Freddie Mac Single-Family Seller/Servicer Guide Section 4302.8 — Credit Fees

Freddie Mac Single-Family Seller/Servicer Guide Section 4302.8 — Credit Fees

4302.8: Credit Fees (05/04/22) The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to Refi Possible® Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4303 As of 10/02/19 Page 4303-1 Chapter 4303: Freddie Mac Relief Refinance MortgagesSM – Open Access Effective October 2, 2019, Chapter 4303 is deleted. 4303.1: Freddie Mac Relief Refinance MortgagesSM – Open Access (10/02/19) Effective October 2, 2019, Section 4303.1 is deleted. 4303.2: Freddie Mac Relief Refinance MortgagesSM – Open Access: Eligibility requirements, eligible Mortgages and ineligible Mortgages (10/02/19) Effective October 2, 2019, Section 4303.2 is deleted. 4303.3: Requirements for Freddie Mac Relief Refinance MortgagesSM – Open Access (10/02/19) Effective October 2, 2019, Section 4303.3 is deleted. 4303.4: Delivery and pooling requirements for Freddie Mac Relief Refinance MortgagesSM – Open Access (10/02/19) Effective October 2, 2019, Section 4303.4 is deleted. 4303.5: Credit Fees in Price and other assessments and credits for Freddie Mac Relief Refinance MortgagesSM – Open Access (10/02/19) Effective October 2, 2019, Section 4303.5 is deleted. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4303 As of 10/02/19 Page 4303-2 4303.6: Other Guide provisions related to Freddie Mac Relief Refinance MortgagesSM – Open Access (10/02/19) Effective October 2, 2019, Section 4303.6 is deleted. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4304 As of 09/01/21 Page 4304-1 Chapter 4304: Freddie Mac Enhanced Relief Refinance® Mortgages 4304.1: General eligibility requirements for Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. 4304.2: Underwriting Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. 4304.3: Minimum and maximum LTV, TLTV and HTLTV ratios for Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. 4304.4: Borrower eligibility for Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4304 As of 09/01/21 Page 4304-2 4304.5: Additional underwriting requirements for certain Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. 4304.6: Incentives and contributions for Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. 4304.7: Property eligibility and valuation for Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. 4304.8: Mortgage insurance and credit enhancements for Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. 4304.9: Cash adjustor under fixed-rate Cash for Freddie Mac Enhanced Relief Refinance® Mortgages (09/01/21) Enhanced Relief Refinance® Mortgages with Application Received Dates on or after July 1, 2021 and all Enhanced Relief Refinance Mortgages with Settlement Dates after August 31, 2021 are not eligible for delivery until further notice. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4305 As of 03/04/26 Page 4305-1 Chapter 4305: Purchase Transaction Mortgages 4305.1: General requirements for all purchase transaction Mortgages (02/04/26) This section contains requirements related to: ■ Purchase transaction definition ■ Cash back or principal curtailment on purchase transaction Mortgages (a) Purchase transaction definition A purchase transaction Mortgage is a Mortgage for which the proceeds are used for one of the following: ■ Acquire the Mortgaged Premises ■ Acquire the Mortgaged Premises and finance improvements to the property as permitted under the Seller’s Purchase Documents ■ Pay off the Interim Construction Financing in accordance with the requirements of Chapter 4602 for Construction to Permanent Mortgages and Renovation Mortgages ■ Pay off the outstanding balance under a land contract or contract for deed in accordance with requirements of Chapter 4404 (b) Cash back or principal curtailment on purchase transaction Mortgages (i) Permissible cash back or principal curtailment The Borrower may receive cash back, or a principal curtailment may be made, only as a result of the following: ■ Reimbursement for the overpayment of costs, fees and charges paid by the Borrower in connection with the purchase transaction Mortgage. Examples of such overpayments may include: ❑ An earnest money deposit exceeding the required Down Payment amount ❑ A fee paid at loan application that is covered by a financing concession (as described in Section 5501.6(b)) at loan closing Freddie Mac Single-Family Seller/Servicer Guide Chapter 4305 As of 03/04/26 Page 4305-2 ❑ A Closing Cost that is reduced after closing ❑ Gift funds given at loan closing and exceeding the amount needed for closing ■ In jurisdictions where real estate taxes are paid in arrears, receipt of funds from the property seller for real estate taxes that cover a period prior to the Note Date ■ Refunds mandated by federal laws or regulations (ii) Required documentation Any cash back or principal curtailment, as described