Freddie Mac Single-Family Seller/Servicer Guide 1301.6 — Enforcement of representations and warranties related to underwriting of the Borrower, Mortgaged Premises and project
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Freddie Mac Single-Family Seller/Servicer Guide 1301.6 — Enforcement of representations and warranties related to underwriting of the Borrower, Mortgaged Premises and project (part 1 of 2)
4 sections · 29,914 characters of verbatim text. Open a section to read it, or . Every section below is in the page source whether open or closed.
§Refer to Bulletin 2026-10, which announced updates related to…986 ch
Refer to Bulletin 2026-10, which announced updates related to accumulated assets as income. Sellers may implement the new requirements prior to the mandatory February 3, 2027 version of this section. This section contains requirements related to: ■ Representations and warranties ■ Eligible Mortgages ■ Life-of-loan representations and warranties Freddie Mac will not exercise its remedies, including the issuance of a repurchase request, in connection with the Seller/Servicer’s breaches of certain selling representations and warranties as described below. Mortgages that are processed by the Seller through Loan Collateral Advisor® and Loan Product Advisor® may also qualify for additional enforcement relief related to value, condition and marketability, provided certain conditions are met. See Section 5602.2 for details. Selling representation and warranty framework The requirements below are effective for Mortgages with Freddie Mac Settlement Dates on and after July 1, 2014.
aRepresentations and warranties For Mortgages, including Mortgages…5,370 ch
(a) Representations and warranties For Mortgages, including Mortgages sold pursuant to negotiated provisions, that comply with the eligibility requirements set forth in (b) below, Freddie Mac will not exercise its remedies, including the issuance of a repurchase request, in connection with the Seller/Servicer’s breaches of selling representations and warranties in the topics, chapters and sections of the Guide listed in the table below1, relating to: ■ The underwriting of the Borrower, which includes the Seller’s assessment of the Borrower’s loan terms, credit history, employment and income, assets, and other financial information used for qualifying the Borrower for the Mortgage ■ The underwriting of the Mortgaged Premises, which is the analysis of the description and valuation of the Mortgaged Premises to determine its adequacy as collateral for the Mortgage ■ The underwriting of the project in which the Mortgaged Premises is located, which is the analysis of the Planned Unit Development (PUD), Condominium Project or Cooperative Project 1 This includes the topics, chapters and sections as amended by the Seller’s Purchase Documents, if applicable. For Guide provisions not listed in this table, the Seller/Servicer will continue to be responsible for representations and warranties for the life of the loan. Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. Section 4101.1 The Mortgage application Section 4201.1 Investment Quality Mortgage, with the following exceptions: ■ The Mortgage is adequately secured by real property ■ For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, all ATR Covered Mortgages sold to Freddie Mac must satisfy the requirements in the Revised General QM Rule Section 4201.3 Amortization and term, with the following exceptions: Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. For a Mortgage with an Application Received Date prior to January 10, 2014, and a Freddie Mac Settlement Date on or before July 31, 2014: The Mortgage must not have an original term that exceeds 40 years from the date that is one month before the first payment Due Date as described in Section 4201.3. For a Mortgage with an Application Received Date on or after January 10, 2014, or a Freddie Mac Settlement Date after July 31, 2014: The Mortgage must not have an original term that exceeds 30 years from the date that is one month before the first payment Due Date as described in Section 4201.3. Subsection 4201.4(c) Additional requirements for Mortgages with Settlement Dates More than 120 days After the Note Date Section 4201.7 Assumption of Mortgage Section 4201.10 No circumstances adversely affecting value of Mortgage Section 4201.11 Mortgages secured by Primary Residences Section 4201.12 Second home Mortgages Section 4201.13 Investment Property Mortgages Section 4201.14 Impact of Contaminated Sites Maximum Loan Amounts and LTV, TLTV and HTLTV Ratios Secondary Financing and Other Financing Arrangements, with the following exceptions: Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ The requirement that for any Mortgage with a buydown plan, the initial interest rate may not be more than 3% below the Note Rate and the buydown plan may not extend for more than 3 years ■ Subsection 4204.3(a) regarding Borrower qualification and qualifying rates, as follows: For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, the qualifying rate must, at a minimum, equal the maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due, based on the loan amount over the loan term. Refinance Mortgages With the exception of Section 4301.3 regarding refinance practices Subsection 4401.2
bARM qualifying rates, with the following exception: For all…12,725 ch
(b) ARM qualifying rates, with the following exception: For all…1,371 ch
(b) ARM qualifying rates, with the following exception: For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, the qualifying rate must, at a minimum, equal the maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due, based on the loan amount over the loan term. Seller-Owned Converted and Seller-Owned Modified Mortgages Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. Land Contract; Contract for Deed Energy Conservation Improvements Mortgages Secured by Properties Subject to Resale Restrictions Properties Impacted by Disasters Mortgages Made Pursuant to Employee Relocation Programs Topic 4500 Affordable Mortgages and Duty to Serve Topic 4600 Special Freddie Mac Mortgage Products Subsection 4701.2
aBorrower-paid financed premiums (mortgage insurance premiums)…5,920 ch
