1. Loan Prospector®
Understanding the Feedback Certificate
August 2013
©2012 Genworth Financial, Inc. All rights reserved.

2. Loan Prospector
– Highlights Certain Credit Policy Updates
– Understanding the Recommendations
– Data Integrity Reviews
– Documentation Matrix
– Reminders
– Help Tools and Training
– Genworth Guidelines
Agenda
Today’s Session Covers Conventional Loans Only
1Loan Prospector

3. Bulletin 2011-04
2Loan Prospector
•Credit Policy Changes:
– Maximum LTV, TLTV and HTLTV to 95% for
all conventional Mortgages
– Short sale processing fees, buyer discount
fee or short sale buyer fees MUST be
considered and treated as sales concessions
NOT financing concessions as per Section
25.3
**LP has been updated to reflect these changes
http://www.freddiemac.com/

4. Bulletin 2011-04
3Loan Prospector
•Mortgage Eligibility:
– Sellers still must subtract “sales concessions”
from the sale price as per Chapter 44.3 and
44.15(f) of the Seller Guide.
– Appraisers still must provide market value
without regard to sales or financing concessions
and provide appropriate comparables.
http://www.freddiemac.com/

5. Bulletin 2011-7
4Loan Prospector
•Mortgage Eligibility:
– Amended asset documentation requirements to require a
gift letter to be signed by the donor in all cases of gift
money from a relative.
http://www.freddiemac.com/

6. Updates Bulletin 2011-15 ..
5Loan Prospector
•Highlights of the Bulletin:
– Removes the option of obtaining a letter from
an accountant to confirm use of business
assets will not have a detrimental impact on
the business (See Chapter 37.13(b) of the
Guide
– For a mortgage to qualify as an “owner
occupied” property, at least one borrower
must occupy the property as a primary
residence as of the delivery date. Effective
for mortgage with delivery dates on or after
Dec 1, 2011
http://www.freddiemac.com/

7. Updates Bulletin 2011-21
6Loan Prospector
•Mortgage eligibility and credit underwriting
(Effective February 15, 2012;Sellers may
implement immediately)
– Updated and provided additional guidance for
“employed” and “other” income.
– Borrower’s on Temporary Leave from current
employment.
– Adding guidance on retirement, survivor and
dependent benefits, long-term disability and social
security supplemental security income
– In some cases reducing the documentation for
history of recent.
– Adding verification of “type” of income by
requiring award letters.
– Change in Alimony, child support and
separate maintenance income requirements.
– Guide sections 37.13, 37.13(a), 37.13(c),
37.22 and 37.223 have been
reorganized/updated.
http://www.freddiemac.com/

8. Updates Bulletin 2011-25
7Loan Prospector
•Mortgage eligibility and credit underwriting
– Revised Section 24.6 Requirements for
Cash-out Refinances to allow a cash-out.
refinance mortgage when property was
purchased free and clear and borrower has
not been on title for at least six months.
– When obtaining subsequent opinions of
value, Sellers must rely on the most accurate
and supported opinion of market value
(which may require seller to rely on the lower
value appraisal) and comply with Exhibit 35.
– New Section 44.16 of the Seller Guide:
Reviewing Appraisal Reports, Obtaining
Subsequent Appraisal Reports and Field
Review Reports, and Reconciling Multiple
Opinions of Market Value.
http://www.freddiemac.com/

9. Updates Bulletin 2012-08
8
Eligibility and credit highlights:
– Updates requirements for borrower funds
– Chapter 26 re-titled “Borrower Funds” and
reclassified terminology for “Borrower Funds”
and “Other Borrower Funds”
– Eliminates use of proceeds from Cash Out
Refinance as reserves.
– Retires Alt 97 Mortgage and all references
– Revises requirements for use of Mortgage
Credit Certificates (MCCs) See next slide..
– Credit policy changes are effective for
mortgages with settlements on or after
August 1, 2012.
Loan Prospector
http://www.freddiemac.com/