above, must be reflected on the Settlement/Closing Disclosure Statement. In instances of reimbursement for the overpayment of costs, fees and charges, and/or refunds mandated by federal law or regulation, the Mortgage file must include documentation supporting the amount and the reason for the reimbursement and/or refund. (iii) Impact of cash back on minimum Borrower contribution The minimum Borrower contribution, if applicable, must be met at closing as described in: ■ Section 5501.3(k) for certain Mortgages secured by second homes, Mortgages secured by Investment Properties and Mortgages with shared equity plans ■ Section 4501.7 for Home Possible® Mortgages ■ Section 4504.7(a) for HeritageOne® Mortgages If the projected cash back, as described above, results in the Borrower not meeting the minimum Borrower contribution at closing, the excess amount of the cash back must be applied as a principal curtailment. 4305.1: General requirements for all purchase transaction Mortgages (Future effective date 06/03/26) This section contains requirements related to: ■ Purchase transaction definition ■ Overpayment of costs, fees and charges ■ Gifts funds or gift of equity exceeding the amount needed for closing Freddie Mac Single-Family Seller/Servicer Guide Chapter 4305 As of 03/04/26 Page 4305-3 ■ Required documentation ■ Impact of cash back on minimum Borrower contribution (a) Purchase transaction definition A purchase transaction Mortgage is a Mortgage for which the proceeds are used for one of the following: ■ Acquire the Mortgaged Premises ■ Acquire the Mortgaged Premises and finance improvements to the property as permitted under the Seller’s Purchase Documents ■ Pay off the Interim Construction Financing in accordance with the requirements of Chapter 4602 for Construction to Permanent Mortgages and Renovation Mortgages ■ Pay off the outstanding balance under a land contract or contract for deed in accordance with requirements of Chapter 4404 (b) Overpayment of costs, fees and charges The Borrower may receive cash back, or a principal curtailment may be made, as a reimbursement for the overpayment of costs, fees and charges paid by the Borrower. Examples of such overpayments may include: ■ An earnest money deposit exceeding the required Down Payment amount ■ A fee paid at loan application that is covered by a financing concession (as described in Section 5501.6(b)) at loan closing ■ A Closing Cost that is reduced after closing Additionally, the Borrower may receive cash back, or a principal curtailment may be made, as a result of the following: ■ In jurisdictions where real estate taxes are paid in arrears, receipt of funds from the property seller for real estate taxes that cover a period prior to the Note Date ■ Refunds mandated by federal laws or regulations (c) Gift funds or gift of equity exceeding the amount needed for closing Gift funds exceeding the amount needed for closing may be: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4305 As of 03/04/26 Page 4305-4 ■ Disbursed to the Borrower as cash back, which includes pay off or pay down of the Borrower’s debt, and/or ■ Applied as a principal curtailment A gift of equity exceeding the amount needed for closing may only be: ■ Used to pay off or pay down the Borrower’s debt at closing when paid by the property seller to the creditor, and/or ■ Applied as a principal curtailment (d) Required documentation Any cash back, pay off or pay down of debt or principal curtailment, as described above, must be reflected on the Settlement/Closing Disclosure Statement. In instances of reimbursement for the overpayment of costs, fees and charges, and/or refunds mandated by federal law or regulation, the Mortgage file must include documentation supporting the amount and the reason for the reimbursement and/or refund. (e) Impact of cash back on minimum Borrower contribution The minimum Borrower contribution, if applicable, must be met at closing as described in: ■ Section 5501.3(k) for certain Mortgages secured by second homes, Mortgages secured by Investment Properties and Mortgages with shared equity plans ■ Section 4501.7 for Home Possible® Mortgages ■ Section 4504.7(a) for HeritageOne® Mortgages If the projected cash back, as described above, results in the Borrower not meeting the minimum Borrower contribution at closing, the excess amount of the cash back must be applied as a principal curtailment. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4401 As of 11/05/25 Page 4401-1 Chapter 4401: ARMs 4401.1: General ARM eligibility requirements (11/05/25) This section contains information related to: ■ Eligible ARM products ■ Common requirements for all ARM products ■ ARM Note Rate change requirements ■ Credit Fees for ARMs (a) Eligible ARM products Freddie Mac will purchase rate-capped ARMs that have an Initial Period followed by subsequent Note Rate adjustments. The following table shows, for each eligible ARM product, the applicable Initial Period and the subsequent periodic adjustments: Initial Periods and periodic adjustments for eligible ARM Products Eligible ARM product Initial Period Periodic adjustments (subsequent to the Initial Period) 3/6-Month ARM 36 months 6 months 5/6-Month ARM 60 months 7/6-Month ARM 84 months 10/6-Month ARM 120 months Note: See Section 4401.1(c) for first Interest Change Date requirements. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4401 As of 11/05/25 Page 4401-2 Only an ARM with an Initial Period of 5, 7 or 10 years is eligible for sale to Freddie Mac as a Higher-Priced Mortgage Loan and Higher-Priced Covered Transaction. See the Glossary and Section 4202.2(b) for additional information. Note: Exhibit 17S, Available Mortgage Products, provides a consolidated summary of certain information contained in this chapter regarding eligible ARM products. (b) Common requirements for all ARM products (i) Index ARMs are subject to periodic Note Rate adjustments based on the value of an Index at a specified time, as set forth in the Note. Only ARMs that use the 30-day Average SOFR Index are eligible for purchase by Freddie Mac. (ii) Lookback Period The time interval for establishing the Index value is referred to as the Lookback Period, and all eligible ARM products have a 45-day Lookback Period. (iii)Due Date The Due Date must occur on the first day of the month. (iv) Payment Change Date The Payment Change Date must occur on the first day of the month following each Interest Change Date. (v) Calculation of monthly payment amount The monthly payment amount that is calculated following each Interest Change Date must be sufficient to amortize the UPB fully over the remaining term of the ARM. (vi) Margin The Margin must be equal to or greater than 100 basis points and less than or equal to 300 basis points. (vii) Lifetime Ceiling The Lifetime Ceiling must equal the sum of the Note Rate at origination plus the Life Cap stated in the Note, as described in Section 4401.1(c). Freddie Mac Single-Family Seller/Servicer Guide Chapter 4401 As of 11/05/25 Page 4401-3 (viii) Lifetime Floor For ARMs with Lifetime Floors, the Lifetime Floor must equal the Margin stated in the Note, as specified in Section 4401.1(c). (ix) Title insurance requirements The Seller must provide title insurance in accordance with Chapter 4702. (c) ARM Note Rate change requirements ARMs eligible for purchase by Freddie Mac must comply with the requirements of this section regarding the timing of, and Periodic Caps for, Interest Change Dates and how Note Rate adjustments are made and disclosed. Note Rate adjustments must comply with the terms of the Note and with applicable law. (i) Interest Change Date Each Interest Change Date, stated in the Note, must occur on the first day of the month. After the first Interest Change Date, subsequent interest changes occur every 6 months. The following table shows when the first Interest Change Date must occur: First Interest Change Date by eligible ARM product Eligible ARM product First Interest Change Date 3/6-Month ARM 36 months after the Due Date of the first payment 5/6-Month ARM 60 months after the Due Date of the first payment 7/6-Month ARM 84 months after the Due Date of the first payment 10/6-Month ARM 120 months after the Due Date of the first payment (ii) Calculation of adjustments Refer to Section 8502.2 for requirements related to determining Note Rate changes on ARMs. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4401 As of 11/05/25 Page 4401-4 (iii)Limits on Note Rate adjustments Each ARM Note must specify limits on the periodic adjustments (the Lifetime Ceiling, the Lifetime Floor and the Periodic Cap) to the Note Rate. The Note Rate may not exceed the Lifetime Ceiling or be less than the Lifetime Floor, which must equal the Margin as required by Section 4401.1(b). The Note Rate at the first Interest Change Date may not exceed the value of the Note Rate at origination plus the Initial Cap or be less than the value of the Note Rate at origination minus the Initial Cap. Adjustments on subsequent Interest Change Dates are subject to the Periodic Cap. (iv) Applicable caps for eligible ARM products All eligible ARM products have (in percentage points) a Periodic Cap of 1% and a Life Cap of 5%. The following table shows (in percentage points) the applicable Initial Cap for ARM products eligible under ARM Cash and WAC ARM Guarantor program: Applicable Initial Cap, Periodic Cap and Life Cap by ARM product Eligible ARM product Initial Cap Periodic Cap Life Cap 3/6-Month ARM 2% 1% 5% 5/6-Month ARM 2% 7/6-Month ARM 5% 10/6-Month ARM 5% (d) Credit Fees for ARMs The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to certain ARMs. