Freddie Mac Single-Family Seller/Servicer Guide Section 4502.1 — Overview for Community Land Trust

Freddie Mac Single-Family Seller/Servicer Guide Section 4502.1 — Overview for Community Land Trust

4502.1: Overview for Community Land Trust (10/01/25) Under the Community Land Trust model, the Community Land Trust owns land and leases it under a long-term ground lease to a homebuyer who purchases the structure on the land. Freddie Mac will purchase Community Land Trust Mortgages that meet the requirements of this chapter and the Guide. The requirements include use of a specified form of ground lease (“Community Land Trust Ground Lease”) and Form 490, Community Land Trust Ground Lease Rider, each as further specified in Section 4502.7. Note: A Community Land Trust that is a non-profit organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code is considered an Agency. 4502.2: Eligible Borrowers for Community Land Trust Mortgages (03/05/25) Based on its focus on affordability, the Community Land Trust typically has Borrower eligibility requirements in addition to restrictions on the resale of the property improvements. Eligible Borrowers must meet the program requirements established by the Community Land Trust. Completion, execution and recordation of the Community Land Trust Ground Lease serves as confirmation that the Borrower has met the eligibility requirements set forth by the Community Land Trust. 4502.3: Eligible and ineligible Community Land Trust Mortgages (02/04/26) This section contains requirements related to: ■ Eligible Mortgages ■ Ineligible Mortgages Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-2 (a) Eligible Mortgages Community Land Trust Mortgages eligible for purchase include: ■ First Lien conventional fixed-rate Mortgages ■ Condominium Unit Mortgages secured by a Detached Condominium Unit ■ Condominium Unit Mortgages not secured by a Detached Condominium Unit, with prior written approval ■ Community Land Trust Mortgages where the Community Land Trust, as a subsidy provider, is also the property seller. The Community Land Trust is not considered an interested party, and the requirements for interested party contributions in Section 5501.6 do not apply. ■ Mortgages with Affordable Seconds provided by a Community Land Trust that meets the requirements of Section 4204.2(a)(i)(A) (b) Ineligible Mortgages Mortgages with the following characteristics are not eligible for purchase as Community Land Trust Mortgages: ■ Cooperative Share Loans ■ Construction to Permanent Mortgages ■ Financed Permanent Buydown Mortgages ■ Freddie Mac Enhanced Relief Refinance® Mortgages ■ Government Mortgages ■ HeritageOne® Mortgages ■ Mortgages secured by Manufactured Homes unless the Manufactured Home is a CHOICEHome® ■ Mortgages with capitalized balances as described in Chapter 4403 ■ Renovation Mortgages ■ Seller-Owned Converted Mortgages ■ Seller-Owned Modified Mortgages Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-3 4502.3: Eligible and ineligible Community Land Trust Mortgages (Future effective date 07/01/26) This section contains requirements related to: ■ Eligible Mortgages ■ Ineligible Mortgages (a) Eligible Mortgages Community Land Trust Mortgages eligible for purchase include: ■ First Lien conventional fixed-rate Mortgages ■ Condominium Unit Mortgages secured by a Detached Condominium Unit ■ Condominium Unit Mortgages not secured by a Detached Condominium Unit, with prior written approval ■ Community Land Trust Mortgages where the Community Land Trust, as a subsidy provider, is also the property seller. The Community Land Trust is not considered an interested party, and the requirements for interested party contributions in Section 5501.6 do not apply. ■ Mortgages with Affordable Seconds provided by a Community Land Trust that meets the requirements of Section 4204.2(a)(i)(A) (b) Ineligible Mortgages Mortgages with the following characteristics are not eligible for purchase as Community Land Trust Mortgages: ■ Cooperative Share Loans ■ Construction to Permanent Mortgages ■ Financed Permanent Buydown Mortgages ■ Freddie Mac Enhanced Relief Refinance® Mortgages ■ Government Mortgages ■ HeritageOne® Mortgages Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-4 ■ Mortgages secured by Manufactured Homes unless the Manufactured Home is a CHOICEHome® ■ Renovation Mortgages ■ Seller-Owned Converted Mortgages ■ Seller-Owned Modified Mortgages 4502.4: Loan purpose, eligible property and occupancy types and underwriting requirements for Community Land Trust Mortgages (06/04/25) This section contains subsections related to: ■ Loan purpose ■ Eligible property and occupancy types ■ Underwriting requirements (a) Loan purpose A Community Land Trust Mortgage may be a purchase, “no cash-out” refinance or cash-out refinance Mortgage. In addition to the requirements of Chapter 4301 relating to refinance Mortgages, any refinance transaction must comply with the applicable requirements of the Community Land Trust, including, but not limited