SAN DIEGO, Calif., January 24, 2023 – Mortgage Capital Trading, Inc. (MCT®), a leading mortgage hedge advisory and secondary marketing software firm, is pleased to announce it is the first secondary marketing platform to integrate with Freddie Mac’s Income Limits application programming interface (API) created for the first-time home buyer area median income (AMI) limits. Income Limits allow for the accurate pricing of Credit Fee in Price (Exhibit 19, or “Credit Fees”) waivers. This is the latest in a series of successful API integrations between MCT and Freddie Mac and helps promote both pricing transparency and housing affordability.
The API, a critical technological advancement for AMI-based pricing, allows the connecting party (either a lender or Secondary Markets Advisor (SMA)) to send income information and the property address through the API to return an answer on whether the borrower qualifies for the Credit Fees waiver. The API provides a more accurate confirmation than can be derived with a ZIP code estimation. The Credit Fees waiver is based on borrower income being less than 100% of AMI, and the API can also confirm whether the subject property is in a high-cost county, which allows for 120% of AMI. Other Duty to Serve elements are supported in this API, including rural and high needs rural areas.
“Freddie Mac continues to be incredibly responsive from a service standpoint for lenders and vendors, as well as from a capital markets technology standpoint,” said MCT COO, Phil Rasori. “Freddie Mac values relationships and rapid innovation, both of which have become more critical with affordability issues, due to high interest rates and home prices plaguing the mortgage industry despite the robust credit profiles of potential borrowers.”
As a refresher, a borrower’s annual qualifying income must be less than or equal to 80% of the AMI for the location of the mortgaged premises for the loan to be eligible under Freddie Mac Home Possible®, Freddie Mac’s flagship mortgage product. For Freddie Mac Refi PossibleSM mortgages, the borrower’s annual qualifying income must be less than or equal to 100% of the AMI for the location of the mortgaged premises for the loan to be eligible. The Federal Housing Finance Agency (FHFA) directive included a key piece on Credit Fees waivers for first-time home buyers in cases where borrower income was less than or equal to 100% of AMI in the subject property census tract or 120% of AMI for high-cost areas.
Previously, price differences and best execution were difficult and tedious to calculate for lenders, as the MSA census tract (which goes within the ZIP code) for the given property address had to be geocoded into the loan file. The AMI API returns eligibility automatically from Freddie Mac’s database after the subject property address and borrower income are entered, enabling lenders to accurately price Credit Fees waivers. This API is the latest in a series of enhancements to pricing, benefitting and incentivizing borrowers at a time when affordability in the housing market has waned.
MCT thanks Freddie Mac for bringing the Income Limits API to market in its Developer Portal, enabling MCT to be the first secondary market platform to put this API into production. As the most active user of the API, MCT is happy to offer this technology to clients, allowing for more accurate and transparent pricing which ultimately passes through to the borrower.
Founded in 2001, Mortgage Capital Trading, Inc. (MCT) has grown from a boutique mortgage pipeline hedging firm into the industry’s leading provider of fully integrated capital markets services and technology. MCT offers an array of best-in-class services and software covering mortgage pipeline hedging, best execution loan sales, outsourced lock desk solutions, MSR portfolio valuations, business intelligence analytics, mark to market services, and an award-winning comprehensive capital markets software platform called MCTlive! MCT supports independent mortgage bankers, depositories, credit unions, warehouse lenders, and correspondent investors of all sizes. Headquartered in San Diego, California, MCT also has offices in Philadelphia, Healdsburg, and San Antonio. MCT is well known for its team of capital markets experts and senior traders who continue to provide the boutique-style hands-on engagement clients love. For more information, visit https://mct-trading.com/ or call (619) 543-5111.