Mortgage Rate Relief FAQs

Pair-Off Calculation

• How will an extension fee be calculated?

  Example: Mortgage Rate Relief price 5.125 at -6.805

  Based on the days left in the DC, look at the current price for Traditional non-Mortgage Rate Relief at 5.125. If at pair-off that price is -7.205, the difference would be 40.

  The price is worse by 40 bps ($100,000. X .0040 = $400.00).

  MPF will compare the price at pair-off to the price when locked in for the same note rate, based on the days left in the delivery commitment.

  Discount pricing (negative) will work the opposite of premium pricing. If the price today is worse (more negative), there will be a pair-off fee. The fee will be based on the difference in pricing multiplied by dollar amount remaining in the DC.

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Extension Fees

• How much would an extension cost for 15 days vs 30 days assuming a single coupon option in the system, with a single price (i.e. pricing not moving with rates)?

  The extension fee can be determined using the eMPF website. From the “Transactions” tab, select “Delivery Commitment” and enter the existing DC number. Select “Extend” and follow the screen prompts; the system will provide the extension fee. You will have the opportunity to accept the fee, extend or cancel if you do not wish to complete the transaction.

  The actual calculation/algorithm is quite complex.

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Mortgage Rate Relief Income Requirements

• What are the income requirements for the Mortgage Rate Relief product?

  A: Mortgage Rate Relief Product requires that all income for the occupying persons on title be at or below 80% of the FHFA AMI. 

  All income includes verifiable income that could have been used to qualify for the loan but was not.

  View Income Decision Tree

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• Can I exclude a spouse to make the loan Mortgage Rate Relief eligible?

  No, the intent of the program is to make homeownership available to those with income at or < 80% FHFA AMI.

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• Does the number of household occupants impact how the 80% AMI will be determined?

  No, household size is not a factor used for the Mortgage Rate Relief Product.

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• When there are multiple occupants, which occupants’ income must meet the Mortgage Rate Relief income requirements?

  Here are a few scenarios:

  Two occupants, both on title, both must be on the loan	All income of both occupant title holders must meet the Mortgage Rate Relief income requirements.
  Two occupants, only one on title. Only the title holder is on the loan.	All income for the occupant on title must meet The Mortgage Rate Relief income requirements.
  Two occupants, and a non-occupant co-borrower, all three on title.	All income for the two occupants on title and the income used to qualify the loan for the non-occupant title holder must meet the Mortgage Rate Relief income requirements.
  Two occupants, both on title and a non-occupant co-borrower, only the two occupants are on title.	All income for the two occupants on title and the income used to qualify the loan for the non-occupant non-title holder must meet the Mortgage Rate Relief income requirements. Since the non-occupant non-title holder is on the loan, their income used to qualify the loan, must be included in the Mortgage Rate Relief income calculation.
  There three occupants, mother, father, and adult son/daughter with income.  Mother and father are on title, son/daughter not on title.	All income for both the occupants on title (mother & father) must meet the Mortgage Rate Relief income requirements.
  Non-married couple, both occupy the home, one on the loan and on title.	Only the occupant, title holder on the loan’s income must meet the Mortgage Rate Relief income requirements.
  On a purchase transaction with 2 purchasers signing the contract and will be on title; however, only one borrower is credit-qualifying. Does the other party’s income need to be taken into consideration?	This would not qualify for the Mortgage Rate Relief Product. If they are both on title they both need to be on the loan and both incomes must meet the Mortgage Rate Relief income requirements.

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• Is a borrower with a commission job eligible for Mortgage Rate Relief?

  If income is below the AMI limit, there is no history of commission (it’s a new job) and you are not using commission to qualify the loan, then the borrower would be eligible.

  For example: the borrower just started a new commission job which comes with a guaranteed draw of $72,000 + commission. The borrower has the potential to earn more than the AMI limit of $82,000, but they don’t have a history of earning the commission. This borrower would be eligible for Mortgage Rate Relief.

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• If a borrower is purchasing a two-unit dwelling, should rental income be considered when determining if the borrower is at or below 80% of the FHFA AMI?

  Yes, if the unit is currently rented use the income from the rental agreement. If not rented, use the rental income from the appraisal.

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• What rental income do I use - the full amount or the rent less the payment?

  Use the net amount that flows through from the REO section of the application.

  Rental Income                         $2,700

  Rental Mortgage Payment    $1,500

  Taxes and Insurance              $400       

  ---

  Net Rental Income                 $800

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• Should the income of an adult dependent (i.e. parent) who is not on title be included?

  No, do not include the adult dependent’s income when determining if the income meets the Mortgage Rate Relief requirements.

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• Can a borrower who has more than 20% equity on a refinance choose to waive the escrows?

