Freddie Mac Single-Family Seller/Servicer Guide §5303.4 — Automated income assessment using employed income data (12/17/25)
Freddie Mac Guide §5303.4 (Automated income assessment using employed income data). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §5303.4 — Automated income assessment using employed income data (12/17/25) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Guide 5303.4
(12/17/25) This section contains: ■ Overview ■ Eligible income types ■ Underwriting requirements ■ Data submission requirements, representation and warranty relief eligibility and documentation requirements ■ Closed Loans data submission requirements, representation and warranty relief eligibility and documentation requirements ■ Internal Revenue Service (IRS) Form 4506-C requirements (a) Overview Representation and warranty relief eligibility is contingent on the Seller’s compliance with all requirements as set forth in this section. (i) Automated income assessment Asset and income modeler (AIM) automated income assessment using employed income data, provides Sellers with the option to use certain Systems (as defined in Section 2401.1(b)) to determine whether the Seller is eligible for relief from enforcement of certain representations and warranties related to the Borrower’s income.
Freddie Mac Guide 5303.4
303-51 The Seller must obtain the Borrower’s employed income data and submit all required data and information to the applicable System. Based on the data submitted, the System will assess for representation and warranty relief eligibility and return the results of the assessment. (ii) Automated income assessment of Closed Loans Sellers with access to Freddie Mac’s application programming interface (API) for automated income assessment with Loan Product Advisor® using employed income data may submit data from a Closed Loan (an existing Mortgage in which the Seller/Servicer or a Related Third Party has a beneficial ownership interest as defined in Section 2402.2(b)(iii)) for assessment. If the Seller is eligible for income representation and warranty relief for a Closed Loan, the API response file will return a Portable Document Format (PDF) document indicating eligibility (the “AIM Payroll API R&W Assessment”). The Seller should contact its Freddie Mac representative or Customer Service at 800-FREDDIE to request Freddie Mac’s approval to submit Closed Loan data to the API. (b) Eligible income types The following tables describes income types that are eligible for an automated income assessment using employed income data: Eligible income types for an automated income assessment Eligible income types Ineligible employment/income characteristics Base non-fluctuating employment earnings, except military earnings (base, entitlements, reserve, National Guard) as described in Section 5303.1(c)(i). Earnings with the following employment/income characteristics as described in Section 5303.1(e) are not eligible for an automated income assessment using employed income data: ■ Earnings of a Borrower employed by a family member, the property seller, real estate broker or other interested party to the transaction ■ Employed income from foreign sources ■ Income reported on IRS Form 1099 for services The following fluctuating employment earnings as described in Section 5303.1(d): ■ Base fluctuating hourly employment earnings ■ Bonus
Freddie Mac Guide 5303.4
303-52 ■ Commission ■ Overtime performed ■ Borrowers with business ownership interest(s) less than 25% (c) Underwriting requirements (i) General underwriting requirements The Seller must have no knowledge, information or documentation that contradicts an expectation that the income will continue for at least the next three years. The Seller must confirm that the information on the third-party verification report (“verification report”) or paystub(s) and W-2 form(s) is for the correct Borrower and employer, and all employed income data must be in U.S. dollars. (ii) Temporary leave of absence In the event the Borrower has taken a temporary leave of absence from their employment: ■ When a verification report is obtained, the verification report must indicate that, as of the date of the verification report, the Borrower has returned to work ■ When the employed income data is from the Borrower’s paystub(s) and W-2 form(s), the Seller must maintain documentation in the Mortgage file showing the Borrower has returned to work (iii) Age of documentation For the age of the documentation: ■ When a verification report is obtained, the expiration date of the verification report reflected in feedback messaging on the Last Feedback Certificate complies with the requirement in Section 5102.4 ■ When the employed income data has been obtained from the Borrower’s paystub(s) and W-2 form(s), the paystub and W-2 must comply with the requirements in Section 5102.4(b)
Freddie Mac Guide 5303.4
303-53 (iv) Verification reports When a verification report is obtained, the method used to obtain the verification report must be an automated process where the employed income data is accessed directly from an electronic database of employer-provided income information. The employed income data on the verification report cannot be obtained from a written, verbal or e-mail verification of income performed by the service provider. (d) Data submission requirements, representation and warranty relief eligibility and documentation requirements (i) Data submission requirements The Seller must submit the most current employed income data to the applicable System. If after the initial submission, the Seller obtains an updated verification report, paystub(s) or W-2 form(s), the Seller must resubmit the employed income data. For Loan Product Advisor submissions, the Seller must submit the income amount used to underwrite the Mortgage. When a verification report is submitted to Loan Product Advisor, the Seller must investigate and resolve any inconsistent or contradictory information between the verification report, information contained in Form 65, Uniform Residential Loan Application (including the Borrower’s income and employment representations), and the Mortgage file and, if applicable, resubmit the correct information to Loan Product Advisor (ii) Representation and warranty relief results on Feedback Certificate If multiple Loan Product Advisor submissions are made, Seller’s eligibility for representation and warranty relief will be based on the results on the Last Feedback Certificate.
