October 17, 2018
CUA 2018-05 - Freddie Mac Bulletin 2018-15 and 2018-16 - Selling Guide Updates

The following represents the position of Arch Mortgage Insurance Company (Arch MI) on the topics covered in Freddie Mac Bulletins 2018-15 and 2018-16 – Selling Updates. All positions stated are effective immediately. See Freddie Mac’s bulletins for complete details of its changes.

Freddie Mac Bulletin 2018-15

Authorized User Accounts

Arch MI aligns with the following changes when the loan meets our EZ Decisioning℠ underwriting requirements.

Freddie Mac will only require additional requirements to be met when a member is listed as an authorized user on a trade line if the Loan Product Advisor® Feedback Certificate contains a feedback message instructing them to do so.

Previously the credit union had to review all member credit reports to determine whether there were any trade lines where the member was listed as an authorized user, and if so, the Loan Product Advisor decision was only valid if additional requirements were met.

Self-Employment Income

Arch MI aligns with the following changes when the loan meets either our EZ Decisioning or Standard underwriting requirements.

Credit unions are no longer required to obtain any additional documentation or evaluate the income or loss from self-employment when self-employment income is disclosed in the loan file if:

Special Member Eligibility – Mortgage Premises Occupied by the Member’s Parent or Disabled Child

Arch MI aligns with the following changes when the loan meets either our EZ Decisioning or Standard underwriting requirements.

A member may be considered an occupying member if the property is occupied as a primary residence by an individual(s) who:

Freddie Mac Bulletin 2018-16

Community Land Trust Mortgages

Arch MI aligns with the following changes when the loan meets our EZ Decisioning underwriting requirements.

Freddie Mac has developed new requirements for Community Land Trust Mortgages. See the Freddie Mac bulletin for complete details.

Arch MI has removed the overlay in our Standard underwriting requirements that requires the loan-to-value (LTV) for a purchase transaction to be based on the lower of the purchase price or the appraised value when the property has a resale restriction that does not survive foreclosure. We have aligned to use the appraised value only to determine the LTV in these transactions. The Arch MI Credit Union Underwriting Manual (the UW Manual) will be updated upon the next release. However, you may underwrite to the requirements in this announcement until that time.

Properties Subject to Resale Restrictions

Arch MI aligns with the following changes when the loan meets our EZ Decisioning underwriting requirements.

Freddie Mac has revised its requirements for properties with resale restrictions that terminate upon foreclosure (or expiration of any applicable redemption period) or recordation of a deed-in-lieu of foreclosure. See the Freddie Mac bulletin for complete details.

Arch MI has removed the overlay in our Standard underwriting requirements that requires the loan-to-value (LTV) for a purchase transaction to be based on the lower of the purchase price or the appraised value when the property has a resale restriction that does not survive foreclosure. We have aligned to use the appraised value to determine the LTV in these transactions. The UW Manual will be updated upon the next release. However, you may underwrite to the requirements in this announcement until that time.

Sweat Equity Requirements for Home Possible Mortgages

Arch MI will not align with this Freddie Mac change in either our EZ Decisioning or Standard underwriting requirements.

Freddie Mac has changed its requirements for the use of sweat equity as a source of funds for Home Possible Mortgages, including but not limited to:

See the Freddie Mac bulletins for complete details.

For our EZ Decisioning underwriting requirements, we will continue to allow sweat equity as an eligible source of funds as follows:

Sweat equity remains ineligible under our Standard underwriting requirements.

The UW Manual will be updated upon the next release. However, you must underwrite to the requirements for sweat equity in this announcement until that time.

For more information, please contact your Arch MI Account Manager.

© 2018 Arch Mortgage Insurance Company. All Rights Reserved. Arch MI is a marketing term for Arch Mortgage Insurance Company and United Guaranty Residential Insurance Company. EZ Decisioning is a service mark of Arch Capital Group (U.S.) Inc. or its affiliates. Home Possible and Loan Product Advisor are marks of Freddie Mac. HomeReady is a mark of Fannie Mae.

CUA 2018-05

Return to Customer Announcements Page