GSEs Revise Guidelines for Lenders, Servicers

Mortgage giant ""Freddie Mac"":http://www.freddiemac.com/ recently upgraded a number of ""quality control guidelines"":http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1115.pdf for financial institutions doing business with it. New features for lenders and servicers include the ability to submit mortgage files over electronic media, with a number of other provisions aimed at collecting mortgage insurance coverage. The GSE follows in the footsteps of ""Fannie Mae"":http://www.fanniemae.com/kb/index?page=home&c=homepage, which also recently ""amended the guidelines"":https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1106.pdf it approves for insurers, servicers, and lenders.

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Included in the overhaul: revisions to Freddie Mac's _Post-Funding Quality Control Review_, _Seller's In-House Quality Control Program_, and _Underwriting the Borrower_, adding pre-closing and post-closing quality review requirements to _Seller's_ and gutting certain requirements in the latter that the GSE deemed ""redundant"" in a statement.

With the revisions, Freddie will now require lenders and servicers to provide records of collection attempts with non-performing mortgages, report alterations to mortgage insurance policies undertaken with insurers, and delineate subordination agreements and other mortgage-related documentation.

Also in the facelift: sellers with Freddie-backed loans must now document changes to their cancellation and rescission notices; draw upon discretionary and targeted sample types; and enhance their random sampling processes with ""statistically-sound sampling methodology"" if these institutions make over 5,000 loans each year, according to the statement.

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Freddie isn't the only GSE to revise and add to its guidelines.

Fannie Mae recently made changes to the servicing guidelines it keeps on file for servicers. Over July the GSE published new bullets for the _Single-Family Seller/Servicer Guide_, which included, much like Freddie, pre-closing and post-closing quality control requirements.

Underwriting standards and financing eligibility requirements also saw changes, with Fannie giving a refinance option to borrowers with Freddie-backed mortgages.

The mortgage giant also issued eligibility measures that now prevent borrowers in the know with their builders and developers from refinancing their mortgages.

Sections particular to underwriting policies for borrowers, pooling needs, limits for super-conforming mortgages, and mortgage insurance also received boosts from Fannie.

In a section issued under the new guidelines, Fannie prescribed additional information about suspended guarantees for ""Republic Mortgage Insurance Co."":http://www.rmic.com/Pages/default.aspx and ""Genworth Residential Mortgage Assurance"":http://mortgageinsurance.genworth.com/, which both entered a ""limited insurer"" pool.

Revisions to their mortgage insurance policies came before decisions by Fannie and Freddie to boot troubled insurer ""The PMI Group, Inc."":http://www.pmi-us.com/, from GSE-approved purchase and securitization requirements.

In a June statement, Fannie said that it ""will not purchase or securitize any mortgage loan insured"" by PMI or PMI Mortgage Assurance Co.

It cited PMI's inability to keep its capital reserves above ""the minimum policyholders' position"" required by Arizona state authorities, with emphasis on the importance of its guidelines respective to financial institutions packaging or securitizing loans backed by the GSE.