Freddie to Boost IO Fees, Tighten Appraisals

Freddie Mac is increasing its loan fees on interest-only mortgages starting Jan. 2 and tightening its rules on appraisals and streamlined refinancings involving "piggyback" loans. In a Freddie Mac Update, the secondary-market agency told lenders that it is planning several changes in loan pricing and credit requirements. Starting Jan. 2, Freddie will "no longer allow the new mortgages to pay off subordinated financing" in a streamlined refinancing of a piggyback loan. In purchasing loans on a flow basis, Freddie will require updated appraisals for loans delivered more than 120 days after origination. Seasoned mortgages sold more than 365 days after origination will no longer be purchased on a flow basis. Freddie will purchase those seasoned loans in bulk sales.