to, the amount of the refinance Mortgage and, in the case of a cash-out refinance Mortgage, the amount of proceeds disbursed to the Borrower. The Seller must obtain and retain in the Mortgage file documentation signed by the Community Land Trust or its authorized representative permitting the Borrower to enter into a refinance transaction. (b) Eligible property and occupancy types A Community Land Trust Mortgage must be secured by a 1- or 2-unit Primary Residence that is not a Manufactured Home. A Community Land Trust Mortgage secured by a 1-unit Primary Residence may be a CHOICEHome®. Note: For requirements for CHOICEHome Mortgages, see Section 5703.12. (c) Underwriting requirements Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-5 A Community Land Trust Mortgage may be submitted to Loan Product Advisor® or may be a Manually Underwritten Mortgage. Note: For Community Land Trust Mortgages, minimum Down Payment requirements are based on the purchase price. 4502.5: Maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios and value for Community Land Trust Mortgages (05/07/25) This section contains requirements related to: ■ Maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) HTLTV ratios ■ Value (a) Maximum LTV/TLTV/HTLTV ratios The LTV, TLTV and HTLTV ratios are based upon the appraised value of the leasehold interest, without the resale and other restrictions included in the Community Land Trust Ground Lease. Note: See Section 4203.1(b) for maximum LTV/TLTV/HTLTV ratios for purchase and “no cash-out” refinance Mortgages. The maximum LTV/TLTV/HTLTV ratio for cash-out refinance Mortgages is 65%. (b) Value For both purchase and refinance transactions, “value” is the appraised value of the Mortgaged Premises on the Note Date. The appraised value must be determined in accordance with Section 4502.6. The LTV ratio is obtained by dividing the First Lien Mortgage amount by the appraised value as illustrated below: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-6 LTV ratio calculation Example Amount Appraised value $300,000 Purchase price $225,000 Subsidy amount $75,000 First Lien Mortgage amount $225,000 LTV ratio 75% Minimum required Borrower contribution for Down Payment* $0 *Minimum required Borrower contribution for Down Payment is determined by the product selected for Mortgages with an LTV of greater than 80%. See Section 5501.3(k). The purchase price excludes the subsidy amount that was provided to acquire the property. For this reason, the purchase price may not be a reliable indicator of appraised value since it reflects the subsidy amount. The LTV ratio is obtained by dividing the First Lien Mortgage amount by the “value” as described above. 4502.6: Appraisal requirements for Community Land Trust Mortgages (03/05/25) In addition to the other Guide requirements related to appraisals, an appraisal for each Community Land Trust Mortgage must meet the requirements in this section. Freddie Mac requires the appraiser to develop the opinion of value for the leasehold interest based on the hypothetical condition that the property rights being appraised are the leasehold interest without the resale and other restrictions included in the Community Land Trust Ground Lease, which are removed by Form 490, Community Land Trust Ground Lease Rider, upon foreclosure (or expiration of any applicable redemption period) or recordation of a deed-in-lieu of foreclosure. Appraisal requirements include: ■ The Seller must ensure that the appraiser is knowledgeable and experienced in appraising a property subject to a leasehold estate held by a Community Land Trust ■ The appraiser must analyze the property subject to the Community Land Trust Ground Lease Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-7 ■ The appraiser must describe the terms and restrictions of the Community Land Trust Ground Lease and Form 490 ■ The appraised value of the property must be well supported and correctly developed by the appraiser ■ The appraiser must develop the opinion of value for the leasehold interest based on the hypothetical condition that the property rights being appraised are the leasehold interest without the resale and other restrictions included in the Community Land Trust Ground Lease, which are removed by Form 490 upon foreclosure (or expiration of any applicable redemption period) or recordation of a deed-in-lieu of foreclosure ■ On the appraisal report form, the appraiser must: ❑ Indicate “leasehold” as the property rights appraised ❑ Report the applicable ground rent paid to the Community Land Trust ■ For a property subject to a leasehold interest created by a Community Land Trust, the appraiser should use sales of similar properties that are subject to other types of leasehold interests as comparable sales. If this is not possible, the appraiser may use sales of properties that are owned in fee simple. The appraiser should make appropriate adjustments to reflect the differences in market value for the properties subject to the other types of leasehold