortgage is not an HPCT or HPML with an Application Received Date on or after January 10, 2014.
For Accept Mortgages and A-minus Mortgages that are HPCTs or HPMLs with Application Received Dates on or after January 10, 2014, the Seller must ensure that the debt payment-to-income ratio is not greater than 45% regardless of the Risk Class.

For Caution Mortgages that are Manually Underwritten Mortgages, the debt payment-to-income ratio must be underwritten in accordance with Section 5401.2.

(f) Documentation requirements

Unless modified in this chapter, the Relief Refinance Mortgage – Open Access must meet all of Freddie Mac's documentation requirements as of the Note Date of the refinance Mortgage.

(i) Income documentation information

All income used for qualifying must, at a minimum, be documented as follows in lieu of meeting Streamlined Accept or Standard Documentation requirements in Topic 5300, except as specifically stated below, and regardless of the Documentation Level returned by Loan Product Advisor:

Income sources	Minimum documentation requirements
Employment income (primary or secondary) Bonus Overtime Tip income Automobile allowance	Year-to-date (YTD) paystub or written verification of employment (VOE) documenting at least 30 days of income; and 10-day pre-closing verification (10-day PCV), as described in Section 5302.2(d)
Commission income	YTD paystub or written VOE documenting at least 30 days of income; or Complete individual federal tax returns covering the most recent one-year period; And 10-day PCV, as described in Section 5302.2(d)
Mortgage differential	Provide a copy of the agreement from the employer stating the amount of the payments
Military base income Military entitlements income Military Reserve and National Guard income	YTD Leave and Earnings Statement (LES) or written VOE documenting at least 30 days of income and a 10-day PCV, as described in Section 5302.2(d)
Seasonal employment	YTD paystub or written VOE documenting at least 30 days of income; and 10-day PCV, as described in Section 5302.2(d)
Income while on temporary leave from current employment	The Seller may use the Borrower's gross monthly income amount that was received prior to the temporary leave provided that the following documentation is obtained: A paystub or a written VOE documenting pre-leave income; and A written statement signed by the Borrower confirming the Borrower's intent to return to the current employer The Seller must receive no evidence of information from the Borrower's employer indicating that the Borrower does not have the right to return to work after the leave period.
Self-employed (all types; primary and secondary)	Complete signed individual federal tax return for the most recent year; and Verification of the current existence of the business through a third-party source obtained either no more than 120 calendar days prior to Note Date or after the Note Date but prior to the Delivery Date
Notes receivable	Copy of the note and most recent one-month bank statement or other equivalent documentation evidencing receipt of the income
Dividend and interest Capital gains Royalty payments	Copy of complete individual federal income tax returns for the most recent one-year period; evidence of sufficient assets to support the qualifying income for dividend/interest income and capital gains
Trust income	Copy of the Trust Agreement
Retirement income Retirement account distributions as income Survivor and dependent benefit income Long-term disability income Social Security Supplemental Security Income Homeownership Voucher Program Public assistance income (including unemployment compensation) Foster care income	A copy of the award letter, 1099 or other third-party documentation showing income type, source, amount; or Most recent one-month bank statement or other equivalent documentation evidencing receipt of the income
Alimony Separate maintenance Child support	Copy of the signed court order, legally binding separation agreement and/or final divorce decree and evidence of receipt of the total documented amount for the most recent one month
Housing or parsonage allowance	A written VOE, a letter from the employer or paystubs reflecting the amount of the housing or parsonage allowance and the terms under which it is paid; or Evidence of one month receipt of the housing allowance
Tax exempt income	The most recent complete individual federal tax returns or other documentation evidencing that the income, or a portion of the income, is nontaxable. Only the nontaxable portion of income may be grossed up.
Rental income	An executed lease agreement or the most recent complete individual federal tax returns
Mortgage Credit Certificate (MCC)	A copy of the MCC

When assets are used as a basis for repayment of obligations, and when restricted stock and/or restricted stock units are used to qualify, the Seller must follow the applicable documentation requirements in Topic 5300.

All Borrowers, whose income is used to qualify or whose assets are used as a basis for repayment of obligations in accordance with the requirements in Section 5307.1, must sign Internal Revenue Service (IRS) Form 4506-T (or an alternate form acceptable to the IRS that authorizes the release of comparable tax information) on the application date and again on the Note Date, except that if the Form 4506-T obtained on the application date is submitted to the IRS and transcripts are received back from the IRS, the Seller is not required to obtain an additional Borrower signed Form 4506-T.

If submitting the Form 4506-T to the IRS, the Seller must ensure that the IRS receives the form prior to the form's expiration date. The Seller must retain the tax documentation received back from the IRS in the Mortgage file.

