Freddie Mac Single-Family Seller/Servicer Guide Section 4504.4 — Ineligible HeritageOne® Mortgages

Freddie Mac Single-Family Seller/Servicer Guide Section 4504.4 — Ineligible HeritageOne® Mortgages

4504.4: Ineligible HeritageOne® Mortgages (03/05/25) Mortgages with the following characteristics are not eligible for sale to Freddie Mac as HeritageOne® Mortgages: ■ ARMs ■ Cash-out refinance Mortgages ■ Community Land Trust Mortgages ■ Cooperative Share Loans ■ Financed Permanent Buydown Mortgages ■ Freddie Mac Enhanced Relief Refinance® Mortgages ■ Government Mortgages ■ HomeOne® Mortgages ■ Home Possible® Mortgages ■ Manually Underwritten Mortgages for which none of the Borrowers has a usable Credit Score ■ Mortgages secured by Investment Properties ■ Mortgages secured by properties on Hawaiian Home Lands ■ Mortgages secured by second homes ■ Mortgages with associated Home Equity Lines of Credit (HELOCs) ■ Mortgages with capitalized balances (as described in Chapter 4403) ■ Mortgages with RHS Leveraged Seconds ■ Refi Possible® Mortgages ■ Seller-Owned Converted Mortgages Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-6 ■ Seller-Owned Modified Mortgages ■ Super conforming Mortgages (as described in Chapter 4603) ■ Texas Equity Section 50(a)(6) Mortgages 4504.4: Ineligible HeritageOne® Mortgages (Future effective date 07/01/26) Mortgages with the following characteristics are not eligible for sale to Freddie Mac as HeritageOne® Mortgages: ■ ARMs ■ Cash-out refinance Mortgages ■ Community Land Trust Mortgages ■ Cooperative Share Loans ■ Financed Permanent Buydown Mortgages ■ Freddie Mac Enhanced Relief Refinance® Mortgages ■ Government Mortgages ■ HomeOne® Mortgages ■ Home Possible® Mortgages ■ Manually Underwritten Mortgages for which none of the Borrowers has a usable Credit Score ■ Mortgages secured by Investment Properties ■ Mortgages secured by properties on Hawaiian Home Lands ■ Mortgages secured by second homes ■ Mortgages with associated Home Equity Lines of Credit (HELOCs) ■ Mortgages with RHS Leveraged Seconds ■ Refi Possible® Mortgages Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-7 ■ Seller-Owned Converted Mortgages ■ Seller-Owned Modified Mortgages ■ Super conforming Mortgages (as described in Chapter 4603) ■ Texas Equity Section 50(a)(6) Mortgages 4504.5: General eligibility requirements for HeritageOne® Mortgages (04/12/26) This section contains requirements related to: ■ Loan limits ■ Mortgage purpose ■ Temporary subsidy buydown plans ■ Secondary financing ■ Rental income ■ Homebuyer education ■ Landlord education for 2- to 4-unit properties ■ Resale restrictions ■ Right of first refusal The following general eligibility requirements apply to HeritageOne® Mortgages: (a) Loan limits The loan amount may not exceed the applicable maximum original loan amount specified in Section 4203.1(c). (a) Mortgage purpose The Mortgage must be either a purchase transaction Mortgage or a “no cash-out” refinance Mortgage. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-8 (b) Temporary subsidy buydown plans Temporary subsidy buydown plans described in Section 4204.3 are permitted if the Mortgage is: ■ Secured by a 1-unit property; or ■ An Accept Mortgage secured by a 2-unit property (c) Secondary financing The following are permitted secondary financing arrangements: ■ Secondary financing that meets the requirements of Section 4204.1 ■ Affordable Seconds® that meet the requirements of Section 4204.2, except that: ❑ For Affordable Seconds provided by an Agency, although Section 4204.2(a)(i)(A) provides otherwise, the Agency may be affiliated with, under contract to or financed (directly or indirectly) by the Seller as the originating lender ❑ For Seller-funded Affordable Seconds, although Section 4204.2(a)(i)(B) provides otherwise, the First Lien Mortgage cannot be a Home Possible® Mortgage and may be a HeritageOne Mortgage ❑ For Mortgages secured by Manufactured Homes and originated with Affordable Seconds, although Section 5703.5(c) provides otherwise, the Mortgage cannot be a Home Possible Mortgage and may be a HeritageOne Mortgage For a Mortgage with a temporary subsidy buydown plan, any secondary financing must have a fixed interest rate. (d) Rental income When determining the stable monthly income (as described in Section 5301.1), rental income may be considered if generated from: ■ A subject 1-unit property, with or without an ADU, if the rental income requirements in Section 4501.6(b) or 5306.1(h) are met ■ An ADU on a subject 1-unit property, if the rental income requirements in Section 5306.1(g) are met ■ A subject 2- to 4-unit property, if the rental income requirements in Section 5306.1(e) are met and excluding any rental income generated from an ADU Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-9 ■ A non-subject investment property, if the rental income requirements in Section 5306.1(c) are met (e) Homebuyer education For purchase transaction Mortgages where all occupying Borrowers are First-Time Homebuyers: ■ At least one occupying Borrower must complete a homeownership education program before the Note Date or, for Construction to Permanent Mortgages and Renovation Mortgages, the Effective Date of Permanent Financing; and ■ As referenced in Section 5103.4(b), homeownership education may be provided by a Native community development financial institution (CDFI), even if the Native CDFI is the originating lender and/or the Seller Note: See Section 5103.4 for other requirements related to homeownership education. (f) Landlord education for 2- to 4-unit properties For purchase transaction Mortgages, at least one qualifying Borrower must: ■ Complete a landlord education program before the Note Date or, for Construction to Permanent Mortgages and Renovation Mortgages, the Effective Date of Permanent Financing; or ■ Have at least one year of previous landlord experience For “no cash-out” refinance Mortgages, landlord education is not required but is recommended for Borrowers who have not previously completed a landlord education program. Landlord education may not be provided by an interested party to the Mortgage transaction, except for a Native CDFI. A Native CDFI may provide landlord education even if the Native CDFI is the originating lender and/or the Seller. (g) Resale restrictions The Mortgaged Premises may be subject to resale restrictions if the requirements of Chapter 4406 are met. (h) Right of first refusal Any right of first refusal must run to: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-10 ■ The Eligible Native American Tribe within whose Tribal Area the Mortgaged Premises is located; and ■ Any lessor other than the Eligible Native American Tribe (if applicable) When the Mortgage is subject to foreclosure proceedings and/or an approved short sale, the right of first refusal may not continue beyond 120 days after the date of written notice that the Mortgaged Premises is being offered for sale. Any right of first refusal may not adversely impact the rights of Freddie Mac or the Seller/Servicer to foreclose or acquire title to the Mortgaged Premises, accept a deed or assignment in lieu of foreclosure or transfer title to or lease the Mortgaged Premises, if acquired. 