In 2013, due to instructions from the Federal Housing Finance Agency (FHFA), which were issued in connection with the new ATR/QM rules, Fannie Mae issued SEL-2013-06, which explained that they would cease to purchasing “loans with an interest-only feature”.
Freddie Mac followed with similar instructions in FHLMC Bulletin 2013-16, announcing that they would no longer purchase loans “that are not fully amortizing (e.g., Mortgages with a potential for negative amortizations or interest-only Mortgages)”.
Although these announcements were made several years ago, we refrained from modifying our associated FNMA and FHLMC Interest-Only Notes and Riders to remove the GSE information from the document footers, since it has been industry practice to continue using these GSE forms for custom Interest-Only programs, even though the forms are no longer available on the GSE websites. There was concern that removing the GSE Form number references could make it more difficult for clients to identify and utilize the appropriate IO Notes and Riders. Following a recent review, it has been decided that we should remove the phrase “Fannie Mae Uniform Instrument” and “Freddie Mac Uniform Instrument,” as well as any revision dates, from these retired GSE Interest-Only Notes and Riders. We will, however, preserve the GSE Form numbers in the footer, in order to facilitate continuity for custom IO programs based on the GSE forms.
The following Interest-Only Notes and Riders are being modified:
- 3271 Interest-Only Note Fixed Note (Cx299)
- 3531 Interest-Only Note ARM 1 Yr Treasury (Cx820)
- 3530 Interest-Only Note ARM 1 Yr WSJ LIBOR (Cx828)
- 3533 Interest-Only ARM Note (Cx3174)
- 5506 Freddie Mac Interest Only 1 YR Treasury A.L.L. (Cx4067)
- 5507 Freddie Mac Interest Only 1 YR Treasury A.I.P. (Cx4947)
- 3537 Multi 1 Yr LIBOR Ten-Year Interest Only Note (Cx6100)
- 3535 Multi 1 Yr LIBOR Ten-Year Interest Only Note (Cx6124)
- 3534 Multi 1 Yr Treasury Ten-Year Interest Only Note (Cx6125)
- 3536 Multi 1 Yr Treasury Ten-Year Interest Only Note (Cx616)
- 5106 1 Year Treasury Interest Only Rider ALL (Cx7649)
- 5107 1 Year Treasury Interest Only Rider AIP (Cx7650)
- 3152 1 Year Treasury 10 Yr Interest Only Rider (Cx9029)
- 3153 1 Year LIBOR 10 Yr Interest Only Rider (Cx9030)
- 3154 1 Year Treasury 10 Yr Interest Only Rider (Cx9031)
- 3155 1 Year LIBOR 10 Yr Interest Only Rider (Cx9032)
These changes will be in effect on December 4, 2019. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.