(a) Borrower-paid financed premiums (mortgage insurance premiums) Topic 5100 Determining Borrower Eligibility With the exception of: ■ Section 5103.2 regarding requirements for permanent and nonpermanent resident aliens ■ Section 5103.5 regarding requirements for living trusts Topic 5200 Credit Assessment Topic 5300 Stable Monthly Income and Asset Qualification Sources Topic 5400 Evaluation of Monthly Obligations Topic 5500 Assets Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. Topic 5600 Property Eligibility and Valuation With the exception of: ■ Subsection 5601.1(a), Eligible properties ■ Subsection 5603.1(b) relating to Exhibit 35, Appraiser Independence Requirements ■ Section 5603.1 relating to the Uniform Standards of Professional Appraisal Practice ■ Subsection 5603.5(a) relating to Exhibit 42, Property Data Collector Independence Requirements Condominiums With the exception of: ■ Section 5701.2 relating to project insurance requirements ■ Section 5701.2 relating to title insurance ■ Subsection 5701.3(a), Projects in which the unit owners do not have an undivided ownership or leasehold interest in the land on which the project is located ■ Subsection 5701.3(b), Condominium Hotel ■ Subsection 5701.3(d), Project with excessive commercial or non-residential space ■ Subsection 5701.3(e), Tenancy-in-Common apartment project ■ Subsection 5701.3(f), Timeshare project or project with segmented ownership ■ Subsection 5701.3(g), Houseboat project Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ Subsection 5701.3(k), Continuing Care Retirement Community (CCRC) ■ Subsection 5701.3(l), Manufactured Homes ■ Subsection 5701.3(m), Project with mandatory dues or similar membership fees for use of Amenities such as clubhouses or recreational facilities ■ Subsection 5701.6(e), Compliance with laws ■ Subsection 5701.6(f), Limitations on ability to sell/right of first refusal ■ Subsection 5701.6(h), Mortgagee consent ■ Subsection 5701.6(i), Rights of Condominium mortgagees and guarantors Planned Unit Developments (PUDs) With the exception of Subsection 5702.1(f) relating to insurance requirements Manufactured Homes With the exception of Section 5703.2 and Subsections 5703.3(a) and (b) regarding the characteristics and requirements of a Manufactured Home Leasehold Estates Cooperative Projects and Cooperative Share Loans With the exception of: ■ Subsection 5705.2(a)(4), Compliance with law ■ Subsection 5705.2(b)(1), Cooperative Project insurance Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ Subsection 5705.2(b)(2), Title insurance ■ Subsection 5705.3(a), Ownership of Cooperative Project land and Cooperative Units ■ Subsection 5705.3(b), Cooperative Hotel ■ Subsection 5705.3(d), Cooperative Project with excessive commercial or non-residential space ■ Subsection 5705.3(g), Houseboat Cooperative Project ■ Subsection 5705.3(h), Ownership and use of Common Elements in the Cooperative Project ■ Subsection 5705.3(k), Continuing Care Retirement Community (CCRC) ■ Subsection 5705.3(l), Cooperative Projects comprised of Manufactured Homes ■ Subsection 5705.3(n), Limited Equity Cooperative Project ■ Subsection 5705.4(b), Owner-occupancy requirement ■ Subsection 5705.4(i), Prior Cooperative Project financing ■ Subsection 5705.5(h), Cooperative Corporation’s approval ■ Subsection 5705.5(i), Cooperative Project that is not a Cooperative Housing Corporation ■ Subsection 5705.6(b), Right of first refusal ■ Subsection 5705.6(d), Rights of Cooperative Shareholders and Sellers ■ Subsection 5705.6(e), Cooperative membership ■ Subsection 5705.6(g), Assignment of Shareholder’s Cooperative Interest Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ Subsection 5705.6(h), Cooperative Corporation Responsibilities and Seller/Servicer Rights ■ Subsection 5705.9(e), Closing requirements for combined Cooperative Units ■ Subsection 5705.10(c), Prior Cooperative Project financing
bEligible Mortgages Freddie Mac will not exercise its remedies in…5,434 ch
(b) Eligible Mortgages Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties described in Section 1301.6(a) for Mortgages that meet the following requirements: ■ The Mortgage must have a Freddie Mac Settlement Date on or after July 1, 2014 ■ The Mortgage must be a conventional Mortgage delivered to Freddie Mac through a flow purchase contract ■ The Mortgage must not be a Mortgage that Freddie Mac and the Seller/Servicer have agreed is subject to any credit enhancement other than primary mortgage insurance ■ The Mortgage must have either an acceptable payment history or a satisfactory conclusion of a Freddie Mac quality control review as more fully described below: Acceptable payment history The Mortgage has an acceptable payment history if it meets the following eligibility requirements: ❑ For Mortgages other than Freddie Mac Relief RefinanceSM Mortgages and Freddie Mac Enhanced Relief Refinance® Mortgages: ■ Following the Freddie Mac Settlement Date, the Borrower (i) made the first 36 monthly payments due with no more than two 30-day Delinquencies and no 60day or greater Delinquencies; and (ii) must not be 30 or more days delinquent with respect to the 36th monthly payment ❑ For Freddie Mac Relief Refinance Mortgages and Freddie Mac Enhanced Relief Refinance Mortgages: ■ Following the Freddie Mac Settlement Date, the Borrower made the first 12 monthly payments due with no 30-day or greater Delinquencies, or ■ Following the Freddie Mac Settlement Date, the Borrower (i) made the first 36 monthly payments due with no more than two 30-day Delinquencies, and no 60day or greater Delinquencies; and (ii) must not be 30 or more days delinquent with respect to the 36th monthly payment ❑ In addition, during the applicable payment history period: ■ With the exception of temporary subsidy buydown arrangements permitted by the Purchase Documents, neither the Seller/Servicer nor any third party may escrow or advance funds to be used for payment of any monthly installment, principal, interest or other charge payable under the terms of the Mortgage ■ The Mortgage must not have been subject to a repayment plan, or otherwise have been modified from its original terms, except as otherwise stated below for a disaster-related forbearance plan ■ The Mortgage must not have an outstanding request for a repurchase, a repurchase alternative or a make-whole ❑ The Mortgage may have been subject to a disaster-related forbearance plan during the applicable payment history period as a result of the Borrower being impacted by an Eligible Disaster pursuant to Chapter 8404, provided that: ■ The Mortgage is fully reinstated, as described in Section 9203.1(c), or ■ The Borrower agrees to a repayment plan and complies with the terms of the repayment plan, restoring the Mortgage to a current status, or ■ The disaster-related forbearance transitions into a Disaster Payment Deferral, restoring the Mortgage to a current status, or ■ The disaster-related forbearance transitions into a permanent modification, restoring the Mortgage to a current status, or ■ For all four options described above, payments due during the disaster-related