4504.6: Underwriting requirements, qualifying ratios and maximum loan-to-value (LTV)/total LTV (TLTV) ratios for HeritageOne® Mortgages (03/05/25) This section contains requirements related to: ■ Underwriting ■ Qualifying ratios ■ Maximum loan-to-value (LTV)/total LTV (TLTV) ratios (a) Underwriting The Mortgage must be an Accept Mortgage or a Manually Underwritten Mortgage. Mortgages secured by 2- to 4-unit properties must be Accept Mortgages. For Manually Underwritten Mortgages: ■ Each Borrower individually, and all Borrowers collectively, must have an acceptable credit reputation (as described in Topics 5100 and 5200 for Manually Underwritten Mortgages) ■ An individual Borrower with insufficient credit history for whom the Seller cannot document a credit reputation is considered to have an acceptable credit reputation if: ❑ No evidence of derogatory credit, such as a lien, judgment or collection, paid or unpaid, is reflected on the credit report or elsewhere in the Mortgage file with respect to such Borrower; and Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-11 ❑ At least one other Borrower whose income and assets are used for qualification has an acceptable credit reputation Any income contributed by the Borrower with insufficient credit history may be considered as qualifying income if the amount contributed by such Borrower is not more than 30% of the total qualifying income. The minimum Indicator Scores for Manually Underwritten Mortgages are: Minimum Indicator Scores for Manually Underwritten HeritageOne® Mortgages Property/Mortgage type Minimum Indicator Score1 Purchase transaction Mortgages secured by 1-unit properties 660 “No cash-out” refinance Mortgages secured by 1-unit properties 680 Manufactured Homes 680 1 The minimum Indicator Scores are also in Exhibit 25, Mortgages with Risk Class and/or Minimum Indicator Score Requirements. (b) Qualifying ratios There is no maximum monthly housing expense-to-income ratio, except for Manually Underwritten Mortgages that include a non-occupying Borrower. See Section 5103.1 for additional requirements for Mortgages that include a non-occupying Borrower. For Loan Product Advisor® Mortgages, the maximum monthly debt payment-to-income (DTI) ratio is determined by Loan Product Advisor. For Manually Underwritten Mortgages, the maximum monthly DTI ratios are: Maximum monthly DTI ratios for Manually Underwritten HeritageOne Mortgages Property/Mortgage type Maximum monthly DTI ratio 1-unit properties1 45% Manufactured Homes that are Caution Mortgages 36% 1 See Section 5103.1 for additional requirements for Mortgages that include a non-occupying Borrower. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-12 Note: The Borrower’s monthly DTI ratio must be underwritten pursuant to Section 5401.2. (c) Maximum LTV/TLTV ratios The value used to calculate the LTV/TLTV ratios must be established pursuant to Section 4203.1(a). The following maximum LTV/TLTV ratios apply to both purchase transaction and “no cash- out” refinance Mortgages: Maximum LTV/TLTV ratios for HeritageOne Mortgages Property/Mortgage type Maximum LTV/TLTV ratios 1-unit properties1 97%2 2- to 4-unit properties 95%2 CHOICEHomes® 97%2 Manufactured Homes1, 3 See Chapter 5703 1 See Section 5103.1 for additional requirements for Mortgages that include a non-occupying Borrower. 2 A TLTV ratio not exceeding 105% is permitted when secondary financing is an Affordable Second®. 3 If permitted under the Seller’s Purchase Documents, see Section 5706.5 for additional requirements for Manufactured Homes on leasehold estates. Note: The maximum LTV/TLTV ratios may be lower for a Condominium Unit Mortgage depending on the project review type or whether the Mortgage is exempt from project review (see Chapter 5701). 4504.7: Borrower contribution, reserves and sources of funds for HeritageOne® Mortgages (04/12/26) This section contains requirements related to: ■ Borrower contribution ■ Reserves ■ Sources of funds ■ Funds provided by a Native American Tribe Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-13 (a) Borrower contribution For purchase transaction Mortgages, the minimum Borrower contribution required to be paid from Borrower personal funds (as described in Section 4504.7(c)(i)), based on the loan-to- value (LTV)/total LTV (TLTV) ratios for the Mortgage, is: Minimum Borrower contribution for HeritageOne® Mortgages Property/Mortgage type LTV/TLTV ratios ≤ 80% LTV/TLTV ratios > 80% and ≤ 95% LTV/TLTV ratios > 95% 1-unit properties None None None 2- to 4-unit properties None 3% of value 3% of value Manufactured Homes None None None (a) Reserves Reserves are not required for: ■ Accept Mortgages secured by 1-unit properties, unless Loan Product Advisor® determines reserves are necessary to offset other underwriting factors ■ Manually Underwritten Mortgages secured by 1-unit properties For Mortgages secured by 2- to 4-unit properties, the Seller must verify all reserves required by Loan Product Advisor, as stated on the Last Feedback Certificate. (b) Sources of funds The following sources of funds may be used to qualify the Borrower if the requirements in Section 4504.7(c)(i), 4504.7(c)(ii) or 4504.7(c)(iii), as applicable, are met: Sources of funds for HeritageOne Mortgages Use Permitted source(s) of funds Minimum Borrower contribution Borrower personal funds Down Payment ■ Borrower personal funds ■ Other eligible sources of funds Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-14 Sources of funds for HeritageOne Mortgages Use Permitted source(s) of funds Paying down the principal balance of the Mortgage being refinanced for a “no cash-out” refinance Mortgage ■ Borrower personal funds ■ Other eligible sources of funds Closing Costs ■ Borrower personal funds ■ Other eligible