Loan Product Advisor Documentation Matrix: Freddie Mac Single-Family Seller/Servicer Guide (Guide)

Loan Product Advisor® Documentation Matrix
Use the following information as a reference for documenting your Loan Product Advisor loans. For complete
documentation information and specific program eligibility requirements, refer to the Freddie Mac Single-Family
Seller/Servicer Guide (Guide). We recommend bookmarking the Guide link (https://guide.freddiemac.com/app/guide/) for
easy access.*
What Has Changed in this Reference?
This reference is updated to coincide with new and significant changes to documentation requirements announced in
Guide Bulletins. Recent changes include:
Bulletin
Topic Change Effective Date
Announcement
Rental Housing For second home, investment property and/or As of November 5, Bulletin 2020-31
Payments loans with a non-occupying co-borrower, 2020, but may
include any rental housing payment for any implement
borrower who does not own, but rents their immediately
principal domicile.
Monthly Obligations Various updates: Documentation of liabilities; As of November 5, Bulletin 2020-31
documentation of proceeds from a loan 2020, but may
secured by the borrower’s assets; and age of implement
documentation requirements for contingent immediately
liabilities excluded from the DTI ratio.
Tax Exempt Income For Social Security income (i.e. retirement As of September 2, Bulletin 2020-36
income, disability benefits, survivor benefits 2020
and Supplemental Security Income): Guide Bulletin
15% of the tax-exempt portion of the income 2020-36 Highlights
may be used without obtaining additional Quick Tutorial
documentation.
Wedding Gift Funds Extending the time frame for wedding gift As of September 2, Bulletin 2020-36
funds to be on deposit from 60 days to 90 2020
days. Guide Bulletin
2020-36 Highlights
Quick Tutorial
Home equity line of If the HELOC monthly payment amount is not As of November 5, Bulletin 2020-38
credit payments captured in the mortgage file documentation 2020, but may
or in the credit report, use 1.5% of the implement
outstanding HELOC balance. immediately
Loan Product Advisor Additional flexibility to the loan amount Settlement dates on Bulletin 2020-43
resubmission tolerance resubmission tolerances for refinance and after
update transactions. February 4, 2021
Note: Vertical revision bars " | " are also used in the margin of this reference to highlight these new requirements and
significant changes.
*The Guide on AllRegs is the official electronic version of the Single-Family Seller/Servicer Guide.
November 2020 Freddie Mac Learning

Loan Product Advisor Documentation Matrix
Table of Contents
Income and Employment Documentation

▪ General Requirements
▪ General Requirements for Documentation Used to Verify Employment and Income
▪ Employed Income
o Primary Employment
o Secondary Employment
o Additional Employed Income
o Military Income
o Income Commencing After the Note Date
▪ Self-Employed Income
▪ Other Income
Asset Documentation
Credit and Liabilities
General Underwriting Requirements
Verification Requirements
Requirements for Resubmission to Loan Product Advisor
Requirements for Resubmission to Loan Product Advisor After the Note Date
Additional Resources:
Reminders for Loan Product Advisor Resubmissions after the Note Date
AIM for Assets with Loan Product Advisor Job Aid
AIM for Income with Loan Product Advisor Job Aid
AIM for Self Employed with Loan Product Advisor Job Aid
Collateral Representation and Warranty Relief with an Appraisal Job Aid
COVID-19 Response Notice:

Visit our COVID-19 Resources web page for temporary guidance related to credit underwriting and
property valuations.
November 2020 Freddie Mac Learning Page 2

INCOME AND EMPLOYMENT DOCUMENTATION
The analysis, verification, calculation and determination of the stable monthly income amount is integral to the overall
qualification of the borrower and determination of the borrower’s capacity to repay the mortgage and other monthly
obligations. Refer to Guide Topic 5300 for complete requirements and guidance for the analysis, stability, history,
continuance and documentation for all stable monthly income and asset qualification sources.
Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

General requirements Stable monthly income is the borrower’s verified gross monthly income from all acceptable and
for stable monthly verifiable sources that can reasonably be expected to continue for at least the next three years.
income For each income source used to qualify the borrower, the Seller must determine that both the
(Guide Section 5301.1) source and the amount of the income are stable, with a consistent level of earnings.
Regardless of the underwriting path, the income qualification sources used to qualify the
borrower (whether or not specifically addressed in Topic 5300) and the documentation in the
mortgage file must be evaluated for stable monthly income qualification requirements and must
meet the requirements of Topic 5300. Income qualification sources that do not meet these
requirements or are not calculated correctly may invalidate the Loan Product Advisor Risk Class
on the Feedback Certificate.
The Seller must include a written analysis of the income qualification sources and amount in the
mortgage file. In addition, all documentation used to establish stable monthly income must be
retained in the mortgage file.
Refer to Guide Section 5301.1 for more requirements and guidance on:
▪ Analysis of stable monthly income amount
▪ General requirements for all stable monthly income
▪ Income stability and history
▪ Income continuance (including charts listing income and earning types and respective
documentation requirements, if applicable)
General requirements Employed income documentation and verification requirements
for documentation ▪ YTD Paystubs
used to verify ▪ W-2 Forms
employment and ▪ Written VOEs
income ▪ Ten-day Pre-Closing Verification (10-day PCV)
(Guide Chapter 5302) ▪ Third-party Verification Service Providers
Tax return requirements
▪ Signed tax returns (and alternatives to signatures)
▪ IRS Transcripts
▪ Unreimbursed employee expenses
Employed income Employed income calculation guidance and requirements
calculation guidance For all income, the Seller must determine how the borrower is paid to accurately analyze and
and requirements calculate the stable monthly income used for qualifying. The documentation in the mortgage file
(Guide Section 5303.4) must support the Seller’s income analysis and calculation. If the documentation does not
support the income used for qualifying purposes, further analysis is required, and additional
documentation may be necessary to support the stability of the income and the amount of
income used to qualify.
▪ For the calculation of base non-fluctuating employment earnings, refer to Guide Section
5303.4(a)
▪ For the calculation fluctuating employment earnings, revised effective 7/2/2020, refer to
Guide Section 5303.4(b)

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Primary and Base non-fluctuating employment earnings
Secondary For determining stable monthly income, base non-fluctuating employment earnings are
Employment: considered to be earnings with a pre-determined and agreed upon rate of pay and number of
Earnings types - hours worked each pay period.
requirements and ▪ The pay rate and number of hours worked must be reflected on an ongoing consistent basis
guidance for each pay period and be fully supported by the year-to-date income. In addition, if the
(Guide Section annual salary is reported on the income verification documentation, that may be considered
5303.2(b)) additional confirmation of base non-fluctuating earnings.
▪ Base non-fluctuating earnings may include:
- Both exempt (salaried) and non-exempt earnings; however, the pay rate and number of
hours worked must not fluctuate between pay periods.
- Military base (basic) pay. For members of the United States Armed Forces, active-duty
pay is considered base non-fluctuating earnings.
- Part-time earnings, provided the number of hours worked each pay period are pre-
determined and the same, as outlined above.
Base non-fluctuating earnings do not include additional employed income (e.g., bonus,
overtime, tips). Refer to Additional Employed Income section or to Guide Section 5303.3 for
complete requirements and guidance.
Fluctuating hourly employment earnings
For the purpose of determining stable monthly income, fluctuating hourly employment earnings
are considered to be wages that ar ebase on an hourly rate of pay and where the number of
hours fluctuate each pay period. The required minimum 12-month history must be derived from
either the borrower’s current hourly employment or a combination of current and prior hourly
employment. Fluctuating hourly earnings are typically representative of non-exempt earnings.
Do not include additional employed income (e.g., bonus, overtime, tips). Refer to Additional
Employed Income section or to Guide Section 5303.3 for complete requirements and guidance.
Employed Income
Primary employment Primary employment earnings – documentation requirements:
earnings: Obtain all the following:
▪ Base non- ▪ Year-to-date (YTD) paystub(s) documenting all YTD earnings, W-2 form(s) for the most
fluctuating recent calendar year, and a 10-day pre-closing verification (10-day PCV)
earnings, and OR, all the following:
▪ Fluctuating hourly
earnings
▪ Written verification of employment (VOE) documenting all YTD earnings and the earnings
for the most recent calendar year, and a 10-day PCV
(Guide Sections
5303.2(a)(i) and (c)) Primary employment - history requirements
In most instances, the borrower should have at least a two-year history of primary employment
documented on Form 65, Uniform Residential Loan Application and verified in accordance with
Topic 5300.


Employed Income (continued)
Primary employment - Under certain circumstances, when a borrower has less than a two-year history of primary
history requirements: employment, the Seller may be able to justify and determine that the employment is stable.
▪ Base non- However, when the borrower’s income is derived from fluctuating hourly earnings, under no
fluctuating circumstances may the employment history be less than 12 months.
earnings, and Examples that may support less than a two-year history of primary employment include, but
▪ Fluctuating hourly are not limited to, the following:
earnings For a borrower:
(continued) ▪ Returning to the workforce after a period of extended absence, for any reason,
(Guide Sections documentation is provided to support a stable employment history that directly preceded
5303.2(a)(i) and (c)) the extended absence
▪ New to the workforce, provide documentation supporting the borrower’s recent attendance
at school or in a training program prior to their current employment
▪ Who experienced recent employment gaps (e.g., 30 days), although a letter of explanation
is not required, the Seller remains responsible for establishing the employment is stable,
which may require analysis of recent employment gaps.
Refer to Guide Section 5303.2(a)(i) for complete requirements and guidance.
Secondary employment Secondary employment earnings – documentation requirements:

earnings: All the following:
▪ Base non- ▪ YTD paystub(s) documenting all YTD earnings, W-2 forms for the most recent two
fluctuating earnings calendar years, and a 10-day PCV
and OR, all the following:
▪ Fluctuating hourly
earnings
▪ Written VOE documenting all YTD earnings and the earnings for the most recent two
(Guide Sections calendar years, and a 10-day PCV
5303.2(a)(ii) and (c))
Secondary employment Secondary employment - history requirements
- history requirements In most instances, the borrower should have at least a two-year history of secondary
(Guide Sections employment for the employment to be considered stable.
5303.2(a)(ii) and (c)) Under certain circumstances, when a borrower has less than a two-year secondary
employment history but has at least a 12-month history, the Seller may be able to justify and
determine the employment is stable.
Refer to Guide Section 5303.2(a)(ii) for complete requirements and guidance.
W-2 Forms: Alternative ▪ Year-end YTD Paystubs: The year-end YTD paystub(s) or military Leave and Earnings
documentation Statement may be used in lieu of the W-2 form(s) provided the documentation reflects the
Guide Section 5302.2(b)) complete income earned in the previous calendar year;
OR,
▪ W-2 Transcripts: The W-2 transcript(s) may be used in lieu of the W-2 form(s) provided
the transcript reflects the complete income earned in the previous calendar year


