Freddie Mac Single-Family Seller/Servicer Guide Section 4202.1 — Legal compliance and regulation

Freddie Mac Single-Family Seller/Servicer Guide Section 4202.1 — Legal compliance and regulation

4202.1: Legal compliance and regulation (11/05/25) This section contains requirements related to: ■ Compliance with law ■ State anti-predatory lending laws and regulations ■ Predatory lending practices (a) Compliance with law (i) Applicable law The Mortgage and the Servicing of the Mortgage, Mortgage transaction and Mortgaged Premises must comply with all requirements of all applicable federal, State and local laws, rules and regulations. This includes, but is not limited to: ■ Truth-in-lending laws ■ Licensing laws ■ Doing-business laws ■ Usury laws ■ Anti-predatory lending Additionally, any right of rescission involving the Mortgage under such laws, rules or regulations must have expired. (ii) Compliance with QM requirements 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. Note: Refer to Section 4202.2(c) for additional information about the ATR/QM Rule requirements. Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-2 (b) State anti-predatory lending laws and regulations Mortgages secured by Mortgaged Premises in the following States that are designated as “high-cost,” “high-risk” or similar Mortgages are not eligible for purchase by Freddie Mac: Mortgages not eligible for purchase by Freddie Mac State Mortgage details Arkansas Mortgages with Note Dates on or after July 17, 2003 that are “high- cost home loans” under the Arkansas Home Loan Protection Act, A.C.A. § 23-53-101, et seq. Colorado Mortgages with Note Dates on or after January 1, 2003 that are “covered loans” under the Consumer Equity Protection Act, C.R.S. 5- 3.5-101, et seq. Georgia Mortgages with Note Dates between October 1, 2002 and March 7, 2003 that are governed by the Georgia Fair Lending Act, O.C.G.A. § 7-6A-1, et seq., and Mortgages with Note Dates on and after March 7, 2003 that are “high-cost home loans” Illinois Mortgages with Note Dates on or after January 1, 2004 that are “high- risk home loans” under the High-Risk Home Loan Act, 815 ILCS 137/1, et seq. Indiana Mortgages with Note Dates on or after January 1, 2005 that are “high cost home loans” under Article 9 (Home Loan Practices) of the Indiana Code concerning trade regulations; consumer sales and credit, Burns Ind. Code Ann. § 24-9-1-1, et seq. Kentucky Mortgages with Note Dates on or after June 25, 2003 that are “high- cost home loans” under the Kentucky Revised Statutes Chapter 360, KRS § 360.100 Maine Mortgages with Note Dates on or after September 13, 2003 that are “high rate, high fee mortgages” under Article 8-A (the Maine Consumer Credit Code – Truth-in-Lending), 9-A MRSA § 8-501, et seq. Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-3 Mortgages not eligible for purchase by Freddie Mac State Mortgage details Massachusetts Mortgages with Note Dates on or after November 7, 2004 that are “high cost home mortgage loans” under the Predatory Home Loan Practices Act, ALM GL ch. 183C, § 1, et seq. New Jersey Mortgages with Note Dates on or after November 27, 2003 that are “high-cost home loans” under the New Jersey Home Ownership Security Act of 2002, N.J. Stat. § 46:10B-22, et seq. New Mexico Mortgages with Note Dates on or after January 1, 2004 that are “high- cost home loans” under the Home Loan Protection Act, N.M. Stat. Ann. § 58-21A-1, et seq. New York Mortgages with initial application dates after April 1, 2003 that are “high-cost home loans” under the New York Banking Law, NY CLS Bank § 6-l. In addition, Mortgages with Note Dates on or after September 1, 2008 that are “subprime home loans” under the New York Banking Law, NY CLS Bank § 6-m. Oklahoma Mortgages with Note Dates on or after January 1, 2004 that are “subsection 10 mortgages” under Article 1, Part 3 of the Consumer Credit Code, 14A Okl. St. § 1-301 Rhode Island Mortgages with Note Dates on or after December 31, 2006 that are “high-cost home loans” under the Rhode Island Home Loan Protection Act, R.I. Gen. Laws § 34-25.2-1, et seq. Tennessee Mortgages with Note Dates on or after January 1, 2007 that are “high- cost home loans” under the Tennessee Home Loan Protection Act, Tenn. Code Ann. § 45-20-101, et seq. Such Mortgages are ineligible for purchase by Freddie Mac regardless of whether the lender and/or