  Follow the escrow waiver requirements found in the MPF Traditional Guides 2.2.1.2.

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• A borrower has recently started a new second job. How will we calculate income since we generally do not count this income for loan qualification?

  Only the income that could be used for loan qualification must be used to determine if the Mortgage Rate Relief requirements are met.

  You would not count the part-time job that could not be used to underwrite the loan.

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• How do we omit borrower income from a previous second job where the borrower is no longer employed? Would a Letter of Explanation (LOX) be sufficient?

  There should be a previous VOE in the loan file with the previous secondary employer confirming the borrower is no longer employed. A LOX is not sufficient.

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• A borrower didn’t disclose that they have secondary employment on their application but the employment is discovered through a QC audit after the loan is funded via tax transcripts. What happens to the loan?

  If the loan does not qualify due to the additional undisclosed income, this would be a repurchase. It is the PFI’s responsibility to satisfy that you are including all income. While not required, we would advise to obtain tax transcripts during the underwriting process of the loan to avoid this type of situation.

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• May I have someone at MPF review my borrower’s income today?

  MPF does not review income for mortgage loans prior to purchase.

  Could your underwriter review it for you?

  The bottom line with Mortgage Rate Relief is to include ALL qualifiable income even if the loan does not require all income for a loan approval (e.g. part-time job or rental income from an investment property).

  View all Mortgage Rate Relief FAQs

• For the program total income calculation, are there going to be parameters as to what documentation is required?

  For underwriting the loan, follow normal underwriting guidelines.

  • If there is income that could have been used to underwrite the loan, but was not needed/used, this type of income will be used to determine if the loan meets the Mortgage Rate Relief requirements.
  • You need documentation to satisfy yourself that you are including all income for the owner/occupants, and the income meets the Mortgage Rate Relief requirements.
  • There is not a requirement on tax transcripts for qualifying income for the Mortgage Rate Relief product; however, if the loan is selected for QC we will need to have tax transcripts.

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Mortgage Rate Relief Master Commitments

• Will only one MC will be issued per PFI?

  Correct, a PFI must choose between the MPF original OR the 125 products. One MC will be issued for $10M.

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• Will all Mortgage Rate Relief MCs expire on December 31, 2024?

  Mortgage Rate Relief loans must be purchased by MPF on or before 3:30 PM CT on 12/31/2024.

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• Will Mortgage Rate Relief funds be available until the 12/31/24 MC expiration date?

  On September 16, 2024,  FHLB Des Moines will allocate a second round of voluntary funding in the amount of $6 million to subsidize the Mortgage Rate Relief product (buydown funds plus the 2%). This is in addition to the $25 million that was allocated in the Spring of 2024. 

  The second round allocated funds for the MRR product could be depleted prior 12/31/24, depending on usage by other PFIs.

  FHLB Des Moines will monitor the delivery commitments daily and notify PFIs prior to the depletion of the allocated funds. 

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• Will FHLB Des Moines increase the amount of allocated funds for the Mortgage Rate Relief product?

  It is undetermined at this time and will be evaluated by our senior management and the Board of Directors in the future.

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• The Mortgage Rate Relief “maximum CE” is 4.5%, but the maximum for a standard Traditional MC is 3.5%. Should we not be originating any MPF loans over 3.5%?

  At the MC level we set the maximum CE obligation allowed. Some loans will be higher, some will be lower. Overall, we are looking for a weighted average at the MC level.

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General Mortgage Rate Relief Questions

• If the borrower is a first-time homebuyer, do they need to go through any home-owner education?

  No, first-time homebuyer education is not required to be eligible for the Mortgage Rate Relief product. If other grant funds are also being used, they may require first-time homebuyer education.

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• Can Fannie Mae DU be used to determine eligibility for the MRR product?

  When using DU, follow the DU findings with the normal MPF overlays (MPF Traditional Selling Guide 4.2.1).

  For a manual underwrite, follow the MPF Traditional Selling Guide.

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• If we are using an automated underwriting system, would we have to show it as an Affordable Housing loan to recognize the income limits?

  You can use AUS. Run as a regular conventional loan, at the current Mortgage Rate Relief rate. Do not mark it as a special product, Affordable Housing or buydown. This is not a Fannie or Freddie loan; this is FHLB Des Moines and will be on our books. As far as AUS, it is a normal conventional loan at a lower interest rate.

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• Is there a minimum credit score requirement, or is it whatever a DU “Approve” or LPA “Accept Eligible” decision allows?

  620 is the minimum credit score for MPF Traditional conventional loans, including the Mortgage Rate Relief product. The 620 applies to loans approved by DU, LPA or a manual underwrite.

