Freddie Mac Single-Family Seller/Servicer Guide 4606.1 — Eligible Mortgages and improvements, and use of Mortgage proceeds

This section contains: ■ Overview ■ Eligible Mortgage purpose ■ Ineligible Mortgages ■ Special occupancy requirement ■ Eligible renovations ■ Use of Mortgage proceeds ■ Loan Status Hub® and Completion Date extension

(a) Overview A CHOICEReno eXPress® Mortgage is a Mortgage that meets the requirements of this chapter and the Seller’s Purchase Documents. The proceeds of such Mortgages must be used to finance eligible renovations, which may be completed before or after the Settlement Date. All requirements in this Chapter 4606 are selling obligations to be fulfilled by the Seller in its capacity as a Seller/Servicer.

(b) Eligible Mortgage purpose A CHOICEReno eXPress Mortgage must be a purchase transaction Mortgage or a “no cashout” refinance Mortgage.

(c) Ineligible Mortgages The following Mortgages are ineligible for sale as CHOICEReno eXPress Mortgages: ■ Community Land Trust Mortgages ■ Financed Permanent Buydown Mortgages ■ Mortgages secured by properties subject to income-based resale restrictions ■ Seller-Owned Converted Mortgages ■ Seller-Owned Modified Mortgages ■ Special purpose cash out refinance Mortgages

(d) Special occupancy requirement For CHOICEReno eXPress Mortgages secured by Primary Residences, if the Borrower does not occupy the Mortgaged Premises during the course of eligible renovations, the Mortgaged Premises will be deemed owner-occupied as of the Delivery Date as long as the Borrower occupies the Mortgaged Premises as a Primary Residence within 60 days of the last disbursement made and distributed from the completion escrow account.

(e) Eligible renovations For purposes of this chapter, “eligible renovations” include improvements, repairs, or alterations that enhance, restore, maintain, modernize or improve the functionality, safety, resilience, accessibility, energy efficiency, water efficiency or livability of the Mortgaged Premises. Eligible renovations must: ■ Be permanently affixed to the property, except for: ❑ Appliances used in a kitchen, laundry room or utility room, and ❑ Health and safety additions, renovations or repairs ■ Comply with all applicable State and local laws and regulations (including zoning), and all required permits and approvals must be obtained ■ Comply with all applicable project conditions, covenants and restrictions for renovations of properties located in Planned Unit Developments (PUDS), Condominium Projects or Cooperative Projects Eligible renovations for a Manufactured Home or a Manufactured Home ADU must: ■ Not impact the structural integrity of the property ■ Comply with HUD’s property acceptability criteria for Manufactured Homes and the general requirements in Section 5703.2, property eligibility requirements for Manufactured Homes in Section 5703.3(a) and requirements for eligible properties with an ADU in Section 5601.2, as applicable ■ Comply with CHOICEReno eXPress appraisal requirements in Section 4606.4 when renovations include the removal of a Manufactured Home on the property that is not the primary dwelling unit, provided any effect of its removal on the value of the Mortgaged Premises is reported by the appraiser when determining the “as completed” value of the property

(f) Use of Mortgage proceeds CHOICEReno eXPress Mortgages must be either a purchase transaction or a “no cash-out” refinance Mortgage with proceeds used as follows: ■ Purchase transaction Mortgages: Proceeds must be used to purchase the Mortgaged Premises and either finance eligible renovations, to be completed after the Note Date, or payoff a Property Assessed Clean Energy (PACE) obligation ■ “No cash-out” refinance Mortgages: Proceeds must be used to finance: ❑ Eligible renovations, to be completed after the Note Date; or ❑ Payment toward an existing debt incurred by the Borrower to finance eligible renovations completed before the Note Date, as further described in Section 4606.3(c) (such debt, an “Existing Debt” for purposes of this chapter) If a PACE obligation is secured by the Mortgaged Premises, the proceeds must be used to pay off that debt, and the following requirements must be met: ■ The PACE obligation must be paid in full ■ The Mortgage file must include evidence that the obligation being paid off is a PACE obligation that results in or provides for First Lien priority Fees associated with the purchase, installation, repair or upgrade of eligible renovations, including any fees related to plans and specifications, permits, title updates, appraisals, draw inspections or final inspections, as applicable, may be financed as part of the Mortgage. In addition, an amount up to, but no more than, six monthly payments of principal, interest, taxes and insurance may be financed. The Mortgage proceeds may not be used to raze an existing structure and build a new primary dwelling unit.

(g) Loan Status Hub and Completion Date extension (i) Overview “Loan Status Hub” means the System (as that term is defined in Section 2401.1(b)) Freddie Mac makes available to the Seller to enable the Seller to submit to Freddie Mac certain data, documents and information required by this Chapter 4606 and to receive associated Output (as that term is defined in Section 2401.1(b)). The Seller must request access to Loan Status Hub by calling their Freddie Mac representative or Customer Service at 800-FREDDIE. (ii) Required use The Seller must use Loan Status Hub to submit required data, documents and information for CHOICEReno eXPress Mortgages when eligible renovations are completed after the Settlement Date. When the eligible renovations are complete, the Seller must notify Freddie Mac through Loan Status Hub and provide the UAD Completion Report including photographs of the completed eligible renovations. (iii)Completion Date extension All eligible renovations must be completed no more than 180 days after the Note Date. However, the Seller may request from Freddie Mac a Completion Date extension when circumstances outside the Borrower’s or contractor’s control prevent completion of the eligible renovations by the Completion Date. To be eligible for a Completion Date extension, the Borrower must not: ■ Be delinquent at the time of the Seller’s extension request, and ■ Have been 30 days delinquent more than once during the renovation period To request a Completion Date extension, the Seller must submit to Loan Status Hub documentation supporting the reason for the delay (e.g., weather, supply chain issues, permit delays). If Freddie Mac grants the extension, the Completion Date may be extended a maximum of 30 days. If the extension request is granted, Freddie Mac will provide the extended Completion Date through Loan Status Hub.