Freddie Mac Guide 5303.4
303-54 When income representation and warranty eligibility results are provided on the Last Feedback Certificate, the representation and warranty relief available is described in the following table: Income representation and warranty relief based on Feedback Certificate result Eligibility result Representation and warranty relief Eligible The Seller is relieved from enforcement of the following representations and warranties: 1. Accuracy of the income calculation related to eligible income types on the verification report or paystub(s) and W-2 form(s), and 2. Accuracy and integrity of the data on the verification report Note: The Seller is not relieved from the representations and warranties related to the accuracy and integrity of the data when obtained from the Borrower’s paystub(s) and W-2 form(s). Partial When partial income representation and warranty relief is granted for a source(s) as confirmed by the feedback message, the Seller is relieved from enforcement of the following representations and warranties: 1. Accuracy of the income calculation related to eligible income types on the verification report or paystub(s) and W-2 form(s), and 2. Accuracy and integrity of the data on the verification report Note: The Seller is not relieved from the representations and warranties related to the accuracy and integrity of the data when obtained from the Borrower’s paystub(s) and W-2 form(s). Not eligible The Seller is not eligible for relief from enforcement of representations and warranties related to the Borrower’s income. Exception: The Seller is relieved from enforcement of representations and warranties related to the Borrower’s income when a message is returned on the Freddie Mac Income Calculator Certificate indicating such relief. See table below titled “Representation and warranty relief
Freddie Mac Guide 5303.4
303-55 Income representation and warranty relief based on Feedback Certificate result Eligibility result Representation and warranty relief based on Freddie Mac Income Calculator Certificate result”. Unavailable The Seller is not eligible for relief from enforcement of representations and warranties related to the Borrower’s income. Exception: The Seller is relieved from enforcement of representations and warranties related to the Borrower’s income when a message is returned on the Freddie Mac Income Calculator Certificate indicating such relief. See table below titled “Representation and warranty relief based on Freddie Mac Income Calculator Certificate result”. (iii) Documentation requirements based on representation and warranty relief result on Feedback Certificate When income representation and warranty eligibility results are provided on the Last Feedback Certificate, the documentation requirements are described in the following table: Documentation requirements based on representation and warranty relief result on Feedback Certificate Eligibility result Income documentation requirements Eligible The Seller must maintain in the Mortgage file, as applicable: ■ Submitted verification report, if obtained ■ Paystub(s) and W-2 form(s) except when a verification report is obtained ■ Last Freddie Mac Income Calculator Certificate, if obtained Paystub and W-2 documentation must meet the requirements of Section 5302.2. When there are multiple income sources and one or more is eligible for income representation and warranty relief, for the income source(s) not eligible for representation and warranty relief,
Freddie Mac Guide 5303.4
303-56 Documentation requirements based on representation and warranty relief result on Feedback Certificate Eligibility result Income documentation requirements the Seller must either: 1. Verify and document the income as required by the Guide, or 2. Remove the income and resubmit the Mortgage to Loan Product Advisor Partial The Seller must maintain in the Mortgage file, as applicable: ■ Submitted verification report, if obtained ■ Paystub(s) and W-2 form(s), except when a verification report is obtained ■ Last Freddie Mac Income Calculator Certificate, if obtained Paystub and W-2 documentation must meet the requirements of Section 5302.2. When there are multiple income sources and one or more income sources are needed to qualify the Borrower, document the income source(s) as required by the feedback messages. Not eligible The income must be verified and documented as required by the Guide. Unavailable The income must be verified and documented as required by the Guide. (iv) Representation and warranty relief results on Freddie Mac Income Calculator Certificate When income representation and warranty eligibility results are provided on the Freddie Mac Income Calculator Certificate, the representation and warranty relief available is described in the following table:
Freddie Mac Guide 5303.4
303-57 Income representation and warranty relief based on Freddie Mac Income Calculator Certificate result Eligibility result Representation and warranty relief Eligible The Seller is relieved from enforcement of the representation and warranty for the accuracy of the income calculation related to each eligible income type that is on the paystub(s) and W-2 form(s). Not eligible The Seller is not eligible for relief from enforcement of representations and warranties related to the Borrower’s income. (v) Documentation requirements based on representation and warranty relief result on Freddie Mac Income Calculator Certificate When income representation and warranty eligibility results are provided on the Freddie Mac Income Calculator Certificate, the documentation requirements are described in the following table: Documentation requirements based on representation and warranty relief result on Freddie Mac Income Calculator Certificate Eligibility result Income documentation requirements Eligible The Seller must maintain in the Mortgage file: ■ The Freddie Mac Income Calculator Certificate reflecting the calculated income amount for each income source used to underwrite the Mortgage ■ Paystub(s) and W-2 form(s) Paystub and W-2 documentation must meet the requirements of Section 5302.2. When there are multiple income sources and one or more is eligible for income representation and warranty relief, for the income source(s) not eligible for representation and warranty relief, the Seller must verify and document the income as required by the Guide.
Freddie Mac Guide 5303.4
303-58 Documentation requirements based on representation and warranty relief result on Freddie Mac Income Calculator Certificate Eligibility result Income documentation requirements Not eligible The income must be verified and documented as required by the Guide. (e) Closed Loans data submission requirements, representation and warranty relief eligibility and documentation requirements (i) Closed Loans data submission requirements For Closed Loans with an automated income assessment, the Seller must: ■ Submit the employed income data used in the last Loan Product Advisor submission to the API for an automated income assessment using employed income data, and ■ Investigate and resolve any inconsistent or contradictory information between employed income data, information contained in Form 65 (including the Borrower’s income and employment representations) and the Mortgage file (ii) Representation and warranty relief provided on the AIM Payroll API R&W Assessment The AIM Payroll API R&W Assessment will only be returned when the Closed Loan is eligible for income representation and warranty relief. When the AIM Payroll API R&W Assessment indicates the Closed Loan is eligible for income representation and warranty relief, the Seller is relieved from enforcement of representation and warranty for the accuracy of the income calculation related to eligible income types described in Section 5303.4(b) that are on the paystub(s) and W-2 form(s). (iii) Documentation requirements based on representation and warranty relief result on AIM Payroll API R&W Assessment
Freddie Mac Guide 5303.4
303-59 When the AIM Payroll API R&W Assessment indicates the Closed Loan is eligible for income representation and warranty relief, the Seller must maintain in the Mortgage file all of the following: ■ AIM Payroll API R&W Assessment ■ Paystub(s) ■ W-2 form(s) For income source(s) submitted to Loan Product Advisor that are not eligible for representation and warranty relief, the Seller must verify and document the income as required by the Guide. (f) IRS Form 4506-C requirements For Mortgages using employed income data obtained from paystub(s) and W-2(s), the IRS form 4506-C documentation requirements for Section 5302.5 apply. For Mortgages that receive an income representation and warranty result of either “Eligible” or “Partial” with a feedback message indicating that no further documentation is required for the income reflected on the verification report, if all the income of a Borrower is from an eligible income type described in Section 5303.4(b) and is on the verification report, the Seller does not need to obtain the following: ■ A signed IRS Form 4506-C (or an alternate form acceptable to the IRS that authorizes the release of comparable tax information to a third party), or ■ A signed Commonwealth of Puerto Rico Form 2907 or Form 4506-C (or an alternate form that authorizes the release of comparable tax information to a third party) for income that is derived from sources in Puerto Rico, Guam or the U.S. Virgin Islands and is exempt from federal income taxation under the Internal Revenue Code