10. Mortgage Credit Certificates Change:
– What is an MCC? A certificate issued by certain state or local governments that
allow for a taxpayer to claim a tax credit for some portion of the mortgage interest
paid during the tax year.
– Freddie Mac is removing the requirement that is can only be used with Home
Possible Mortgages.
– Freddie Mac is removing requirement that is must be deducted from the housing
expense but can added to qualifying income.
– See the Seller Guide Chapter 37 for more information on the use and calculation
of MCC.
– Changes are effective August 1, 2012
Updates Bulletin 2012-08
9
http://www.freddiemac.com/
Loan Prospector

11. Updates Bulletin 2012-18 & 2012-22
10Loan Prospector

12. Bulletin 2012-21
11
•ARM Caps and Qualification Rates
– ARMS with initial periods of less than or equal to
5 years require they have Initial Caps and
Periodic caps that are less than or equal to 2%
or less
– ARM products with caps that exceed the above
will be retired.
– All ARMS with initial adjustment periods of five
years of less, ARMS with financed permanent
buydowns or ARM loans with temporary subsidy
buydowns must be qualified at the greater of the
note rate plus 2 or the fully indexed rate.
– LP will be updated July 14, 2013 with the
changes.
– Changes are effective for loans with settlement
dates of July 1, 2013 or after.
Loan Prospector
http://www.freddiemac.com/

13. Bulletin 2013-13
12
•ARM Caps and Qualification Rates
– ARMS with initial periods of less than or equal to
5 years require they have Initial Caps and
Periodic caps that are less than or equal to 2%
or less
Loan Prospector
http://www.freddiemac.com/

14. Industry Letter July 2, 2013
13
•Update to Industry Letter issued in May
•Changes for applications taken on or after
January 10, 2012
•Mortgages must be fully amortizing (no IO
or potential neg am)
•No terms >30 years
•Mortgages must not have total points &
fees in excess of 3% of the total loan
amount (or other limits as per CFPB final
rule)
Loan Prospector
http://www.freddiemac.com/sell/guide/bulletins/pdf/iltr070213.pdf

15. Loan Prospector Receives a “Request File” By:
– Importing your loan file from your loan origination system into Loan Prospector.
– Direct Data Entry of your loan file into Loan Prospector.
– A Link on Your Lender’s Website Allowing You to Import Your File Into Loan
Prospector.
– Seamless submission via your Loan origination system.
Loan Prospector the Process
Be familiar with your Loan Origination System And Any Mapping Issues
Your Interface May have With Loan Prospector
Loan Prospector 14

16. LP...The Process Continued
LP Returns a “Response File”:
– Documentation Checklist: Used to Help You Process/Document Your File…see example
on next slide
– Credit report: LP allows for several options for Credit Reports. In-file credit reports or Tri-
Merged Credit Report (If You Opted to Order a Tri-Merged Credit Report there is an
Additional Charge).
– Full Feedback Certificate
• Provides Information Used in Determining Final Approval Requirements As Well As Documentation
Requirements.
• Remember: The Feedback Certificate Is a “Recommendation” Not an Approval!
15Loan Prospector

17. LP...The Process Continued
– For Validation You May Use In-file Credit Reports Pulled Either Inside or Outside Loan
Prospector (In File Credit Reports Are the Default in LP) and three must be requested for
each borrower.
– You May Select to Order a Tri-merged Credit Report Either Through Loan Prospector or
through your LOS or Credit Vendor.
– For Validation You May Use Either of These Tri-merged Credit Reports (verify your
investor requirements if it’s other than Freddie Mac). There is an additional Charge for
merged reports issued through LP.
– All credit reports Must Be in the Closed Loan Package, even the LP in-files that may not
have been used for underwriting purposes.
– LP Views Name and address, Social Security, Public Records/Disputed Items and Credit
Scores on the in File Credit Reports.
– LP DOES NOT Read the Tri-merged or the Trade Lines on Any Type Credit Report.
16Loan Prospector
Check with your Investor - Many Require Use of Tri-Merged Reports Only

18. Credit Report Options for LP
17Loan Prospector
LP Defaults to Infile Credit Reports
– Lenders can order or reissue merged
reports for additional fees
– Document provide detailed instructions on
how to order or reissue credit reports
– Verify with investor what type of report is
required

19. LP Functionality Guide June 2013
18Loan Prospector
http://freddiemac.com/learn/qr.html
– Refer originators or LP users to
Freddie Mac’s website for help with
common questions or data entry
issues.

