Freddie Mac to Enhance Disclosures on MBS

April 9, 2008 No Comments »

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Freddie Mac announced todaty that it will enhance disclosures on its mortgage-backed securities so investors have a better idea of what they’re getting into.

The McLean, Virginia-based mortgage financier plans to provide nine new loan-level disclosures and expand two existing disclosures on its single-family fixed-rate mortgage and adjustable-rate mortgage (ARM) Participation Certificate (PC) securities.

The new loan variables will include the income, asset, and employment documentation type, original combined loan-to-value ratio, number of borrowers, “first-time homebuyer flag”, mortgage insurance percentage, MSA or Metropolitan Division, and original debt-to-income ratio.

Freddie’s expanded variables will specify if a loan was originated by a mortgage broker, correspondent lender, or a retail bank, and loan purpose will be made clear on refinance transactions to determine if there was any cash-out.

The enhanced disclosures will be available beginning in June for all newly issued PC securities and for PC securities issued on or after December 1, 2005.

The Third Party Origination (TPO) disclosure on all newly issued PC securities will begin no later than August 2008.

The hope is to bring a new level of transparency to a growing segment of the mortgage market as a greater number of loans are expected to be backed by the GSEs.

(photo: ebeth)

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