sources of funds ■ Flexible sources of funds Reserves ■ Borrower personal funds ■ Other eligible sources of funds (i) Borrower personal funds Borrower personal funds include: ■ Borrower personal funds described in Section 5501.3 ■ Cash on hand, if the requirements in Section 4501.7(c)(i)(2) are met (ii) Other eligible sources of funds Other eligible sources of funds include: ■ Other eligible sources of funds described in Section 5501.4 ■ Gift or grant funds provided by the Seller as the originating lender, if a contribution of at least 3% of value is made from Borrower personal funds and/or other eligible sources of funds. The gift or grant may not be funded through the Mortgage transaction (i.e., through premium pricing). ■ Although Sections 4204.2(a)(i)(A) and 5501.4 provide otherwise, funds provided by an Agency affiliated with, under contract to or financed (directly or indirectly) by the Seller as the originating lender, if: ❑ The source of funds (e.g., a gift or grant, an unsecured loan, an Affordable Second®) is an eligible source of funds that meets all other Guide requirements; and ❑ The source of funds is not funded through the Mortgage transaction Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-15 ■ For purchase transaction Mortgages, funds from an unsecured loan. Funds from an unsecured loan must be from one of the following sources: ❑ A Community Savings System (funds exceeding the Borrower’s contribution to the Community Savings System) ❑ Except as stated in Section 4504.7(c)(ii) or 4504.7(d), an Agency that is not: ■ The Seller or participated in any aspect of the Mortgage origination process ■ Affiliated with, under contract to, or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process. For these purposes, “affiliated with” means that the Agency and the Seller or other party are related to each other as a consequence of one entity directly or indirectly controlling the other party, being controlled by the other party or being under common control with that party. The unsecured loan must meet the following requirements: ❑ Must not contain provisions that allow or could result in negative amortization ❑ Must have a maturity date that: ■ Does not exceed the maturity date of the Mortgage ■ Is at least five years after the Note Date of the Mortgage, unless the unsecured loan is fully amortizing ❑ Must have an interest rate that is no greater than the Note Rate on the Mortgage ❑ Must not be a cash advance from a credit card or unsecured line of credit ❑ Must have its source, terms and conditions documented on Form 65, Uniform Residential Loan Application If the monthly payment begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the monthly payment amount may be excluded from the monthly debt payment-to- income ratio; otherwise, the required monthly payments must be included in calculating the monthly debt payment-to-income ratio. ■ Sweat equity as a credit towards the Down Payment and/or Closing Costs, if the sweat equity requirements in Section 4501.7(c)(ii)(4) are met, except that the maximum LTV/TLTV ratios in this chapter and the special delivery requirements in Section 6302.50 apply Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-16 ■ Funds from an Affordable Second or other secondary financing arrangement (iii) Flexible sources of funds Flexible sources of funds include: ■ Financing concessions described in Section 5501.6(b) that meet the applicable interested party contribution requirements in Section 5501.6 ■ Lender credits described in Section 5501.7(a) that are documented on the Settlement/Closing Disclosure Statement ■ Unsecured loan proceeds from the Seller as the originating lender meeting the following requirements: ■ Must not contain provisions that allow or could result in negative amortization ■ Must have a maturity date that: ❑ Does not exceed the maturity date of the Mortgage ❑ Is at least five years after the Note Date of the Mortgage, unless the unsecured loan is fully amortizing ■ Must have an interest rate that is no greater than the Note Rate on the Mortgage ■ Must not be a cash advance from a credit card or unsecured line of credit ■ Must have its source, terms and conditions documented on Form 65 If the monthly payments begin on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the monthly payment amount may be excluded from the monthly debt payment-to-income ratio. Otherwise, the required monthly payments must be included in calculating the monthly debt payment-to-income ratio. (c) Funds provided by a Native American Tribe For funds provided by a Native American Tribe: ■ The Native American Tribe providing the funds must be the Eligible Native American Tribe within whose Tribal Area the Mortgaged Premises is located; or ■ The Borrower must be an enrolled member of the Native American Tribe providing the funds Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-17 4504.8: HeritageOne® Mortgages that are leasehold Mortgages (03/05/25) This section contains requirements related to: ■ Leasehold Mortgages ■ Lease agreements ■ Form of lease agreement (a) Leasehold Mortgages For leasehold Mortgages, the Mortgaged Premises must be located on either tribal trust land or allotted trust land and cannot be located on land that is owned in fee simple. Leasehold Mortgages must meet the requirements of Chapter 5704 and all other provisions in the Seller’s Purchase Documents applicable to leasehold estates. If permitted under the Seller’s Purchase Documents, Leasehold Mortgages secured by Manufactured Homes must meet the requirements of Chapter 5706 and all other provisions in the Seller’s Purchase Documents applicable to Manufactured Homes, except that the Manufactured Home is not required to be located in a ground lease community (although Section 5706.2 provides otherwise). (b) Lease agreements The term of the lease agreement must be a minimum of 25 years with an automatic 25-year renewal. The term of the lease agreement (before renewal) must expire at least five years after the term of the Mortgage expires. Any necessary approvals or signatures must be obtained from the U.S. Secretary of the Interior or the BIA, as applicable, to extend the term of the lease agreement to a period longer than 25 years. The Seller must maintain in the Mortgage file a copy of the recorded lease agreement, including any amendments or riders thereto. (c) Form of lease agreement It is recommended (but not required) that the most recent version of the standard lease form in HUD’s Section 184 Program be used for leasehold Mortgages. The lease agreement may not adversely impact the rights of Freddie Mac or the Seller/Servicer to foreclose or acquire title to the Mortgaged Premises, accept a deed or Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-18 assignment in lieu of foreclosure or transfer title to or lease the Mortgaged Premises, if acquired. 