Freddie Mac Single-Family Seller/Servicer Guide §4702.3 — Attorney opinion of title letter (02/04/26)
Freddie Mac Guide §4702.3 (Attorney opinion of title letter). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §4702.3 — Attorney opinion of title letter (02/04/26) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Guide 4702.3
This section contains information related to: ■ Issuer requirements ■ Attorney opinion of title letter requirements ■ Mortgages that are ineligible for delivery with an attorney opinion of title letter ■ Documentation and delivery requirements for an attorney opinion of title letter (a) Issuer requirements Attorney must meet the following requirements to be acceptable issuer of attorney opinion of title letters: ■ Be licensed and in good standing to practice law in the jurisdiction where the Mortgaged Premises is located ■ Provide coverage for the “gap” period between closing of the Mortgage and recordation of the loan documents ■ Maintain professional liability insurance that meets the following requirements:
Freddie Mac Guide 4702.3
702-6 ❑ Extends coverage against malpractice or errors and omissions in rendering opinions of title ❑ Maintains coverage amount that adequately accounts for the quantity and size of opinions rendered by the attorney and organization or law firm, without limits of liability for a single claim lower than the UPB of the Mortgaged Premises ❑ Extends coverage to all assignees and successors ❑ Extends coverage to the organization or law firm under which the attorney opinion of title letter is issued, in the event the attorney is no longer a member of the firm or organization ■ Provide current proof of acceptable professional liability coverage (b) Attorney opinion of title letter requirements Freddie Mac will accept an attorney opinion of title letter in lieu of a title insurance policy if all the following conditions are satisfied. The attorney opinion of title letter must: Attorney opinion of title letter requirements Be addressed to the Seller and all successors in interest of the Seller Provide the following statement: “We [I] agree to indemnify you and your successors in interest in the [Mortgage] [deed of trust] opined hereto, to the full extent of any loss attributable to a breach of our [my] duty to exercise reasonable care and skill in the examination of the title and the giving of this opinion.” Be issued by an eligible attorney and organization as defined above State that the condition of title to the Mortgaged Premises is acceptable and the Mortgage constitutes a lien of the required priority on a fee simple estate in the property List all other liens as subordinate Include the following if the Mortgage is secured by a unit in a Condominium Project or Planned Unit Development (PUD): ■ There is no violation of any restrictive covenants that are in the Condominium Project or PUD constituent documents and restrict the use of the land ■ All dues applicable to the Mortgages Premises are current and not delinquent ■ No recorded right of first refusal to purchase the land was exercised or could have
Freddie Mac Guide 4702.3
702-7 Attorney opinion of title letter requirements been exercised on or before the closing date of the Mortgage and the undersigned is unaware of the existence or the exercise of any right of first refusal on or before the closing date of the Mortgage For ARMs, if applicable, include the following: “The law of [the State in which the property securing the Mortgage is located] provides that (i) the lien of the Mortgage will not become invalid or unenforceable resulting from provisions in the Mortgage which provide for changes in the interest rate calculated pursuant to the formula provided in the Mortgage, and (ii) priority of the lien of the Mortgage for the UPB of the loan, together with interest as changed and other sums advanced by the Noteholder in accordance with the provisions of the Mortgage, will not be lost as a result of changes in the rate of interest calculated pursuant to the formula provided in the Mortgage.” Include an opinion on environmental protection liens that addresses the following: ■ That there are no environmental protection liens filed in the public records that have priority over the lien of the insured Mortgage ■ That there are no applicable State laws that provide that environmental liens filed after the date of the policy would have priority over the lien of the insured Mortgage. If there are such laws, the letter must expressly identify them as an exception. ■ May include an exception for possible subsequent superliens that could take priority over the Mortgage only if the Mortgaged Premises is located in a State whose State statutes provide for such a superlien Not take exception to survey matters; when the attorney’s opinion takes exception to survey matters, the Seller must provide whatever information is required by the attorney to remove the exception Not be subject to any title exceptions other than those permitted under Section 4702.4 (c) Mortgages that are ineligible for delivery with an attorney opinion of title letter An attorney opinion of title letter may not be delivered for Mortgages with the following characteristics: ■ Mortgaged Premises is located in a Tribal Area (as defined in Section 4504.2) ■ Mortgaged Premises is located in jurisdictions where an attorney opinion of title letter is prohibited by law ■ Mortgages secured by a dwelling on a leasehold estate, including leasehold estates on property owned by a Community Land Trust, and a property subject to a sublease(s) that survive(s) the extinguishment of the primary ground lease
Freddie Mac Guide 4702.3
702-8 ■ Mortgages secured by Manufactured Homes ■ Mortgages executed using a power of attorney ■ CHOICERenovation® Mortgages ■ Construction to Permanent Mortgages ■ Cooperative Share Loans ■ GreenCHOICE Mortgages® ■ HeritageOne® Mortgages ■ Renovation Mortgages ■ Texas Equity Section 50(a)(6) Mortgages (d) Documentation and delivery requirements for an attorney opinion of title letter The Seller must deliver Investor Feature Identifier (IFI) “J18” when delivering a Mortgage that uses an attorney opinion of title letter in lieu of a title insurance policy or Iowa certificate of title. This is in addition to any other IFIs that may apply. The Seller must include and maintain the following in the Mortgage file: ■ A copy of the attorney opinion of title letter ■ Proof of acceptable professional liability coverage ■ Current claim filing instructions Note: See Section 6302.47 for delivery requirements for each Mortgage delivered with an attorney opinion of title letter in lieu of a title insurance policy.