Income tax information obtained by the Seller directly from the IRS is acceptable in lieu of tax returns, provided that the Seller obtains and maintains in the Mortgage file all of the information that would be included on the tax returns.

For Borrowers with income that is derived from sources in Puerto Rico, Guam or the U.S. Virgin Islands that are exempt from federal income taxation under the Internal Revenue Code, the above requirements apply, except as follows:

In lieu of a Form 4506-T, Borrowers with income that is derived from sources in Puerto Rico must sign the most recent version of Commonwealth of Puerto Rico Form 2907 titled "Request For Copy of the Return, Estate or Gift Certificate of Release" (Modelo SC 2907 "Solicitud De Copia De Planilla, Relevo De Herencia Y De Donacion") for submission to the Puerto Rico Department of the Treasury, Internal Revenue Area
Borrowers with income that is derived from sources in Guam or the U.S. Virgin Islands must sign the Form 4506-T (or an alternate form that authorizes the release of comparable tax information) for submission to the Guam Department of Taxation and Revenue or Virgin Islands Bureau of Internal Revenue, as applicable

See Section 5102.3(a) for written verification requirements, Section 5302.2(d) for 10-day PCV requirements and Section 5302.3 for third-party employment and/or income verification requirements.

(ii) Asset documentation information

When verifying funds in the Borrower's depository accounts, securities or retirement accounts, the Seller must obtain and maintain in the Mortgage file the most recent monthly or quarterly account statement. The Seller does not need to meet the documentation requirements of Section 5501.3(b) and (c) or investigate large deposits or increases in balances as required in Section 5501.3(a).
All other asset types (other than depository accounts, securities and retirement accounts) must meet the Streamlined Accept documentation requirements in Section 5501.3(b) and (c).

(g) Property valuation requirements

With respect to the determination of property value for a Relief Refinance Mortgage – Open Access, the Seller has the two options identified below. The Seller's regulatory agency may require an appraisal report in instances where Freddie Mac does not; in such event, the Seller must comply with any relevant requirements of regulatory agencies that mandate an appraisal.For Texas Equity Section 50(a)(6) Mortgages, the Seller must obtain an appraisal that meets Freddie Mac requirements and complies with Section 50(a)(6)(Q)(ix) and Section 50(h) of Article XVI of the Texas Constitution.

Option One: HVE®The Seller may determine the value of the Mortgaged Premises using a point value estimate from HVE. For detailed information on HVE, visit http://www.freddiemac.com/hve/hve.html.The Seller that receives a point value estimate and other data generated by HVE) (HVE data) directly from Freddie Mac (as opposed to an authorized HVE distributor or reseller) to originate Relief Refinance Mortgages – Open Access will be deemed to have agreed to the terms and conditions relating to use of data generated by HVE as set forth in Sections 2401.1 and 2402.7.The following requirements must be met for the Seller to use an HVE point value estimate to determine property value for the Relief Refinance Mortgage – Open Access:
- The property must be a 1- or 2-unit dwelling
- The property must be an attached or detached dwelling, or a unit in a Condominium Project or Planned Unit Development (PUD)
- The property must not be a Manufactured Home, dwelling on a leasehold estate, or if the Seller is permitted to deliver Cooperative Share Loans under its Purchase Documents, a Cooperative Unit
- The HVE point value estimate must have a Forecast Standard Deviation that is no greater than 0.20 (corresponding to a Confidence Score of "H" (high) or "M" (medium))
- The Seller must maintain the HVE point value estimate for the Relief Refinance Mortgage – Open Access and any information necessary to evidence compliance with the HVE requirements. Upon Freddie Mac's request, the Seller must provide Freddie Mac with a copy of this HVE documentation.
- As of the Note Date of the Relief Refinance Mortgage – Open Access, the HVE point value estimate may not be more than 120 days old
If the above requirements are met and the Seller uses the HVE point value estimate to determine value:
- The Seller is relieved of representations and warranties regarding the value, internal and external condition and marketability of the Mortgaged Premises for the Relief Refinance Mortgage – Open Access, provided that if the Seller, as of the Settlement Date, is aware of any circumstances or conditions that would adversely affect the value, condition or marketability of the Mortgaged Premises, the refinance Mortgage is not eligible for sale to Freddie Mac under Option One and the Seller must determine the value of the Mortgaged Premises in accordance with Option Two described below
- The Seller represents and warrants that all information provided by the Seller for the purpose of obtaining the HVE point value estimate, including the address of the Mortgaged Premises, is true, complete and accurate
If the above requirements for use of the HVE point value estimate are not met, the Seller must determine the value of the Mortgaged Premises in accordance with Option Two described below.
For special delivery instructions related to the delivery of Mortgages for which the Seller determines property value using the HVE point value estimate refer to Section 4303.3.
Option Two: New appraisal