Employed Income (continued)
Employment For certain employment characteristics, additional documentation and/or analysis may be
Characteristics needed. Refer to Guide Section 5303.2(d) for complete requirements and guidance.
Guide Section 5303.2(d) ▪ Full-time and part-time employment
▪ Seasonal employment
▪ Union members
▪ Borrower employed by a family member or interested party to the transaction
▪ Employed income from a foreign source
▪ Employment contracts (educational and other industries)
▪ Temporary help services (W-2 income from contract and/or temporary staffing firms)
▪ Income reported on IRS Form 1099 for services performed
Additional Employed Income

Additional Employed Income history and stability - requirements and guidance
Income – History and Many additional employed income types are fluctuating income. The stability of fluctuating
Stability income is determined based primarily upon historical earnings, so it is imperative that a
Guide Section 5303.3(b) sufficient income history has been established. For this reason, most income types that
fluctuate have a history requirement of two years. In certain instances, a shorter history may
still be considered stable if Seller provides a written analysis, and sufficient supporting
documentation, justifying the determination of stability. When making this determination, the
Seller must take into consideration factors such as income and/or employment characteristics
and the overall layering of risk factors, including the borrower’s demonstrated ability to repay
obligations. In no event may the history be less than 12 months.
Refer to Guide Section 5303.4 for information with respect to employed income calculation
requirements and guidance.
Commission income History of receipt: Two years, consecutive

(Guide Section Continuance: Must be likely to continue for at least the next three years
5303.3(d)) Calculation: Refer to Guide Section 5303.4(b) for calculation guidance and requirements
Documentation:
All the following:
▪ YTD paystub(s) documenting all YTD earnings, W-2 forms for the most recent two
calendar years, and a 10-day PCV
OR, all the following:
Bonus income and History of receipt: Two years, consecutive
overtime income Continuance: Must be likely to continue for at least the next three years
(Guide Section
Calculation: Refer to Guide Section 5303.4(b) for calculation guidance and requirements
5303.3(d))
Documentation:
All the following:


Additional Employed Income, continued
Tip Income History of receipt: Two years, consecutive
(Guide Section
Continuance: Must be likely to continue for at least the next three years
5303.3(d))
Tip income reported by the employer:
Documentation:
All the following:
Tip income - Cash and charge tips reported on IRS Form 4137:
Documentation:
All the following:
▪ IRS Form 4137 for the most recent two years
▪ Complete federal individual income tax returns covering the most recent two-year period
10-day PCV

Restricted stock (RS) History of receipt:

and restricted stock ▪ Two years, consecutive
units (RSU) subject to ▪ To be considered for history of receipt, RS and RSU used for qualifying must have vested
performance-based
and been distributed to the borrower from their current employer, without restriction
vesting provisions
(Guide Section
5303.3(d)) Calculation: Refer to Guide Section 5303.4(b) for calculation guidance and requirements
Documentation:
All the following:
▪ YTD paystub(s) documenting all YTD earnings, including payout(s) of RS or RSU, W-2
forms for the most recent two calendar years and a 10-day PCV.
▪ Written VOE documenting all YTD earnings (including payout(s) of RS or RSU) as well as
earnings for the most recent two calendar years, and a 10-day PCV. Employment and
income verifications obtained through a third-party verification service provider as
described in Guide Section 5302.3 are permitted, provided that the documentation clearly
identifies and distinguishes the payout(s) of RS/RSU
Additional documentation requirements applicable to all documentation levels:

The mortgage file must contain:
▪ Evidence the stock is publicly traded
▪ Documentation verifying that the vesting provisions are performance-based (e.g., RS
and/or RSU agreement, offer letter)
▪ Vesting schedule(s) currently in effect detailing past and future vesting
▪ Evidence of receipt of previous year(s) payout(s) of RS/RSU (e.g., year-end paystub,
employer-provided statement paired with a brokerage or bank statement showing transfer
of shares or funds) that must, at a minimum, include the number of vested shares or its
cash equivalent distributed to the Borrower (pre-tax)
RS and RSU subject History of receipt:
to time-based vesting ▪ One year
(Guide Section
5303.3(d)) ▪ To be considered for history of receipt, RS and RSU used for qualifying must have vested
and been distributed to the borrower from their current employer, without restriction
Continuance: Must continue for at least the next three years
Documentation:
All the following:
▪ YTD paystub(s) documenting all YTD earnings, including payout(s) of RS or RSU, W-2
form for the most recent calendar year and a 10-day PCV.


Additional Employed Income (continued)
RS and RSU subject OR, all the following:
to time-based vesting ▪ Written VOE documenting all YTD earnings (including payout(s) of RS or RSU) as well as
(continued) earnings for the most recent calendar year, and a 10-day PCV. Employment and income
(Guide Section
5303.3(d))
verifications obtained through a third-party verification service provider as described in
Guide Section 5302.3 are permitted, provided that the documentation clearly identifies and
distinguishes the payout(s) of RS/RSU
Additional documentation requirements applicable to all documentation levels:

The Mortgage file must contain:
▪ Evidence the stock is publicly traded
▪ Documentation verifying that the vesting provisions are time-based (e.g., RS and/or RSU
agreement, offer letter)
▪ Vesting schedule(s) currently in effect detailing past and future vesting
▪ Evidence of receipt of previous year’s payout(s) of RS/RSU (e.g., year-end paystub,
employer-provided statement paired with a brokerage or bank statement showing transfer
of shares (or funds) that must, at a minimum, include the number of vested shares or its
cash equivalent distributed to the Borrower (pre-tax)
Automobile allowance History of receipt: Two years, consecutive
(Guide Section
5303.3(d))
Calculation: The Seller may add the full amount of the allowance to the borrower’s qualifying
income, and when calculating the borrower’s debt payment-to-income (DTI) ratio, the Seller
must include the full amount of the monthly automobile financing expense in the calculation of
the borrower’s monthly debt payment (refer to Guide Section 5401.2). The Seller may not
subtract the automobile allowance from the monthly automobile financing expense.
Documentation:
All the following:
Mortgage differential Overview: Payments from the borrower’s employer for all or part of the housing payment
(Guide Section differential between the borrower’s present and proposed mortgage payment. The employer
5303.3(d)) must not be an interested party to the transaction.
Mortgage differential History of receipt: A history of receipt is not required for the income to be considered stable
(continued) Continuance: Must continue for at least the next three years
(Guide Section Calculation: The Seller may add the mortgage differential payments to the borrower’s income.
5303.3(d)) The payments may not be used to offset the monthly housing payment amount used for
qualification.
Documentation:
▪ Agreement from the employer stating the terms, including but not limited to, the scheduled
amount and duration of the payments.
▪ The documentation must show that the payments are pursuant to an established, ongoing
and documented employer program.


Additional Employed Income (continued)
Unemployment History of receipt: Two years, consecutive
compensation Continuance: Must be likely to continue for at least the next three years
associated with Calculation: Refer to Guide Section 5303.4(b) for calculation guidance and requirements
seasonal employment Documentation:
(Guide Section ▪ Proof of receipt of unemployment compensation for the most recent two-year period (e.g.,
5303.3(d))
IRS Form 1099-G(s) and/or equivalent documentation)
Military Income
Military base (basic) Primary employment earnings – Military base (basic) pay:
pay History of receipt: For borrowers who are active-duty members of the United States Armed
(Guide Sections Forces, a history of military employment is not required for the employment to be considered
5303.2(a) and (c)) stable.
Documentation:
All the following:
▪ YTD Military Leave and Earnings Statement, W-2 form(s) for the most recent calendar
year, and a 10-day PCV
▪ Written VOE documenting all YTD earnings and the earnings for the most recent calendar
Note: A military Leave and Earnings Statement dated no more than 120 days prior to the Note
Date is acceptable documentation for the 10-day PCV.
Military entitlements Additional Employed Income – Military entitlements
(e.g., as flight or History of receipt: A history of receipt is not required for the income to be considered stable
hazard duty, rations, Continuance: Must be likely to continue for at least the next three years
clothing or quarters
Calculation: Current fixed monthly amount
allowances)
(Guide Section
Documentation:
5303.3(d)) Obtain all the following:
▪ YTD Leave and Earnings Statement, W-2 form for the most recent calendar year, and a
10-day PCV
▪ Written VOE documenting the current monthly fixed entitlement amount(s) and type(s) and
the earnings for the most recent calendar year, and a 10-day PCV
Military Reserve and Additional Employed Income – Military Reserve and National Guard income
National Guard History of receipt: One year
income Continuance: Must be likely to continue for at least the next three years
(Guide Section
Calculation: 12-month average
5303.3(d))
Documentation:
Obtain all the following:
▪ YTD Military Leave and Earnings Statement, W-2 form for the most recent calendar year,
and a 10-day PCV
Written VOE documenting all YTD earnings and the earnings for the most recent calendar


Employed Income: Income Commencing After the Note Date (Guide Section 5303.2(e))
For borrowers starting new employment or receiving a future salary increase from their current employer, income
commencing after the Note Date may be considered a stable source of qualifying income, provided that either all
requirements for option one, or all requirements for option two in the following table are met.
Subject Option one Option two
Start date of the new ▪ Must be no later than 90 days after the ▪ No limit on the number of days after the
employment or future Note Date Note Date
salary increase ▪ May be before or after the Delivery Date ▪ Must be before the Delivery Date
Eligible employment
Employment and income must meet the Employment and income must meet the
and earnings type
following requirements: following requirements:
▪ Income must be from new primary ▪ Income must be from new primary
employment or a future salary increase employment
with the current primary employer ▪ Earnings must be non-fluctuating and
▪ Income must be non-fluctuating and salaried (e.g., hourly earnings are not
salaried earnings (e.g., hourly earnings permitted) and
are not permitted), and ▪ The borrower’s employer must not be a
▪ The borrower’s employer must not be a family member or an interested party to the
family member or an interested party to real estate or mortgage transaction
the real estate or mortgage transaction ▪ As of the Delivery Date, the income must
be no less than that used to qualify the
borrower for the mortgage
Eligible loan purpose
The mortgage must be originated for one of The mortgage must be originated for one of
the following purposes: the following purposes:
▪ Purchase transaction ▪ Purchase transaction
▪ “No cash-out” refinance ▪ “No cash-out” refinance
▪ Cash-out refinance
Eligible Mortgaged
The mortgaged premises must be a 1-unit The mortgaged premises must be one of the
Premises
Primary Residence following:
▪ 1- to 4-unit Primary Residence
▪ Second home
▪ 1- to 4-unit Investment Property


