Freddie Mac Single-Family Seller/Servicer Guide 4406.8 — Mortgages secured by properties subject to income-based resale restrictions

Freddie Mac Single-Family Seller/Servicer Guide 4406.8 — Mortgages secured by properties subject to income-based resale restrictions

Effective 2024-12-04 · Freddie Mac's stamp for this section

This section contains requirements related to: ■ Income-based resale restrictions ■ Mortgage purpose ■ Property eligibility ■ Borrower eligibility ■ Down Payments (a) Income-based resale restrictions Affordable housing programs use income-based resale restrictions to create affordable housing opportunities. These affordable housing programs are often based on State or local inclusionary housing policies, which typically require a specified number or percentage of properties in a designated area to be dedicated as housing for individuals and households with very low-, low- or moderate-incomes. The income-based resale restrictions restrict the initial sales price and subsequent resale price of properties subject to such resale restrictions. In doing so, the resale restricted price provides a form of subsidy to the homebuyer in an amount equal to the difference between the sales price and the market value of the property without resale restrictions. (b) Mortgage purpose A Mortgage secured by a property subject to income-based resale restrictions may be a purchase transaction, “no cash-out” or cash-out refinance Mortgage. “No cash-out” and cash-out refinance Mortgages are permitted with prior written approval of the transaction from the subsidy provider or program administrator. The Mortgage file must contain evidence of such approval and, if applicable, the approved amount of the Mortgage proceeds that the Borrower may receive. Mortgage proceeds from a “no cash-out” refinance Mortgage may be used to pay the unpaid principal amount used to subsidize the sales price at the time the Borrower purchased the property subject to income-based resale restrictions and any required share of appreciation due to the subsidy provider per the resale restricted covenants. (c) Property eligibility For Mortgages secured by properties subject to income-based resale restrictions, the Mortgaged Premises must be a 1- or 2-unit Primary Residence that is not a Manufactured Home, unless the Manufactured Home is a CHOICEHome®. (d) Borrower eligibility Borrowers must meet the program eligibility requirements established by the subsidy provider or program administrator. For Mortgages secured by properties subject to income-based resale restrictions, when the First Lien Mortgage is a Home Possible® Mortgage or Refi Possible® Mortgage, the Seller must use the Home Possible or Refi Possible income limits, as applicable, to determine Borrower eligibility even if the subsidy provider’s or program administrator’s limits are different. (e) Down Payments For Mortgages secured by properties subject to income-based resale restrictions, the Down Payment is based on the resale restricted price.

Source: Freddie Mac Single-Family Seller/Servicer Guide 4406.8 — Mortgages secured by properties subject to income-based resale restrictions · source URL · snapshot 4c94f67729042dd6