forbearance period are considered to have been made on time for the purposes of this section Note: The Servicer must report the Borrower’s payment status of the Mortgage in accordance with Section 8303.1(c). Satisfactory conclusion of a Freddie Mac quality control review For a Mortgage to obtain a satisfactory conclusion of a Freddie Mac quality control review, it must meet one of the following requirements: ■ Freddie Mac completes a quality control review of the Mortgage file, which includes a review of the credit underwriting and eligibility of the Borrower, the Mortgaged Premises (including its value) and the project in which the Mortgaged Premises is located, if applicable (“quality control review”), and determines that the Mortgage is acceptable (that is, the Mortgage is not subject to a repurchase request) ■ Freddie Mac completes the quality control review and determines the Mortgage is not acceptable because of a loan deficiency that is curable, and the Seller/Servicer cures the deficiency to Freddie Mac’s satisfaction. Example: If the Mortgage file delivered to Freddie Mac did not contain the required verification of income, the loan deficiency would be deemed to be corrected if the Seller/Servicer provided the missing documentation within the time frame specified. Another example of an action taken to correct a loan deficiency is rectifying a prior lien by producing evidence of a recorded satisfaction or release of such prior lien within the time frame specified. ■ Freddie Mac completes the quality control review and determines the Mortgage is not acceptable, but Freddie Mac and the Seller/Servicer agreed upon an alternative to repurchase that has since expired or terminated by its terms. Example: If Freddie Mac determined a Mortgage was not acceptable and, as a repurchase alternative, Freddie Mac and the Seller/Servicer agreed that the Mortgage would be subject to recourse for five years, then the Seller/Servicer will be relieved from Freddie Mac’s enforcement of the representations and warranties described in Section 1301.6(a) at the end of the five-year period. Other possible repurchase alternatives include indemnification, make-whole arrangements and certain split loss agreements.
cLife-of-loan representations and warranties For Mortgages that…10,833 ch
(c) Life-of-loan representations and warranties For Mortgages that meet the eligibility requirements set forth in (b) above, the Seller/Servicer will not be relieved from Freddie Mac’s enforcement of its representations and warranties with respect to the following matters, even if such issues are referenced in the Guide topics, chapters or sections in the table above. Instead, the Seller/Servicer will be responsible for all such representations and warranties for the life of the loan. ■ Charter matters Each Mortgage must be eligible for purchase under the Freddie Mac Charter Act in the following respects: ❑ The Mortgage must be secured by a residential property that is located within any of the 50 States, the District of Columbia, Guam, Puerto Rico or the U.S. Virgin Islands at the time of Freddie Mac’s purchase, as set forth in Section 4201.1 and the definition of a State in the Glossary ❑ The original UPB of the Mortgage must not exceed the maximum original loan amounts set forth in Sections 4203.1(c) and 4603.2 ❑ The Mortgage must not be secured by vacant land or property primarily used for agriculture, farming or commercial enterprise at the time of Freddie Mac’s purchase ❑ The Mortgage must be secured by a residential property consisting of one to four dwelling units at the time of Freddie Mac’s purchase ❑ Any Mortgage with an LTV ratio in excess of 80% at the time of Freddie Mac’s purchase must (i) have mortgage insurance on the portion of the Mortgage in excess of 80% of the property’s value (determined in accordance with Section 4701.1), or in the case of Freddie Mac Relief Refinance Mortgages and Freddie Mac Enhanced Relief Refinance Mortgages, meet the applicable mortgage insurance requirements in the Guide, (ii) be sold with recourse, within the meaning of Section 6201.2(b)(i) ■ Misstatements, misrepresentations and omissions The Mortgage must not have any misstatements misrepresentations or omissions (“misrepresentations”) by any party to the Mortgage transaction (including, but not limited to, the Seller, Borrowers, property sellers, builders, real estate agents, lenders, mortgage brokers, loan officers, originators, appraisers, appraisal companies, closing agents, title companies or other third party vendors) pertaining to the requirements described in the topics, chapters and sections of the Guide set forth in the table above that are made with or without the Seller’s knowledge and that: ❑ Involve three or more Mortgages sold to Freddie Mac by the same Seller, and ❑ Were made pursuant to a common pattern of activity in connection with the Mortgage origination or sale based on information in the Mortgage file or other facts or circumstances that existed on the Settlement Date that involved at least one party common to all the Mortgages (if the common party is the Seller, then the same individual; if the common party is a third party, then the same individual or entity), and ❑ Are “significant” in that, using true and accurate information, either Freddie Mac determines that: 1. The Mortgage would not have been eligible for sale under the terms of the Seller’s Purchase Documents in effect on the Settlement Date, or 2. The Mortgage would have been eligible for sale, but under different terms For purposes of finding three or more Mortgages to constitute the pattern, both Mortgages that have obtained relief under the framework and Mortgages that have not obtained relief may be counted. If Mortgages that have not obtained relief are counted for purposes of establishing a pattern, those Mortgages must meet all requirements of this exclusion (i.e., three or more Mortgages, common pattern of activity, significance) in order for Freddie Mac to enforce a remedy for each Mortgage. In determining whether a misrepresentation is significant, Freddie Mac will rely on its Loan Product Advisor simulator, which approximates the Risk Class at the time of delivery. Freddie Mac will compare the Loan Product Advisor simulator assessment using true and accurate information with the Loan Product Advisor simulator assessment received at the time of delivery. A misrepresentation will be considered significant only if the Mortgage receives a worse Loan Product Advisor assessment from the simulator than was received at the time of delivery to Freddie Mac, except that Freddie Mac will also take into account any applicable negotiated terms