Employed Income: Income Commencing After the Note Date (Guide Section 5303.2(e)), continued
Subject Option one Option two*
Verification of
In addition to funds required to be paid by the borrower and borrower reserves, you must verify
additional funds
additional funds in the borrower’s depository and/or securities account(s) that equal no less
than the sum of the monthly housing expense, as described in Guide Section 5401.1, and
other monthly liabilities, as described in Guide Section 5401.2, multiplied by the number of
months between the Note Date* and the start date of the new employment/future salary
increase, plus one additional month. A partial month is counted as one month for the purpose
of this calculation.
The amount of the required additional funds, as described above, may be reduced by the
amount of verified gross income that any borrower on the mortgage is expected to receive
between the Note Date and the start date of the new employment, whether or not this income
is used to qualify for the Mortgage or is expected to continue after the start date of the new
employment/future salary increase.
For option two, the above requirements apply when there are more than 15 calendar days
between the Note Date and the start date of the new employment.
Sellers may use the following worksheet to assist with the additional funds’ calculation:


Employed Income: Income Commencing After the Note Date (continued)
Subject Option one Option two
Required The following documentation is required: The following documentation is required:
Documentation ▪ Copy of the employment offer letter, ▪ Copy of the employment offer letter or
employment contract or other evidence of employment contract that:
the future salary increase that: − Is fully executed and accepted by the
− Is fully executed and accepted by the borrower
borrower − Includes the terms of employment,
− Is non-contingent or provides including but not limited to,
documentation, such as a letter or an e- employment start date and annual
mail from the employer verifying all income based on non-fluctuating
contingencies have been cleared earnings
− Includes the terms of employment, ▪ Paystub, written verification of
including employment start date and employment (VOE) or a third-party
annual income based on non-fluctuating employment verification supporting the
earnings income used for qualifying the Borrower
▪ For a future salary increase provided by ▪ Documentation of additional funds, as
the borrower’s current employer, the required above
above documentation must indicate that
the increase is fully approved and is
explicitly granted to the borrower
▪ A 10-day pre-closing verification (PCV)
verifying the terms of the employment
offer letter, contract or salary increase
have not changed (refer to Guide Section
5302.2(d))
▪ Documentation of additional funds, as
required above
Employed Income: Income while on Temporary Leave

Income while on For requirements and guidance for underwriting borrowers on temporary leave from their
temporary leave current employer, refer to Guide Section 5303.5.
(Guide Section 5303.5)
Self-employed Income
Self-employment A borrower who has an ownership interest of 25% or more in a Partnership, S Corporation
indicator and/or Corporation is considered to be self-employed. A borrower who is a sole-proprietor is
(Guide Section 5304.1) considered to be a self-employed borrower.
The Seller must indicate to Loan Product Advisor that a borrower is self-employed when the
borrower meets Freddie Mac’s definition of self-employed as stated above. This is required in
all cases where the self-employment income and/or loss is used to determine the borrower’s
stable monthly income for qualifying.
Business income and Refer to Guide Section 5304.1 for requirements and guidance pertaining to the business and
analysis income analysis:
(Guide Section ▪ Business and income analysis:
5304.1(d)) - Business review and analysis
- Use of business income reported on the borrower’s personal returns
- Use of business income not reported on the borrower’s personal returns


Business income and - Access to business income
analysis - Income calculation
(continued) - Income fluctuation
(Guide Section
▪ Business financial statements
5304.1(d)) ▪ Income analysis – adjustments (e.g., mortgages and notes payable in less than a year)
▪ Borrower debt paid by business (refer to Guide Section 5401.2(b)(ii))
▪ IRS Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S
Corporation
Documentation The Seller must establish and calculate the stable monthly qualifying income using at least the
Requirements following required documentation. Additional documentation may be warranted to support
(Guide Section income stability.
5304.1(h)) ▪ Freddie Mac Form 91, Income Analysis Form, or an alternative form that provides the
same information
Verification of the current existence of the business as described in Guide Section
5304.1(g)
▪ Federal income tax returns, including all applicable schedules and forms must reflect at
least 12 months of self-employed income.
▪ Verification of how long the business has been in existence
- For partnerships, S corporations and corporations, the federal income tax return(s) for
the business must indicate the number of years that the business has been in existence
- For sole proprietorships, the federal individual income tax return(s) and any other
documentation or information received must not contradict the number of years that the
business has been in existence as documented on Uniform Residential Loan
Application
Business in existence ≥ 5 years1 Business in existence < 5 years

Sole Obtain complete signed federal Obtain complete signed federal
proprietorship individual (Form 1040) income tax individual (Form 1040) income tax
return for the most recent year. returns for the most recent two years.
Partnership Verify the number of years that the Verify the number of years that the
business has been in existence and business has been in existence and
obtain complete signed federal obtain complete signed federal
individual and Partnership (Form individual and Partnership (Form
1065) income tax returns, including 1065) income tax returns, including
the Schedule K-1(s) for the most the Schedule K-1(s) for the most
recent year. recent two years.
1The Borrower must be self-employed (i.e., have an ownership interest of 25% or more) in the
same business for at least five years.


Self-employed Income (continued)
Documentation
Requirements Business in existence ≥ 5 years1 Business in existence < 5 years
(continued)
S Corporation Verify the number of years that the Verify the number of years that the
(Guide Section
5304.1(h)) obtain complete signed federal obtain complete signed federal
individual and S corporation (Form individual and S corporation (Form
1120S) income tax returns, including 1120S) income tax returns, including
the Schedule K-1(s), Form 1125-E the Schedule K-1(s), Form 1125-E
and W-2(s) if applicable, for the and W-s(s) if applicable, for the most
most recent year. recent two years.
Corporation Verify the number of years that the Verify the number of years that the
obtain complete signed federal obtain complete signed federal
individual and Corporation (Form individual and Corporation (Form
1120) income tax returns, including 1120) income tax returns, including
Form 1125-E and W-2(s) as Form 1125-E and W-2(s) as
applicable, for the most recent year. applicable, for the most recent two
years.
1 The Borrower must be self-employed (i.e., have an ownership interest of 25% or more) in the
same business for at least five years.
Refer to Chapter 5304 for complete requirements and guidance.

Self-employment The Seller is not required to obtain any additional documentation or evaluate the income or
disclosed on Form loss from the self-employment for each borrower on the mortgage who:
65, Uniform ▪ Has a primary source of income, other than self-employment, used for qualifying the
Residential Loan mortgage (e.g., salaried income from regular employment), and
Application (or other ▪ Is self-employed and self-employment income is a secondary source of income.
documentation), but For each borrower on the mortgage who is self-employed and does not have another source of
not used to qualify income that is used in qualifying the mortgage, the following requirements apply:
(Guide Section
▪ The seller must obtain pages 1 and 2 of the borrower’s federal individual tax returns, and
5304.1(e))
the applicable schedules (e.g., Schedule C, Schedule E) to determine if there is a business
loss that may have an impact on the stable monthly income. Refer to Guide Section
5302.4(b) for information about using IRS tax transcripts to meet certain portions of this
requirement.
- If a business loss is reported and the borrower qualifies with the loss, then the
Seller is not required to obtain any additional documentation relating to the business
loss.
- If a business loss is reported and the borrower does not qualify with the loss,
then the Seller must perform a business and income analysis to determine whether
depreciation adjustments or other factors such as business closure or evidence of a
one-time non-recurring event justify a reduction of the reported loss when calculating
the stable monthly income. The Seller must obtain additional documentation needed to
fully evaluate the loss and support the analysis (e.g. business tax returns (final or
otherwise), evidence of a one-time non-recurring event).
▪ If the tax returns or other documentation in the mortgage file (e.g., IRS tax transcripts,
additional Schedule K-1s) reflect positive income from self-employment but that income is
not used to qualify, additional documentation (e.g., complete business or federal individual
income tax return(s)) is not required.
The Loan Product Advisor self-employed indicator is not required when self-employed income
is not used to qualify.


Self-employed Income (continued)
Verification of current
existence of the Verification of the current existence of the business is required when positive income from
business the business is used as stable monthly income.
(Guide Section
5304.1(g)) Acceptable third- Acceptable third-party sources include, but are not limited to:
party sources ▪ Regulatory agency
▪ Phone directory
▪ Internet source (e.g., Better Business Bureau)
▪ Directory assistance
▪ Applicable licensing bureau
Verification of current existence of the business obtained verbally from an
acceptable third-party source must be documented and include all the
following:
▪ Name and address of the business
▪ Name of individual and entity contacted to obtain the verification
▪ Date information verified
▪ Name and title of the individual who completed the verification for the
Seller
Alternative The Seller may consider alternative sources if the above are not
sources available, such as:
▪ Preparer of the tax returns for the business (e.g., accountant),
provided the preparer has an arm's length relationship with the
borrower
▪ At least one months' business bank statement that supports the
current existence of the business and the level and type of income
and expenses reported on the business tax returns
Date The verification must be completed prior to the Delivery Date, but no
requirements more than 120 days prior to the Note Date
Other Income (non-employment / non-self-employment)

Other Income general The Seller must evaluate the stability and consistency of receipt of all other non-
requirements employment/non-self-employment income in accordance with the requirements of Topic 5300.
(Guide Section 5305.1) For general requirements with respect to income history, stability and continuance, refer to
Guide Section 5301.1.
Factors that must be considered in determining the likelihood of continued consistent receipt of
all other non-employment/non-self-employment income below include, but are not limited to,
the following:
▪ Whether the payments are received pursuant to a written agreement, court decree,
government program, law and/or regulation
▪ The length of time the payments have been received
▪ The regularity of receipt of the income


Other Income (non-employment / non-self-employment)
Other Income general ▪ The consistency of the amount of income
requirements ▪ The availability of procedures to compel payment
(continued) ▪ Whether full or partial payments have been made
(Guide Section 5305.1) ▪ The age of each child for which support and/or benefit payments are made (if applicable)
▪ Applicable eligibility criteria governing the continued receipt of the income
Alimony, child support History of receipt: Most recent six months
or separate If the payor has been obligated to make payments for less than six months, if the payments are not
maintenance income for the full amount or are not received on a consistent basis, the income must not be considered
(Guide Section 5305.2) for qualifying.
Continuance: Document and verify the payor is obligated to make payment to the borrower for at
least the next three years
Calculation: Use the documented fixed monthly payment amount
Documentation: Obtain the following:
▪ Documentation to evidence receipt of the alimony child support and/or separate maintenance
payment amount for the most recent six months,
AND,
▪ Copy of signed court order, legally binding separation agreement and/or final divorce decree
verifying the payor’s obligation for the previous six months, including the amount and the
duration of the obligation,
AND
▪ For child support income, proof of the ages of the children for which child support is received
Tax exempt income History of receipt: A history of receipt is not required
(Guide Section 5305.2) Continuance: Must be likely to continue to remain tax exempt
Calculation: To determine the amount to adjust (i.e., "gross-up") the borrower’s income, use:
▪ 25%* of the tax-exempt portion of the income, or
▪ The current federal and state income tax withholding tables
Documentation:
▪ Copy of complete individual federal tax returns for the most recent one-year period,
OR,
▪ Other documentation evidencing that the income, or a portion of the income, is tax exempt.
*Note: For Social Security income (i.e. retirement income, disability benefits, survivor benefits and
Supplemental Security Income):
▪ 15% of the tax-exempt portion of the income may be used without obtaining additional
documentation. (To gross up beyond the 15%, additional documentation must be obtained,
as stated above.)
Dividend and interest History of receipt: Most recent two years
(Guide Section 5305.2) Continuance: Document that sufficient assets remain after closing to support continuance of the
dividend and interest income, at the level used for qualifying, for at least the next three years
Calculation: 24-month average
Documentation:
▪ Complete federal individual income tax returns for the most recent two-year period, or
▪ Year-end asset account statements for the most recent two years evidencing all dividend and
interest income for each year for the income producing asset(s),
AND,
▪ Evidence of sufficient assets to support the qualifying income