20. 19Loan Prospector
Risk Factors Used By Loan Prospector

21. Sample Loan Prospector Doc Checklist
20Loan Prospector

22. Sample LP Feedback Certificate
21Loan Prospector

23. Loan Prospector “Risk Class”
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24. 23Loan Prospector
The Risk Classes
•Risk Classes for:
•Conventional / Conforming Loans
–ACCEPT
–CAUTION

25. Loan Prospector “Documentation Level”
24Loan Prospector

26. 25
Documentation Level
Loan Prospector
Documentation Levels for Conventional Conforming Loans
– Streamlined Accept (Generally The Rule of One…).
– Standard (Generally The Rule of Two) Documentation for this level will
vary depending on the Risk Recommendation provided by Loan Prospector:
For Example: If loan recommendation is Accept, A-Minus eligible, or Caution
different documentation rules apply.
– Also Investor Documentation Overlays may apply
See the Freddie Mac Conventional Conforming Documentation Matrix for
Specific Documentation Requirements

27. 26Loan Prospector
Documentation Matrix
– Updated June 2013
– Assists in properly documenting the file per
the LP feedback certificate.
– Overlays may apply if you sell loans to an
investor other than Freddie Mac.
http://www.freddiemac.com/learn/qr.html

28. Documentation Matrix
27Loan Prospector
Loan Prospector Documentation Matrix is broken out by Topic AND by
Documentation Level (Streamlined Accept or Standard)

29. Credit and Liabilities (page one of matrix)
28Loan Prospector
Documentation Matrix

30. Credit and Liabilities (page two of matrix)
29Loan Prospector
Documentation Matrix

31. 30
The Loan Prospector Documentation Matrix reminders Sellers Of Common Credit
Policy Requirements
Loan Prospector
Documentation Matrix
– Regardless of the Risk Classification
any evidence of a short sale must be
considered a significant and adverse
derogatory event.
– Lenders must apply the appropriate
policies manually.
– (page three of matrix)

32. Follow Freddie Mac Policy as stated in Seller Guide, Chapter 37.16.2
and the Rental Income Matrix (page three of matrix)
– Seller Guide Details Guidelines depending on the pending disposition of the
current primary residence.
Sale or Conversion of Primary Residence
31Loan Prospector

33. Follow Freddie Mac Policy as stated in Seller Guide, Chapter 37.16.2
and the Rental Income Matrix
– Conversion to rental property:
Sale or Conversion of Primary Residence
32Loan Prospector

34. Follow Freddie Mac Policy as stated in Seller Guide, Chapter 37.16.2
and the Rental Income Matrix
– Conversion to a Second Home:
Sale or Conversion of Primary Residence
33Loan Prospector

35. 34Loan Prospector
Calculation of Stable Monthly Income
The Matrix Gives What Section Of The Freddie Mac Seller Guide You Can Find More
Information.
Page four of matrix

36. 35Loan Prospector
Freddie Mac Requires A Two Year History For Commission, Bonus And Overtime
Income If Using For Qualification Purposes
Income Documentation Requirements
Page four of matrix

37. 36
Loan Prospector Does NOT Know When An Applicant Is Employed By A Family
Member, Property Seller Or Real Estate Broker. Apply These Guidelines Manually
Loan Prospector
Income Documentation Requirements
Page five of matrix

38. 37Loan Prospector
Income Documentation Requirements
Page six of matrix

39. 38Loan Prospector
Income Documentation Requirements
Page seven of matrix

40. 39Loan Prospector
Income Documentation Requirements
Page eight of matrix

41. 40Loan Prospector
Self Employment Requirements
Page eight of matrix
Sellers Must Indicate in LP When A Borrower Is Self-Employed In ALL cases

