AWACSMortgage compliance intelligence from Flightline

Pennymac Correspondent · Correspondent Announcement 26-59 · Published

Pennymac Alignment with Freddie Mac Policy on Gifts of Equity

Pennymac has updated its underwriting guidelines to align with Freddie Mac Bulletin 2026-03 regarding gifts of equity. For principal residences and second homes, excess proceeds may be applied to pay down debt directly or curtail principal, but cannot be taken as cash back or used as reserves.

InformationalApplications dated on or after Jun 3, 2026Checks passed· adjusted automaticallyRead the announcement ↗ (opens in a new tab)

Loan impact

Summarized from the announcement · needs review

Applies to: Primary residences and second home mortgages with applications on or after June 3, 2026 utilizing a gift of equity.

Applies when all of these are true
  • ANDPennymac loan
  • ANDApplication date on or after June 3, 2026
  • ANDOccupancy is primary or second_home
Addressed to
Pennymac correspondent sellersFrom the publisher, not quoted from the text
Investor
PennymacFrom the publisher, not quoted from the text
Occupancy
Primary residence, second home
Affected area
Gifts
Effective
Applications dated on or after Jun 3, 2026
Applicability confidence
Needs review: some rows could not be matched to a quote from the source

Summary by AWACS. Pennymac Correspondent's guide is proprietary, so AWACS does not reproduce its text. Read the official announcement ↗ (opens in a new tab)

What changed

Summarized from the announcement
RequirementPreviouslyNow
Freddie Mac gift of equity policy alignmentClarifiedNot statedExcess equity gift proceeds can be used to pay off debts directly through the seller or applied to principal curtailment, but may not serve as reserves or cash back.

Each change applies when all the loan-impact conditions above are true.

What to do

AWACS interpretation · not source language

What to review: Review the updated alignment guidance allowing excess gift of equity proceeds on primary residences and second homes to be applied to debt payoff or principal curtailment while prohibiting cash back and reserves.

QC implications

  • Sample primary residence and second home files involving gifts of equity to verify that excess proceeds are only used to pay off debts directly or curtail principal, and are not applied toward reserves or received as cash back.

Source and record

Version 1 · archived

Checks

  • Source verified: Passed

    The document ID, link and publication date match the official source.

  • Quotes match the source: Passed

    Every quoted passage appears word for word in the official document.

  • Requirements backed by the source: Passed, adjusted automatically

    Anything marked required is backed by the requirement language and dates in the source.

    • A detail the source does not support was removed or adjusted

  • In scope: Passed

    The document is about residential mortgage lending.

  • Format and labels: Passed

    The record follows the AWACS format and uses its standard labels.