Other Income (non-employment / non-self-employment) (continued)
Retirement income
(Guide Section 5305.2) Existing and established retirement income
For Retirement Income (e.g., Social Security, pension, annuity, other similar benefits), evidence
of the type, source, pre-determined payment amount, payment frequency and current receipt
must be obtained. These requirements do not include retirement account distributions as
income.
History of receipt: A history of receipt is ▪ Document income type, source, payment
not required for the income to be frequency, pre-determined payment amount
considered stable and current receipt with one or more of the
following documents, as needed: a copy of a
Continuance: Must be likely to continue benefit verification letter, award letter, pay
for at least the next three years statement, 1099, bank statement(s) or other
equivalent documentation.
Calculation: Use the documented fixed
monthly payment amount ▪ Age of documentation requirements as
described in Guide Section 5102.4 do not
have to be met for verification of income type,
source, payment frequency or predetermined
payment amount.
▪ For Social Security retirement benefits, the

Seller must obtain either: (i) a copy of the
Social Security Administration benefit
verification letter or (ii) documentation
evidencing current receipt but is not required
to obtain both.
Newly established retirement income

Verification of current receipt is not Document the finalized terms of the newly
required; however, the finalized terms of established income including, but not limited to,
the new income must be documented. the source, type, effective date of income
commencement, payment frequency and pre-
The income must commence prior to or on determined payment amount with a copy of the
the first mortgage payment due date. benefit verification letter, notice of award letter or
other equivalent documentation from the payor
that provides and establishes these terms.
The terms that must be verified include,
but are not limited to, the source, type,
effective date of income commencement, The income must commence prior to or on the
payment frequency and pre-determined first mortgage payment due date. The
payment amount that will commence prior documentation must be dated no more than 120
to or on the first mortgage payment due days prior to the Note Date. Verification of current
date. receipt is not required.


Other Income (non-employment / non-self-employment) (continued)
Additional Types of Refer to Guide Section 5305.2 for history of receipt, continuance, calculation and documentation
Other Income requirements for these types of other income:
(Guide Section 5305.2) ▪ Notes receivable
▪ Trust income
▪ Capital gains
▪ Royalty payments
▪ Retirement account distributions as income
▪ Survivor and dependent benefit income
▪ Long-term disability income
▪ Social Security Supplemental Security Income (SSI)
▪ Public assistance income
▪ Homeownership Voucher Program
▪ Mortgage Credit Certificate (MCC)
▪ Income from a foreign source
▪ Foster-care income
Rental income ▪ Refer to Guide Section 5306.1 for the requirements and guidance for the use of rental
(Guide Section 5306.1) income.
▪ See our Rental Income Matrix.
Asset Qualification Sources
Assets as a basis for Assets that will be used by the borrower for the repayment of their obligations may be used to
repayment of qualify. Refer to Guide Section 5307.1 for requirements
obligations
(Guide Section 5307.1)

ASSET DOCUMENTATION
Topic Documentation Requirements

Required funds All funds used to qualify the borrower for the mortgage transaction (i.e., any funds required to be
(Guide Section 5103.1 paid by the borrower and borrower reserves) must come from eligible sources described in the
and Guide Section next section (from Guide Section 5501.3).
5501.1, 5501.3) ▪ For purchases, document the borrower has sufficient funds verified and from eligible sources
to qualify for the mortgage transaction.
▪ For refinances, verification of funds is required.
▪ For non-occupant co-borrower transactions, funds may come from the occupant and/or non-
occupant borrower.
Asset documentation must be maintained in the mortgage file and must also meet the general
requirements for verifying documents (5102.3), age of documentation (5102.4) and asset eligibility
and documentation requirements (5501.3). In addition:
▪ For purchase transactions, document the source of funds for any large deposit when the
deposit is needed to qualify the borrower for the mortgage transaction. A large deposit is any
single deposit that exceeds 50% of the sum of:
− The total monthly qualifying income for the mortgage.
− The amount derived from the asset calculation for establishing the DTI ratio in accordance
with the requirements of Guide Section 5307.1, if applicable.
▪ When a large deposit is not verified and is not needed to qualify the borrower for the mortgage
transaction:
− Reduce the funds used for qualifying purposes by the amount of the unverified deposit.
− For Loan Product Advisor mortgages, enter the reduced amount of the asset into Loan
Product Advisor.
▪ When a single deposit consists of both verified and unverified funds, use just the unverified
amount when determining whether the deposit is a large deposit.
▪ When the source of funds can clearly be identified (e.g., direct payroll deposits or tax refund),
additional documentation is not required.
▪ If an account was opened within 90 days of a direct verification (i.e., VOD) and/or reflects a
current balance significantly greater than the average balance, document the source of funds.
▪ You must consider any liabilities resulting from all borrowed funds.
Additional resources available are Understanding Loan Product Advisor's Determination of Total
Funds to Be Verified and Understanding Loan Product Advisor's Determination of Reserve
Requirements

ASSET DOCUMENTATION, continued

Eligible Asset Types
Depository accounts Obtain:
(Guide Section ▪ Depository account statements covering a one-month period (for Streamlined Accept
5501.3(b)) Documentation) or two-month period (for Standard Documentation), or
▪ A direct account verification (i.e., VOD)
Securities Provide one of the following:
(Guide Section
5501.3(b))
▪ An account statement covering a one-month period (for Streamlined Accept Documentation)
or two-month period (for Standard Documentation), or
If the borrower does not receive a stock/security account statement:
▪ Provide evidence the security is owned by the borrower, and
▪ Verify value using current stock prices from a financial publication or website
Value must not include margin accounts.
Stock with limitations on its accessibility (e.g., restricted stock which has not vested and been
distributed to the recipient) is not eligible.
* See below Topic: “Evidence of Liquidation” for requirements.
Retirement accounts Provide the following:
(Guide Section ▪ Account statements covering a one-month (for Streamlined Accept Documentation) or two-
5501.3(b)) month period (for Standard Documentation), or
When evidence of liquidation is not obtained:
▪ To use the vested amount of an IRS-qualified employer requirement account to qualify the
borrower for the mortgage transaction, the mortgage file must include documentation
confirming the borrower is permitted to make withdrawals, and severance from the borrower’s
current employment is not required.
* See below Topic: “Evidence of Liquidation” for requirements.
Government bonds Provide documentation verifying the ownership and the value. Note, the value must be based on
(federal, state or the lower of the purchase price or current redeemable value.
municipal) * See below Topic: “Evidence of Liquidation” for requirements.
(Guide Section
5501.3(b))


Proceeds from a loan Provide the following:
fully secured by the ▪ Documentation verifying the value and ownership of the asset used to secure the loan as well
borrower’s assets as the amount and terms of the loan
other than real ▪ Evidence of receipt of the loan proceeds
property)
(Guide Section
5501.3(b))
Proceeds from the Provide the following:
sale or refinance of ▪ The Settlement/Closing Disclosure Statement verifying the proceeds from the sale or
the borrower’s real refinance of the borrower’s real property – For mortgages with Application Received Dates
property (including a Prior to October 3, 2015, the Settlement/Closing Disclosure Statement must be signed by the
1031 exchange or a buyer and the seller, or their authorized agents, and/or
bridge loan) ▪ An executed buy-out agreement that is part of an employer relocation plan that takes
(Guide Section responsibility for the outstanding mortgage(s).
5501.3(b))
Proceeds from the Provide the following:
sale of the borrower’s ▪ A signed bill of sale documenting the asset and transfer of ownership
assets other than real ▪ Evidence of receipt of the proceeds
property or exchange-
traded securities
(Guide Section
5501.3(b))
Borrower’s real estate The Settlement/Closing Disclosure Statement must reflect the commission earned by the borrower
commission and credited toward the mortgage transaction (for instances when the borrower is a licensed real
(Guide Section estate agent that is due to receive a sales commission from the purchase of the subject property).
5501.3(b))
Funds from a trust Provide a copy of the trust agreement or a signed statement from the trustee or trust manager that
(Guide Section documents the following:
5501.3(b)) ▪ Identifies the borrower as the beneficiary
▪ Confirms the borrower has access to all or a certain specific amount of the funds
▪ Confirms the trust has sufficient assets to disburse funds needed by the borrower
When trust funds are needed for closing, evidence of receipt of the disbursed funds from the trust
is required.
Individual Provide documentation of the IDA program verifying:
Development ▪ The matching funds are not subject to recapture
Accounts (IDA) – ▪ The ratio of matching funds by the agency (maximum of a four-to-one match permitted)
Agency matching
▪ Regular payments made to the IDA by the borrower and the matching organization
funds not subject to
▪ The vested balance or the percentage of vesting
Recapture
(Guide Section
5501.3(b))
Community Savings Provide Community Savings Systems account statements or a direct account verification which:
System accounts –
Borrower
▪ Identifies the nonprofit community organization as the administrator, and
contributions ▪ Shows all borrower contributions
(Guide Section
5501.3(b))


Pooled funds on Provide the following:
deposit from Related ▪ Evidence that the borrower and the related person have resided together for at least one year
Persons who reside ▪ Documentation verifying the pooled funds per the requirements for the applicable asset type
with the borrower ▪ A written statement by the borrower executed at application meeting the requirements of
(Guide Section Guide Section 5501.3(b)
5501.3(b))
Borrower’s revolving Provide the following:
credit card (charges/ ▪ A copy of the account statement or receipt showing the amount charged or advanced; and
cash advances) or ▪ Verification of sufficient funds to pay the amount charged or advanced if the amount charged
unsecured line of or advanced is not included in the monthly DTI ratio
credit (used to pay
fees associated with Note:
the Mortgage ▪ The maximum amount charged or advanced may not exceed the greater of 2% of the
application process) mortgage amount or $1,500
(Guide Section AND,
5501.3(b))
▪ The borrower must have sufficient verified funds to pay these fees (in addition to the funds
needed for the mortgage transaction; however, the borrower is not required to pay off these
charges at closing;
OR,
▪ The amount charged or advanced must be included in the borrower’s total outstanding debt
and the repayment of such amount must be included when determining the borrower’s
monthly DTI ratio as described in Guide Section 5401.2
Cash value of life Provide documentation from the life insurance company verifying the following information:
insurance policy (not
face value)
▪ Policy owner(s),
(Guide Section ▪ Period covered and current cash value, and
5501.3(b)) ▪ Any outstanding loans
When the cash value of the life insurance policy is needed for closing, evidence of liquidation is
required.
Rent credits Provide the following:
(Guide Section
5501.3(b)) ▪ A copy of the rental/purchase agreement
▪ Evidence of rental payments (see Section 5202.2(b) for acceptable documentation for rental
verification)
▪ Appraiser’s determination of the market rent for the subject property
Trade equity: Net Provide the following:
proceeds of the trade- ▪ The appraisal of the borrower’s previously-owned residence
in of the borrower’s ▪ A copy of the trade-in contract
previously owned The borrower’s equity in the previously-owned residence is determined by subtracting any
residence outstanding liens on the previously-owned residence, plus any transfer costs, from the lesser of
(Guide Section the appraised value of the previously-owned residence or its trade-in price as shown in the trade-
5501.3(b)) in contract.