of business and the impact of any undisclosed concessions, concealed transaction terms or other violations of the Seller’s Purchase Documents that are involved in the misrepresentation but are not assessed by the Loan Product Advisor simulator when determining significance. Freddie Mac will notify the Seller/Servicer of any such undisclosed matters or violations that are considered in connection with determining significance and will provide the Seller/Servicer with documentation supporting the significance determination. If Freddie Mac determines that the Mortgage would have been eligible for sale but under different terms than those under which the Mortgage was sold, as described in number 2 of the third bullet above, Freddie Mac will not seek repurchase but instead will re-price the Mortgage, consistent with the Seller’s Purchase Documents in effect on the Settlement Date, to reflect the true risk profile of the Mortgage. As an exception to the above, Mortgages involving fraud will be subject to repurchase, regardless of whether the above test (three or more Mortgages, common pattern of activity, significance) has been met. For purposes of this life-of-loan representation and warranty only, “fraud” is established either by: ■ An adjudicated claim affirming fraud by or against the Seller or other party to the Mortgage transaction, or ■ Freddie Mac finding clear and convincing evidence that a Seller or other party to the Mortgage transaction knowingly executed or participated in a scheme or artifice in connection with the underwriting, origination or sale of a Mortgage to: ❑ Defraud Freddie Mac or any other party to the Mortgage transaction, or ❑ Obtain any moneys, funds, credits, assets, securities or other properties from Freddie Mac or any other party to the Mortgage transaction by means of fraudulent pretenses, representations or promises ■ Data inaccuracies The Mortgage must not have any Uniform Loan Delivery Dataset (ULDD) data inaccuracies pertaining to the requirements described in the topics, chapters and sections of the Guide set forth in the table above, if and to the extent: ❑ The data inaccuracies affect five or more Mortgages and involve the same delivery data element(s), and ❑ The ULDD data differs from the information in the Mortgage file, and ❑ The data inaccuracies are “significant” in that, using the information in the Mortgage file to qualify the Borrower, Mortgaged Premises and/or project in which the Mortgaged Premises is located, Freddie Mac determines that either: 1. The Mortgage would not have been eligible for sale under the terms of the Seller’s Purchase Documents in effect on the Settlement Date, or 2. The Mortgage would have been eligible for sale but under different terms For purposes of finding five or more Mortgages involving the same delivery data element inaccuracy, both Mortgages that have obtained relief under the framework and Mortgages that have not obtained relief may be counted. If Mortgages that have not obtained relief are counted for purposes of establishing that there were five or more Mortgages with the same delivery data element inaccuracy, those Mortgages must meet all other requirements of this exclusion (i.e., same delivery data elements, data differs from information in the Mortgage file, significance) in order for Freddie Mac to enforce a remedy for each Mortgage. In determining whether the data inaccuracy is significant, Freddie Mac will rely on its Loan Product Advisor simulator, which approximates the Risk Class at the time of delivery. Freddie Mac will compare the Loan Product Advisor simulator assessment using true and accurate information with the Loan Product Advisor simulator assessment received at the time of delivery. A data inaccuracy will be considered significant only if the Mortgage receives a worse Loan Product Advisor assessment from the simulator than was received at the time of delivery to Freddie Mac, except that Freddie Mac will also take into account any applicable negotiated terms of business when determining significance. Freddie Mac will provide the Seller/Servicer with documentation supporting the significance determination. If Freddie Mac determines that the Mortgage would have been eligible for sale but under different terms than those under which the Mortgage was sold, as described in number 2 of the third bullet above, Freddie Mac will not seek repurchase but instead will re-price the Mortgage, consistent with the Seller’s Purchase Documents in effect on the Settlement Date, to reflect the true risk profile of the Mortgage. ■ Clear title/First Lien priority: The Mortgage must be enforceable as a First Lien (with no pending condemnation proceedings) and have clear title through foreclosure ■ Compliance with laws: The Mortgage must comply with all applicable federal, State and local laws, ordinances, regulations and orders, including, without limitation, State antipredatory lending laws and regulations. For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, in addition to ensuring compliance with applicable laws, Sellers must ensure that all ATR Covered Mortgages satisfy the QM requirements of the Revised General QM Rule, even if the Seller is not required by law or regulation to comply with the Revised General QM Rule. ■ Unacceptable Mortgage products: The Mortgage must be a Mortgage product acceptable for sale to Freddie Mac. The Seller/Servicer will not be relieved of Freddie Mac’s enforcement of its representations and warranties for unacceptable Mortgage products, including, but not limited to, the following: ❑ A Mortgage with an interest-only feature ❑ A graduated-payment Mortgage ❑ A Mortgage originated with stated or no income and/or asset documentation. (Freddie Mac Relief Refinance Mortgages and Freddie Mac Enhanced Relief Refinance Mortgages are not considered a Mortgage originated with stated or no income and/or asset documentation.) ❑ A Mortgage subject to negative amortization ❑ A construction loan (other than a Construction to Permanent Mortgage) ❑ A daily simple interest Mortgage ❑ A Prepayment Penalty Mortgage with an Application Received Date on or after January 10, 2014 or a Freddie Mac Settlement Date after July 31, 2014 ❑ A reverse Mortgage ❑ A Mortgage with balloon payments (with or without a reset option) ❑ A second Mortgage
Freddie Mac Single-Family Seller/Servicer Guide 1301.6 — Enforcement of representations and warranties related to underwriting of the Borrower, Mortgaged Premises and project — PENDING VERSION, takes effect 2027-02-03
Not yet in force. This is the pending version of the section, which takes effect 2027-02-03. The other version on this page governs until then.