4504.9: Appraisal requirements for HeritageOne® Mortgages (02/04/26) Refer to Bulletin 2025-7, which announced the policy requirements for Uniform Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal® appraisal reports that use UAD 3.6 before the mandatory effective November 2, 2026 version of this section. This section contains requirements related to: ■ Appraiser qualifications ■ Appraisal type, automated collateral evaluation (ACE) eligibility and ACE+ PDR eligibility ■ Appraised value representation and warranty relief ■ Appraisal cost offset credit ■ Sales comparison approach and cost approach ■ Additional form instructions ■ Site value ■ Uniform Collateral Data Portal® (UCDP®) ■ Additional resources The following appraisal requirements apply to HeritageOne® Mortgages: (a) Appraiser qualifications In addition to the appraiser qualifications in Section 5603.1, the Seller must ensure the appraiser has the knowledge and experience required to perform appraisals for properties located in Tribal Areas. By way of example and not of limitation, the appraiser must be knowledgeable about and have experience with the various types of land ownership interests (e.g., tribal trust land, allotted trust land, unrestricted or restricted fee simple land, etc.) and have access to all appropriate data sources. Although traditional appraisal data sources (e.g., multiple listing service, public land records, etc.) remain important sources of data, the appraiser may need access to other sources of data Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-19 and information, such as those maintained by the BIA and the Eligible Native American Tribe within whose Tribal Area the Mortgaged Premises is located, to develop a fully supported and sufficiently documented opinion of market value. (b) Appraisal type, ACE eligibility and ACE+ PDR eligibility The appraisal must meet the requirements of Topic 5600. Unless ACE or ACE+ PDR is offered and accepted in accordance with Section 5602.3 or 5602.4, respectively: ■ An appraisal report with an interior and exterior inspection is required; and ■ The Seller must maintain in the Mortgage file all property valuation documentation (c) Appraised value representation and warranty relief If an appraisal report is obtained and the sales comparison approach was used, the Mortgage may be eligible for appraised value representation and warranty relief, if the requirements for Loan Collateral Advisor® appraised value representation and warranty relief in Section 5602.2 are met. (d) Appraisal cost offset credit If an appraisal report is obtained for the Mortgage transaction, Freddie Mac will issue an appraisal cost offset credit, which must be passed to the Borrower. The appraisal cost offset credit will be detailed in the Seller’s Purchase Documents. (e) Sales comparison approach and cost approach When a sufficient number of comparable sales (i.e., a minimum of three closed comparable sales) are available, the sales comparison approach (with any support provided from the cost approach or income approach, as applicable) must be used by the appraiser. It is acceptable to use comparable sales that are older than, distant from or dissimilar to the subject property, if the applicable sales comparison approach requirements in Section 5605.6 are met. For Market Areas without a sufficient number of comparable sales to develop a fully supported and sufficiently documented opinion of market value using the sales comparison approach, although Sections 5605.6 and 5605.7(a) provide otherwise, an appraisal report that relies solely on the cost approach for the opinion of market value is acceptable, if the appraiser: ■ Provides: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-20 ❑ A well-developed cost approach that includes a fully completed cost approach section of the report ❑ Sufficient detail to allow the Seller to replicate the cost approach; and ❑ In the reconciliation section of the report, an explanation of how the value was derived ■ Uses the revised scope of work, statement of assumptions and limiting conditions and appraiser’s certifications (which will be provided in the Seller’s Purchase Documents), and the additional form instructions set forth below; and ■ Completes all fields in the report, other than the comparable sales data in the sales comparison approach grid An appraisal report may not rely solely on the cost approach for the opinion of market value if the Mortgage is secured by a: ■ Property subject to 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 ■ Condominium Unit ■ 2- to 4-unit property; or ■ Property with an ADU (f) Additional form instructions For an appraisal report that relies solely on the cost approach for the opinion of market value, the report must include the text identifier “Heritage1” in the “File #” field in the appraisal report form. The appraiser must complete all applicable fields for the subject property in the sales comparison approach grid, including, but not limited to: ■ Location ■ View ■ Quality of Construction ■ Condition ■ Gross Living Area Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-21 (g) Site value For properties on land that is owned in fee simple, for appraisal reports that rely solely on the cost approach for the opinion of market value, a site value must be developed and reported. For leasehold Mortgages, if there is no ground rent due under the lease agreement and no upfront payment was made, the leased fee value is zero, and no value is attributable to the underlying land. (h) UCDP If an appraisal report is obtained for the Mortgage transaction, the report must be submitted to the UCDP and receive a “Successful” status prior to delivery of the Mortgage. (i) Additional resources Sellers are encouraged to review the Appraisal Institute’s appraisal training curriculum for performing property valuations in tribal areas. 