Gift funds or a gift of Provide the following:
equity ▪ A gift letter signed by the donor. Information provided in the gift letter must:
(Guide Section 55 ▪ State the donor’s name and the funds are given by a related person
01.3(c)) ▪ Include the donor’s mailing address and telephone number
▪ State the amount of the gift funds or gift of equity
▪ Establish the gift funds or gift of equity are a gift that does not have to be repaid
▪ Evidence of one of the following:

▪ Transfer of funds from the donor’s account in a financial institution to the Borrower’s
account. For example, copies of bank statements from both the donor and the Borrower’s
accounts, a copy of a canceled gift check or a copy of a donor’s withdrawal slip and the
Borrower’s deposit slip, or
Transfer of the funds from the donor’s account in a financial institution to the settlement or
closing agent. For example, a copy of a cashier’s check or wire transfer confirmation.
Funds transferred using a third-party money transfer application or service are acceptable
only when the documentation included in the Mortgage file evidences that the funds were
transferred using the application or service directly from the donor’s bank account to the
borrower’s bank account or to the settlement or closing agent.
Gift of equity: A gift of equity must be reflected on the Settlement/Closing Disclosure Statement.
Note:
▪ Investment Property Mortgages: Gift funds or gift of equity are not an eligible source of funds
▪ Second Home Mortgages with LTV/TLTV/HTLTV ratios greater than 80%: Minimum
contribution from borrower personal funds must be 5% of value when gift funds or grants are
used for the transaction.
Gift funds received as Provide the following:
a wedding gift ▪ A copy of the marriage license or certificate
(Guide Section ▪ A verification of the gift funds in the borrower’s depository account
5501.3(c)) The gift funds must be on deposit in the borrower’s depository account within 90 days of the date
of the marriage license or certificate
A gift or grant from an Provide documentation supporting a gift or grant from an agency. Examples of acceptable
agency documentation include copies of grant program materials, award letters or terms and conditions
(Guide Section provided to the borrower. The documentation must:
5501.3(c)) ▪ Establish that the funds were provided by an Agency
▪ Establish that the organization has an established gift or grant program
▪ Establish that the funds are a gift or grant that does not have to be repaid
▪ Provide evidence that the funds were received by the borrower or by the Seller on the
borrower’s behalf
▪ Identify the donor’s mailing address


Individual Provide documentation of the IDA program verifying:
Development ▪ The matching funds are subject to recapture
Accounts (IDA) – ▪ The ratio of matching funds by the agency (maximum of three-to-one match permitted)
Agency matching ▪ Regular payments made by the borrower and the matching organization
funds subject to ▪ The vested balance or the percentage of vesting
Recapture Documentation of matching funds subject to a recapture provision must also meet the
(Guide Section requirements for a gift or grant from an agency.
5501.3(c))
Employer Assisted In addition to the documentation requirements for specific benefit types, the following
Homeownership requirements must be met:
(EAH) Benefit ▪ EAH Benefits must be documented with a copy of the employer benefit program that provides
(Guide Section the amount of the benefit and the terms of the program
5501.4(c)) ▪ Evidence of receipt of the EAH Benefit must be provided (e.g., funds on deposit in borrower’s
account or funds reflected on the Settlement/Closing Disclosure Statement)
Interested party ▪ Document the amount and source of all interested party contributions in the mortgage file and
contributions show on the Settlement/Closing Disclosure Statement
(Guide Section ▪ If financing concessions exceed Freddie Mac’s limits (see Guide Section 5501.5(b)) and an
5501.5(e) unplanned buydown is involved, include a written analysis and documentation in the mortgage
file evidencing the unplanned buydown met each of the conditions in Guide Section 5501.5(d)
Earnest money The source of the earnest money deposit for a purchase transaction must be from an eligible
deposit source meeting the requirements of Guide Section 5501.3 and documented in accordance with
(Guide Section 5501.1) the requirements for the applicable asset type. Account statement(s) or direct account verification
must cover the period up to and including the date the earnest money deposit funds cleared the
account.
Note: Ensure the earnest money deposit is not counted twice in the evaluation of the mortgage
(i.e., deducted from the funds to close and counted in assets).
Evidence of When assets that are invested in stocks, bonds, mutual funds, U.S. government Securities,
liquidation retirement accounts or other securities are needed for closing, evidence of liquidation is required
(Guide Section unless the combined value of the assets is at least 20% greater than the amount from these
5501.3(b)) assets needed for closing.
Business assets Document according to the asset type.
(Guide Section As described in Guide Section 5501.3(a)(iii), documentation of large deposits is not required
5501.3(b)) provided the Seller:
▪ Reviews a minimum of the most recent two months of the business account statements, and
▪ Determines the deposits are typical for the borrower’s business
Refer to Guide Section 5304.1(f) for additional requirements when self-employed income from the
business is used for qualifying.
Source of funds from ▪ Funds must be transferred into a United States or State regulated financial institution and
outside the United verified in U.S. dollars prior to the closing of the mortgage transaction, or
States and its ▪ Combined value of the assets must be at least 20% greater than the amount from these
territories assets needed for closing
(Guide Section Refer to Guide Section 5102.3(b) for additional requirements when funds from outside the United
5501.3(b)) States and its territories are used to qualify the borrower for the mortgage transaction.

CREDIT AND LIABILITIES

Completing Liabilities Review the mortgage application, credit report, borrower’s paystubs (if provided) and other file
Section of the Loan documentation for borrower liabilities. The liabilities portion of the application may be completed
Application directly from the credit reports either manually or through an automated process. If the credit
(Guide Sections reports identify fewer than three open tradelines (except for Accept Mortgages), ask the
4101.1(b) and 5401.2) borrower if any additional tradeline references exist. Additionally, must include other debts in
monthly debt as detailed under the Monthly Debt Payment section below.
Credit data for Loan Obtain the same type of credit report for all borrowers from:
Product Advisor ▪ Infile(s) or merged/joint merged obtained through Loan Product Advisor
Mortgages ▪ Infile(s), merged/joint merged, or RMCR obtained outside of Loan Product Advisor
(Guide Sections 5201.1 Once you have selected a type of credit report, review all reports of that type for all borrowers.
(c)(ii) and 5203.1(h) All infiles for an individual borrower must be dated within 14 days of each other. Retain all
and (i)) credit reports in the file.
All credit reports must be dated within 120 days before, as applicable, the Note Date, or for
Construction and Renovation Mortgages, the Effective Date of Permanent Financing, the
modification date for Seller-Owned Modified Mortgages, the Conversion Date for Seller-Owned
Converted Mortgages or the date of the assumption agreement.
For mortgages with borrowers who do not have a usable credit score, see Mortgages for
Borrowers Without Credit Scores.
Credit report inquiries Determine if additional credit was granted. If additional credit was granted, verification of the
within previous 90 debt must be obtained, and the debt must be considered when qualifying the borrower.
days
(Guide Sections
5201.1(e) and 5202.6)
Verification of Direct verification of housing payment history is not required if all borrowers have a usable
Housing Debt credit score.
(Guide Sections Third-party documentation to verify the payment amount is required if the credit report does not
5201.1, 5202.1, 5202.2, contain a required monthly payment. Examples of acceptable third-party documentation
5401.1, 5401.2 and include (but are not limited to) a Settlement/Closing Disclosure Statement (if recently
5101.9(c)) purchased), billing coupons, tax statement, insurance statement and, if applicable, HOA/Condo
statement.
Reminder: When application indicates property owned free and clear, total monthly debt must
include taxes, insurance, and HOA or Condo fees, as applicable.
Caution (A-minus eligible) loans: If not adequately shown on the Loan Product Advisor
credit report, directly verify the payment history of that mortgage debt for the most recent 12
months. During the most recent 12 months, if any borrower was 30 days or more delinquent
more than once, or 60 days or more delinquent on any directly verified mortgage or
combination of directly verified mortgages, the mortgage is ineligible for delivery to Freddie
Mac.
Caution (not A-minus eligible) loans: When the borrower has a housing payment history,
verify both current and prior housing payment histories for the most recent 12 months (or length
of housing payment history if less than 12 months) in accordance with Section 5202.2(b) and
payment amount for any debt (housing or other) not reported on the credit report.
Documentation of Effective for mortgages with Settlement Dates on and after November 5, 2020, however, may
Liabilities implement earlier.
(Guide Section ▪ Documentation of all payment amounts included in the monthly DTI ratio, except as
5401.2) otherwise stated in Section 5401.2.
▪ Documentation of the remaining term for installment loans omitted from the DTI ratio if
there are 10 or fewer months of payments remaining.