4 sections · 29,779 characters of verbatim text. Open a section to read it, or . Every section below is in the page source whether open or closed.
§Mortgaged Premises and project (Future effective date 02/03/27)…850 ch
Mortgaged Premises and project (Future effective date 02/03/27) This section contains requirements related to: ■ Representations and warranties ■ Eligible Mortgages ■ Life-of-loan representations and warranties Freddie Mac will not exercise its remedies, including the issuance of a repurchase request, in connection with the Seller/Servicer’s breaches of certain selling representations and warranties as described below. Mortgages that are processed by the Seller through Loan Collateral Advisor® and Loan Product Advisor® may also qualify for additional enforcement relief related to value, condition and marketability, provided certain conditions are met. See Section 5602.2 for details. Selling representation and warranty framework The requirements below are effective for Mortgages with Freddie Mac Settlement Dates on and after July 1, 2014.
aRepresentations and warranties For Mortgages, including Mortgages…5,370 ch
(a) Representations and warranties For Mortgages, including Mortgages sold pursuant to negotiated provisions, that comply with the eligibility requirements set forth in (b) below, Freddie Mac will not exercise its remedies, including the issuance of a repurchase request, in connection with the Seller/Servicer’s breaches of selling representations and warranties in the topics, chapters and sections of the Guide listed in the table below1, relating to: ■ The underwriting of the Borrower, which includes the Seller’s assessment of the Borrower’s loan terms, credit history, employment and income, assets, and other financial information used for qualifying the Borrower for the Mortgage ■ The underwriting of the Mortgaged Premises, which is the analysis of the description and valuation of the Mortgaged Premises to determine its adequacy as collateral for the Mortgage ■ The underwriting of the project in which the Mortgaged Premises is located, which is the analysis of the Planned Unit Development (PUD), Condominium Project or Cooperative Project 1 This includes the topics, chapters and sections as amended by the Seller’s Purchase Documents, if applicable. For Guide provisions not listed in this table, the Seller/Servicer will continue to be responsible for representations and warranties for the life of the loan. Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. Section 4101.1 The Mortgage application Section 4201.1 Investment Quality Mortgage, with the following exceptions: ■ The Mortgage is adequately secured by real property Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, all ATR Covered Mortgages sold to Freddie Mac must satisfy the requirements in the Revised General QM Rule Section 4201.3 Amortization and term, with the following exceptions: For a Mortgage with an Application Received Date prior to January 10, 2014, and a Freddie Mac Settlement Date on or before July 31, 2014: The Mortgage must not have an original term that exceeds 40 years from the date that is one month before the first payment Due Date as described in Section 4201.3. For a Mortgage with an Application Received Date on or after January 10, 2014, or a Freddie Mac Settlement Date after July 31, 2014: The Mortgage must not have an original term that exceeds 30 years from the date that is one month before the first payment Due Date as described in Section 4201.3. Subsection 4201.4(c) Additional requirements for Mortgages with Settlement Dates More than 120 days After the Note Date Section 4201.7 Assumption of Mortgage Section 4201.10 No circumstances adversely affecting value of Mortgage Section 4201.11 Mortgages secured by Primary Residences Section 4201.12 Second home Mortgages Section 4201.13 Investment Property Mortgages Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. Section 4201.14 Impact of Contaminated Sites Maximum Loan Amounts and LTV, TLTV and HTLTV Ratios Secondary Financing and Other Financing Arrangements, with the following exceptions: ■ The requirement that for any Mortgage with a buydown plan, the initial interest rate may not be more than 3% below the Note Rate and the buydown plan may not extend for more than 3 years ■ Subsection 4204.3(a) regarding Borrower qualification and qualifying rates, as follows: For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, the qualifying rate must, at a minimum, equal the maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due, based on the loan amount over the loan term. Refinance Mortgages With the exception of Section 4301.3 regarding refinance practices Subsection 4401.2
bARM qualifying rates, with the following exception…12,726 ch
(b) ARM qualifying rates, with the following exception…1,371 ch
(b) ARM qualifying rates, with the following exception: Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, the qualifying rate must, at a minimum, equal the maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due, based on the loan amount over the loan term. Seller-Owned Converted and Seller-Owned Modified Mortgages Land Contract; Contract for Deed Energy Conservation Improvements Mortgages Secured by Properties Subject to Resale Restrictions Properties Impacted by Disasters Mortgages Made Pursuant to Employee Relocation Programs Topic 4500 Affordable Mortgages and Duty to Serve Topic 4600 Special Freddie Mac Mortgage Products Subsection 4701.2
aBorrower-paid financed premiums (mortgage insurance premiums)…5,921 ch
(a) Borrower-paid financed premiums (mortgage insurance premiums) Topic 5100 Determining Borrower Eligibility With the exception of: ■ Section 5103.2 regarding requirements for permanent and nonpermanent resident aliens Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ Section 5103.5 regarding requirements for living trusts Topic 5200 Credit Assessment Topic 5300 Stable Monthly Income and Accumulated Assets as Income Topic 5400 Evaluation of Monthly Obligations Topic 5500 Assets Topic 5600 Property Eligibility and Valuation With the exception of: ■ Subsection 5601.1(a), Eligible properties ■ Subsection 5603.1(b) relating to Exhibit 35, Appraiser Independence Requirements ■ Section 5603.1 relating to the Uniform Standards of Professional Appraisal Practice ■ Subsection 5603.5(a) relating to Exhibit 42, Property Data Collector Independence Requirements Condominiums With the exception of: ■ Section 5701.2 relating to project insurance requirements ■ Section 5701.2 relating to title insurance ■ Subsection 5701.3(a), Projects in which the unit owners do not