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• There are 2 different qualifying incomes and 2 different DTI ratios – one to qualify for FHFA AMI, and the other for loan qualifying purposes. Which income and DTI ratio will be input on the Loan Presentment?

  Loan presentment will use the information used to qualify for the loan. The only qualification for the Mortgage Rate Relief Product is income. Income must be at or below 80% of the FHFA AMI. DTI or TDTI ratios are not considered for the Mortgage Rate Relief Product (only income).

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• Newrez (F/K/A SLS) bases the SRP on the Note rate, the Mortgage Rate Relief note is lower than the Newrez SRP schedule. What SRP would be used?

  Use the lowest note rate on the SRP schedule.

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• How will Mortgage Rate Relief be disclosed on the closing disclosure?

  Borrower disclosures are not affected by Mortgage Rate Relief; grant is disbursed to the PFI, not to borrower.

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• How do the funds come to us? We have both MPF Xtra loans and MPF Traditional loans.

  The Mortgage Rate Relief applies only to the MPF Traditional product. It will be in the funding of the loan. 

  There will be a fourth line reflected in your eAdvantage DDA indicating “Permanent Buydown” (or something similar). It will reimburse you the agent fee/discount and also pay the 2% agent fee.

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• The Mortgage Rate Relief product pricing will yield the PFI a 2% agent fee. Our goal is to make 2% on MPF originations so we could waive our 1% origination fee for the Mortgage Rate Relief product.

  The Mortgage Rate Relief Product will include 2% points to the PFI for loan origination in addition to providing the funds to pay the cost of the buydown. We have no issue with a 1% origination fee being waived.

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• How are we notified when the rate for Mortgage Rate Relief will change?

  Each eMPF user will receive an email notification when the rate  for MRR changes. The website will also be updated with the new rate.

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• If using DU or LPA, can we accept an appraisal waiver under the Mortgage Rate Relief program?

  The FHLB Des Moines does accept the appraisal waiver for both DU and LPA. This applies to the MPF Traditional product and the MPF Traditional Mortgage Rate Relief product.

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• Is manufactured housing eligible for delivery using the Mortgage Rate Relief Product?

  Yes, follow the MPF Traditional guides on manufactured housing.

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• Does the Mortgage Rate Relief product follow the MPF Traditional guidelines?

  Yes. Remember when using AUS, follow the AUS feedback taking into account the MPF AUS overlays found in the MPF Traditional Selling Guide 4.2.1.

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• What should we do if our Product Pricing Engine is kicking it back if LTV is above 74%.

  Reach out to your Product Pricing Engine to resolve this issue.

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• What does FHLB Des Moines require to document a borrowing spouse (on the loan, title, and contract) who does not have any income?

  Follow normal underwriting documentation.

  The application will show the spouse not employed or as a homemaker. Tax returns will support that. Document the file to support how you arrived at the Mortgage Rate Relief income calculation.

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FHFA AMI Table

• Where can I find the AMA table?

  Using your user ID and password, sign into the eMPF website. The AMA table is on the homepage, lower right-hand side of the screen.

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• Does eMPF use the same AMI Table as Fannie and Freddie?

  Yes, we do.

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• How often do the FHFA AMI numbers change?

  The FHFA AMI is updated once a year. It was last updated around May 13, 2024.

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• What if the county AMI is lower from the time we started the application?

  In that case we will honor the AMI table in effect at the time of the delivery commitment.

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Mortgage Rate Relief Delivery Commitments

• What do I need to know about Mortgage Rate Relief DCs?

  As with all DCs, the DC information should be carefully reviewed:

  a. at the point you are ready to confirm the DC, and;

  b. upon the receipt of the DC confirmation.

  If you notice an error, immediately resolve the issue yourself (pair-off and relock) or contact the MPF Service Center for assistance.

  Contact info: 877-345-2673  |  mpf-help@fhlb.com

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• The DC confirmation for Mortgage Rate Relief should show one rate, why am I seeing multiple rates?

  Using the wrong sub-product will result in the DC displaying the normal rate spread tolerances. Two things are important when locking a loan:

  1. Use the correct MC number.

  2. Use the correct sub-product code of “Fixed 30 YR Permanent Buydown.”

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• What if I used the wrong MC number for a Mortgage Rate Relief Loan?

  This should be paired off and relocked with the correct MC number.

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• What if I put a non-Mortgage Rate Relief loan in a Mortgage Rate Relief MC?

  It can stay in the MC; it will lower the Mortgage Rate Relief Product funds available. The other option would be to pair-off and relock in the correct MC number.

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• What if I didn’t use the sub-product of “Fixed 30 YR Permanent Buy-down?”

  The DC will need to be paired off and relocked using the correct MC and sub-product code.

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