Freddie Mac Single-Family Seller/Servicer Guide 4607.1 — CHOICERenovation® Mortgages

This section contains requirements related to: ■ Mortgages with Settlement Dates after completion of renovations ■ Mortgages with Settlement Dates before completion of renovations ■ CHOICEReno eXPress® Mortgages ■ Loan Status Hub® A CHOICERenovation® Mortgage is a Mortgage that meets the requirements of this chapter and the Seller’s Purchase Documents. The proceeds from a CHOICERenovation Mortgage must be used to finance renovations, repairs and/or improvements to the Mortgaged Premises (the “renovations”); the renovations may be completed before or after the Settlement Date. All requirements in this Chapter 4607 are selling obligations to be fulfilled by the Seller in its capacity as a Seller/Servicer. See also Section 4607.17 regarding Transfers of Servicing.

(a) Mortgages with Settlement Dates after completion of renovations Freddie Mac’s prior written approval is not needed to sell Mortgages to Freddie Mac secured by properties with: ■ Renovations that are completed before the Settlement Date, or ■ Renovations are substantially complete when the remaining renovations meet the requirements in the table below CHOICERenovation Mortgages: renovations substantially complete prior to Settlement Date Topic Requirement Appraisal report The appraisal report must be completed subject to completion or subject to repairs or alterations. Cost to complete renovations The appraiser must provide a list of the incomplete renovations, and the appraiser or a disinterested CHOICERenovation Mortgages: renovations substantially complete prior to Settlement Date Topic Requirement (but relevant) party must have provided a cost to complete the incomplete renovations. Example: A contractor who provides an estimate to install or repair interior walls is a disinterested (but relevant) party. A relevant party may also include a representative of a home improvement store or an independent contractor who performs the services needed to complete the renovations. Maximum permitted renovation cost The cost to complete the incomplete renovations must not exceed 10% of the “as completed” value of the Mortgaged Premises. Property condition rating The incomplete renovations must not represent deficiencies consistent with a C6 condition rating (e.g., active roof leak(s), damaged or failing foundation). Completion escrow account The Seller must establish a completion escrow account for the incomplete renovations or required repairs. The Seller and the Borrower must execute a written escrow agreement detailing how the funds will be managed and disbursed. A copy of the escrow agreement must be retained in the Mortgage file. Completion deadline The incomplete renovations must be completed no more than 450 days after the Note Date. If the incomplete renovations are not completed by the required completion date, the Seller/Servicer must notify Freddie Mac Quality Control pursuant to the reporting requirements in Section 3402.3(b). Completion report After the Settlement Date and upon completion of all renovations, the Seller/Servicer must have the appraiser: ■ Inspect the Mortgaged Premises to verify the renovations have been completed, and ■ Provide the Seller/Servicer with a completion report that includes photographs of the completed improvements. The Seller/Servicer CHOICERenovation Mortgages: renovations substantially complete prior to Settlement Date Topic Requirement must retain the completion report in the Mortgage file. Mortgage insurance The mortgage insurance must be maintained in compliance with the master policy and applicable guides of the selected MI. Title The title to the Mortgaged Premises must not be impaired or adversely affected by the delayed completion of the incomplete renovations. The Seller will not be subject to the requirements for: ■ Renovation work and process described in Sections 4607.9(a)(1 and 2) and 4607.9(b)(1 through 3) ■ The contingency reserve described in Section 4607.11(b) ■ Recourse described in Section 4607.14

(b) Mortgages with Settlement Dates before completion of renovations As used in this chapter, a “CHOICERenovation In Progress Mortgage” is a CHOICERenovation Mortgage that: ■ Is not a CHOICEReno eXPress Mortgage as described in Section 4607.1(c); and ■ Has renovations that are not complete or substantially complete as of the Settlement Date Such CHOICERenovation Mortgages must be sold to Freddie Mac with recourse (see Section 4607.14), and the Seller must obtain Freddie Mac’s written approval before selling CHOICERenovation In Progress Mortgages to Freddie Mac. The Seller can request approval by contacting its Freddie Mac representative or Customer Service at 800-FREDDIE. See Section 4607.3(b) for a special occupancy requirement for CHOICERenovation In Progress Mortgages.

(c) CHOICEReno eXPress Mortgages As used in this chapter, a “CHOICEReno eXPress Mortgage” is CHOICERenovation Mortgage with renovations not completed by the Settlement Date that may be sold to Freddie Mac without recourse if: ■ All renovations are completed within 180 days of the Note Date in accordance with Section 4607.4(a), and ■ The maximum financed renovation costs for CHOICEReno eXPress Mortgages meet the requirements of Section 4607.7 For CHOICEReno eXPress Mortgages, the Seller will not be subject to the requirements for: ■ Renovation work and process described in Section 4607.9(a)(1) ■ The minimum contingency reserve described in Section 4607.11(b) ■ Recourse described in Section 4607.14 The Seller is not required to obtain Freddie Mac’s prior written approval before selling CHOICEReno eXPress Mortgages to Freddie Mac.

(d) Loan Status Hub “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 4607 and to receive associated Output (as that term is defined in Section 2401.1(b)). The Seller must use Loan Status Hub to submit required data, documents and information for: ■ CHOICERenovation In Progress Mortgages ■ CHOICEReno eXPress Mortgages The Seller must request access to Loan Status Hub by calling their Freddie Mac representative or Customer Service at 800-FREDDIE.

