Freddie Mac LPA risk class requiring manual underwriting for an otherwise eligible mortgage.
Caution is the non-favorable risk class returned by Freddie Mac’s Loan Product Advisor for a submitted mortgage file.
For a Caution mortgage to be eligible for sale to Freddie Mac, the lender must manually underwrite it under the applicable guide requirements and the mortgage must satisfy purchase eligibility and all other program rules.
Caution means the file does not qualify for the ordinary Accept automated-risk path as submitted. The lender needs a manual assessment of borrower creditworthiness and layered risk rather than relying on favorable automated relief.
It is not an automatic rejection. The LPA Feedback Certificate may identify messages that help the lender understand the result, correct inaccurate data, or determine whether a supported resubmission could change the risk class. If Caution remains, a manual path is possible only where the mortgage product, property, occupancy, and transaction permit it.
Purchase Eligibility remains separate. A Caution/Eligible file has a potential manual-underwriting route; Caution/Ineligible also has an eligibility problem that must be resolved.
Caution can appear during preapproval, formal underwriting, or after resubmission. The lender reviews the feedback certificate, verifies that application and credit data are complete, and examines the messages associated with the risk class.
The next step may be a supported correction and rerun, a change to the loan structure, manual underwriting, another program, or denial. Borrowers should ask which path is actually permitted rather than assuming that more documents alone will turn Caution into Accept.
| LPA combination | Practical meaning |
|---|---|
| Caution + Eligible | Non-favorable risk class, but the submitted mortgage appears purchase-eligible; manual underwriting is required for the Freddie Mac path |
| Caution + Ineligible | Manual credit review alone is not enough because a separate purchase-eligibility issue also exists |
| Accept + Eligible | Favorable automated risk class and eligible purchase status, subject to complete verification and lender review |
The feedback messages and current Freddie Mac requirements determine the work behind each combination.
A borrower has stable income but layered credit risks, and LPA returns Caution with Eligible purchase status. The selected product permits manual underwriting.
The underwriter applies the manual credit, ratio, reserve, and documentation rules and reviews any compensating factors. If the file meets those requirements and lender overlays, approval may still be possible. If the product required Accept, the lender would need another valid structure or program instead.
Accept is LPA’s favorable risk class. Caution requires the lender to use the applicable manual underwriting path for Freddie Mac eligibility.
Refer with Caution is a Fannie Mae DU recommendation, not an LPA label. Both can lead to manual review when permitted, but their system rules and output structures differ.
Ineligible is the separate LPA purchase-eligibility field. A mortgage can be Caution/Eligible or Caution/Ineligible.
Manual underwriting is the review method applied after Caution when the transaction allows it. Caution is the system result, not the manual decision.
A loan denial is the lender’s decision not to approve. Caution can contribute to that outcome but is not the decision itself.