Freddie Mac Single-Family Seller/Servicer Guide §5307.1 — Assets as a basis for repayment of obligations (04/01/26)
Freddie Mac Guide §5307.1 (Assets as a basis for repayment of obligations). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §5307.1 — Assets as a basis for repayment of obligations (04/01/26) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Guide 5307.1
(04/01/26) This section contains information related to: ■ Mortgage eligibility requirements ■ Asset calculation method for establishing the debt payment-to-income (DTI) ratio ■ Asset eligibility and documentation requirements ■ Special delivery requirements Assets that will be used by the Borrower for the repayment of their monthly obligations may be used to qualify the Borrower for the Mortgage, provided that, regardless of the underwriting path of the Mortgage, the requirements of this section and Section 5301.2 are met. Form 65, Uniform Residential Loan Application, should include information pertaining to the Borrower’s employment and income, even if the Borrower qualifies for the Mortgage solely based on assets. (a) Mortgage eligibility requirements The assets described in this Section 5307.1 may only be used to qualify the Borrower if the Mortgage meets all of the following requirements: ■ The Mortgage is secured by a 1- or 2-unit Primary Residence or a second home ■ The Mortgage is either a purchase transaction Mortgage, “no cash-out” refinance Mortgage or Freddie Mac Enhanced Relief Refinance® Mortgage ■ The Mortgage has a maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio of 80%, unless the Mortgage is a Freddie Mac Enhanced Relief Refinance Mortgage, in which case the maximum ratios in Section 4304.3 apply (b) Asset calculation method for establishing the DTI ratio To determine the qualifying asset amount used to establish the DTI ratio, the following asset calculation method must be used:
Freddie Mac Guide 5307.1
307-2 Asset calculation method Step Requirement Step 1 Determine the total eligible documented asset amount. Step 2 Subtract all of the following from the total eligible documented assets: ◼ Any funds required to be paid by the Borrower to complete the transaction (e.g., Down Payment and Closing Costs), ◼ Any gift funds and borrowed funds ◼ Any portion of assets pledged as collateral for a loan or otherwise encumbered Net eligible assets: The resulting figure is the “net eligible assets.” Step 3 Divide the “net eligible assets” by 240. Qualifying asset amount: The resulting figure is the “qualifying asset amount” used to establish the DTI ratio. (c) Asset eligibility and documentation requirements The assets described below may be used to qualify the Borrower for the Mortgage, provided that the assets meet the following requirements: (i) Retirement assets The following table contains eligibility, documentation and calculation requirements for retirement accounts: Retirement assets Topic Stable monthly asset qualification requirements Asset eligibility ■ The retirement assets must be in a retirement account recognized by the Internal Revenue Service (IRS) (e.g., 401(k), IRA) ■ Borrower must be the sole owner ■ The asset must not currently be used as a source of income by the Borrower ■ As of the Note Date, the Borrower must have access to withdraw the funds in their entirety, less any portion
Freddie Mac Guide 5307.1
307-3 Retirement assets Topic Stable monthly asset qualification requirements pledged as collateral for a loan or otherwise encumbered, without being subject to a penalty or an additional early distribution tax ■ The Borrower’s rights to the funds in the account must be fully vested ■ Cryptocurrency may not be considered in the calculation of net eligible assets for establishing the DTI ratio described in Section 5307.1(b) Documentation Streamlined Accept and Standard Documentation: ■ Most recent retirement asset account statement ■ Documentation evidencing asset eligibility requirements are met Calculation Refer to asset calculation method in Section 5307.1(b) above. (ii) Lump-sum distribution funds not deposited into an eligible retirement asset The following table contains eligibility, documentation and calculation requirements for lump-sum distribution funds not deposited into an eligible retirement asset: Lump-sum distribution funds not deposited into an eligible retirement asset Topic Stable monthly asset qualification requirements Asset eligibility If the lump-sum distribution funds have been deposited into an eligible retirement asset, follow the requirements for retirement assets described in the table above. If the lump-sum distribution funds have been deposited into a depository or non-retirement securities account, the requirements in this table apply. ■ Lump-sum distribution funds must be derived from a retirement account recognized by the IRS (e.g., 401(k), IRA) and must be deposited into a depository or non- retirement securities account ■ A Borrower must have been the recipient of the lump-sum distribution funds
Freddie Mac Guide 5307.1