■ Mortgages with Settlement Dates after completion of renovations ■ Mortgages with Settlement Dates before completion of renovations ■ CHOICEReno eXPress® Mortgages ■ Loan Status Hub® A CHOICERenovation® Mortgage is a Mortgage that meets the requirements of this chapter and the Seller’s Purchase Documents. The proceeds from a CHOICERenovation Mortgage must be used to finance renovations, repairs and/or improvements to the Mortgaged Premises (the “renovations”); the renovations may be completed before or after the Settlement Date. All requirements in this Chapter 4607 are selling obligations to be fulfilled by the Seller in its capacity as a Seller/Servicer. See also Section 4607.17 regarding Transfers of Servicing.

(a) Mortgages with Settlement Dates after completion of renovations Freddie Mac’s prior written approval is not needed to sell Mortgages to Freddie Mac secured by properties with: ■ Renovations that are completed before the Settlement Date, or ■ Renovations are substantially complete when the remaining renovations meet the requirements in the table below CHOICERenovation Mortgages: renovations substantially complete prior to Settlement Date Topic Requirement Appraisal report The appraisal report must be completed subject to completion or subject to repairs or alterations. Cost to complete renovations The appraiser must provide a list of the incomplete renovations, and the appraiser or a disinterested (but relevant) party must have provided a cost to complete the incomplete renovations. Example: A contractor who provides an estimate to install or repair interior walls is a disinterested (but relevant) party. A relevant party may also include a representative of a home improvement store or an CHOICERenovation Mortgages: renovations substantially complete prior to Settlement Date Topic Requirement independent contractor who performs the services needed to complete the renovations. Maximum permitted renovation cost The cost to complete the incomplete renovations must not exceed 10% of the “as completed” value of the Mortgaged Premises. Property condition rating The incomplete renovations must not represent deficiencies consistent with a C6 condition rating (e.g., active roof leak(s), damaged or failing foundation). Completion escrow account The Seller must establish a completion escrow account for the incomplete renovations or required repairs. The Seller and the Borrower must execute a written escrow agreement detailing how the funds will be managed and disbursed. A copy of the escrow agreement must be retained in the Mortgage file. Completion deadline The incomplete renovations must be completed no more than 450 days after the Note Date. If the incomplete renovations are not completed by the required completion date, the Seller/Servicer must notify Freddie Mac Quality Control pursuant to the reporting requirements in Section 3402.3(b). UAD Completion Report After the Settlement Date and upon completion of all renovations, the Seller/Servicer must have the appraiser: ■ Inspect the Mortgaged Premises to verify the renovations have been completed, and ■ Provide the Seller/Servicer with a UAD Completion Report that includes photographs of the completed improvements. The Seller/Servicer must retain the completion report in the Mortgage file. Mortgage insurance The mortgage insurance must be maintained in compliance with the master policy and applicable guides of the selected MI. CHOICERenovation Mortgages: renovations substantially complete prior to Settlement Date Topic Requirement Title The title to the Mortgaged Premises must not be impaired or adversely affected by the delayed completion of the incomplete renovations. The Seller will not be subject to the requirements for: ■ Renovation work and process described in Sections 4607.9(a)(1 and 2) and 4607.9(b)(1 through 3) ■ The contingency reserve described in Section 4607.11(b) ■ Recourse described in Section 4607.14

(b) Mortgages with Settlement Dates before completion of renovations As used in this chapter, a “CHOICERenovation In Progress Mortgage” is a CHOICERenovation Mortgage that: ■ Is not a CHOICEReno eXPress Mortgage as described in Section 4607.1(c); and ■ Has renovations that are not complete or substantially complete as of the Settlement Date Such CHOICERenovation Mortgages must be sold to Freddie Mac with recourse (see Section 4607.14), and the Seller must obtain Freddie Mac’s written approval before selling CHOICERenovation In Progress Mortgages to Freddie Mac. The Seller can request approval by contacting its Freddie Mac representative or Customer Service at 800-FREDDIE. See Section 4607.3(b) for a special occupancy requirement for CHOICERenovation In Progress Mortgages.

(c) CHOICEReno eXPress Mortgages As used in this chapter, a “CHOICEReno eXPress Mortgage” is CHOICERenovation Mortgage with renovations not completed by the Settlement Date that may be sold to Freddie Mac without recourse if: ■ All renovations are completed within 180 days of the Note Date in accordance with Section 4607.4(a), and ■ The maximum financed renovation costs for CHOICEReno eXPress Mortgages meet the requirements of Section 4607.7 For CHOICEReno eXPress Mortgages, the Seller will not be subject to the requirements for: ■ Renovation work and process described in Section 4607.9(a)(1) ■ The minimum contingency reserve described in Section 4607.11(b) ■ Recourse described in Section 4607.14 The Seller is not required to obtain Freddie Mac’s prior written approval before selling CHOICEReno eXPress Mortgages to Freddie Mac.

(d) Loan Status Hub “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 4607 and to receive associated Output (as that term is defined in Section 2401.1(b)). The Seller must use Loan Status Hub to submit required data, documents and information for: ■ CHOICERenovation In Progress Mortgages ■ CHOICEReno eXPress Mortgages The Seller must request access to Loan Status Hub by calling their Freddie Mac representative or Customer Service at 800-FREDDIE.