have an undivided ownership or leasehold interest in the land on which the project is located ■ Subsection 5701.3(b), Condominium Hotel Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ Subsection 5701.3(d), Project with excessive commercial or non-residential space ■ Subsection 5701.3(e), Tenancy-in-Common apartment project ■ Subsection 5701.3(f), Timeshare project or project with segmented ownership ■ Subsection 5701.3(g), Houseboat project ■ Subsection 5701.3(k), Continuing Care Retirement Community (CCRC) ■ Subsection 5701.3(l), Manufactured Homes ■ Subsection 5701.3(m), Project with mandatory dues or similar membership fees for use of Amenities such as clubhouses or recreational facilities ■ Subsection 5701.6(e), Compliance with laws ■ Subsection 5701.6(f), Limitations on ability to sell/right of first refusal ■ Subsection 5701.6(h), Mortgagee consent ■ Subsection 5701.6(i), Rights of Condominium mortgagees and guarantors Planned Unit Developments (PUDs) With the exception of Subsection 5702.1(f) relating to insurance requirements Manufactured Homes With the exception of Section 5703.2 and Subsections 5703.3(a) and (b) regarding the characteristics and requirements of a Manufactured Home Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. Leasehold Estates Cooperative Projects and Cooperative Share Loans With the exception of: ■ Subsection 5705.2(a)(4), Compliance with law ■ Subsection 5705.2(b)(1), Cooperative Project insurance ■ Subsection 5705.2(b)(2), Title insurance ■ Subsection 5705.3(a), Ownership of Cooperative Project land and Cooperative Units ■ Subsection 5705.3(b), Cooperative Hotel ■ Subsection 5705.3(d), Cooperative Project with excessive commercial or non-residential space ■ Subsection 5705.3(g), Houseboat Cooperative Project ■ Subsection 5705.3(h), Ownership and use of Common Elements in the Cooperative Project ■ Subsection 5705.3(k), Continuing Care Retirement Community (CCRC) ■ Subsection 5705.3(l), Cooperative Projects comprised of Manufactured Homes ■ Subsection 5705.3(n), Limited Equity Cooperative Project ■ Subsection 5705.4(b), Owner-occupancy requirement ■ Subsection 5705.4(i), Prior Cooperative Project financing ■ Subsection 5705.5(h), Cooperative Corporation’s approval Seller/Servicer representations and warranties Guide topic/chapter/section Title of topic, chapter or section and where noted, exclusions to provisions in the topic/chapter/section Note: Where the following provisions of the Guide contain references to requirements located in other topics, chapters and/or sections of the Guide, Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties related to those requirements only if the topic/chapter/section where the requirement is located is included below. ■ Subsection 5705.5(i), Cooperative Project that is not a Cooperative Housing Corporation ■ Subsection 5705.6(b), Right of first refusal ■ Subsection 5705.6(d), Rights of Cooperative Shareholders and Sellers ■ Subsection 5705.6(e), Cooperative membership ■ Subsection 5705.6(g), Assignment of Shareholder’s Cooperative Interest ■ Subsection 5705.6(h), Cooperative Corporation Responsibilities and Seller/Servicer Rights ■ Subsection 5705.9(e), Closing requirements for combined Cooperative Units ■ Subsection 5705.10(c), Prior Cooperative Project financing
bEligible Mortgages Freddie Mac will not exercise its remedies in…5,434 ch
(b) Eligible Mortgages Freddie Mac will not exercise its remedies in connection with breaches of representations and warranties described in Section 1301.6(a) for Mortgages that meet the following requirements: ■ The Mortgage must have a Freddie Mac Settlement Date on or after July 1, 2014 ■ The Mortgage must be a conventional Mortgage delivered to Freddie Mac through a flow purchase contract ■ The Mortgage must not be a Mortgage that Freddie Mac and the Seller/Servicer have agreed is subject to any credit enhancement other than primary mortgage insurance ■ The Mortgage must have either an acceptable payment history or a satisfactory conclusion of a Freddie Mac quality control review as more fully described below: Acceptable payment history The Mortgage has an acceptable payment history if it meets the following eligibility requirements: ❑ For Mortgages other than Freddie Mac Relief RefinanceSM Mortgages and Freddie Mac Enhanced Relief Refinance® Mortgages: ■ Following the Freddie Mac Settlement Date, the Borrower (i) made the first 36 monthly payments due with no more than two 30-day Delinquencies and no 60day or greater Delinquencies; and (ii) must not be 30 or more days delinquent with respect to the 36th monthly payment ❑ For Freddie Mac Relief Refinance Mortgages and Freddie Mac Enhanced Relief Refinance Mortgages: ■ Following the Freddie Mac Settlement Date, the Borrower made the first 12 monthly payments due with no 30-day or greater Delinquencies, or ■ Following the Freddie Mac Settlement Date, the Borrower (i) made the first 36 monthly payments due with no more than two 30-day Delinquencies, and no 60day or greater Delinquencies; and (ii) must not be 30 or more days delinquent with respect to the 36th monthly payment ❑ In addition, during the applicable payment history period: ■ With the exception of temporary subsidy buydown arrangements permitted by the Purchase Documents, neither the Seller/Servicer nor any third party may escrow or advance funds to be used for payment of any monthly installment, principal, interest or other charge payable under the terms of the Mortgage ■ The Mortgage must not have been subject to a repayment plan, or otherwise have been modified from its original terms, except as otherwise stated below for a disaster-related forbearance plan ■ The Mortgage must not have an outstanding request for a repurchase, a repurchase alternative or a make-whole ❑ The Mortgage may have been subject to a disaster-related forbearance plan during the applicable payment history period as a result of the Borrower being impacted by an Eligible Disaster pursuant to Chapter 8404, provided that: ■ The Mortgage is fully reinstated, as described in Section 9203.1(c), or ■ The Borrower agrees to a repayment plan and complies with the terms of the repayment plan, restoring the Mortgage to a current status, or ■ The disaster-related forbearance transitions into a Disaster Payment Deferral, restoring the Mortgage to a current status, or ■ The disaster-related forbearance transitions into a permanent modification, restoring the Mortgage to a current status, or ■ For all four options described above, payments due during the disaster-related forbearance period are considered to have been made on time for the purposes