Freddie Mac Single-Family Seller/Servicer Guide 4402.3 — Uniform Instruments and nonstandard documents for Seller-Owned Converted Mortgages

Freddie Mac Single-Family Seller/Servicer Guide 4402.3 — Uniform Instruments and nonstandard documents for Seller-Owned Converted Mortgages

Effective 2026-02-04 · Freddie Mac's stamp for this section

This section contains requirements related to: ■ Original Security Instrument and Convertible Adjustable Rate Rider ■ Original Convertible Adjustable Rate Note ■ Seller-Owned Converted Mortgages originated as a Construction to Permanent Mortgage or Renovation Mortgage The original convertible ARM may have been originated using Uniform Instruments in accordance with Section 4101.2 or nonstandard documents. Documentation for the Seller-Owned Converted Mortgage should consist of the following: ■ The original Security Instrument and Convertible Adjustable Rate Rider; and ■ A document evidencing the conversion of the ARM to a fixed-rate Mortgage; the conversion document must be recorded if necessary to establish that the Seller-Owned Converted Mortgage is a First Lien. The Seller may use the Freddie Mac Multistate Agreement to Convert, Freddie Mac Uniform Instrument Form 3180, to evidence the ARM conversion. If the Seller uses a loan instrument other than the Agreement to Convert, the Seller represents and warrants that the instrument, when completed, contains substantially identical provisions to the Freddie Mac Agreement to Convert and is appropriate for use to evidence the conversion of the Convertible ARM; and ■ Either: ❑ The original Convertible Adjustable Rate Note with the document evidencing the conversion attached, or ❑ A new fixed-rate Note If a new Note is executed, the Seller must use the Fannie Mae/Freddie Mac Fixed-Rate Note as required by Section 4101.2. If the Seller-Owned Converted Mortgage is documented with the original documents and a document evidencing the ARM conversion, the following requirements apply. (a) Original Security Instrument and Convertible Adjustable Rate Rider The original Security Instrument and Convertible Adjustable Rate Rider must be either: ■ The version of the Fannie Mae/Freddie Mac Uniform Security Instrument for the State in which the Mortgaged Premises is located in effect on the Note Date, with either the Fannie Mae or Freddie Mac Uniform Convertible Adjustable Rate Rider, or ■ A nonstandard document that contains provisions comparable to the provisions of the version of the Fannie Mae/Freddie Mac Uniform Security Instrument in effect on the Note Date for the State in which the Mortgaged Premises are located, including the provisions relating to: ❑ Default and foreclosure rights ❑ The use of hazard insurance proceeds, condemnation and hazardous waste ❑ No waivers of homestead rights, dower or similar marital rights ❑ Matters that affect the security for the Mortgage, including charges and liens and property preservation ❑ Borrower Mortgage payment and escrow obligations ❑ Rights of the lender in the event of Borrower bankruptcy (b) Original Convertible Adjustable Rate Note The original Convertible Adjustable Rate Note must be either: ■ The applicable version of the Fannie Mae or Freddie Mac Uniform Convertible Adjustable Rate Note in effect on the Note Date, or ■ A nonstandard Convertible Adjustable Rate Note, provided the Convertible Adjustable Rate Note contains provisions that are consistent with the provisions in the Fannie Mae or Freddie Mac Convertible Adjustable Rate Note for ARMs originated on the Note Date. The Seller must review the Convertible Adjustable Rate Note for consistency, including the provisions relating to the following, and determine that: ❑ The late payment fee does not exceed the maximum fee allowed by State law and the Guide ❑ There are no provisions allowing skipped payments, a grace period following a partial payment or a grace period for other hardship or other reasons ❑ There are no waivers of homestead rights, dower or similar marital rights (c) Seller-Owned Converted Mortgages originated as a Construction to Permanent Mortgage or Renovation Mortgage For a Seller-Owned Converted Mortgage that was originated as a Construction to Permanent Mortgage or Renovation Mortgage, the conversion of Interim Construction Financing to Permanent Financing must have occurred prior to the conversion from a Convertible ARM to a fixed-rate Mortgage and must have been documented in accordance with Chapter 4602. The conversion from a Convertible ARM to a fixed-rate Mortgage must be documented in accordance with this section.

Source: Freddie Mac Single-Family Seller/Servicer Guide 4402.3 — Uniform Instruments and nonstandard documents for Seller-Owned Converted Mortgages · source URL · snapshot 4c94f67729042dd6