Freddie Mac Single-Family Seller/Servicer Guide Section 4403.1 — Mortgages with capitalized balances

Freddie Mac Single-Family Seller/Servicer Guide Section 4403.1 — Mortgages with capitalized balances

4403.1: Mortgages with capitalized balances (12/04/24) (a) Overview Mortgages having principal balances that include capitalization of interest, taxes, hazard insurance premiums and/or late charges are eligible for purchase under certain conditions. The following Mortgages are not eligible for sale as Mortgages with capitalized balances: ■ Community Land Trust Mortgages ■ Mortgages secured by properties subject to income-based resale restrictions that terminate upon foreclosure (or expiration of any applicable legally required foreclosure redemption period) or recordation of a deed-in-lieu of foreclosure, where the property value must be determined in accordance with Section 4406.4(c) (b) General requirements By delivery of Mortgages with capitalized balances, the Seller represents and warrants the following requirements have been met as of the Delivery Date: 1. Capitalization is permitted under the Mortgage documents and applicable State law 2. The Note is negotiable, and the entire indebtedness, including all amounts capitalized, is fully enforceable against the Borrower and secured by a First Lien 3. The UPB of the Mortgage, including all amounts capitalized, does not exceed the original loan amount as reflected in the Note 4. No capitalization will occur after the Purchase Contract Date of Acceptance 5. The Mortgage is fully amortizing in substantially equal monthly installments of principal and interest over a period of up to 10, 15, 20 or 30 years, respectively (depending on whether the Mortgage is to be included in a 10-, 15-, 20- or 30-year Pool) following the Delivery Date. If, as a result of the capitalization, the Note maturity date could have exceeded the maximum term to maturity for the related Pool after delivery to Freddie Mac or could have resulted in a balloon payment at maturity, the Seller must have reamortized the Mortgage before delivery to Freddie Mac. For each Mortgage that has been reamortized or for which the stated maturity date has been extended, the Seller makes the following additional representations and warranties: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4403 As of 04/01/26 Page 4403-2 ■ Each affected Borrower has been informed of the capitalization, and ■ If such Borrower’s Mortgage contains a stated maturity date, that capitalization will result in installments becoming due after such stated maturity date or an increase in the monthly payment 6. All computations of maturity dates are correct (c) Delivery requirements Refer to Section 6302.22 for delivery requirements for Mortgages with capitalized balances. 4403.1: Mortgages with capitalized balances (Future effective date 07/01/26) Mortgages having principal balances that include capitalization of interest, taxes, hazard insurance premiums and/or late charges are not eligible for sale to Freddie Mac. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4404 As of 02/05/25 Page 4404-1 Chapter 4404: Land Contract; Contract for Deed

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