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4401 As of 11/05/25 Page 4401-5 4401.2: Underwriting requirements for ARMs (07/02/25) This section contains information related to: ■ Special ARM qualifications ■ ARM qualifying rates ■ Buydowns (a) Special ARM qualifications For 3/6-Month ARMs and 5/6-Month ARMs, the initial Note Rate cannot be more than three percentage points below the fully indexed rate. (b) ARM qualifying rates The following table provides the minimum Borrower qualification requirements for each eligible ARM product. Borrower qualifying rate requirements by ARM product SOFR ARM product Borrower qualified at no less than the: 3/6-Month ARM1 Note Rate + Life Cap (5%) 5/6-Month ARM1 Greater of the Note Rate plus two percentage points or the fully indexed rate2 7/6-Month ARM 10/6-Month ARM ■ Note Rate for Mortgages that are not Higher-Priced Covered Transactions (HPCTs) or Higher-Priced Mortgage Loans (HPMLs) ■ Greater of the Note Rate or the fully indexed rate2 for Mortgages that are HPCTs or HPMLs 1The qualifying rate must, at a minimum, equal the maximum interest rate that may apply during the first 5 years after the first payment Due Date. If the ARM qualifying rate requirements above are more restrictive, those requirements must be satisfied. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4401 As of 11/05/25 Page 4401-6 2For purposes of this section, the fully indexed rate is the sum of the Margin plus a value of the applicable Index (at any time within 90 days preceding the Note Date), rounded to the nearest one-eighth of 1% (0.125%). (c) Buydowns For ARMs that are Financed Permanent Buydown Mortgages and ARMs with temporary subsidy buydown plans, the Borrower must be qualified in accordance with the requirements of this section. For additional buydown provisions related to ARMs, refer to Section 4204.3 for ARMs with temporary subsidy buydown plans and Chapter 4601 for Financed Permanent Buydown Mortgages. 3/6-Month ARMs are not eligible as Financed Permanent Buydown Mortgages or ARMs with temporary subsidy buydown plans. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-1 Chapter 4402: Seller-Owned Converted Mortgages and Seller-Owned Modified Mortgages 4402.1: Common requirements for Seller-Owned Converted Mortgages and Seller-Owned Modified Mortgages (02/04/26) This section contains information related to: ■ Eligible Mortgages ■ Special underwriting requirements ■ Special documentation requirements ■ Property value warranty requirements ■ Condominium, leasehold estate and Planned Unit Development (PUD) warranty requirements ■ Mortgage insurance requirements ■ Form 1077, Uniform Underwriting and Transmittal Summary ■ Title insurance ■ Quality control (a) Eligible Mortgages (i) Requirements related to the Mortgage prior to conversion or modification Prior to conversion or modification, the Mortgage must have had the following characteristics: ■ The Mortgage must have been secured by a First Lien on a 1- to 4-unit Primary Residence; if the Mortgage is a Home Possible® Mortgage it must have been secured by a 1-unit Primary Residence Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-2 ■ The occupancy type of the Mortgaged Premises must not have changed since the Note Date or since the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage ■ The Mortgage met all Freddie Mac’s eligibility and underwriting requirements on the Note Date or on the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage ■ The loan-to-value (LTV), total LTV (TLTV) and Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios did not exceed the limits in Section 4203.1(b) or, for Home Possible Mortgages, Section 4501.7 as of the Note Date or as of the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage ■ The principal balance of the Mortgage has not increased since the Note Date or since the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage, and the loan amount of the Mortgage prior to modification or conversion did not exceed the maximum loan amount in Section 4203.1(c) in effect on the Note Date. The Mortgage may not be a super conforming Mortgage (as described in Chapter 4603). ■ The Mortgage was not in default and meets the requirements in Section 4201.6 ■ The Mortgage was a conventional, fully amortizing Mortgage, with an original amortization term no greater than 30 years from the date that is one month before the first payment Due Date as described in Section 4201.3 ■ The Mortgage was not an interest-only Mortgage prior to conversion or modification (ii) Requirements for the Seller-Owned Converted Mortgage or Seller-Owned Modified Mortgage A Seller-Owned Converted Mortgage or Seller-Owned Modified Mortgage must have the following characteristics: ■ The Mortgage meets all Freddie Mac’s eligibility and underwriting requirements in effect on the Delivery Date ■ The current LTV, TLTV and HTLTV ratios do not exceed the limits in Section 4203.1(b) or, for Home Possible Mortgages, Section 4501.7 as of the Delivery Date. The current ratios are calculated by dividing the UPB of the Mortgage as of the Delivery Date by the value as defined in Section 4203.1(a). ■ The Mortgage must comply with the maximum original loan amounts stated in Section 4203.1(c) in effect on the Settlement Date. The Mortgage may not be a super conforming Mortgage as described in Chapter 4603. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-3 ■ The Seller may not have assessed a prepayment penalty in connection with the conversion or modification of the Mortgage ■ The Borrowers are the same as the Borrowers on the Mortgage prior to conversion or modification, except that a Borrower who contributed no qualifying income, assets or reserves may have been removed ■ The Mortgage is a conventional, fully amortizing Mortgage and the Mortgage term may not extend beyond 30 years from the date that is one month before the first payment Due Date as described in Section 4201.3 A Mortgage originated as a Construction to Permanent Mortgage or Renovation Mortgage is a Seller-Owned Modified Mortgage if all of the following conditions are met: ■ The terms of the Permanent Financing have been modified or, for an ARM, converted to a fixed-rate Mortgage after the Effective Date of Permanent Financing ■ The Mortgage meets the requirements of this Chapter 4402 ■ The Mortgage is not secured by a Manufactured Home (b) Special underwriting requirements The following special underwriting requirements apply to Seller-Owned Modified Mortgages that are not Home Possible Accept Mortgages and to Seller-Owned Converted Mortgages: ■ Except as modified by this chapter, the Seller is required to manually underwrite and requalify each Borrower using Freddie Mac’s eligibility and underwriting requirements in accordance with Topics 5100 through 5500 in effect as of the Delivery Date ■ A Seller-Owned Converted Mortgage or Seller-Owned Modified Mortgage is not eligible to be submitted to Loan Product Advisor® for assessment ■ The Seller-Owned Converted Mortgage or Seller-Owned Modified Mortgage will not receive any representation and warranty relief relating to the assessment of the Mortgage through Loan Product Advisor, and any previous relief provided is of no force and effect in connection with the Mortgage The following special underwriting requirements apply to all Seller-Owned Converted Mortgage and Seller-Owned Modified Mortgages: ■ The Seller-Owned Converted Mortgage or Seller-Owned Modified Mortgage eligibility and underwriting requirements must be based on the loan purpose as of the Note Date Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-4 ■ The Mortgage must comply with the minimum Indicator Score requirements in Exhibit 25, Mortgages with Risk Class and/or Minimum Indicator Score Requirements, for an applicable Mortgage product and must meet the requirements of Topics 5100 through 5500. If no Borrower has a usable Credit Score and, as a result, the Mortgage does not have an Indicator Score, the Mortgage is not eligible for purchase. Home Possible Mortgages must be either Manually Underwritten Mortgages or Loan Product Advisor Accept Mortgages. (c) Special documentation requirements The Seller must maintain in the Mortgage file: ■ All documentation required as of the Note Date or as of the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage ■ All documentation associated with the conversion or modification of the Mortgage ■ The payment history of the Mortgage for the 12-month period prior to the Delivery Date (or the full length of the payment history, if less than 12 months) documented by a new credit report or a Servicer-generated payment history ■ Credit, employment and income documentation required to requalify each Borrower in accordance with the Standard Documentation requirements in Topic 5300 for the Seller- Owned Converted Mortgage or Seller-Owned Modified Mortgage, including, but not limited to: ❑ New Uniform Residential Loan Application ❑ New credit report meeting the requirements of Section 5203.1 ❑ Verification of income and employment Exception: This requirement does not apply to Seller-Owned Modified Mortgages that are Home Possible Mortgages. ■ Any other documentation required as of the Delivery Date (e.g., the Indicator Score). If Freddie Mac required a minimum Indicator Score for the Mortgage at time of origination, the Seller must note this Indicator Score in addition to the Indicator Score required for delivery under this chapter on Form 1077. Underwriting documentation must be dated no more than 120 days prior to the modification or Conversion Date. (d) Property value warranty requirements Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-5 The following requirements must be met regarding the valuation of the Mortgaged Premises: ■ The Seller must provide a new appraisal with an effective date no more than 120 days prior to the modification or Conversion Date ■ The appraisal must