Freddie Mac issued Selling Guide Bulletin 2024-01 on February 7, 2024, to announce recent changes to Selling Guide requirements, which include the following:
Adequacy of Insurance
At the direction of the Federal Housing Finance Agency, Freddie Mac is updating its guide sections covering Seller/Servicers responsibilities to ensure that properties have adequate property insurance. Guidance will now require that insurance claims must be settled on a replacement cost basis. Policies that allow for claims to be settled for anything less than a replacement cost value are not eligible.
Policy limits for master condominium and cooperative projects must be at least equal to 100% replacement cost value of the project’s improvements. Additionally, Seller/Servicers must verify the replacement cost of a property as of the policy effective date. The update is effective for loans with an application date of June 1, 2024, or later, but new guidance can be implemented immediately.
The property insurance updates were also published by Fannie Mae in Selling Guide Announcement 2024-01 (SEL-2024-01).
Age of Tax Return
Guidance has been updated to reflect dates for the 2023 tax year. Specifically, loans with note dates of November 1, 2024, or later, must have tax returns no older than 2023 to be eligible.
Appraisal Updates
As of February 19, 2024, Loan Product Advisor began offering automated collateral evaluation (ACE) appraisal waivers for cash-out refinance loans. The maximum loan-to-value (LTV) / total (LTV) ratio for a primary residence cash-out refinance is 70%. The maximum LTV / total LTV ratio for a second home cash-out refinance is 60%.
Photo requirements for appraisal reports were also updated. When an appraisal report requires interior photos of the subject property, the photos must include details of all living areas, and any basement areas.
Click hereto view Freddie Mac Selling Guide Bulletin 2024-01.