4504.9: Appraisal requirements for HeritageOne® Mortgages (Future effective date 11/02/26) This section contains requirements related to: ■ Appraiser qualifications ■ Appraisal type, automated collateral evaluation (ACE) eligibility and ACE+ PDR eligibility ■ Appraised value representation and warranty relief ■ Appraisal cost offset credit ■ Sales comparison approach and cost approach ■ Additional form instructions ■ Site value ■ Uniform Collateral Data Portal® (UCDP®) ■ Additional resources The following appraisal requirements apply to HeritageOne® Mortgages: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-22 (a) Appraiser qualifications In addition to the appraiser qualifications in Section 5603.1, the Seller must ensure the appraiser has the knowledge and experience required to perform appraisals for properties located in Tribal Areas. By way of example and not of limitation, the appraiser must be knowledgeable about and have experience with the various types of land ownership interests (e.g., tribal trust land, allotted trust land, unrestricted or restricted fee simple land, etc.) and have access to all appropriate data sources. Although traditional appraisal data sources (e.g., multiple listing service, public land records, etc.) remain important sources of data, the appraiser may need access to other sources of data and information, such as those maintained by the BIA and the Eligible Native American Tribe within whose Tribal Area the Mortgaged Premises is located, to develop a fully supported and sufficiently documented opinion of market value. (b) Appraisal type, ACE eligibility and ACE+ PDR eligibility The appraisal must meet the requirements of Topic 5600. Unless ACE or ACE+ PDR is offered and accepted in accordance with Section 5602.3 or 5602.4, respectively: ■ An appraisal report with an interior and exterior inspection is required; and ■ The Seller must maintain in the Mortgage file all property valuation documentation (c) Appraised value representation and warranty relief If an appraisal report is obtained and the sales comparison approach was used, the Mortgage may be eligible for appraised value representation and warranty relief, if the requirements for Loan Collateral Advisor® appraised value representation and warranty relief in Section 5602.2 are met. (d) Appraisal cost offset credit If an appraisal report is obtained for the Mortgage transaction, Freddie Mac will issue an appraisal cost offset credit, which must be passed to the Borrower. The appraisal cost offset credit will be detailed in the Seller’s Purchase Documents. (e) Sales comparison approach and cost approach When a sufficient number of comparable sales (i.e., a minimum of three closed comparable sales) are available, the sales comparison approach (with any support provided from the cost approach or income approach, as applicable) must be used by the appraiser. It is acceptable Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-23 to use comparable sales that are older than, distant from or dissimilar to the subject property, if the applicable sales comparison approach requirements in Section 5605.7 are met. For Market Areas without a sufficient number of comparable sales to develop a fully supported and sufficiently documented opinion of market value using the sales comparison approach, although Sections 5605.7 and 5605.8(a) provide otherwise, an appraisal report that relies solely on the cost approach for the opinion of market value is acceptable, if the appraiser: ■ Provides: ❑ A well-developed cost approach that includes a fully completed cost approach section of the report ❑ Sufficient detail to allow the Seller to replicate the cost approach; and ❑ In the reconciliation section of the report, an explanation of how the value was derived ■ Uses the revised scope of work, statement of assumptions and limiting conditions and appraiser’s certifications (which will be provided in the Seller’s Purchase Documents), and the additional form instructions set forth below; and ■ Completes all fields in the report, other than the comparable sales data in the sales comparison approach grid An appraisal report may not rely solely on the cost approach for the opinion of market value if the Mortgage is secured by a: ■ Property subject to 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 ■ Condominium Unit ■ 2- to 4-unit property; or ■ Property with an ADU (f) Additional form instructions For an appraisal report that relies solely on the cost approach for the opinion of market value, the report must include the text identifier “Heritage1” in the “File #” field in the appraisal report form. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-24 The appraiser must complete all applicable fields for the subject property in the sales comparison approach grid, including, but not limited to: ■ Location ■ View ■ Quality of Construction ■ Condition ■ Gross Living Area (g) Site value For properties on land that is owned in fee simple, for appraisal reports that rely solely on the cost approach for the opinion of market value, a site value must be developed and reported. For leasehold Mortgages, if there is no ground rent due under the lease agreement and no upfront payment was made, the leased fee value is zero, and no value is attributable to the underlying land. (h) UCDP If an appraisal report is obtained for the Mortgage transaction, the report must be submitted to the UCDP and receive a “Successful” status prior to delivery of the Mortgage. (i) Additional resources Sellers are encouraged to review the Appraisal Institute’s appraisal training curriculum for performing property valuations in tribal areas. 4504.10: Mortgage insurance and title insurance requirements for HeritageOne® Mortgages (03/05/25) This section contains requirements related to: ■ Mortgage insurance ■ Title insurance (a) Mortgage insurance Information related to mortgage insurance for HeritageOne® Mortgages will be detailed in the Seller’s Purchase Documents. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-25 (b) Title insurance See Section 4702.7 for title insurance requirements for HeritageOne Mortgages. 