5101.9: A-minus Mortgages (11/05/18)

(a) Purchase of A-minus Mortgages

Freddie Mac will purchase A-minus Mortgages under the terms of the Purchase Documents and this section. A-minus Mortgages are designed for Borrowers who have a weak credit reputation and/or questionable capacity and for Mortgages where excessive layering of risk indicates that the Mortgage is unlikely to be acceptable according to Topics 5100 through 5500.An A-minus Mortgage may not be secured by property that is subject to income-based resale restrictions that terminate upon foreclosure (or expiration of any applicable redemption period) or recordation of a deed-in-lieu of foreclosure, where the property value must be determined in accordance with Section 4406.1(g)(ii).

(b) Eligibility requirements

An A-minus Mortgage must have the following characteristics:

The Mortgage must be a conventional Mortgage
The Mortgage must be a Loan Product Advisor® Mortgage with a Risk Class of Caution and evaluation results of eligible for A-minus

A Caution Mortgage that receives loan evaluation results of eligible for A-minus, but that does not meet the requirements of this section, is not eligible for delivery to Freddie Mac as an A-minus Mortgage, but may be eligible for delivery as a Caution Mortgage in accordance with the requirements of Topics 5100 through 5500. A Caution Mortgage that receives loan evaluation results of eligible for A-minus, and that meets the requirements of this section, may be eligible for sale as an Affordable Merit Rate® Mortgage if the requirements of Chapter 4604 are met.

(c) Special underwriting requirements

Loan Product Advisor has determined the creditworthiness of the Borrower is acceptable if all Mortgage payment histories for each qualifying Borrower are verified on the Loan Product Advisor credit reports.

If all Mortgage payment histories for each qualifying Borrower are not verified on the Loan Product Advisor credit reports, the Seller must directly verify and document any Mortgage payment histories in accordance with the requirements of Section 5202.2(b). The Seller must warrant that during the prior 12-month period, each Borrower was not 30 days or more delinquent more than once and was never 60 days or more delinquent on any directly verified Mortgage or combination of directly verified Mortgages. If this warranty cannot be made, the Mortgage is ineligible for delivery to Freddie Mac.

In addition, for all Mortgages with Borrowers who do not have usable Credit Scores, the requirements in Section 5201.1 must be met.

(d) Other requirements

Documentation

The Mortgage must be documented in accordance with the requirements in Topic 5300 and Section 5501.3 for Standard Documentation.

Quality control

An A-minus Mortgage is subject to the quality control requirements for a Loan Product Advisor Accept Mortgage as described in Chapter 3402..

Delivery requirements

There are no special requirements for delivery of A-minus Mortgages.

Credit Fees in Price for A-minus Mortgages

A special Credit Fee in Price will be assessed and billed to the Seller in conjunction with the sale of A-minus Mortgages. The Credit Score/Loan-to-Value (CS/LTV) Fee Level found on the Last Feedback Certificate will determine the applicable CS/LTV (A-minus) Credit Fee in Price rate.

The Seller must refer to Exhibit 19, Credit Fees in Price, for information on the CS/LTV (A-minus) Credit Fees in Price and other Credit Fees in Price. Credit Fees in Price are paid in accordance with the Credit Fee in Price provisions outlined in Chapter 6303.