TIP OF THE DAY- FREDDIE MAC GIFT AND GIFT OF EQUITY

TIP OF THE DAY- FREDDIE MAC GIFTS AND GIFTS OF EQUITY

 

Asset type and eligibility requirements

Streamlined Accept and Standard Documentation requirements

1. Gift funds or a gift of equityGift funds or a gift of equity is an eligible source of funds for a Mortgage secured by a Primary Residence or second home provided that:

·         The funds are from a Related Person, and

·         The funds do not have to be repaid

When a Mortgage is secured by a second home and the LTV/TLTV/HTLTV ratio is greater than 80%, the gift is permitted only if the Borrower has made a Down Payment of at least 5% from Borrower personal funds as described in Section 5501.3(b). Gift funds or gift of equity are not an eligible source of funds for Investment Property Mortgages.

Provide a gift letter signed by the donor. Information provided in the gift letter must:

 

·         State the donor's name and that the funds are given by a Related Person

·         Include the donor's mailing address and telephone number

·         State the amount of the gift funds or gift of equity

·         Establish that the gift funds or gift of equity are a gift that does not have to be repaid

Gift funds: If the verifications provided in the Mortgage file do not show evidence that the gift funds have been deposited in the Borrower's account, the Borrower must provide evidence of the transfer of funds from the donor to the Borrower.

Gift of equity: A gift of equity must be reflected on the Settlement/Closing Disclosure Statement

 

Related Person

A person that is any of the following:

·         The Borrower's spouse, child or dependent

·         An individual related to the Borrower by blood, marriage or adoption

·         A guardian of the Borrower

·         A person for whom the Borrower is a guardian

·         The Borrower's fiancée

·         The Borrower's domestic partner

justin brown