The Seller must obtain an appraisal with an interior and exterior inspection that meets Freddie Mac requirements.The Seller is not responsible for the representations and warranties regarding the value, condition and marketability of the Mortgaged Premises. Notwithstanding the requirements of Section 5601.12(e), Freddie Mac will accept appraisal reports with a Uniform Appraisal Dataset (UAD) condition rating of C5 or C6 and/or a UAD quality rating of Q6 completed on an "as-is" basis; the appraisal does not have to be completed "subject to" needed repairs being completed.The Seller is not responsible for the completeness and accuracy of the appraiser's description of the Mortgaged Premises, and the accuracy of and support for, the appraiser's opinion of the market value of the Mortgaged Premises as specified in Section 5601.12.Notwithstanding the provisions of Sections 4201.5 and 5601.8(b), the Seller is not required to obtain a new appraisal if the Settlement Date is more than 120 days after the Note Date.When obtaining a new appraisal using Option Two above, the special appraisal and collateral requirements in Section 4603.5 do not apply for super conforming Relief Refinance Mortgages – Open Access.

Properties affected by disasters

For Relief Refinance Mortgages secured by properties in areas affected by disasters:

A Seller is not required to obtain a property inspection or new appraisal when a property valuation (either an HVE point value estimate or an appraisal) was relied on prior to a disaster, provided the Mortgage meets the requirements of Chapter 8202; and
A Seller can use an HVE point value estimate with a high or medium confidence score after a disaster without obtaining a property inspection or appraisal to determine property condition, provided that the Mortgage meets the requirements of Chapter 8202

This flexibility for Freddie Mac Relief Refinance Mortgages does not impact Servicing requirements. Seller/Servicers must ensure that the Mortgaged Premises are covered by insurance meeting the requirements in Chapter 8202, and in accordance with the terms of the Security Instrument and applicable law. See Chapter 4407 for additional information relating to property eligibility requirements for properties affected by disasters.

(h) Mortgage insurance

For each Relief Refinance Mortgage – Open Access with an LTV ratio greater than 80%:

If the Mortgage being refinanced has mortgage insurance coverage, then the same percentage of mortgage insurance coverage must be maintained for the new refinance Mortgage on the entire UPB
If the Mortgage being refinanced does not have mortgage insurance coverage, then no mortgage insurance coverage is required for the new refinance Mortgage

The Seller/Servicer must comply with any requirements established by the applicable MI to transfer and/or maintain the existing mortgage insurance coverage.

Refer to Section 4303.4 for special delivery requirements for Relief Refinance Mortgage – Open Access related to mortgage insurance.

(i) Hardest Hit Fund (HHF)

HHF program funds provided by a state Housing Finance Agency ("HFA") may be used to pay down the outstanding balance on a Mortgage being refinanced at the time of closing, and to pay Closing Costs for the Relief Refinance Mortgage – Open Access, as long as the funds do not result in a lien on the property.The Mortgage file must contain documentation verifying the terms and conditions under which the HHF program funds are provided to the Borrower.When repayment of HHF program funds is required, the verified payment must be included in the monthly debt payment-to-income ratio, unless repayment of funds is due only upon sale or default.The HHF program funds must be reflected on the Settlement/Closing Disclosure Statement.

(j) Incentives and contributions

The following requirements are effective for Mortgages with Application Received Dates on or after April 30, 2013:

(i) The lender may provide the Borrower with a cash or a cash-like (e.g., a gift card) incentive that is not part of the refinance transaction and is therefore not reflected on the Settlement/Closing Disclosure Statement provided that:

The amount of the contribution does not exceed $500.00; and
No repayment is required

The contribution is not considered cash out to the Borrower and does not have to be included in the calculation of the proceeds of the Relief Refinance Mortgage – Open Access as described in Section 4303.3(b).

(ii) The lender may provide a contribution towards the payoff of the Mortgage being refinanced, provided that:

The amount of the contribution does not exceed $2,000.00
No repayment is required; and
The contribution is reflected on the Settlement/Closing Disclosure Statement

The contribution is not considered cash out to the Borrower provided it does not result in cash disbursed to the Borrower exceeding $250.00, as required in Section 4303.3(b).

As required under the Guide for all Mortgages sold to Freddie Mac, the Seller must comply with the requirements of all applicable laws in structuring and providing the contributions in Section 4303.3(j)(i) and (ii) above.