of this section Note: The Servicer must report the Borrower’s payment status of the Mortgage in accordance with Section 8303.1(c). Satisfactory conclusion of a Freddie Mac quality control review For a Mortgage to obtain a satisfactory conclusion of a Freddie Mac quality control review, it must meet one of the following requirements: ■ Freddie Mac completes a quality control review of the Mortgage file, which includes a review of the credit underwriting and eligibility of the Borrower, the Mortgaged Premises (including its value) and the project in which the Mortgaged Premises is located, if applicable (“quality control review”), and determines that the Mortgage is acceptable (that is, the Mortgage is not subject to a repurchase request) ■ Freddie Mac completes the quality control review and determines the Mortgage is not acceptable because of a loan deficiency that is curable, and the Seller/Servicer cures the deficiency to Freddie Mac’s satisfaction. Example: If the Mortgage file delivered to Freddie Mac did not contain the required verification of income, the loan deficiency would be deemed to be corrected if the Seller/Servicer provided the missing documentation within the time frame specified. Another example of an action taken to correct a loan deficiency is rectifying a prior lien by producing evidence of a recorded satisfaction or release of such prior lien within the time frame specified. ■ Freddie Mac completes the quality control review and determines the Mortgage is not acceptable, but Freddie Mac and the Seller/Servicer agreed upon an alternative to repurchase that has since expired or terminated by its terms. Example: If Freddie Mac determined a Mortgage was not acceptable and, as a repurchase alternative, Freddie Mac and the Seller/Servicer agreed that the Mortgage would be subject to recourse for five years, then the Seller/Servicer will be relieved from Freddie Mac’s enforcement of the representations and warranties described in Section 1301.6(a) at the end of the five-year period. Other possible repurchase alternatives include indemnification, make-whole arrangements and certain split loss agreements.
cLife-of-loan representations and warranties For Mortgages that…10,833 ch
(c) Life-of-loan representations and warranties For Mortgages that meet the eligibility requirements set forth in (b) above, the Seller/Servicer will not be relieved from Freddie Mac’s enforcement of its representations and warranties with respect to the following matters, even if such issues are referenced in the Guide topics, chapters or sections in the table above. Instead, the Seller/Servicer will be responsible for all such representations and warranties for the life of the loan. ■ Charter matters Each Mortgage must be eligible for purchase under the Freddie Mac Charter Act in the following respects: ❑ The Mortgage must be secured by a residential property that is located within any of the 50 States, the District of Columbia, Guam, Puerto Rico or the U.S. Virgin Islands at the time of Freddie Mac’s purchase, as set forth in Section 4201.1 and the definition of a State in the Glossary ❑ The original UPB of the Mortgage must not exceed the maximum original loan amounts set forth in Sections 4203.1(c) and 4603.2 ❑ The Mortgage must not be secured by vacant land or property primarily used for agriculture, farming or commercial enterprise at the time of Freddie Mac’s purchase ❑ The Mortgage must be secured by a residential property consisting of one to four dwelling units at the time of Freddie Mac’s purchase ❑ Any Mortgage with an LTV ratio in excess of 80% at the time of Freddie Mac’s purchase must (i) have mortgage insurance on the portion of the Mortgage in excess of 80% of the property’s value (determined in accordance with Section 4701.1), or in the case of Freddie Mac Relief Refinance Mortgages and Freddie Mac Enhanced Relief Refinance Mortgages, meet the applicable mortgage insurance requirements in the Guide, (ii) be sold with recourse, within the meaning of Section 6201.2(b)(i) ■ Misstatements, misrepresentations and omissions The Mortgage must not have any misstatements misrepresentations or omissions (“misrepresentations”) by any party to the Mortgage transaction (including, but not limited to, the Seller, Borrowers, property sellers, builders, real estate agents, lenders, mortgage brokers, loan officers, originators, appraisers, appraisal companies, closing agents, title companies or other third party vendors) pertaining to the requirements described in the topics, chapters and sections of the Guide set forth in the table above that are made with or without the Seller’s knowledge and that: ❑ Involve three or more Mortgages sold to Freddie Mac by the same Seller, and ❑ Were made pursuant to a common pattern of activity in connection with the Mortgage origination or sale based on information in the Mortgage file or other facts or circumstances that existed on the Settlement Date that involved at least one party common to all the Mortgages (if the common party is the Seller, then the same individual; if the common party is a third party, then the same individual or entity), and ❑ Are “significant” in that, using true and accurate information, either Freddie Mac determines that: 1. The Mortgage would not have been eligible for sale under the terms of the Seller’s Purchase Documents in effect on the Settlement Date, or 2. The Mortgage would have been eligible for sale, but under different terms For purposes of finding three or more Mortgages to constitute the pattern, both Mortgages that have obtained relief under the framework and Mortgages that have not obtained relief may be counted. If Mortgages that have not obtained relief are counted for purposes of establishing a pattern, those Mortgages must meet all requirements of this exclusion (i.e., three or more Mortgages, common pattern of activity, significance) in order for Freddie Mac to enforce a remedy for each Mortgage. In determining whether a misrepresentation is significant, Freddie Mac will rely on its Loan Product Advisor simulator, which approximates the Risk Class at the time of delivery. Freddie Mac will compare the Loan Product Advisor simulator assessment using true and accurate information with the Loan Product Advisor simulator assessment received at the time of delivery. A misrepresentation will be considered significant only if the Mortgage receives a worse Loan Product Advisor assessment from the simulator than was received at the time of delivery to Freddie Mac, except that Freddie Mac will also take into account any applicable negotiated terms of business and the