Freddie Mac Single-Family Seller/Servicer Guide §4301.6 — Special purpose cash-out refinance Mortgages (06/04/25)
Freddie Mac Guide §4301.6 (Special purpose cash-out refinance Mortgages). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §4301.6 — Special purpose cash-out refinance Mortgages (06/04/25) — 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 4301.6
(06/04/25) A special purpose cash-out refinance Mortgage is a cash-out refinance Mortgage where the owner of a property uses the proceeds to buy out the equity of a co-owner. A special purpose cash-out refinance Mortgage must meet the loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio requirements for cash-out refinance Mortgages in: ■ Section 5703.8(a) for Mortgages secured by a Manufactured Home ■ Section 4203.1(b) for all other Mortgages A special purpose cash-out refinance Mortgage must meet all requirements of the Guide that apply to cash-out refinance Mortgages, except as specifically modified below. This section contains requirements related to: ■ Allowable uses of proceeds from a special purpose cash-out refinance Mortgage ■ Special Borrower requirements ■ Documentation requirements ■ Credit Fees (a) Allowable uses of proceeds from a special purpose cash-out refinance Mortgage The loan amount of a special purpose cash-out refinance Mortgage is limited to amounts used to buy out the equity of the co-owner, which may include: ■ Paying off the first Mortgage, regardless of age ■ Paying off junior liens secured by the Mortgaged Premises. Note: The Borrower is not required to satisfy outstanding junior liens secured by the Mortgaged Premises if the requirements of Section 4204.1 for Mortgages with secondary financing and/or Section 4204.2 for Affordable Seconds®, are met. ■ Paying related Closing Costs (b) Special Borrower requirements The following requirements must be met:
Freddie Mac Guide 4301.6
301-12 ■ The Borrower and the co-owner receiving the buy-out proceeds must have jointly owned the property for a minimum of 12 months prior to the initial loan application. (Parties who inherited an interest in the property are exempt from this requirement.) ■ The Borrower and the co-owner receiving the buy-out proceeds must provide evidence that they occupied the subject property as their Primary Residence. (Parties who inherited an interest in the property are exempt from this requirement.) ■ The Borrower and the co-owner receiving the buy-out proceeds must provide a written agreement, signed by all parties, stating the property transfer terms of the property transfer and disposition of the refinance proceeds ■ The Borrower who retains sole ownership of the property may not receive any of the proceeds from the refinance transaction (c) Documentation requirements The Seller must retain the following in the Mortgage file: ■ Documentation evidencing that the Borrower and the co-owner jointly occupied the Mortgaged Premises as their Primary Residence, if applicable ■ A copy of the written agreement stating the terms of property transfer and the disposition of the refinance proceeds (d) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to special purpose cash-out refinance Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303.