42. Form 91-Income Analysis form
41Loan Prospector
http://www.freddiemac.com/learn/uw/form_91.htm
l
Page seven of matrix

43. 42Loan Prospector
Self Employment Requirements
Page nine of matrix
Many Investors Have Overlays When It Comes To Self Employed Borrowers. Always
Follow The Applicable Credit Policy For Your Investor

44. 43Loan Prospector
Self Employment Requirements
Sellers Must Indicate in LP When A Borrower Is Self-Employed In ALL cases
Page nine of matrix

45. 44Loan Prospector
Other Income Requirements
Page ten of matrix

46. 45Loan Prospector
Income Documentation Requirements
Other income sources are addressed on pages 10-13 of the June 2013 matrix
Page 11 of matrix

47. Form 90-Verbal VOE
46Loan Prospector
Form 90 Is Available For Down Load At www.Freddiemac.com
Page 20 of matrix

48. 47Loan Prospector
Income Documentation Requirements
For Rental Income Requirements, See Rental Income Matrix Which Was Updated
October 2010
Page 13 of matrix

49. Rental Income Matrix
48Loan Prospector
•Updated October 2010
– Note that the sections with a bar
in margin are the “updates”.

50. 49
Rental Income Matrix
The Matrix Was Updated To Require Reserves Regardless Of The Use Of Rental
Income If Subject Property Of The Loan Is A 2-4 Unit Primary Or A 1-4 Unit Investment
Transaction
•Updated October 2010
– LP was updated December 19, 2010
to reflect the changes in reserve
requirements.
– See also Freddie Mac Bulletin 2010-23
for more information for recent
changes.
– Clarifies Freddie Mac policy when
rental properties have been undergoing
renovation.
Loan Prospector

51. Rental Income Matrix
50Loan Prospector
•Updates
– Reminds sellers to use rental income
to qualify from an investment property
the borrower must have a two year
history of owning and managing rental
properties…even under the
“Conversion of a Current Primary to an
Investment Property”. See Guide
Section 37.16.2 (c) and (d) for more
information.
– Leases alone are never used to
qualify.
The Matrix Was Updated To Require Two Year History Of Owning Rentals If You
Want To Use Rental income From A Recently Acquired “Other” Rental Property.
Leases Alone Are No Longer Acceptable

52. Rental Income Matrix
Notes
– Gift funds not allowed on investment
transactions.
– Use of boarder income for a single
family not allowed.
– Maximum of four financed properties
when subject of your loan is an
investment.
51Loan Prospector

53. 52Loan Prospector
Asset Requirements
Page 13 of matrix

54. 53Loan Prospector
Asset Requirements
Page 14 of matrix

55. 54Loan Prospector
Asset Requirements
Page 15 of matrix

56. 55Loan Prospector
Asset Requirements
Page 16 of matrix

57. 56Loan Prospector
Asset Requirements
Page 17 of matrix

58. Asset Requirements
57Loan Prospector
Assets Reminders
– Many assets require proof of liquidation if used for down payment or closing
costs.
• CD, Stock, bond, life insurance policies or retirement accounts
– Reserve requirements must be manually applied to LP loans.
• i.e. No reserves entered but the transaction type may still require reserves.
– Retirement accounts used for reserves entered at entered at 70% of the
vested amount.
• Terms of withdrawal is required.

59. 58Loan Prospector
Eligibility Requirements
Page 18 of matrix
Eligibility Requirements Updated with the June 2013 Matrix

60. 59Loan Prospector
Eligibility Requirements
Page 19 of matrix
Eligibility Requirements Updated with the June 2013 Matrix

61. Credit Processing Information
60Loan Prospector
•Read ALL Findings Report
Messages
– Ensure each message has been
cleared, documented or does not apply.
– Verification of all reserves entered into
LP is required or they must be removed
– Reserves may be required, verify per
the Seller Guide and product
requirements

62. Income/Employment Messages
61Loan Prospector
•Documentation “Level” Determines the documentation required
– Lenders are required to document self employed income even if not using the income to
qualify.
– Obtain individual tax returns to review for possible business losses and determine the
effect any possible business loss has on the qualifying income.