Freddie Mac Guide 4702.3
Acceptable exceptions to the title insurance policy or to the attorney’s opinion of title letter (04/02/25) This section contains requirements related to: ■ Subsurface public utility easements ■ Surface public utility easements ■ Encroachments on public utility easements ■ Restrictive agreements and restrictive covenants ■ Mutual easement agreements ■ Fence misplacements ■ Encroachments on the Mortgaged Premises by improvements on adjoining property ■ Encroachments on adjoining property ■ Oil, gas, water and mineral rights ■ Liens for taxes not due ■ Sums readvanced ■ Tenants in possession ■ Liens and leases for solar panels ■ Other exceptions The following exceptions to the title insurance policy or to the attorney opinion of title letter are acceptable:
Freddie Mac Guide 4702.3
702-10 (a) Subsurface public utility easements Exceptions for subsurface public utility easements for local residential distribution, such as lines for gas and water, and cable for electric, telephone or television utilities, are acceptable provided that the location of the easements is ascertainable and fixed. The exercise of the rights thereunder must not interfere with the use and enjoyment of any present improvements on the Mortgaged Premises or proposed improvements on which the appraisal or Mortgage is based. (b) Surface public utility easements Exceptions for surface easements for public utilities for local residential distribution are acceptable provided that the location of the easements is ascertainable and fixed. The exercise of the rights thereunder must not interfere with the use and enjoyment of any of the following: ■ Present improvements on the Mortgaged Premises ■ Proposed improvements upon which the appraisal or Mortgage is based ■ Part of the Mortgaged Premises outside the easement and not occupied by improvements (c) Encroachments on public utility easements Exceptions for encroachments on easements for public utilities by a garage, tool shed or similar structure that is not attached to, or a portion of, the dwelling structure are acceptable provided that the encroachments do not interfere with the use and enjoyment of the easements or the exercise of rights of repair and maintenance in connection therewith. (d) Restrictive agreements and restrictive covenants Exceptions for restrictive agreements or restrictive covenants of record related to cost, use, setback, resale restrictions, right of first refusal, minimum size and building materials, and architectural, aesthetic or similar matters (other than single-family-use restrictions on 2- to 4- unit properties) are acceptable provided that the following conditions are met: ■ The restrictive agreements or restrictive covenants do not create or provide for any lien that would be prior to the lien of the Home Mortgage nor provide for the elimination of the lien of the Home Mortgage ■ The terms and provisions of the restrictive agreements or restrictive covenants are commonly acceptable to private institutional Mortgage investors in the area where the Mortgaged Premises is located
Freddie Mac Guide 4702.3
702-11 ■ An endorsement to the title insurance policy affirmatively insures that no violation of any such restrictive agreement or restrictive covenant exists and that any future violation shall not result in forfeiture or reversion of title (e) Mutual easement agreements Exceptions for mutual easement agreements of record that establish a joint driveway or a party wall are acceptable if such improvements are constructed in any of the following ways: ■ Partly on the Mortgaged Premises and partly on adjoining property ■ Wholly on the Mortgaged Premises, or ■ Wholly on the adjoining property The easement agreement must allow all present and future owners and their heirs, successors and assigns forever, unlimited use and enjoyment of the driveway or party wall without any restriction other than restriction by reason of the mutual easement owners’ rights in common and duties for joint maintenance. (f) Fence misplacements Exceptions for fence misplacements on either side of the property line of the Mortgaged Premises are acceptable provided that neither the misplacement, nor a future correction thereof, will interfere with the use and enjoyment of any improvements on the Mortgaged Premises nor with the use and enjoyment of the balance of the Mortgaged Premises not occupied by improvements. The definition of fence in this section shall not include retaining walls or other permanent structures. (g) Encroachments on the Mortgaged Premises by improvements on adjoining property Exceptions for encroachments on the Mortgaged Premises by improvements on adjoining property are