Freddie Mac Age of Tax Returns and Living Trust Assets in 2026

Freddie Mac's guidelines on the age of tax returns and living trust assets are critical for mortgage brokers to understand, particularly with the recent updates to the Freddie Mac Seller/Servicer Guide (via Bulletin 2026-4). These changes aim to simplify documentation requirements, but brokers must still navigate them carefully to ensure compliance and avoid file conditions. Here is how these updates affect the age of tax returns and living trust asset documentation.

What are the updated requirements for the age of tax returns?

Freddie Mac's updated guidance in Chapter 5302 of the Single-Family Seller/Servicer Guide clarifies the age of tax returns required for mortgage qualification. As of 2026, the most recent tax returns can be no older than the previous calendar year. For example, if the Note Date is November 15, 2026, the tax returns must be from 2025 or later. This standard applies regardless of any tax filing extensions or IRS deadline relief.

Brokers must ensure that the tax returns are the most recent filed with the IRS. This means obtaining IRS confirmation if tax transcripts are not yet available and documenting any IRS tax filing extensions using forms like IRS Form 4868 for individual returns and IRS Form 7004 for business returns.

How do these changes impact living trust assets?

When it comes to living trust assets, Freddie Mac's Chapter 5501.3 provides specific guidelines. Accounts held in the name of a living trust are considered owned by the borrower if the borrower is the settlor of the trust. This ownership is crucial for asset qualification, as it ensures that the borrower has access to the funds necessary for loan qualification.

The updated guidelines also specify that at least one borrower who is an account owner must be at least 62 years old. Additionally, the borrower must have unrestricted access to withdraw funds, minus any portion pledged as collateral. This ensures that the assets can genuinely support the borrower's financial standing.

What documentation is required for living trust assets?

To document living trust assets, brokers must provide:

• An account statement covering a one-month period or a direct account verification.
• Evidence that the borrower owns the security if no stock/security account statement is available.
• Verification of the asset's value using stock prices from a financial publication or website.

These documentation requirements ensure that the borrower's assets are accurately assessed and can be used to support the mortgage application.

What are the implications for brokers?

Understanding these updates is crucial for brokers to streamline the mortgage process and reduce the likelihood of conditions or delays. By ensuring that tax returns are current and that living trust assets are properly documented, brokers can facilitate smoother transactions and enhance borrower satisfaction.

Brokers should also be aware of the need to resolve any inconsistencies in tax return information. According to Chapter 5306, the seller must investigate and resolve any contradictory information in the income calculation report or mortgage file. This diligence helps maintain the integrity of the loan application and prevents potential issues during underwriting.

Practical takeaways for brokers

1. Verify Tax Return Currency: Ensure that tax returns are from the most recent calendar year and obtain IRS confirmations if necessary.
2. Document Living Trust Assets: Provide clear documentation of living trust assets, including account statements and verification of ownership.
3. Resolve Inconsistencies: Investigate and resolve any inconsistencies in tax return information to prevent underwriting issues.
4. Educate Borrowers: Inform borrowers about the importance of timely tax return filings and accurate asset documentation to facilitate a smooth mortgage process.

By adhering to these updated guidelines and implementing these practical steps, brokers can enhance their operational efficiency and improve the mortgage experience for their clients.

For more on agency mortgage guidelines, see the Agency Guidelines hub.

This article is for informational purposes only and is not professional advice. Always verify against current guidelines before making decisions.