63. Asset Messages
62Loan Prospector
•Documentation “Level” Determines the documentation required
– Reserves must be verified if entered into LP.
– Accounts opened in the past 90 days must be sourced as well as all large deposits or
large increases in any asset account.
– Provide proof of liquidation as applicable for certain asset types.

64. Loan Processing/Delivery Fee Messages
63Loan Prospector
•General Processing and Delivery Fee Messages Appear
– Does the occupancy make sense?
– MI obtained in required coverage amount?
– Are sales/financing concessions within guidelines?

65. Loan Processing/Delivery Fee Messages
64Loan Prospector
Credit Report Processing Information
– Guidance when no payment listed or liability not on credit report
– Contingent liability requirements

66. Freddie Mac Purchase Eligibility
65Loan Prospector
•Review the Feedback Certificate for Purchase Eligibility Messages
– Freddie Mac Eligible
– Freddie Mac Ineligible
– Freddie Mac 500 A-minus Offering and Feedback Level and Purchase
Restrictions, If Applicable
Many lenders and MI companies do NOT allow for A-Minus loans to be
delivered or insured. Always check investor requirements.

67. Caution and A Minus Loans
Review the Credit Risk Comments
– For Caution and A- Loans, Be Sure to Review the Credit Risk Comments on the Feedback
Certificate.
66Loan Prospector

68. Caution Risk Class
67Loan Prospector
October 2010 www.FreddieMac.com/learn

69. LP HVE Estimate Now Available
68Loan Prospector
http://www.freddiemac.com/learn/qr.html

70. LP Updates HVE Estimate Now Available
69Loan Prospector
http://www.loanprospector.com/about/features/hve_results.html

71. HVE Message Guidance
70Loan Prospector
http://www.freddiemac.com/learn/pdfs/uw/hve_messages.pdf

72. New HVE Feedback Messages- Tips
71Loan Prospector
http://www.loanprospector.com/about/features/hve_results.html

73. HVE Message Guidance
72Loan Prospector
http://www.freddiemac.com/learn/pdfs/uw/hve_messages.pdf

74. HVE FAQs
73Loan Prospector
http://www.freddiemac.com/hve/faq.html

75. 74Loan Prospector
Verify all information and resubmit to LP as necessary

76. Always Remember
Data Submitted to LP Must Be, True, Correct, Accurate
– Support LP minimum documentation requirements as per the LP feedback
certificate.
– Meet any requirements not addressed within LP.
• Large Deposits, Sales Contract, Appraisal Issues, Etc.
– Meet any delivery requirements of the lender or MI Company, such as Fico
score, ratio restriction or appraisal form.
75Loan Prospector

77. Common Errors
Double Check Your Data. The Most Common Errors are:
– Social Security Number entered wrong
– Address Information Wrong
– Reserves entered in LP but NOT verified
– Property Type entered incorrectly (condo but entered as single family)
– HOA or Condo or PUD dues not included in DTI
– Liabilities omitted without supporting documentation
– Inquires not cleared as either a new account opened or no credit granted
(effective February 1, 2011)
– Estimation liability payments when documentation is required
– If any of the above data is incorrect, resubmission to LP is required
– MI required but MI guidelines not followed
76Loan Prospector

78. Always Remember
A Few Reminders:
– *Use 70% of the vested value of the borrower’s 401k, IRA, KEOGH, 403b or any
other IRS qualified plan as reserves (You must apply this percentage manually
then enter the correct amount into your system or LP).
– Ensure any loans are subtracted from value of the asset account and that your
applicant is fully vested.
– **Loans secured by a “Financial Asset” may be excluded from the debt
calculation ONLY if it was granted by a financial institution. It should always be
listed on the Form 1003/65.
– LP does not validate if your applicant has the required minimum percentage into
the transaction if LTV is > 80%. This is a manual verification.
– LP does not validate if the maximum seller paid fees have been exceeded. You
must validate this and it is now based off the TLTV.
77Loan Prospector
*Guide Section 37.22, 37.23
**Guide Section 37.16
See Loan Prospector Documentation Matrix Dated June 2013 And Rental Income
Matrix Dated October 2010 For More Details