meet Freddie Mac requirements ■ The Seller warrants that the property value has not declined since the effective date of the most recent appraisal if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage ■ The new appraisal must not be used to determine the original LTV, TLTV and HTLTV ratios for the Mortgage or the current LTV, TLTV and HTLTV ratios as of the Delivery Date (e) Condominium, leasehold estate and Planned Unit Development (PUD) warranty requirements For Mortgages secured by Condominium Units, the Seller must underwrite the Condominium Project and, based on such evaluation, represent and warrant that the Condominium Project complies with the requirements in Chapter 5701. Mortgages secured by leasehold estates must meet the special warranties in Chapter 5704 as applicable. Mortgages secured by PUDs must meet the special warranties in Chapter 5702 as applicable. (f) Mortgage insurance requirements The following are mortgage insurance requirements for Seller-Owned Converted Mortgages and Seller-Owned Modified Mortgages: ■ For a Mortgage that had an LTV ratio greater than 80% on the Note Date or on the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage and has a current LTV ratio greater than 80%, the required level of mortgage insurance coverage will be determined by the requirements in the Guide as of the Note Date or as of the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage ■ The Seller is not required to increase existing mortgage insurance coverage to comply with Section 4701.1 if Freddie Mac’s minimum coverage amounts have increased between the (i) Note Date or the Effective Date of Permanent Financing if the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage, and (ii) Delivery Date Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-6 ■ The Seller/Servicer must warrant that conversion or modification has not altered or impaired the coverage under the mortgage insurance policy. If the Seller/Servicer cannot warrant that the insurance policy has not been impaired, the Seller/Servicer must obtain an endorsement that brings the policy into compliance with the requirements of Section 4701.1. ■ Lender-paid mortgage insurance is permitted ■ The custom mortgage insurance option described in Section 4701.1 and financed mortgage insurance premiums described in Section 4701.2(a) are not permitted (g) Form 1077 On Form 1077, or on another document in the Mortgage file, the Seller must state that the Mortgage is a Seller-Owned Converted Mortgage or a Seller-Owned Modified Mortgage. If applicable, Seller must state that the Mortgage was originated as a Construction to Permanent Mortgage or Renovation Mortgage. (h) Title insurance The Mortgage must meet the title insurance requirements of Chapter 4702. The Seller/Servicer must warrant that conversion or modification has not altered or impaired coverage under the title insurance policy or attorney’s opinion of title. (i) Quality control If the Mortgage is selected for Freddie Mac’s post-funding quality control, the Seller/Servicer must provide both the original underwriting file and the underwriting file required to requalify the Borrower at the time of conversion or modification. 4402.2: Special requirements for Seller-Owned Converted Mortgages (05/07/25) This section contains: ■ Eligibility requirements ■ Delivery requirements Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-7 (a) Eligibility requirements The following are requirements related to Mortgage eligibility for Seller-Owned Converted Mortgages: ■ A Community Land Trust Mortgage is not eligible for sale as a Seller-Owned Converted Mortgage ■ A HeritageOne® Mortgage is not eligible for sale as a Seller-Owned Converted Mortgage ■ A Mortgage secured by property subject to income-based resale restrictions that terminate upon foreclosure (or expiration of any applicable legally required foreclosure redemption period) or recordation of a deed-in-lieu of foreclosure where the property value must be determined in accordance with Section 4406.4(c) is not eligible for sale as a Seller-Owned Converted Mortgage ■ A Mortgage with a temporary subsidy buydown plan is not eligible for sale as a Seller- Owned Converted Mortgage. If the original Mortgage included a temporary subsidy buydown, any remaining funds in the buydown account at time of conversion must be distributed in accordance with the buydown agreement. ■ The Seller must warrant that all the original Note and Security Instrument terms for converting the Mortgage to a fixed rate of interest have been met ■ The Seller-Owned Converted Mortgage Note must be negotiable, and the entire indebtedness must be fully enforceable against the Borrower and secured by a First Lien on the Mortgaged Premises ■ The Seller-Owned Converted Mortgage Note must have a fixed rate of interest with level monthly principal and interest payments ■ A fully enforceable due-on-sale clause, such as contained in Freddie Mac’s current fixed- rate Uniform Instruments, must be in effect after conversion to fixed rate (b) Delivery requirements See Section 6302.19 for delivery and pooling requirements for Seller-Owned Converted Mortgages. 