4504.11: Mortgage file requirements for HeritageOne® Mortgages (03/05/25) For HeritageOne® Mortgages, the Seller must maintain in the Mortgage file: ■ Evidence that the Eligible Native American Tribe within whose Tribal Area the Mortgaged Premises is located is included in the BIA’s most recent publication of the notice titled “Indian Entities Recognized by and Eligible To Receive Services From the United States Bureau of Indian Affairs” and: ❑ A copy of the fully executed memorandum of understanding between the Eligible Native American Tribe and Freddie Mac, if applicable ❑ A printout showing the Eligible Native American Tribe in the list of Eligible Native American Tribes on Freddie Mac’s website ❑ A printout showing the Eligible Native American Tribe in HUD’s most recent Section 184 Participating Tribes List; or ❑ Documentation issued by HUD indicating unconditional approval of the Eligible Native American Tribe as a participating tribe ■ Documentation verifying the Borrower is an enrolled member of a Native American Tribe: ❑ A copy of the Borrower’s tribe-issued enrollment card; or ❑ A copy of a tribe-issued letter indicating the Borrower’s enrollment as a member of the Native American Tribe ■ Evidence of the land ownership interest (e.g., tribal trust land, allotted trust land, unrestricted or restricted fee simple land, etc.) of the Mortgaged Premises and the court system that has jurisdiction over the Mortgaged Premises ■ A copy of the certified title status report(s) obtained from the BIA, if applicable ■ To the extent possible, the following contact information for the Eligible Native American Tribe within whose Tribal Area the Mortgaged Premises is located: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-26 ❑ If different from the contact information listed in the Tribal Leaders Directory maintained by the BIA, documentation listing the Eligible Native American Tribe’s contact information in a substantially similar format ❑ Contact information for the Eligible Native American Tribe’s office of real estate services, if applicable; and ❑ For leasehold Mortgages, contact information for the party that manages lease agreements on behalf of the Eligible Native American Tribe or the lessor (e.g., management company), if applicable ■ For purchase transaction Mortgages secured by 2- to 4-unit properties, evidence of completion of the landlord education program, if required 4504.12: Credit Fees for HeritageOne® Mortgages (03/05/25) Credit Fees related to HeritageOne® Mortgages will be detailed in the Seller’s Purchase Documents. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4601 As of 07/02/25 Page 4601-1 Chapter 4601: Financed Permanent Buydown Mortgages 4601.1: Financed Permanent Buydown Mortgages (07/02/25) A Financed Permanent Buydown Mortgage is a Mortgage for which the Borrower has permanently reduced the interest rate by financing discount points in the loan amount. This section contains requirements related to: ■ Eligible Financed Permanent Buydown Mortgages ■ Ineligible Financed Permanent Buydown Mortgages ■ Underwriting Financed Permanent Buydown Mortgages ■ Calculation of applicable Credit Fees for Financed Permanent Buydown Mortgages (a) Eligible Financed Permanent Buydown Mortgages The Mortgage must be an eligible fixed-rate, level-payment Mortgage or a 5/6-Month, 7/6- Month or 10/6-Month ARM. (b) Ineligible Financed Permanent Buydown Mortgages Financed Permanent Buydown Mortgages must not be: ■ Community Land Trust Mortgages ■ Government Mortgages ■ HeritageOne® Mortgages ■ Home Possible® Mortgages ■ HomeOne® Mortgages ■ Mortgages with a temporary subsidy buydown ■ Secured by property subject to income-based resale restrictions that terminate upon foreclosure (or expiration of any applicable legally required foreclosure redemption Freddie Mac Single-Family Seller/Servicer Guide Chapter 4601 As of 07/02/25 Page 4601-2 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) Underwriting Financed Permanent Buydown Mortgages For purposes of this chapter, the following definitions apply: Defined terms for Financed Permanent Buydown Mortgages B Base Mortgage Amount The Mortgage amount without the financed discount points G Gross loan-to-value (LTV), total LTV (TLTV) and Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios The LTV, TLTV or HTLTV ratio calculated using the Mortgage amount, which includes the financed discount points Eligibility of Financed Permanent Buydown Mortgages is determined using the Gross LTV, TLTV and HTLTV ratios. Financed Permanent Buydown Mortgages must comply with the following requirements: 1. The Gross LTV, TLTV and HTLTV ratios must not exceed the LTV, TLTV or HTLTV ratios specified in Section 4203.1(b) 2. The amount of the mortgage insurance coverage must meet the coverage level requirements in Section 4701.1, using the Gross LTV ratio 3. The maximum amount a Borrower can finance for a permanent buydown is three discount points, calculated based upon the Base Mortgage Amount 4. For fixed-rate Mortgages, Borrower qualification is based on the monthly housing expense-to-income ratio calculated using the monthly payment at the permanent bought down Note Rate. For ARMs, Borrower qualification is based on monthly payments calculated in accordance with Section 4401.2. 5. For ARMs, the permanent buydown is in effect for the initial Note Rate and each Note Rate adjustment for the entire term of the Mortgage. The Lifetime Ceiling will be calculated using the permanent bought down initial Note Rate. The permanent buydown does not affect the Margin, Initial Cap or Periodic Cap. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4601 As of 07/02/25 Page 4601-3 (d) Calculation of applicable Credit Fees for Financed Permanent Buydown Mortgages Applicable Credit Fees will be assessed and billed based on the UPB of the Mortgage (including the financed permanent buydown points) and the Gross LTV ratio. The Seller must refer to Exhibit 19, Credit Fees. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-1 Chapter 4602: Construction to Permanent Mortgages and Renovation Mortgages 4602.1: Construction to Permanent Mortgages and Renovation Mortgages (02/04/26) Refer to Bulletin 2025-7, which announced the policy requirements for Uniform Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal® appraisal reports that use UAD 3.6 before the mandatory effective November 2, 2026 version of this section. The requirements of this section apply to all Construction to Permanent Mortgages and Renovation Mortgages. Additionally, One-Time Close transactions must meet the requirements in 4602.2 and Two-Time Close transactions must meet the requirements in Section 4602.3. This section contains requirements related to: ■ Eligible Mortgages ■ Ineligible Mortgages ■ Eligible use of Interim Construction Financing proceeds ■ Permanent Financing proceeds ■ Eligible property ■ Borrower eligibility ■ Completion status of the Mortgaged Premises ■ Mortgage file documentation ■ Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages ■ Credit Fees (a) Eligible Mortgages Mortgages must be First Lien Mortgages and may be any Mortgage Product or offering eligible under the Guide unless specifically described as ineligible in this section. (b) Ineligible Mortgages Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-2 The following Mortgages are ineligible as Construction to Permanent Mortgages and Renovation Mortgages: ■ Community Land Trust Mortgages ■ Government Mortgages ■ Mortgages secured by properties subject to income-based resale restrictions ■ Special purpose cash-out refinance Mortgages (c) Eligible use of Interim Construction Financing proceeds For purchase transaction Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Eligible use of Interim Construction Financing proceeds Purchase transaction Construction to Permanent Mortgage Renovation Mortgage ■ Purchase the land or acquire a leasehold interest in the land ■ Pay construction costs of the site-built home or Manufactured Home ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Purchase the site-built home ■ Pay renovation costs of the site-built home For refinance Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-3 Eligible use of Interim Construction Financing proceeds Refinance transaction Construction to Permanent Mortgage Renovation Mortgage ■ Pay off any existing liens on the land ■ Pay construction costs of the site- built home or Manufactured Home ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Pay all Closing Costs ■ Pay off any existing liens on the land and on the improvements ■ Pay renovation costs of the site-built home ■ Pay all Closing Costs (d) Permanent Financing proceeds Permanent Financing proceeds are used to replace Interim Construction Financing after construction or renovations are complete and must not be used for the purpose of making a single disbursement of funds to a builder or contractor or for the assumption of an existing Mortgage. (e) Eligible property A Construction to Permanent Mortgage must be secured by: ■ A newly built or constructed 1- to 4-unit site-built home, or ■ A newly purchased Manufactured Home that has never been attached to a foundation A Renovation Mortgage must be secured by an existing 1-to 4-unit site-built home. Prior to the start of construction or renovation work, the Borrower must own the land or Mortgaged Premises in fee simple or have a leasehold estate meeting the requirements of Chapter 5704. The Borrower may have acquired the land through a purchase, inheritance, gift or legal award in accordance with a final judgment or decision from a legal body (e.g., court, jury, judge or arbitrator) such as in a case of divorce, separation or dissolution of a domestic partnership. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-4 (f) Borrower eligibility The Borrower on the Permanent Financing must be the Borrower on, and obligated to repay, the Interim Construction Financing, and any other outstanding prior financing, including installation financing or outstanding prior Mortgages. Exceptions: ■ A Borrower may be omitted in the event of death or divorce ■ A Borrower who is a Related Person may be added, provided that all Borrowers on the Permanent Financing are owner-occupants of the Mortgaged Premises and considered in the underwriting of the Permanent Financing The builder/developer must not be obligated to repay the Interim Construction Financing or any Mortgage on the land or the improvements except when the builder/developer is the Borrower on the Permanent Financing and will occupy the Mortgaged Premises as their Primary Residence. (g) Completion status of the Mortgaged Premises All improvements to the Mortgaged Premises must be fully completed before the Settlement Date, except for Mortgages secured by site-built homes meeting the requirements in Section 5601.3. For Manufactured Homes, the installation must be fully complete, including permanent utility connections and construction of any site-built improvements such as garages, decks, or porches, before the Settlement Date as evidenced by a satisfactory completion report. For both site-built homes and Manufactured Homes, the Seller must obtain a completion report in accordance with the requirements in Section 5605.8. (h) Mortgage file documentation For Construction to Permanent Mortgages and Renovation Mortgages, the Mortgage file must include: ■ Documentation that supports classification of the Mortgage as a Construction to Permanent Mortgage or a Renovation Mortgage ■ Sufficient documentation (e.g., purchase contracts, plans and specifications, receipts, invoices, lien waivers) on which to validate the actual cost to construct or renovate the home ■ A document that clearly shows the Seller’s calculation of the purchase price and/or cost to construct Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-5 ■ The Settlement/Closing Disclosure Statement or an alternative form required by law evidencing all costs to homebuyer and property seller for the Interim Construction Financing ■ The Settlement/Closing Disclosure Statement for the Permanent Financing ■ For a Mortgage secured by a Manufactured Home, the manufacturer’s invoice and the Manufactured Home Purchase Agreement (i) Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages (as described in Chapter 4402) may not be used to modify or convert Interim Construction Financing to Permanent Financing. After the Effective Date of Permanent Financing, if the terms of the Permanent Financing have been modified or if an ARM converted to a fixed-rate Mortgage, the resulting Mortgage is a Seller-Owned Modified Mortgage or Seller-Owned Converted Mortgage, as applicable, and must meet the requirements of Chapter 4402 and other provisions related to these Mortgages. (j) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to Construction to Permanent Mortgages and Renovation Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303. 