impact of any undisclosed concessions, concealed transaction terms or other violations of the Seller’s Purchase Documents that are involved in the misrepresentation but are not assessed by the Loan Product Advisor simulator when determining significance. Freddie Mac will notify the Seller/Servicer of any such undisclosed matters or violations that are considered in connection with determining significance and will provide the Seller/Servicer with documentation supporting the significance determination. If Freddie Mac determines that the Mortgage would have been eligible for sale but under different terms than those under which the Mortgage was sold, as described in number 2 of the third bullet above, Freddie Mac will not seek repurchase but instead will re-price the Mortgage, consistent with the Seller’s Purchase Documents in effect on the Settlement Date, to reflect the true risk profile of the Mortgage. As an exception to the above, Mortgages involving fraud will be subject to repurchase, regardless of whether the above test (three or more Mortgages, common pattern of activity, significance) has been met. For purposes of this life-of-loan representation and warranty only, “fraud” is established either by: ■ An adjudicated claim affirming fraud by or against the Seller or other party to the Mortgage transaction, or ■ Freddie Mac finding clear and convincing evidence that a Seller or other party to the Mortgage transaction knowingly executed or participated in a scheme or artifice in connection with the underwriting, origination or sale of a Mortgage to: ❑ Defraud Freddie Mac or any other party to the Mortgage transaction, or ❑ Obtain any moneys, funds, credits, assets, securities or other properties from Freddie Mac or any other party to the Mortgage transaction by means of fraudulent pretenses, representations or promises ■ Data inaccuracies The Mortgage must not have any Uniform Loan Delivery Dataset (ULDD) data inaccuracies pertaining to the requirements described in the topics, chapters and sections of the Guide set forth in the table above, if and to the extent: ❑ The data inaccuracies affect five or more Mortgages and involve the same delivery data element(s), and ❑ The ULDD data differs from the information in the Mortgage file, and ❑ The data inaccuracies are “significant” in that, using the information in the Mortgage file to qualify the Borrower, Mortgaged Premises and/or project in which the Mortgaged Premises is located, Freddie Mac determines that either: 1. The Mortgage would not have been eligible for sale under the terms of the Seller’s Purchase Documents in effect on the Settlement Date, or 2. The Mortgage would have been eligible for sale but under different terms For purposes of finding five or more Mortgages involving the same delivery data element inaccuracy, both Mortgages that have obtained relief under the framework and Mortgages that have not obtained relief may be counted. If Mortgages that have not obtained relief are counted for purposes of establishing that there were five or more Mortgages with the same delivery data element inaccuracy, those Mortgages must meet all other requirements of this exclusion (i.e., same delivery data elements, data differs from information in the Mortgage file, significance) in order for Freddie Mac to enforce a remedy for each Mortgage. In determining whether the data inaccuracy is significant, Freddie Mac will rely on its Loan Product Advisor simulator, which approximates the Risk Class at the time of delivery. Freddie Mac will compare the Loan Product Advisor simulator assessment using true and accurate information with the Loan Product Advisor simulator assessment received at the time of delivery. A data inaccuracy will be considered significant only if the Mortgage receives a worse Loan Product Advisor assessment from the simulator than was received at the time of delivery to Freddie Mac, except that Freddie Mac will also take into account any applicable negotiated terms of business when determining significance. Freddie Mac will provide the Seller/Servicer with documentation supporting the significance determination. If Freddie Mac determines that the Mortgage would have been eligible for sale but under different terms than those under which the Mortgage was sold, as described in number 2 of the third bullet above, Freddie Mac will not seek repurchase but instead will re-price the Mortgage, consistent with the Seller’s Purchase Documents in effect on the Settlement Date, to reflect the true risk profile of the Mortgage. ■ Clear title/First Lien priority: The Mortgage must be enforceable as a First Lien (with no pending condemnation proceedings) and have clear title through foreclosure ■ Compliance with laws: The Mortgage must comply with all applicable federal, State and local laws, ordinances, regulations and orders, including, without limitation, State antipredatory lending laws and regulations. For all Mortgages with Application Received Dates on or after July 1, 2021, and all Mortgages with Settlement Dates after August 31, 2021, in addition to ensuring compliance with applicable laws, Sellers must ensure that all ATR Covered Mortgages satisfy the QM requirements of the Revised General QM Rule, even if the Seller is not required by law or regulation to comply with the Revised General QM Rule. ■ Unacceptable Mortgage products: The Mortgage must be a Mortgage product acceptable for sale to Freddie Mac. The Seller/Servicer will not be relieved of Freddie Mac’s enforcement of its representations and warranties for unacceptable Mortgage products, including, but not limited to, the following: ❑ A Mortgage with an interest-only feature ❑ A graduated-payment Mortgage ❑ A Mortgage originated with stated or no income and/or asset documentation. (Freddie Mac Relief Refinance Mortgages and Freddie Mac Enhanced Relief Refinance Mortgages are not considered a Mortgage originated with stated or no income and/or asset documentation.) ❑ A Mortgage subject to negative amortization ❑ A construction loan (other than a Construction to Permanent Mortgage) ❑ A daily simple interest Mortgage ❑ A Prepayment Penalty Mortgage with an Application Received Date on or after January 10, 2014 or a Freddie Mac Settlement Date after July 31, 2014 ❑ A reverse Mortgage ❑ A Mortgage with balloon payments (with or without a reset option) ❑ A second Mortgage
Operationalizing Freddie Mac Single-Family Seller/Servicer Guide 1301.6 — Enforcement of representations and warranties related to underwriting of the Borrower, Mortgaged Premises and project
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