acceptable provided that the following conditions are met: ■ The encroachment must not touch any improvements on the Mortgaged Premises ■ The encroachment must not interfere with the use and enjoyment of any improvements on the Mortgaged Premises nor with the use and enjoyment of the Mortgaged Premises not occupied by improvements (h) Encroachments on adjoining property Exceptions for encroachments on adjoining property by eaves or other projections attached to improvements on the Mortgaged Premises, or by structures such as tool sheds, or by a driveway appurtenant to the Mortgaged Premises, are acceptable provided that there is an endorsement to the title insurance policy whereby the policy affirmatively insures against
Freddie Mac Guide 4702.3
702-12 loss suffered by reason of the entry of a decree or court order requiring the removal of the encroachment. (i) Oil, gas, water and mineral rights Exceptions for outstanding oil, gas, water or mineral rights are acceptable if commonly granted by private institutional Mortgage investors in the area where the Mortgaged Premises is located, and: ■ The exercise of such rights will not result in damage to the Mortgaged Premises or impairment of the use or marketability of the Mortgaged Premises for residential purposes and there is no right of surface or subsurface entry within 200 feet of the residential structure, or ■ There is a comprehensive endorsement to the title insurance policy that affirmatively insures the lender against damage or loss due to the exercise of such rights (j) Liens for taxes not due Exceptions for liens for real estate or ad valorem taxes and assessments that specifically state that such liens are not yet due and payable are acceptable. (k) Sums readvanced This includes the priority of the lien for any sum repaid and subsequently readvanced under the terms of the Mortgage insured thereby. (l) Tenants in possession Exceptions for rights of tenants in possession, as tenants only, under prior unrecorded leases are acceptable. (m)Liens and leases for solar panels Exceptions for liens and leases, including UCC-1 Financing Statements, for solar panels are acceptable provided the exception is for a lien or lease that lists only the solar panels as the collateral. (n) Other exceptions Any exception not set forth above in Sections 4702.4(a) through 4702.4(m) is acceptable only if all of the following conditions are met: 1. The subject of the exception must not interfere with the use and enjoyment of any present or proposed improvements on the Mortgaged Premises or with the use and enjoyment of the balance of the Mortgaged Premises not occupied by improvements
Freddie Mac Guide 4702.3
702-13 2. The subject of the exception must not affect the marketability of the Mortgaged Premises 3. The subject of the exception must have no or minimal effect on the value of the Mortgaged Premises 4. The subject of the exception must be acceptable to the MI if the Mortgage is insured 5. The subject of the exception must be commonly acceptable to private institutional Mortgage investors in the area where the Mortgaged Premises is located The Seller shall warrant that all exceptions to the title insurance policy or to the attorney opinion of title letter are permissible under this section. Freddie Mac will not issue any letters addressing the acceptability of particular exceptions nor waivers of the above requirements.
Freddie Mac Guide 4702.3
Special title insurance requirements for Texas Equity Section 50(a)(6) Mortgages (04/02/25) Texas Equity Section 50(a)(6) Mortgages must be covered by a title insurance policy meeting the requirements of Chapter 4702 with the endorsements described below: ■ An Equity Loan Mortgage Endorsement (Form T-42). The Form T-42 endorsement must include the optional coverage provided by paragraph 2(f) of the endorsement, and there must not be any exceptions to, or deletions of, paragraphs 2(a) through 2(e) of the Form T-42 endorsement. ■ A Supplemental Coverage Equity Loan Mortgage Endorsement (Form T 42.1). There must not be any exceptions to, or deletions of, paragraphs 1(a) through 1(k) of the Form T-42.1 endorsement or any subsequent subparagraphs added to Paragraph 1 by any revision of the Form T 42.1 approved by the Texas Insurance Commission. ■ Any other endorsement that provides additional optional mortgagee coverage that is approved by the State of Texas Insurance Commission. The endorsement must be obtained by the Seller for Texas Equity Section 50(a)(6) Mortgages originated on and after the date the endorsement becomes legally available. There must be no exceptions to, or deletions of, any paragraphs providing additional coverage in any such endorsement.