4602.1: Construction to Permanent Mortgages and Renovation Mortgages (Future effective date 11/02/26) The requirements of this section apply to all Construction to Permanent Mortgages and Renovation Mortgages. Additionally, One-Time Close transactions must meet the requirements in 4602.2 and Two-Time Close transactions must meet the requirements in Section 4602.3. This section contains requirements related to: ■ Eligible Mortgages ■ Ineligible Mortgages ■ Eligible use of Interim Construction Financing proceeds ■ Permanent Financing proceeds Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-6 ■ Eligible property ■ Borrower eligibility ■ Completion status of the Mortgaged Premises ■ Mortgage file documentation ■ Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages ■ Credit Fees (a) Eligible Mortgages Mortgages must be First Lien Mortgages and may be any Mortgage Product or offering eligible under the Guide unless specifically described as ineligible in this section. (b) Ineligible Mortgages The following Mortgages are ineligible as Construction to Permanent Mortgages and Renovation Mortgages: ■ Community Land Trust Mortgages ■ Government Mortgages ■ Mortgages secured by properties subject to income-based resale restrictions ■ Special purpose cash-out refinance Mortgages (c) Eligible use of Interim Construction Financing proceeds For purchase transaction Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-7 Eligible use of Interim Construction Financing proceeds Purchase transaction Construction to Permanent Mortgage Renovation Mortgage ■ Purchase the land or acquire a leasehold interest in the land ■ Pay construction costs of the site-built home or Manufactured Home ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Purchase the site-built home ■ Pay renovation costs of the site-built home For refinance Mortgages, the proceeds of the Interim Construction Financing may be used as described in the table below: Eligible use of Interim Construction Financing proceeds Refinance transaction Construction to Permanent Mortgage Renovation Mortgage ■ Pay off any existing liens on the land ■ Pay construction costs of the site- built home or Manufactured Home ■ Pay costs for site preparation, including the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes, acquire the Manufactured Home and pay construction costs, including costs to affix the Manufactured Home to a permanent foundation ■ Pay all Closing Costs ■ Pay off any existing liens on the land and on the improvements ■ Pay renovation costs of the site-built home ■ Pay all Closing Costs Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-8 (d) Permanent Financing proceeds Permanent Financing proceeds are used to replace Interim Construction Financing after construction or renovations are complete and must not be used for the purpose of making a single disbursement of funds to a builder or contractor or for the assumption of an existing Mortgage. (e) Eligible property A Construction to Permanent Mortgage must be secured by: ■ A newly built or constructed 1- to 4-unit site-built home, or ■ A newly purchased Manufactured Home that has never been attached to a foundation A Renovation Mortgage must be secured by an existing 1-to 4-unit site-built home. Prior to the start of construction or renovation work, the Borrower must own the land or Mortgaged Premises in fee simple or have a leasehold estate meeting the requirements of Chapter 5704. The Borrower may have acquired the land through a purchase, inheritance, gift or legal award in accordance with a final judgment or decision from a legal body (e.g., court, jury, judge or arbitrator) such as in a case of divorce, separation or dissolution of a domestic partnership. (f) Borrower eligibility The Borrower on the Permanent Financing must be the Borrower on, and obligated to repay, the Interim Construction Financing, and any other outstanding prior financing, including installation financing or outstanding prior Mortgages. Exceptions: ■ A Borrower may be omitted in the event of death or divorce ■ A Borrower who is a Related Person may be added, provided that all Borrowers on the Permanent Financing are owner-occupants of the Mortgaged Premises and considered in the underwriting of the Permanent Financing The builder/developer must not be obligated to repay the Interim Construction Financing or any Mortgage on the land or the improvements except when the builder/developer is the Borrower on the Permanent Financing and will occupy the Mortgaged Premises as their Primary Residence. (g) Completion status of the Mortgaged Premises Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-9 All improvements to the Mortgaged Premises must be fully completed before the Settlement Date, except for Mortgages secured by site-built homes meeting the requirements in Section 5601.3. For Manufactured Homes, the installation must be fully complete, including permanent utility connections and construction of any site-built improvements such as garages, decks, or porches, before the Settlement Date as evidenced by a satisfactory completion report. For both site-built homes and Manufactured Homes, the Seller must obtain documentation verifying completion in accordance with the requirements in Section 5605.9. (h) Mortgage file documentation For Construction to Permanent Mortgages and Renovation Mortgages, the Mortgage file must include: ■ Documentation that supports classification of the Mortgage as a Construction to Permanent Mortgage or a Renovation Mortgage ■ Sufficient documentation (e.g., purchase contracts, plans and specifications, receipts, invoices, lien waivers) on which to validate the actual cost to construct or renovate the home ■ A document that clearly shows the Seller’s calculation of the purchase price and/or cost to construct ■ The Settlement/Closing Disclosure Statement or an alternative form required by law evidencing all costs to homebuyer and property seller for the Interim Construction Financing ■ The Settlement/Closing Disclosure Statement for the Permanent Financing ■ For a Mortgage secured by a Manufactured Home, the manufacturer’s invoice and the Manufactured Home Purchase Agreement (i) Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages (as described in Chapter 4402) may not be used to modify or convert Interim Construction Financing to Permanent Financing. After the Effective Date of Permanent Financing, if the terms of the Permanent Financing have been modified or if an ARM converted to a fixed-rate Mortgage, the resulting Mortgage is a Seller-Owned Modified Mortgage or Seller-Owned Converted Mortgage, as applicable, and must meet the requirements of Chapter 4402 and other provisions related to these Mortgages. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-10 (j) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to Construction to Permanent Mortgages and Renovation Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303.

Source: Freddie Mac Single-Family Seller/Servicer Guide Section 4504.4 — Ineligible HeritageOne® Mortgages · source URL · snapshot 5869ee9e606cd4ae