4402.3: Uniform Instruments and nonstandard documents for Seller-Owned Converted Mortgages (02/04/26) This section contains requirements related to: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-8 ■ Original Security Instrument and Convertible Adjustable Rate Rider ■ Original Convertible Adjustable Rate Note ■ Seller-Owned Converted Mortgages originated as a Construction to Permanent Mortgage or Renovation Mortgage The original convertible ARM may have been originated using Uniform Instruments in accordance with Section 4101.2 or nonstandard documents. Documentation for the Seller-Owned Converted Mortgage should consist of the following: ■ The original Security Instrument and Convertible Adjustable Rate Rider; and ■ A document evidencing the conversion of the ARM to a fixed-rate Mortgage; the conversion document must be recorded if necessary to establish that the Seller-Owned Converted Mortgage is a First Lien. The Seller may use the Freddie Mac Multistate Agreement to Convert, Freddie Mac Uniform Instrument Form 3180, to evidence the ARM conversion. If the Seller uses a loan instrument other than the Agreement to Convert, the Seller represents and warrants that the instrument, when completed, contains substantially identical provisions to the Freddie Mac Agreement to Convert and is appropriate for use to evidence the conversion of the Convertible ARM; and ■ Either: ❑ The original Convertible Adjustable Rate Note with the document evidencing the conversion attached, or ❑ A new fixed-rate Note If a new Note is executed, the Seller must use the Fannie Mae/Freddie Mac Fixed-Rate Note as required by Section 4101.2. If the Seller-Owned Converted Mortgage is documented with the original documents and a document evidencing the ARM conversion, the following requirements apply. (a) Original Security Instrument and Convertible Adjustable Rate Rider The original Security Instrument and Convertible Adjustable Rate Rider must be either: ■ The version of the Fannie Mae/Freddie Mac Uniform Security Instrument for the State in which the Mortgaged Premises is located in effect on the Note Date, with either the Fannie Mae or Freddie Mac Uniform Convertible Adjustable Rate Rider, or ■ A nonstandard document that contains provisions comparable to the provisions of the version of the Fannie Mae/Freddie Mac Uniform Security Instrument in effect on the Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-9 Note Date for the State in which the Mortgaged Premises are located, including the provisions relating to: ❑ Default and foreclosure rights ❑ The use of hazard insurance proceeds, condemnation and hazardous waste ❑ No waivers of homestead rights, dower or similar marital rights ❑ Matters that affect the security for the Mortgage, including charges and liens and property preservation ❑ Borrower Mortgage payment and escrow obligations ❑ Rights of the lender in the event of Borrower bankruptcy (b) Original Convertible Adjustable Rate Note The original Convertible Adjustable Rate Note must be either: ■ The applicable version of the Fannie Mae or Freddie Mac Uniform Convertible Adjustable Rate Note in effect on the Note Date, or ■ A nonstandard Convertible Adjustable Rate Note, provided the Convertible Adjustable Rate Note contains provisions that are consistent with the provisions in the Fannie Mae or Freddie Mac Convertible Adjustable Rate Note for ARMs originated on the Note Date. The Seller must review the Convertible Adjustable Rate Note for consistency, including the provisions relating to the following, and determine that: ❑ The late payment fee does not exceed the maximum fee allowed by State law and the Guide ❑ There are no provisions allowing skipped payments, a grace period following a partial payment or a grace period for other hardship or other reasons ❑ There are no waivers of homestead rights, dower or similar marital rights (c) Seller-Owned Converted Mortgages originated as a Construction to Permanent Mortgage or Renovation Mortgage For a Seller-Owned Converted Mortgage that was originated as a Construction to Permanent Mortgage or Renovation Mortgage, the conversion of Interim Construction Financing to Permanent Financing must have occurred prior to the conversion from a Convertible ARM to a fixed-rate Mortgage and must have been documented in accordance with Chapter 4602. The conversion from a Convertible ARM to a fixed-rate Mortgage must be documented in accordance with this section. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-10 4402.4: Special requirements for Seller-Owned Modified Mortgages (05/07/25) This section contains information related to: ■ Overview ■ Ineligible Mortgages ■ Special requirements ■ Delivery requirements (a) Overview Unless specifically made applicable to Seller-Owned Modified Mortgages, negotiated underwriting provisions in the Seller’s Purchase Documents do not apply to Seller-Owned Modified Mortgages and cannot be used with Seller-Owned Modified Mortgages. (b) Ineligible Mortgages A Seller-Owned Modified Mortgage may not have been originated as: ■ A Mortgage using an Automated Valuation Model (AVM) ■ A HomeOne® Mortgage ■ A Community Land Trust Mortgage ■ A HeritageOne® Mortgage ■ A Mortgage secured by a property subject to income-based resale restrictions that terminate upon foreclosure (or expiration of any applicable legally required foreclosure redemption period) or recordation of a deed-in-lieu of foreclosure where the property value must be determined in accordance with Section 4406.4(c) (c) Special requirements The Mortgage must only be modified for the purpose of a reduction in the interest rate. (d) Delivery requirements See Section 6302.27 for delivery and pooling requirements for Seller-Owned Modified Mortgages. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-11 4402.5: Uniform Instruments for Seller-Owned Modified Mortgages (02/04/26) This section contains requirements related to: ■ Security Instrument ■ Note ■ Loan modification agreement ■ Seller-Owned Modified Mortgages originated as a Construction to Permanent Mortgage or Renovation Mortgage Documentation for a Seller-Owned Modified Mortgage should consist of all of the following. (a) Security Instrument The Security Instrument must be either: ■ The version of the Fannie Mae/Freddie Mac Uniform Security Instrument for the State in which the Mortgaged Premises is located in effect on the Note Date, or ■ A nonstandard document that has been modified to conform to the current Fannie Mae/Freddie Mac Uniform Security Instrument for the State in which the Mortgaged Premises are located (b) Note The promissory note must be either: ■ The original Fannie Mae/Freddie Mac Uniform Fixed-Rate Note with the loan modification agreement attached, or ■ A new Note; a new Note must be used if the Seller-Owned Modified Mortgage is not a fixed-rate Mortgage. If a new Note is executed, Seller must use the applicable Uniform Instrument Note as required by Section 4101.2 for the modified Mortgage Product. (c) Loan modification agreement The loan modification agreement must be recorded if necessary to establish that the Seller- Owned Modified Mortgage is a First Lien. The loan modification agreement must contain the following information with respect to the modification on the Seller-Owned Modified Mortgage: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4402 As of 02/04/26 Page 4402-12 ■ The effective date of the loan modification ■ The current outstanding principal balance on the Seller-Owned Modified Mortgage ■ Whether the interest rate on the Seller-Owned Modified Mortgage is fixed or adjustable ■ The yearly interest rate on the Seller-Owned Modified Mortgage ■ The monthly payment amount on the Seller-Owned Modified Mortgage ■ The date the monthly payments on the Seller-Owned Modified Mortgage begin ■ The maturity date of the Seller-Owned Modified Mortgage The Seller may use the Freddie Mac Multistate Loan Modification to a Fixed Interest Rate, Freddie Mac Uniform Instrument Form 5161, as the loan modification agreement if the original Mortgage is either: ■ A fixed-rate Mortgage originated on the Fannie Mae/Freddie Mac Uniform Fixed-Rate Note and after modification will remain a fixed-rate Mortgage, or ■ A Mortgage that is being modified to a fixed-rate Mortgage using the Fannie Mae/Freddie Mac Uniform Fixed-Rate Note If Seller uses a different instrument to evidence the loan modification for a fixed-rate Seller- Owned Modified Mortgage, the Seller represents and warrants that the instrument, when completed, contains substantially identical provisions to the Freddie Mac Loan Modification to a Fixed Interest Rate and is appropriate for use to evidence the modification of the Mortgage. (d) Seller-Owned Modified Mortgages originated as a Construction to Permanent Mortgage or Renovation Mortgage For a Seller-Owned Modified Mortgage that was originated as a Construction to Permanent Mortgage or Renovation Mortgage, the conversion of Interim Construction Financing to Permanent Financing must have occurred prior to the modification and must have been documented in accordance with Chapter 4602. The modification of the Permanent Financing that occurs after the Effective Date of Permanent Financing must be documented in accordance with this Section 4402.5. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4403 As of 04/01/26 Page 4403-1 Chapter 4403: Mortgages with Capitalized Balances

Source: Freddie Mac Single-Family Seller/Servicer Guide Section 4302.8 — Credit Fees · source URL · snapshot 5869ee9e606cd4ae