CREDIT AND LIABILITIES, continued

Direct verification of Direct verification of payment history is not required if all borrowers have a usable credit score.
other debts not Obtain documentation to verify the payment amount for any installment debt if the credit
reported on the report does not contain a required monthly payment.
credit report Caution (not A-minus eligible): Verify most recent 12-months’ payment history for any
(Guide Sections significant debt (housing or other) not reported on the credit report. If credit report does not
5201.1(a), 5202.2 and contain a required monthly installment payment amount, then verify the amount with third-party
5401.2) documentation.
Accounts listed on the credit report as, “will rate by mail only” or “need written authorization”
require separate verification.
Monthly debt Must include all the following, if applicable:
payment ▪ Monthly housing expense (refer to Guide Section 5401.1). In addition, if applicable, for
(Guide Sections mortgages secured by second homes, investment properties or with a non-occupying
5401.1 and 5401.2) borrower and the borrower does not own, but rents, their principal domicile, effective for
mortgages with settlement dates on and after November 5, 2020 you must include the
monthly rental housing payment in the monthly housing expense-to-income ratio.
▪ Payments on installment debts with more than 10 months remaining, including debts that
are in a period of deferment or forbearance.
− For student loans (see Student Loans in this table)
− Other installment debt (other than a student loan): If not reported on the credit report or is
listed as deferred or in forbearance, you must obtain documentation verifying the monthly
payment amount.
− Payments on installment debts secured by financial assets made by a financial institution
may be excluded for qualifying purposes; however, the payments must be included on the
loan application.
▪ Child support payments with more than 10 months remaining
▪ Monthly payments on revolving or open-end accounts, regardless of the balance. In the
absence of a stated payment on the credit report, and if there is no documentation in the
mortgage file indicating the monthly payment amount, 5% of the outstanding balance will be
considered to be the required monthly payment amount. Monthly payments on open-end
accounts (accounts which require the balance to be paid in full monthly) are not required to
be included in the monthly debt payment if the borrower has sufficient verified funds to pay
off the outstanding account balance. The funds must be in addition to any funds used to
qualify the borrower for the mortgage transaction.
▪ Monthly lease payments, regardless of number of payments remaining
▪ Aggregate net rental loss from all investment properties owned
▪ Monthly payment amounts for other properties, including principal and interest on the First
Lien and any secondary financing, bridge loan payment, real estate taxes, property hazard
insurance premiums and, when applicable, mortgage insurance premiums, leasehold
payments, homeowner’s association dues (excluding unit utility charges)
This additional resource is available: Understanding Loan Product Advisor's Determination of
Total Monthly Debt for Conventional Loans

Topic Documentation
Child support Effective for Mortgages with Settlement Dates on and after November 5, 2020:
(Guide Section 5401.2) • The monthly payment amount must be documented in the Mortgage file with a copy of the
signed court order, legally binding separation agreement and/or final divorce decree, or
• To omit child support from the debt payment-to-income ratio due to 10 or fewer months of
payments remaining, the Mortgage file documentation must show that there are 10 or
fewer months of payments remaining.
Alimony or Maintenance When alimony or maintenance payments have more than 10 months of payments remaining,
Payments in lieu of including these payments in the calculation of the debt, the payments must be
(Guide Section 5401.2) deducted from the Borrowers stable monthly income as determined in accordance with
Section 5301.1. The reduced stable monthly income must be used to qualify the Borrower.
Documentation:
• The monthly payment amount must be documented in the Mortgage file with a copy of the
signed court order, legally binding separation agreement and/or final divorce decree, or
• To omit alimony due to 10 or fewer months of payments remaining, the Mortgage file
documentation must show that there are 10 or fewer months of payments remaining.
Student Loans
(Guide Section 5401.2) Debt Type Eligibility and Documentation Requirements
In repayment, ▪ If the monthly payment amount is greater than zero, use the
forbearance or monthly payment amount reported on the credit report or other
deferment file documentation, or
▪ If the monthly payment amount reported on the credit report is

zero, use 0.5% of the outstanding balance, as reported on the
credit report.
In loan forgiveness, The monthly payment amount may be excluded from the monthly
cancellation, DTI ratio provided the mortgage file contains documentation that
discharge and indicates the following:
employment-
contingent repayment ▪ The student loan has 10 or less monthly payments remaining
programs until the full balance of the student loan is forgiven, canceled,
discharged or paid, or
▪ The monthly payment on a student loan is deferred or is in
forbearance and the full balance of the student loan will be
forgiven, cancelled, discharged or paid at the end of the
deferment or forbearance period
AND
▪ The borrower is eligible or approved for the student loan
forgiveness, cancelation, discharge or employment-contingent
repayment program. Evidence of eligibility or approval must
come from the student loan program or the employer, as
applicable.
Loans on financial Payments on loans secured by financial assets that may be repaid through liquidation of the
assets asset may be excluded from the qualifying ratios provided the loan was made by a financial
(Guide Section 5401.2) institution, and the asset is reduced by the outstanding balance of the loan when including it in
the funds available to the borrower. You must document the monthly payment, value and
ownership of the asset and provide documentation that the loan is secured by that same asset
in the mortgage file.


Excluding contingent For installment, revolving and monthly lease payments, provide documentation that indicates:
liabilities from monthly ▪ A party other than the borrower has been making timely payments for the most recent 12
debt payment-to- months
income (DTI) ratio ▪ The party making the payments is not an interested party to the subject real estate or
(Guide Sections mortgage transaction. See Section 5501.5 for examples of an interested party.
5401.2(a) and (b) and For mortgages, provide documentation that indicates:
5102.4 ▪ A party other than the borrower has been making timely payments for the most recent 12
months
▪ The party making the payments is obligated on the Note for the mortgage being excluded
▪ The party making the payments is not an interested party to the subject real estate or
mortgage transaction. See Guide Section 5501.5 for examples of an interested party.
For assumed mortgage:
▪ Verify that the borrower no longer owns the property by documenting the property transfer,
and
▪ Obtain a copy of any assumption agreement executed by the transferee
For assigned debt:
▪ A liability (secured debt including a mortgage) may be excluded if assigned to another by a
court order, such as a divorce decree. Document the court order with, for example,
appropriate pages from separation agreement or divorce decree.
For self-employed borrower’s debt paid by the borrower’s business:
▪ If debt has been paid for 12 months or longer, the monthly payment for the debt may be
excluded from the monthly DTI ratio if the following requirements are met:
- The mortgage file contains evidence that the debt has been paid timely by the
borrower’s business for no less than the most recent 12 months, and
- The tax returns evidence that business expenses associated with the debt (e.g.,
interest, lease payments, taxes, insurance) have been reported and support that the
debt has been paid by the business
Reminder: All borrower debt incurred through the Note Date must be considered when qualifying
a borrower(s). The final Form 65, Uniform Residential Loan Application, and Form 65A, Statement
of Assets and Liabilities, must reflect accurate and complete information as of the Note Date of
the subject mortgage.
Excluding Self- When a self-employed borrower is obligated on a debt that has been paid by the borrower’s
employed borrower business for 12 months or longer, the monthly payment for the debt may be excluded from the
debt paid by the monthly debt payment-to-income ratio if the following requirements are met:
business ▪ The mortgage file contains evidence that the debt has been paid timely by the borrower’s
(Guide Section business for no less than the most recent 12 months, and
5401.2(b)) ▪ The tax returns evidence that business expenses associated with the debt (e.g., interest,
lease payments, taxes, insurance) have been reported and support that the debt has been
paid by the business.
Derogatory credit Accept and Caution (A-minus eligible):
information ▪ No documentation required
(Guide Sections Caution (not A-minus eligible):
5201.1(a), 5202.3 and ▪ When a Seller has determined the derogatory information is significant, you must document
5202.5(a)) the extenuating circumstances or conclude the difficulties were due to financial
mismanagement.
Refer to Guide Chapter 5202 and the Caution Reminders Quick Reference
(https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/caution_remind.pdf) for
documenting the recovery period and re-establishment of credit.


Sale or Conversion of Refer to Guide Section 5401.2(a) and the Freddie Mac Rental Income Matrix
Primary Residence (http://www.FreddieMac.com/learn/pdfs/uw/rental.pdf), if either:
(Guide Section ▪ Pending sale of the primary residence and the sale will not close before the Mortgage Note
5401.2(a)) Date, or for Construction Conversion or Renovation Mortgages, the Effective Date of
Permanent Financing
▪ Converting the current primary residence to a second home or an Investment Property
Payoff of existing The mortgage must be a valid First Lien on the mortgaged premises. The mortgaged premises
judgments and tax must be free and clear of all prior liens and encumbrances and no rights or condition may exist
liens that could give rise to such liens, except for:
(Guide Section 4201.2) ▪ Liens for real estate taxes and special assessment not yet due and payable,
▪ Rights and conditions specified in Guide Section 4702.4
Home equity line of HELOC payments must be included in the housing expense-to-income ratio when there is an
credit (HELOC) outstanding balance on the account.
payments
(Guide Section Effective for Mortgages with Settlement Dates on and after November 5, 2020; however, may
5401.1 and 5401.2) implement immediately.
When the HELOC monthly payment amount is not captured in the mortgage file documentation or
in the credit report, use 1.5% of the outstanding HELOC balance.
Note: Documentation of HELOC terms, including the monthly payment amount continues to be
required for HELOCs originated concurrently with the First Lien Mortgage, as stated in Section
4204.1.

GENERAL UNDERWRITING REQUIREMENTS
Eligibility (Guide Chapter 5101)

Loan Product Advisor assumes that the last information submitted to Loan Product Advisor is the same as the information
that is verified and documented in the mortgage file delivered to Freddie Mac. If the information changes or an error is
identified in a prior submission, the mortgage information must be resubmitted to Loan Product Advisor. See Guide
Sections 5101.7 and 5101.7 for exceptions and requirements for resubmission to Loan Product Advisor after the Note Date,
or for Construction Conversion and Renovation Mortgages, after the Effective Date of Permanent Financing. Incorrect
information in Loan Product Advisor may invalidate the Loan Product Advisor Feedback Certificate. To qualify as a Loan
Product Advisor mortgage, the mortgage must meet all the following criteria:
▪ Be submitted to Loan Product Advisor no more than 120 days before and no later than the Note Date, or for
Construction Conversion and Renovation Mortgages, the Effective Date of Permanent Financing
▪ Have all credit reports (including Loan Product Advisor credit reports) dated no more than 120 days before and no later
than on the Note Date, or for Construction Conversion and Renovation Mortgages, the Effective Date of Permanent
Financing
▪ Receive a “Complete” AUS Status on the Feedback Certificate based on the last submission to Loan Product Advisor
on or before the Note Date, or for Construction Conversion and Renovation Mortgages, the Effective Date of
Permanent Financing
▪ Comply with all requirements of Guide Chapter 5101 – Using Loan Product Advisor
▪ Have a Settlement Date that is not more than 12 months after the Note Date, or for Construction Conversion and
Renovation Mortgages, the Effective Date of Permanent Financing
For Accept Mortgages and A-minus Mortgages, Loan Product Advisor makes the determination that borrower capacity is
acceptable so long as the amount of stable monthly income used by Loan Product Advisor is correct and meets the
requirements in Guide Topic 5300 as verified under the applicable verification requirements of the Guide.
Borrowers without usable credit scores (Guide Section 5201.1(c))
Our requirements for Accept and A-minus Mortgages when not all borrowers have a usable Credit Score have been
updated. Also, for mortgages originally submitted through Loan Product Advisor on and after May 14, 2017 with Settlement
Dates on and after June 26, 2017, Loan Product Advisor will allow the assessment of Mortgages when no borrower has a
Credit Score. Refer to Mortgages for Borrowers Without Credit Scores job aid for details.
Permanent and nonpermanent resident aliens (Guide Section 5103.2)
Permanent and nonpermanent resident aliens lawfully residing in the United States are eligible for mortgages on the same
terms as U.S. citizens. When selling such mortgages to Freddie Mac, Sellers represent and warrant that the non-U.S.
citizen borrower is lawfully resident in the United States. Freddie Mac does not specify the documentation required to
establish lawful U.S. residency. You should consult your own counsel or other information sources to determine
documentation that may be used to establish lawful residency.

