Fee for Loan Prospector 'Caution' Assessments Dropped; Home Possible(R) Upgraded MCLEAN, Va., June 26 /PRNewswire/ -- Freddie Mac today announced it is adjusting its Loan Prospector(R) automated underwriting service and upgrading its Home Possible(R) suite of affordable mortgage products to help more low- and moderate-income borrowers qualify for mortgages that are eligible for purchase by Freddie Mac. "Today's announcements are the latest installment on the pledge we made to our lender customers to buy more of the loans they originate and give them new ways to build their market share with Loan Prospector," said Paul Mullings, senior vice president of Single Family Sourcing at Freddie Mac. "We believe the changes we are announcing today further demonstrate how today's Freddie Mac is fulfilling its mission to expand homeownership opportunities for America's families while delivering a consistently superior business experience to its lender customers." Specifically, Freddie Mac expects more mortgages submitted to Loan Prospector will get an "accept" response as a result of the changes. Freddie Mac also said it is waiving the Loan Prospector assessment fee when a "caution" is returned on the first submission of a conforming, conventional mortgage. Caution responses are triggered by higher risk mortgages that Freddie Mac purchases as well as by loans that do not meet the company's loan purchase guidelines. "Simultaneously removing the fee and providing more 'accept' responses will enable our lenders to expand their business while discovering how many more of their customers qualify for Freddie Mac's most affordable mortgage products," Mullings added. Freddie Mac noted that it is not changing the way Loan Prospector assesses risk, but is expanding its purchases of higher risk mortgages submitted through Loan Prospector that will meet the company's federal affordable housing goals. For example, one of this year's subgoals requires low-and moderate-income borrowers to account for 46 percent of the home purchase mortgages Freddie Mac buys. Freddie Mac Reduces Home Possible Cash Contributions Freddie Mac also said it is eliminating the $500 borrower cash contribution and pre-purchase homeownership education requirement for borrowers who use Home Possible(R) mortgages to finance a single-family home. Freddie Mac's premier suite of affordable mortgage products, Home Possible is designed to expand the home buying power of borrowers with limited credit or downpayment savings. Freddie Mac is also cutting the cash contribution from five to three percent of the purchase price for Home Possible borrowers buying a three-to four-unit property. The change is expected to help foster the supply of affordable ownership and rental housing in many of America's underserved neighborhoods and other communities. In a separate effort to qualify more Home Possible borrowers, Loan Prospector is also being changed to exclude Affordable Seconds(R) when calculating total loan-to-value ratios. Affordable Seconds are second mortgages that federal, state or local housing programs, non-profit organizations or employers provide to borrowers who need additional assistance to overcome financial hurdles posed by the downpayment, closing costs, or home purchase price. In practice, the change means lenders will enter Affordable Seconds into Loan Prospector as gifts, which, in turn, is how Loan Prospector will evaluate them. For more information on the latest Loan Prospector and Home Possible changes, mortgage originators should contact their Freddie Mac sales representative or call 1-800-FREDDIE. Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than two million renters across America. For additional information about Freddie Mac, see the Company's web site: http://www.freddiemac.com/ DATASOURCE: Freddie Mac CONTACT: Brad German of Freddie Mac, +1-703-903-2437 Web site: http://www.freddiemac.com/

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