79. Always Remember
A Few Reminders:
– Address items that Loan Prospector cannot see such as missing pages to bank
statement or unrealistic commute.
– All assets and reserves entered in Loan Prospector must always be verified or
removed (LP will not allow you to enter zero, you can use $1 for assets).
Regardless of the amount you enter, you must verify the funds for
closing/reserves on a purchase and effective May 1, 2011 on all refinances*).
– Collections are not required to be paid off by Freddie Mac but may be a
requirement of the lender.
– Tax Liens and judgments must be paid and funds to do so must be verified in
addition to the funds required to close.
– Investment transactions/rental income, refer to the Freddie Mac Rental Income
Matrix for requirements.
– LP does NOT have a maximum DTI but many investors and MI companies do
regardless of the AUS recommendation of “Accept”.
78Loan Prospector
See Loan Prospector Documentation Matrix Dated June 2013 And Rental Income
Matrix Dated October 2010 For More Details

80. Always Remember
A Few Reminders:
– If an applicant indicates they are Self Employed (25% or more ownership in a business),
you must indicate this in LP even if you are NOT using that income. See the
Documentation Matrix and the Feedback Certificate for additional information.
– Loans in deferment must be included in debt ratio. Obtain documentation to support the
payment amount used-no ESTIMATING unless that is your investor’s policy.
– If a revolving debt or open ended debt does not show a payment on the credit report ,you
are required to use 5% of the balance unless your investor has a different policy. You can
also get a copy of the statement evidencing a lower payment.
79Loan Prospector
See Loan Prospector Documentation Matrix Dated June 2013 And Rental Income
Matrix Dated October 2010 For More Details

81. 80Loan Prospector
Freddie Mac No Longer Allows For Delivery Of Any 97% LTV Loans, Including
The Home Possible Mortgage
Loan Product Data Entry Tip

82. Condo Job Aid
82Loan Prospector
http://www.freddiemac.com/learn/pdfs/uw/condo.pdf

83. Additional Resources and Help
83Loan Prospector
•Visit Freddie Mac’s Home Page www.freddiemac.com/singlefamily
– Single Family Loans: Resources for Sellers/Servicers
– Changes to Delivery Fees and Credit Requirements
– Guide Bulletins and Forms
– Allregs
– Mortgage Product Requirements
– Documentation and Rental Income Matrix
– Single Family News Email Sign up
– Freddie Mac Training
See Loan Prospector Documentation Matrix Dated June 2013 And Rental Income
Matrix Dated October 2010 For More Details

84. www.freddiemac.com
84Loan Prospector
www.freddiemac.com

85. Freddie Mac “Single-Family”
85Loan Prospector
www.freddiemac.com

86. The Learning Center
86Loan Prospector

87. Freddie Mac Quick References
87Loan Prospector
http://www.freddiemac.com/learn

88. Loan Prospector® Resource Center
88Loan Prospector
http://loanprospector.com/

89. Loan Prospector® Resource Center
89Loan Prospector
http://loanprospector.com/

90. Genworth Guidelines
Access Genworth website www.mortgageinsurance.genworth.com
• Click on rates and guidelines
90Credit Reports & Credit Scoring

91. 91Credit Reports & Credit Scoring

92. 92Credit Reports & Credit Scoring

93. Legal Disclaimer
Genworth Mortgage Insurance is happy to provide you with these training
materials. While we strive for accuracy, we also know that any discussion of laws
and their application to particular facts is subject to individual interpretation,
change, and other uncertainties. Our training is not intended as legal advice, and
is not a substitute for advice of counsel. You should always check with your own
legal advisors for interpretations of legal and compliance principles applicable to
your business.
GENWORTH EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO THESE MATERIALS AND THE RELATED TRAINING. IN NO
EVENT SHALL GENWORTH BE LIABLE FOR ANY DIRECT, INDIRECT,
INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND
WHATSOEVER WITH RESPECT TO THE TRAINING AND THE MATERIALS.
93©2012 Genworth Financial, Inc. All rights reserved.
®Loan Prospector is a Registered Trademark of Freddie Mac
® Desktop Originator/Desktop Underwriter (DO ® /DU ® ) are registered trademarks of Fannie Mae.