GENERAL UNDERWRITING REQUIREMENTS (continued)
Financing concessions (Guide Section 5501.5 (b))

▪ Financing concessions for primary residences and second homes must be within allowable percentages:
− 9 percent of value for mortgages with LTV/TLTV ratios less than or equal to 75 percent
− 6 percent of value for mortgages with LTV/TLTV ratios greater than 75 percent up to and including 90 percent
− 3 percent of value for mortgages with LTV/TLTV ratios greater than 90 percent
▪ The maximum financing concession for investment properties is 2 percent regardless of the LTV ratio
Note: Maximum financing concessions are based on the LTV ratio when there is no secondary financing and TLTV ratio
when secondary financing is present. Contributions in excess of the above limitations are considered sales concessions.
▪ Sales concessions are deducted from the purchase price and LTV is calculated using the lower of the reduced
purchase price or appraised value.
▪ Interested party contributions used to reimburse the borrower for payment of short sale fees must be considered and
treated as a sales concession.
Interested party contributions – abatements (Guide Sections 5501.5 (a))
A payment of up to 12 months of homeowner’s association dues by an interested party is not considered an abatement but
is considered an interested party contribution and is subject to all requirements for interested party contributions and other
conditions.
Lender credit (Guide Sections 5501.6)
May be used provided it meets all of the following requirements:
▪ The amount of the lender credit must:
o Be derived from an increase in the interest rate (i.e., premium pricing), or
o Be funded directly by the Seller
▪ The lender credit must not require repayment
▪ The Seller must not use funds from a third party to provide a lender credit
▪ Lender credit may only be used as a credit towards the borrower’s closing costs. In the event the lender credit exceeds
the amount of the borrower’s closing costs, the following requirements apply:
o The lender credit must be reduced so it does not exceed the amount of the borrower’s closing costs, or
o The amount of the lender credit that exceeds the borrower’s closing costs must be applied as a principal
curtailment to the mortgage and must be clearly reflected on the Settlement/Closing Disclosure Statement.
(See Section 6302.32 for delivery requirements for Mortgages with principal curtailments.)
▪ Lender credit derived from an increase in the interest rate (i.e., premium pricing) must not be used as a credit towards
funding a temporary subsidy buydown plan on a “no cash-out” refinance mortgage.
Lender incentives (Guide Sections 5501.6)
The Seller may provide the Borrower with a cash or a cash-like (e.g., a gift card) incentive that is not lender credit toward
the Mortgage transaction as described in Guide Section 5501.6(a), provided that:
▪ The amount of the incentive does not exceed $500.00
▪ No repayment is required, and
▪ The amount is documented in the Mortgage file
The incentive is not considered cash out to the Borrower and does not have to be included in the calculation of the
Mortgage proceeds, including the calculation of cash back to the Borrower. These requirements apply regardless of
whether the incentive is provided before, at or after the Mortgage closing.
Cash back on purchase transactions (Guide Section 4305.1)
The Borrower may receive cash back, or a principal curtailment may be made, only as a result of the following:
▪ Reimbursement for the overpayment of costs, fees and charges paid by the Borrower in connection with the purchase transaction
Mortgage.
▪ In jurisdictions where real estate taxes are paid in arrears, receipt of funds from the property seller for real estate taxes that cover a
period prior to the Note Date
▪ Refunds mandated by federal laws or regulations
The minimum Borrower contribution, if applicable, must be met at closing. If the projected cash back, as described above, results in the
Borrower not meeting the minimum Borrower contribution at closing, the excess amount of the cash back must be applied as a principal
curtailment.
Any cash back or principal curtailment must be reflected on the Settlement/Closing Disclosure Statement. In instances of reimbursement
for the overpayment of costs, fees and charges, and/or refunds mandated by federal law or regulation, the Mortgage file must include
documentation supporting the amount and the reason for the reimbursement and/or refund.


Property (Guide Chapters 5601, 5701 and 5703)
The Seller must ensure that the mortgage premises (collateral) are eligible for sale to Freddie Mac and that it supports the
transaction; Loan Product Advisor’s Minimum Assessment Feedback (MAF) will advise the Seller of the type of appraisal
report required. Refer to the Automated Collateral Evaluation job aid for more information regarding appraisal waivers.
For units in Condominium Projects, the project must meet Freddie Mac eligibility criteria for the project (e.g., Existing, New,
2- to 4-Unit condominium projects, or Detached condominium projects, etc.). For details, refer to the Condominium Unit
Mortgages Job Aid or Guide Chapter 5701.
Mortgages secured by a Manufactured Home (even if located within a condominium project) must be submitted to Loan
Product Advisor and must identify the property as a single-wide or multi-wide Manufactured Home. In addition:
▪ An appraisal reported on Appraisal Form 70B, Manufactured Home Appraisal Report, is required for all Manufactured
Homes.
▪ If the property is a Manufactured Home located in a Condominium Project, the project must be approved through an
acceptable reciprocal review process. For details, refer to Guide Chapter 5701. The project information section of Form
465, Individual Condominium Unit Appraisal Report, must also be completed and attached as an addendum to Form
70B.
For purchase transactions, verify the property seller is the Owner of Record. For refinance transactions, verify the borrower
is an Owner of Record. For transactions involving the payoff of a land contract, verify the borrower is a vendee on the
recorded land contract, and the property seller is the vendor and Owner of Record. Evidence verification with
documentation in the file.
If Loan Product Advisor returns an excessive value message or a message notifying you of REO activity within the
preceding 24 months, review the appraisal report carefully to ensure property value is supported.
Freddie Mac recommends the use of Loan Collateral Advisor, our web-based tool that analyzes appraisal reports and
provides Freddie Mac’s view of appraisal quality and risk. More information about Loan Collateral Advisor can be found on
FreddieMac.com at https://sf.freddiemac.com/tools-learning/loan-advisor/our-solutions/loan-collateral-advisor

Date and verification requirements for Loan Product Advisor results, employment, income, source of funds and
payment history (other than credit reports) (Guide Sections 5101.1(b), 5101.7, 5102.4 and 5301.1)
Date Requirements
▪ A mortgage that was processed through Loan Product Advisor and received a complete assessment (a Risk Class of
Accept or Caution) on the Last Feedback Certificate must have a Settlement Date no more than 12 months after the
Note Date, or for Construction Conversion and Renovation Mortgages, the Effective Date of Permanent Financing.
▪ Loan Product Advisor results must be dated within 120 days prior to the Note Date. However, if the Seller determines
after the Note Date, or the Effective Date of Permanent Financing for Construction Conversion and Renovation
Mortgages that the information entered into Loan Product Advisor was not true, complete, and accurate and does not
match the terms of the mortgage to be delivered to Freddie Mac, the mortgage must be resubmitted to Loan Product
Advisor after the Note Date or the Effective Date of Permanent Financing, as applicable, but prior to the Loan Product
Advisor Assessment Expiration Date and Delivery Date, unless otherwise prohibited or not required by Guide Section
5101.7.
▪ Verifications of employment, income, current receipt of income, source of funds and payment history must be dated no
more than 120 days before the Note Date and must be used in evaluating the creditworthiness of the Borrower. Any
information verified more than 120 days before the Note Date must be reverified. Verifications made after the Note Date
do not satisfy the requirements of Guide Section 5102.4. For eligible properties impacted by a disaster, certain age of
documentation flexibilities may apply. Refer to Guide Sections 4407.2 and 4407.3 for additional information.
Verification Requirements (Guide Sections 5102.3 5302.1 through 5302.5 and 5501.3)
General Requirements for Verifying Documents: VOE, VOD and mortgage or rental verification forms
▪ For more information on automating the manual processes for income verification, refer to AIM.
▪ Written verifications:
− Standard verification forms such as original verifications of employment (VOE), verification of deposit (VOD) and
mortgage or rental verification forms must be sent directly from the originator to the borrower’s employer, depository,
creditor or landlord and upon completion, returned directly from the entity to the originator.
− Facsimile verification forms are acceptable if it is clear from the document that the information was sent by facsimile
transmission directly from the source to the originator and are considered to be originals.
− The original documents must not contain any alterations, erasures, correction fluid or correction tape.
− The Seller’s mortgage file contains legible copies of the originals.
− The copies must have been made by the originator or the applicant directly from the originals. Copies provided by
any other source, such as the applicant, agent or builder, are not acceptable. A picture of a document may be
provided by the borrower to provide verification of income, employment and assets
▪ Electronic verifications (VOE, VOD, VOM/R) are computer-generated documents, accessed and printed from an
Intranet or Internet. This includes online bank statements, investment account statements and employment and/or
income statements. The borrower may provide the electronic verification directly, or the originator may obtain it directly
from the employer, depository or other institution.
Income and asset qualification sources
▪ IRS Form 4506-T (Guide Section 5302.5):
− All Borrowers, whose income is used to qualify or whose assets are used as a basis for repayment of obligations in
accordance with the requirements in Guide Section 5307.1, are required to sign Internal Revenue Service (IRS) Form
4506-T (or an alternate form acceptable to the IRS that authorizes the release of comparable tax information). The
Form 4506-T must be signed no later than the Note Date.