307-4 Lump-sum distribution funds not deposited into an eligible retirement asset Topic Stable monthly asset qualification requirements ■ Parties not obligated on the Mortgage may not have an ownership interest in the account that holds the funds from the lump-sum distribution ■ The proceeds from the lump-sum distribution must be immediately accessible in their entirety ■ The proceeds from the lump-sum distribution must not have been or currently be subject to a penalty or early distribution tax Documentation Streamlined Accept and Standard Documentation: ■ Employer distribution letter(s) and/or check-stub(s) evidencing receipt and type of lump-sum distribution funds; IRS 1099-R (if it has been received) ■ Satisfactorily documented evidence of the following: ❑ Funds verified in the non-retirement account and used for qualification must have been derived from eligible retirement assets ❑ Lump-sum distribution funds must not have been or currently be subject to a penalty or early distribution tax Calculation Refer to the asset calculation method in Section 5307.1(b) above. (iii)Depository accounts and securities (as described in Section 5501.3) The following table contains eligibility, documentation and calculation requirements for depository accounts and securities: Depository accounts and securities (as described in Section 5501.3) Topic Stable monthly asset qualification requirements Asset eligibility ■ The Borrower must solely own assets or, if the asset is owned jointly, each asset owner must be a Borrower on the Mortgage and/or on the title to the subject property ■ Accounts held in the name of a Living Trust are considered to be owned by the Borrower when the Borrower is the Settlor of the Living Trust
Freddie Mac Guide 5307.1
307-5 Depository accounts and securities (as described in Section 5501.3) Topic Stable monthly asset qualification requirements ■ When the Borrower is a Living Trust, the Underwritten Settlor is considered to be the owner of the accounts held in the name of the trust ■ At least one Borrower who is an account owner must be at least 62 years old ■ As of the Note Date, the Borrower must have access to withdraw the funds in their entirety, less any portion pledged as collateral for a loan or otherwise encumbered, without being subject to a penalty ■ Account funds must be located in a U.S.- or State- regulated financial institution and verified in U.S. dollars ■ Cryptocurrency may not be considered in the calculation of net eligible assets for establishing the DTI ratio described in Section 5307.1(b) Documentation Streamlined Accept Documentation: Provide an account statement covering a one-month period or a direct account verification (i.e., verification of deposit (VOD)) For securities: If the Borrower does not receive a stock/security account statement: ■ Provide evidence the security is owned by the Borrower, and ■ Verify value using stock prices from a financial publication or website Standard Documentation: Provide account statement(s) covering a two-month period or a direct account verification (i.e., VOD) For securities: If the Borrower does not receive a stock/security account statement: ■ Provide evidence the security is owned by the Borrower, and ■ Verify value using stock prices from a financial publication or website In addition to the documentation requirements above, the following requirements apply to all Mortgages: ■ Documentation evidencing asset eligibility requirements are met ■ Sourcing deposits:
Freddie Mac Guide 5307.1
307-6 Depository accounts and securities (as described in Section 5501.3) Topic Stable monthly asset qualification requirements ❑ The Seller must document the source of funds for any deposit exceeding 10% of the Borrower’s total eligible assets in depository accounts and securities and verify the deposit does not include gifts or borrowed funds or reduce the eligible assets used to qualify the Borrower by the amount of the deposit ❑ When the source of funds can be clearly identified from the deposit information on the account statement (e.g., direct payroll deposits) or other documented income or asset source in the Mortgage file, the Seller is not required to obtain additional documentation Calculation Refer to the asset calculation method in Section 5307.1(b) above (iv) Assets from the sale of the Borrower’s business The following table contains eligibility, documentation and calculation requirements for assets from the sale of the Borrower’s business: Assets from the sale of the Borrower’s business Topic Stable monthly asset qualification requirements Asset eligibility ■ The Borrower(s) must be the sole owner(s) of the proceeds from the sale of the business that were deposited to the depository or non-retirement securities account ■ Parties not obligated on the Mortgage may not have an ownership interest in the account that holds the proceeds from the sale of the Borrower’s business ■ The proceeds from the sale of the business must be immediately accessible in their entirety ■ The sale of the business must not have resulted in the following: retention of business assets, existing secured or unsecured debt, ownership interest or seller-held notes to buyer of business Documentation Streamlined Accept and Standard Documentation:
Freddie Mac Guide 5307.1
307-7 Assets from the sale of the Borrower’s business Topic Stable monthly asset qualification requirements ■ Most recent three months’ depository or securities account statements ■ Fully executed closing documents evidencing final sale of business to include sales price and net proceeds ■ Contract for sale of business ■ Most recent business tax return prior to sale of business ■ Satisfactorily documented evidence that the funds verified in the non-retirement account and used for qualification were derived from the sale of the Borrower’s business Calculation Refer to the asset calculation method in Section 5307.1(b) above (d) Special delivery requirements The Seller must deliver the ULDD Data Point Investor Feature Identifier valid value “H31” for Mortgages using assets as a basis for repayment of obligations. Note: See Section 6302.33 for special delivery requirements.