interests based on the terms of leases and the properties that are owned in fee simple. ■ When the Market Area has sales activity for other leasehold interests created by a Community Land Trust, the appraiser should analyze and report them in the appraisal report but not use them as comparable sales if their sales prices were impacted or limited by restrictions in the ground lease ■ Because Freddie Mac’s appraisal report forms do not include space to provide all the details required for appraising a property subject to a leasehold interest held by a Community Land Trust, the appraiser must attach an addendum to the appraisal report to provide any information that cannot otherwise be presented on the appraisal report form. The appraiser must check the box “as is” and include in the addendum an expanded discussion of the comparable sales used and considered. The addendum must also include the following statement: “This appraisal is made based on the hypothetical condition that the property rights being appraised are the leasehold interest without resale and other restrictions that are removed by Form 490 upon foreclosure.” 4502.7: Requirements for Community Land Trust Ground Leases and Ground Lease Riders (10/01/25) Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-8 This section contains sub-sections related to: ■ Community Land Trust Ground Lease ■ Leasehold estate eligibility requirements ■ Community Land Trust Ground Lease Rider ■ Mortgage file requirements (a) Community Land Trust Ground Lease (i) Ground lease requirements The Seller must review the Community Land Trust’s ground lease and determine whether it is based on the National Community Land Trust Network (NCLTN) 2011 Community Land Trust Network Model Ground Lease or the Institute for Community Economics (ICE) Model Ground Lease (collectively, the “model ground leases”). For Community Land Trust programs included in Fannie Mae’s Certified Shared Equity Program list, which is available at https://singlefamily.fanniemae.com/originating- underwriting/mortgage-products/shared-equity-programs, the Seller may sell such Community Land Trust Mortgages to Freddie Mac, provided that, ■ If the Community Land Trust’s ground lease is based on one of the two model ground leases, the Seller is not required to comply with the additional ground lease requirements in Section 4502.7(a)(ii); or ■ If the Community Land Trust’s ground lease is not based on either of the two model ground leases, the Seller must confirm that the ground lease complies with the additional ground lease requirements in Section 4502.7(a)(ii) The resale restrictions in the Community Land Trust Ground Lease can be imposed by State or local governments, municipalities, instrumentalities or nonprofit entities to create and preserve affordable housing (including entities administering governmental- sponsored subsidy programs). For each Community Land Trust Mortgage sold to Freddie Mac, the Seller represents and warrants that the Community Land Trust Ground Lease is valid, enforceable and in full force and effect. (ii) Additional ground lease requirements The Seller must confirm that the Community Land Trust Ground Lease: ■ Has a term of at least 30 years Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-9 ■ Includes a resale formula that limits the homeowner’s proceeds at resale. The restrictions must be binding on current and subsequent property owners and remain in effect (i.e., survive) until they are formally removed, are modified or terminate automatically in accordance with their terms, such as at a foreclosure sale or upon recordation of a deed-in-lieu of foreclosure. ■ Provides the Community Land Trust or its assignee the right to a preemptive option to purchase the home from the homeowner at resale (“the right of first refusal”) ■ Requires the Community Land Trust to review and approve any refinances and secondary financing, including Home Equity Lines of Credit (HELOCs) ■ Requires that the homeowner use the leased land and the improvements primarily for residential uses (iii) Freddie Mac prior written approval If the Community Land Trust’s ground lease is not based on either of the two model ground leases or is not included in Fannie Mae’s Certified Shared Equity Program list, Freddie Mac’s prior written approval is required. With prior written approval from Freddie Mac, Community Land Trusts certified under a Freddie Mac-approved certification program may be exempt from Seller review of the Community Land Trust’s ground lease, and Sellers will be relieved from enforcement of representations and warranties that the Community Land Trust Ground Lease is valid, enforceable and in full force and effect. The Seller must obtain Freddie Mac’s written approval before selling Mortgages without review of the Community Land Trust’s ground lease by contacting its Freddie Mac representative or Customer Service at 800- FREDDIE. (iv) Excess proceeds for Community Land Trust Mortgages The Community Land Trust may be entitled to any