Verification Requirements, continued

Income and asset qualification sources (continued)
▪ Year-to-date (YTD) paystubs must:
− Identify the employer’s name, the borrower as the employee and the date issued. Show the time period covered and
both the current pay period dates and earnings, and complete YTD earnings
▪ W-2 forms must be the complete IRS Form W-2 distributed by the employer for the preceding tax year(s).
▪ Written VOEs must contain:
− A signature, printed name, title and contact information of the authorized employer representative who verified the
information and the date completed
▪ Borrower’s name and employer’s name and address
▪ Refer to Guide Section 5302.2 for additional written VOE requirements regarding employment and earnings10-day pre-
closing verifications (10-day PCVs), when required, must be obtained no more than 10 business days prior to the Note
Date, or after the Note Date but prior to the Delivery Date. Types may include a verbal VOE, written VOE, Military
Leave and Earnings Statement or third-party employment verification service
▪ Verbal VOEs must be completed using Form 90, or a similar written document that includes the following:
− Name of the borrower, employer’s name, name and title of the individual contacted at employer, date of contact, and
phone number used to contact the employer
− Name of the third-party source used to obtain the phone number for the employer (e.g., the phone directory, reliable
internet source, directory assistance, etc.)
− Borrower’s current employment status
− Any additional information that was verified
− Name, title and employer of the representative who contacted the borrower’s employer and completed the verbal
VOE
▪ Third-party employment and income verifications obtained through third-party verification service providers are
acceptable. The verifications must be received by the originator directly from the third-party verification service provider.
A copy of the verification must meet the following requirements:
− Sufficient information to determine stable monthly income in accordance with Topic 5300
− 10-day PCVs for employment must meet Section 5302.2(d) requirements
− If verification is completed using employment and/or income information from an electronic database, the verification
must evidence that the information in the database in no more than 35 days old
Note: If any required information is missing, the Seller must obtain additional documentation to supplement the third-
party verification. The Seller is responsible for ensuring the accuracy and integrity of the information provided by the
third-party verification services.
▪ Tax returns must be the borrower’s signed copy of the complete U.S. federal income tax returns(s) that were filed with
the IRS, and include all schedules and forms required in Guide Topic 5300. Acceptable alternatives for the borrower’s
signature on the tax return(s) include evidence the tax returns were filed electronically or tax transcripts that validate the
information on the unsigned tax returns
Asset account verifications
▪ For more information on automating the manual processes for asset verification, refer to AIM.
▪ Direct account verifications (i.e., verification of deposit form (VOD)) must:
− Identify the issuing financial institution, the account owner(s), the account number-which at a minimum must include
the last four digits, the type of account, the account open date, the current account balance, the average balance for
the previous two months, and any outstanding loans secured by the asset
− Include the title, signature and phone number of the depository representative who completed the verification
▪ Asset account statements must:
− Identify the issuing financial institution, the account owner(s), and the account number, which at a minimum must
include the last four digits
− Show all transactions, the period covered, ending balances, and any outstanding loans secured by the asset
A transaction history that is computer-generated and downloaded by the borrower from the Internet, or by a financial
institution representative from the institution’s system is acceptable. It must identify the name of the institution and
the source, and includes the information required above for asset account statements, unless it is used in
combination with other asset verifications containing the missing information, and it can clearly establish that the
transaction history pertains to the same account

Verification Requirements, continued

Asset account verifications (continued)
▪ Third-party asset verifications
− Asset verifications obtained through third-party verification service providers are acceptable
− Must be received by the originator directly from the third-party verification service provider
− Must contain the same information as required for direct account verifications or asset account statements above,
except when verification is generated electronically and is not completed or provided by a representative of the
employer or the depository institution, as applicable, the representative’s information is not required
Note: If any required information is missing, the Seller must obtain additional documentation to supplement the third-party
verification. The Seller is responsible for ensuring the accuracy and integrity of the information provided by the third-party
verification services
Minimum repository and date requirements for Credit Reports (Guide Section 5203.1(i))
All credit reports used in conjunction with Loan Product Advisor Mortgages (including the credit data provided through Loan
Product Advisor, even those reports not used by the Seller) must be dated within 120 days prior to the Note Date or the
date of the assumption agreement.
The credit report must include information from at least two national credit repositories. When a borrower has frozen credit,
no more than one national credit repository can have frozen credit information
Resubmission to Loan Product Advisor (Guide Sections 5101.6 and 5101.7)
If the information submitted changes or an error is identified in the prior submission, the mortgage must be resubmitted to
Loan Product Advisor with new data. Refer to Guide Section 5101.7 for exceptions and requirements for resubmission to
Loan Product Advisor after the Note Date, or for Construction Conversion and Renovation Mortgages, after the effective
Date of Permanent Financing.
Resubmission of loan data to Loan Product Advisor is required prior to the Delivery Date if:
1. Information on the previous submission is not true, complete or accurate. For example:
− Information on the previous submission is inaccurate, invalid, or changes during the origination process
− Borrowers are added to or deleted from the loan application
− Property information changes, the property information included an inaccurate or incomplete property address, or an
appraisal provides a different value for the property
− Credit Alert Interactive Voice Response System (CAIVRS) authorization shows a Federal Delinquency/Lien for any
borrower (FHA or VA loan applications only)
− You request a different mortgage product
2. The loan has not closed and the most recent submission (including the date of the Loan Product Advisor credit report(s))
exceeds the date requirements in Guide Section 5203.1.
3. Any information used by Loan Product Advisor changes; however, a change from the previous submission involving the
following does not require resubmission:
Debts/income:
− The monthly debt payment decreases (including monthly housing expense)
− The income for any borrower increases; however, if the income used to qualify borrowers increases for Home
Possible® Mortgages, resubmission is required
− The income for any borrower decreases and/or the monthly debt payment (including monthly housing expense)
increases, and
− The total difference does not change the total DTI ratio by more than three percentage points, and
− The total DTI ratio on the previous submission did not exceed 45%
Assets/reserves:
− The amount of verified assets increases
− The amount of verified reserves increases
− The amount of verified reserves decreases to an amount that is no less than the reserves required to be verified on
the Feedback Certificate.

Resubmission to Loan Product Advisor (Guide Sections 5101.6 and 5101.7) (continued)
Loan amount changes on refinance transactions (effective for mortgages with Settlement Dates on and after
February 4, 2021):
Loan amount decreases
- The loan amount decreases by no more than 5% on a refinance transaction and at the time of the most recent Loan
Product Advisor submission mortgage insurance is not required on the mortgage, or
- The loan amount decreases by no more than 5% on a refinance transaction and at the time of the most recent Loan
Product Advisor submission mortgage insurance on the mortgage is required, and
o The change does not impact the amount of the mortgage insurance coverage, and
o The amount of the mortgage insurance premium collected by the Seller is based on the new loan amount
and the Seller obtains a new mortgage insurance certificate, and
- For Mortgages that qualify for an appraisal waiver, the Seller has not accepted the appraisal waiver offer.
Loan amount increases
- For refinance transactions when the loan amount increases by no more than $500 or up to 1% of the loan amount,
whichever is less and based on the new loan amount at the time of the most recent Loan Product Advisor
submission mortgage insurance is not required on the mortgage, or
- For refinance transactions when the loan amount increases by no more than $500 or up to 1% of the loan amount,
whichever is less and based on the new loan amount at the time of the most recent Loan Product Advisor
submission mortgage insurance on the mortgage is required, and
o The change does not impact the amount of the mortgage insurance coverage, and
o The amount of the mortgage insurance premium collected by the Seller is based on the new loan amount
and the Seller obtains a new mortgage insurance certificate, and
- For Mortgages that qualify for an appraisal waiver, the Seller has not accepted the appraisal waiver offer.
- The increase in the monthly debt payment results in a debt payment-to-income ratio that meets the requirements in
Section 5101.6(b)(i) referenced above under #3 Debts/income.
If the Risk Class and/or Documentation Level changes as a result of the resubmission, the Seller must meet the new
requirements.
Resubmission to Loan Product Advisor After the Note Date (Guide Section 5101.7)
A mortgage cannot be resubmitted to Loan Product Advisor after the Note Date or the Effective Date of Permanent
Financing for Construction Conversion and Renovation Mortgages if:
▪ Resubmission is more than 120 days after the Loan Product Advisor Assessment Expiration Date displayed on the
Feedback Certificate in effect as of the Note Date; or
▪ A borrower is being added or deleted, or a change is being made to a borrower’s last name or Social Security Number;
or
▪ A new credit report company needs to be selected; or
▪ The single or joint merged credit report indicator changes; or
▪ The order of borrowers’ changes on a joint merged credit request; or
▪ The merged credit report number does not match the merged credit report number from the most recent complete
transaction
▪ If the mortgage cannot be resubmitted to Loan Product Advisor after the Note Date, or the Effective Date of Permanent
Financing for Construction Conversion and Renovation Mortgages, the mortgage must be manually underwritten and is
considered a Non-Loan Product Advisor Mortgage.
Note: Select the appropriate Loan Processing Stage, which is Post Closing Quality Control. Once Post Closing Quality
Control is selected, you must remain in that processing stage for the life of the loan.
This document is not a replacement or substitute for the information found in the Freddie Mac Single-Family
Seller/Servicer Guide or terms of your Master Agreement or other Pricing Identifier Terms.
© 2020 Freddie Mac

Loan Product Advisor Documentation Matrix: Freddie Mac Single-Family Seller/Servicer Guide (Guide)

Uploaded by

Copyright:

Available Formats

Loan Product Advisor Documentation Matrix: Freddie Mac Single-Family Seller/Servicer Guide (Guide)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Loan Product Advisor Documentation Matrix: Freddie Mac Single-Family Seller/Servicer Guide (Guide)

Uploaded by

Copyright:

Available Formats

Loan Product Advisor® Documentation Matrix

November 2020 Freddie Mac Learning

Income and Employment Documentation

Credit and Liabilities

General Underwriting Requirements

Requirements for Resubmission to Loan Product Advisor

AIM for Assets with Loan Product Advisor Job Aid

AIM for Income with Loan Product Advisor Job Aid

Collateral Representation and Warranty Relief with an Appraisal Job Aid

COVID-19 Response Notice:

November 2020 Freddie Mac Learning Page 2

INCOME AND EMPLOYMENT DOCUMENTATION

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

November 2020 Freddie Mac Learning Page 3

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

November 2020 Freddie Mac Learning Page 4

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

Secondary employment Secondary employment earnings – documentation requirements:

November 2020 Freddie Mac Learning Page 5

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

Additional Employed Income

Commission income History of receipt: Two years, consecutive

November 2020 Freddie Mac Learning Page 6

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

November 2020 Freddie Mac Learning Page 7

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Restricted stock (RS) History of receipt:

OR, all the following:

Additional documentation requirements applicable to all documentation levels:

November 2020 Freddie Mac Learning Page 8

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

Additional documentation requirements applicable to all documentation levels:

November 2020 Freddie Mac Learning Page 9

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

November 2020 Freddie Mac Learning Page 10

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

November 2020 Freddie Mac Learning Page 11

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

November 2020 Freddie Mac Learning Page 12

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

Employed Income: Income while on Temporary Leave

November 2020 Freddie Mac Learning Page 13

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

Business in existence ≥ 5 years1 Business in existence < 5 years

November 2020 Freddie Mac Learning Page 14

INCOME AND EMPLOYMENT DOCUMENTATION, continued

Topic Documentation Requirements (Streamlined and Standard Documentation Levels)

same business for at least five years.

Refer to Chapter 5304 for complete requirements and guidance.