Seller/Servicer enjoys preemption based on its charter or whether the law provides for an exemption for particular lenders and/or Seller/Servicers based on their charters or for particular Mortgages based on their purchase by Freddie Mac or another entity. In addition, the Seller/Servicer represents and warrants that: Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-4 ■ It has in place policies and procedures based on the requirements of each law identified above to ensure that it does not inadvertently deliver an ineligible Mortgage to Freddie Mac for purchase ■ It has received representations and warranties from any person or entity from which the Seller purchased the Mortgage that they are not “high-cost,” “high-risk” or similar Mortgages under the laws identified above, and ■ No person, with the intent to avoid the application or evade the provisions of one of the laws identified above, divided a loan transaction into separate parts (by creating a concurrent subordinate lien or otherwise) or performed any other subterfuge (c) Predatory lending practices Freddie Mac actively opposes predatory lending and has implemented a number of policies designed to combat it. Freddie Mac-approved Seller/Servicers should have policies designed to identify and avoid predatory lending practices. In addition, Sellers must not “steer” a Borrower who qualified for a lower-cost loan product to a higher-cost loan product. A Seller should offer or direct applicants who seek financing through the Seller’s higher-priced subprime or non-prime lending channel toward its standard Mortgage line if the applicants qualify for one of the standard products. For additional information regarding Freddie Mac anti-predatory lending and compliance requirements, see the following locations: Additional anti-predatory lending and compliance requirements Topic Guide location Compliance with applicable law Section 1301.2 Compliance with law Section 4202.1(a) State anti-predatory lending laws and regulations Section 4202.1(b) Home Ownership and Equity Protection Act Mortgages Section 4202.2(a) Higher-Priced Mortgage Loans (HPML) and Higher-Priced Covered Transactions (HPCT) Section 4202.2(b) ATR/QM Rule eligibility and compliance Section 4202.2(c) Credit insurance Section 4202.3(a) Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-5 Additional anti-predatory lending and compliance requirements Topic Guide location Mandatory arbitration Section 4202.3(c) Underwriting the Borrower Topics 5100–5500 Credit reporting requirements Section 8106.1(d) 4202.2: Specific Mortgage types and regulations (02/04/26) This section contains requirements related to: ■ Home Ownership and Equity Protection Act of 1994 (HOEPA) Mortgages ■ Higher-Priced Mortgage Loans (HPMLs) and Higher-Priced Covered Transactions (HPCTs) ■ ATR/QM Rule eligibility and compliance (a) HOEPA Mortgages For Primary Residences, purchase transaction Mortgages and refinance Mortgages that exceed the thresholds under HOEPA and its implementing regulations are ineligible for purchase by Freddie Mac. (b) HPMLs and HPCTs For Mortgages with Application Received Dates on or after October 15, 2014, Freddie Mac will purchase HPMLs and HPCTs, as defined in the Glossary, under the terms of the Purchase Documents and this section. HPMLs and HPCTs eligible for sale to Freddie Mac must be one of the following Mortgage Products: ■ A fixed-rate Mortgage ■ An ARM with an Initial Period of five, seven or 10 years For additional information regarding Freddie Mac HPML and HPCT requirements, see the following: Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-6 Additional information regarding Freddie Mac HPML and HPCT requirements Topic Guide location Compliance with applicable law Section 1301.2 Compliance with law Section 4202.1(a) Refi Possible® Mortgages Chapter 4302 Freddie Mac Enhanced Relief Refinance® Mortgages Chapter 4304 General ARM eligibility requirements Section 4401.1 Underwriting requirements for ARMs Section 4401.2 (c) ATR/QM Rule eligibility and compliance This section provides the requirements related to the ATR/QM Rule and specifies which Mortgages Freddie Mac will purchase and under what conditions those Mortgages will be purchased. Note: For ATR Covered Mortgages originated under the GSE Patch, Construction One- Time Close Construction to Permanent Mortgages with Application Received Dates prior