applicable excess proceeds when there is a transfer of title on a Community Land Trust property that occurs as a result of such property being sold by: ■ The Borrower for an amount exceeding the resale restricted price, or ■ Freddie Mac after acquiring title through a completed foreclosure sale or deed-in-lieu of foreclosure Excess proceeds on Community Land Trust properties are those proceeds that are above the amount required to satisfy the total indebtedness, including any additional liens, claims or encumbrances, in addition to any amount(s) incurred during an REO holding Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-10 period if title was acquired by Freddie Mac via a completed foreclosure sale or deed-in- lieu of foreclosure. Upon satisfaction of the total indebtedness as outlined above, any excess proceeds should be distributed as outlined below: ■ For properties that are sold by the Borrower for an amount exceeding the resale restricted price agreed upon in the Community Land Trust Ground Lease: ❑ First to the Borrower and Community Land Trust for equity due as agreed upon in the Community Land Trust Ground Lease, and ❑ All remaining excess proceeds to the Community Land Trust when the Community Land Trust Ground Lease includes terms for excess proceeds to be distributed to the Community Land Trust ■ For properties that are sold by Freddie Mac after acquiring title through a completed foreclosure sale or deed-in-lieu of foreclosure: ❑ First to Freddie Mac for any amount(s) incurred during an REO holding period, as applicable, and ❑ All remaining excess proceeds to the Community Land Trust when the Community Land Trust Ground Lease includes terms for excess proceeds to be distributed to the Community Land Trust Note: Servicers will not be responsible for these REO activities. For more information on Servicer responsibilities on REO properties, see Chapter 9601. (b) Leasehold estate eligibility requirements The leasehold estate created by the Community Land Trust Ground Lease must constitute real property under applicable law. (c) Community Land Trust ground lease rider Freddie Mac has developed Form 490, Community Land Trust Ground Lease Rider, that must be completed, executed and recorded in the land records, together with the Community Land Trust Ground Lease. Fannie Mae’s Form 2100, Community Land Trust Ground Lease Rider, may be used in lieu of Form 490. Requirements pertaining to Form 490 in the Guide apply to Fannie Mae’s Form 2100, when applicable. (d) Mortgage file requirements Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-11 The Mortgage file must contain an original executed or certified copy of the Community Land Trust Ground Lease and the Form 490 containing the recordation information. If the Community Land Trust program is included in Fannie Mae’s Certified Shared Equity Program list, the Seller must include in the Mortgage file evidence that the Community Land Trust program is included in Fannie Mae’s list as of the Note Date. 4502.8: Security Instruments for Community Land Trust Mortgages (03/05/25) The Uniform Security Instrument must describe the Mortgaged Premises as a leasehold interest created by a recorded ground lease in the property described in the legal description. In addition, the Seller must comply with Exhibit 5A, Authorized Changes to Notes, Riders, Security Instruments and the Uniform Residential Loan Application, Section IV, for Leasehold Estates. 4502.9: Title insurance requirements for Community Land Trust Mortgages (03/05/25) Community Land Trust Mortgages must be insured by a title insurance policy or a policy and endorsements that meet the requirements of Chapter 4702. The title insurance policy or an endorsement to the policy must ensure the following: ■ The Community Land Trust Ground Lease or ground lease memorandum was recorded ■ Form 490, Community Land Trust Ground Lease Rider, was recorded ■ The Community Land Trust Mortgage is a First Lien on the leasehold estate and the improvements ■ There are no existing mortgages, loans or other liens on the fee estate, except as may be permitted under Form 490 ■ The Community Land Trust Ground Lease reversionary interest is subordinate to the Community Land Trust Mortgage; and ■ There are no related Community Land Trust Ground Lease occupancy and resale restrictions, covenants or agreements that are valid, existing or effective as of the date of the policy except as may be permitted under Form 490 Freddie Mac Single-Family Seller/Servicer Guide Chapter 4502 As of 04/01/26 Page 4502-12 4502.10: Other requirements for Community Land Trust Mortgages (11/19/25) Additional Guide requirements for Community Land Trust Mortgages Guide topic Guide location Special Servicing requirements for Community Land Trust Mortgages Chapter 8701 Special delivery requirements for Community Land Trust Mortgages Section 6302.42 Special Mortgage file requirements for Community Land Trust Mortgages Section 3401.5(b)

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