to July 1, 2021 and Settlement Dates before March 1, 2022 are eligible for sale to Freddie Mac if originated in accordance with the GSE Patch. (i) Definitions related to the ATR/QM Rule The following table contains Glossary definitions related to the ATR/QM Rule and are incorporated within this section for ease of use: Glossary definitions related to the ATR/QM Rule A ATR Covered Mortgage An ATR Covered Mortgage is a consumer credit transaction secured by a dwelling that is covered by the ATR/QM Rule and is not an Exempt Mortgage. ATR/QM Rule Regulation Z’s Ability to Repay (ATR) rule (12 C.F.R. § 1026.43) that implements the Truth in Lending Act’s provisions requiring a creditor to determine a Borrower’s ability to repay a Mortgage loan. QMs are a subset of loans under the ATR requirements. Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-7 Glossary definitions related to the ATR/QM Rule E Exempt Mortgage There are two classifications of Exempt Mortgages, as follows: ■ TILA Exempt Mortgage: A TILA Exempt Mortgage is a Mortgage exempt from TILA and, as such, is exempt from the ATR requirements in Regulation Z. TILA Exempt Mortgages include business purpose loans as defined in 12 C.F.R. § 1026.3. ■ ATR Exempt Mortgage: An ATR Exempt Mortgage is a Mortgage that is exempt from the ATR requirements in Regulation Z as set forth in 12 C.F.R. § 1026.43(a)(3) G GSE Patch GSE Patch refers to the Consumer Financial Protection Bureau (CFPB) temporary QM rule definition in Regulation Z, 12 C.F.R. § 1026.43(e)(4), that became effective January 10, 2014, under which Mortgages were considered to be QMs if they satisfied certain requirements and were eligible for purchase by Freddie Mac. P PSPA Amended Senior Preferred Stock Purchase Agreement by and between Freddie Mac and the Treasury. Q QM A qualified mortgage as defined in the ATR/QM Rule. R Revised General QM Rule Revised General QM Rule refers to the CFPB QM rule in Regulation Z, 12 C.F.R. § 1026.43(e)(2) that became effective on March 1, 2021. Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-8 (ii) Eligibility requirements for ATR Covered Mortgages and Exempt Mortgages (A) ATR Covered Mortgages All ATR Covered Mortgages must meet the requirements of the Revised General QM Rule. Revised General QM Rule Requirement reference summary1 Regulatory reference2 Requirement 1026.43(e)(2)(i) Mortgage must be fully amortizing with regular periodic payments that are substantially equal and that do not result in an increase of the principal balance or allow the Borrower to defer repayment of principal. 1026.43(e)(2)(ii) Mortgage term cannot exceed 30 years. 1026.43(e)(2)(iii) Mortgage must not exceed the applicable points and fees limitations specified in the Revised General QM Rule. 1026.43(e)(2)(iv) The monthly payment for Mortgage-related obligations must be taken into account when underwriting the Mortgage using: ■ 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 ■ Periodic payments of principal and interest that will repay the loan amount over the loan term 1026.43(e)(2)(v) Mortgage must meet consider and verify requirements specified in the ATR/QM Rule. 1026.43(e)(2)(vi) Mortgage must not equal or exceed the applicable APR-APOR QM spread thresholds specified in the Revised General QM Rule. 1 Chart is included for illustrative purposes only. Sellers remain responsible for compliance with all aspects of the ATR/QM Rule, including the Revised General QM Rule requirements. 2 Regulatory section references are to the Revised General QM Rule at 12 C.F.R. § 1026.43. Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-9 (B) Exempt Mortgages Exempt Mortgages are not subject to the Revised General QM Rule; however, they must meet: ■ Points and fees limitations set forth below for Exempt Mortgages; and ■ Annual percentage rate (APR)/average prime offer rate (APOR) threshold limitations set forth below for Exempt Mortgages Sellers are responsible for determining whether the Mortgage is an Exempt Mortgage. (iii) Points and fees limitations (A) Points and fees limitations for ATR Covered Mortgages ATR Covered Mortgages with points and fees exceeding 3% of the total loan amount (or such other applicable limits for lower-balance Mortgages) as specified under the Truth in Lending Act and its implementing regulations, 12 C.F.R. 1026.43(e)(3), will not be eligible for sale to Freddie Mac. Sellers must use the points and fees calculation that is required for QMs under the Truth in Lending Act and its implementing regulations that are found at 12 C.F.R. 1026.43(e)(3) and 12 C.F.R. § 1026.32(b) to determine compliance with applicable requirements. (B) Points and fees limitations for Exempt Mortgages Exempt Mortgages will be eligible for sale to Freddie Mac if the following conditions are met: ■ Such Mortgages are exempt from Regulation Z, 12 C.F.R. § 1026.43(a) (ATR Exempt Mortgages) or are not subject to the Truth in Lending Act (TILA Exempt Mortgages); and ■ The points and fees do not exceed 5% of the total loan amount. Sellers must use the points and fees calculation that is required for high-cost Mortgages under HOEPA and its implementing regulations, 12 C.F.R. § 1026.32(b). (iv) APR-APOR threshold limitations (A) Permissible spread The permissible spread between the APR and the APOR on the date the interest rate is set depends on ATR coverage: ■ ATR Covered Mortgages: The Mortgage’s APR may not exceed the APOR by 2.25 percentage points or more or such other applicable threshold as specified in Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-10 the Revised General QM Rule for ATR Covered Mortgages, calculated in accordance with the provisions of that rule; and ■ Exempt Mortgages: The Mortgage’s APR may not exceed the APOR by 6.5 percentage points or more for TILA Exempt and ATR Exempt Mortgages calculated in accordance with the provisions of the ATR/QM Rule (B) Short-term ARMs QM APR Calculation For all ARMs with an initial fixed period of five years or less that are ATR Covered Mortgages, Sellers must calculate the APR in accordance with the Revised General QM Rule. Note: When calculating the APR for APR-APOR threshold purposes for 3/6-Month SOFR and 5/6-Month SOFR ARMs that are ATR Covered Mortgages, Sellers must calculate the APR using 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. (v) Term – Interim Construction Financing Sellers must structure any Interim Construction Financing to be exempt from the ability to repay provisions of Regulation Z, 12 C.F.R. § 1026.43(a)(3) so that the Mortgage term does not exceed 30 years. (vi) Life of loan representation and warranty Sellers are responsible for representations and warranties related to requirements set forth in Section 4202.2(c) for the life of the loan, and Freddie Mac’s rights to exercise remedies related to violations of these requirements will not be waived. (vii) Determination of regulatory compliance with the ATR/QM Rule Freddie Mac will not determine whether a Mortgage, including a Mortgage assessed through Loan Product Advisor® or Loan Product Advisor asset and income modeler, or delivered through Loan Selling Advisor®, complies with or is exempt from the ATR/QM Rule, including the Revised General QM Rule, or whether a Seller’s designation of the status of a Mortgage under the Revised General QM Rule is correct. These determinations of compliance with the Revised General QM Rule and other applicable laws are the Seller’s responsibility. (viii) Responsible lending 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 Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-11 if the Seller is not required by law or regulation to comply with the Revised General QM Rule. (ix) Government funded, guaranteed or insured Mortgages Refer to Chapter 4205 for government funded, guaranteed or insured Mortgages. (x) Assumptions Sellers must comply with the Revised General QM Rule with respect to a Borrower’s assumption of a Mortgage when the assumption is being used, in whole or in part, to acquire title to the Mortgaged Premises or is otherwise an ATR Covered Mortgage. (xi) Other Guide provisions related to the ATR/QM Rule Refer to the following Guide provisions for additional information related to ATR/QM Rule eligibility and compliance: Guide provisions for additional information related to ATR/QM Rule eligibility and compliance Guide provision Guide location Compliance with applicable law Sections 1301.2 and 4202.1(a) Representation and warranties Sections 1301.6(a) and 1301.6(c) HPCTs Section 4202.2(b) and Glossary Investment quality Mortgage Section 4201.1 Amortization and term Section 4201.1 ARM qualifying rates Section 4401.2 Temporary subsidy buydown plans Section 4204.3(a)

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