Freddie Mac Single-Family Seller/Servicer Guide §5103.6 — Land Trust (07/02/25)
Freddie Mac Guide §5103.6 (Land Trust). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §5103.6 — Land Trust (07/02/25) — 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 5103.6
This section contains information related to: ■ General eligibility requirements ■ Required Uniform Instrument signatures ■ Special documentation: Collateral Assignment of Beneficial Interest (“Collateral Assignment”)
Freddie Mac Guide 5103.6
103-11 ■ Title and title insurance requirements ■ Mortgage file documentation requirements Freddie Mac will purchase Land Trust Mortgages under the terms of this section and all other requirements of the Guide. (a) General eligibility requirements (i) Location of Mortgaged Premises The Mortgaged Premises must be located in a State that recognizes and permits the use of Land Trusts by statute. (ii) Beneficiary of a Land Trust At least one beneficiary of the Land Trust must be a Borrower. Each beneficiary who is a Borrower must be fully underwritten and a qualified Borrower in the beneficiary’s individual capacity. A beneficiary of the Land Trust Mortgage who is a Borrower must be deemed to be an owner of the property/Mortgaged Premises. (iii) Trust requirements All beneficiaries of the Land Trust must be individuals. The trustee of the Land Trust must be a corporation or financial institution customarily engaged in the business of acting as trustee for land trusts in the applicable jurisdiction. The Mortgaged Premises must be the only asset of the Land Trust. (iv) Property type and occupancy requirements Each Land Trust Mortgage must be secured by one of the following: ■ A 1- to 4-unit Primary Residence occupied by a beneficiary of the Land Trust who is a Borrower ■ A second home occupied for some portion of the year by a beneficiary of the Land Trust who is a Borrower, or ■ A 1- to 4-unit Investment Property, provided at least one beneficiary of the Land Trust is a Borrower
Freddie Mac Guide 5103.6
103-12 (b) Required Uniform Instrument signatures (i) Form of signature for Note Each beneficiary of a Land Trust who is a Borrower must sign the Note in their individual capacity. (ii) Signature required on Security Instrument The trustee of the Land Trust must execute the Security Instrument. Note: See Section 4101.6 for additional Note and Security Instrument signature requirements. (c) Special documentation: Collateral Assignment of Beneficial Interest (“Collateral Assignment”) (i) Collateral Assignment requirements Each beneficiary of the Land Trust who is a Borrower must execute a Collateral Assignment under which the beneficiary: ■ Grants the lender named in the Security Instrument and the Note and the lender’s successors and assigns (the “Lender”) a security interest in the following (collectively, the “Collateral”): ❑ All of the beneficiary’s rights, title, powers and interests in, under and to the Land Trust ❑ The property held in the Land Trust (including any rights to earnings or proceeds from that property), and ❑ The Land Trust agreement (including any powers of direction or control over the trustee of the Land Trust or the property) ■ Certifies that no prior security interest in the Collateral has been granted ■ Agrees not to make any further assignment or take any other action by which all or any part of the Collateral is transferred in any way without the written approval of the Lender; and ■ Agrees that the Collateral Assignment is for collateral security only, no liability under the Land Trust agreement accrues to the Lender by virtue of the Collateral Assignment, and signing the Collateral Agreement does not relieve the beneficiary of any responsibility or liability under the Land Trust agreement
Freddie Mac Guide 5103.6
103-13 (ii) Collateral Assignment signatures requirements The Collateral Assignment must be signed by the appropriate parties as follows: ■ Each beneficiary of the Land Trust who is a Borrower must individually execute the Collateral Assignment ■ The lender named in the Security Instrument and the Note in whose favor the beneficiary of the Land Trust grants a security interest under the Collateral Assignment (the “Assignee”) must accept the Collateral Assignment ■ The trustee of the Land Trust must receive and agree to, endorse and/or acknowledge, as appropriate in the applicable jurisdiction, the Collateral Assignment (iii)Collateral Assignment form (A) Sample Illinois Collateral Assignment form Form 50, Collateral Assignment of Beneficial Interest in Land Trust, is a sample form of Collateral Assignment for Land Trust Mortgages secured by Mortgaged Premises located in Illinois. The Seller may use: ■ Freddie Mac’s form for Land Trust Mortgages secured by Mortgaged Premises located in Illinois, or ■ An alternative form that meets Illinois requirements (B) Collateral Assignment forms for use in other jurisdictions For Land Trust Mortgages secured by property located in jurisdictions other than Illinois, the Seller must use a form of Collateral Assignment that reflects the requirements of the jurisdiction in which the Mortgaged Premises is located (unless the Seller determines that the use of Form 50 is appropriate for the specific jurisdiction). (iv) Collateral Assignment representations and warranties The Seller represents and warrants that the Collateral Assignment is: ■ Appropriately executed by each beneficiary of the Land Trust who is a Borrower ■ Accepted by the lender named in the Security Instrument and the Note in whose favor the beneficiary of the Land Trust grants a security interest under the Collateral Assignment (the “Assignee”)
Freddie Mac Guide 5103.6
103-14 ■ Appropriately received and agreed to, endorsed and/or acknowledged, as appropriate in the applicable jurisdiction, by the trustee of the Land Trust ■ Valid, enforceable and meets the provisions of the applicable jurisdiction, including relevant statutes, regulations and judicial decisions if the Land Trust Mortgage is secured by Mortgaged Premises located in a jurisdiction other than Illinois or by Mortgaged Premises located in Illinois and the Seller uses a form of Collateral Assignment other than Form 50. (d) Title and title insurance requirements The Land Trust Mortgage must constitute a valid First Lien. The Land Trust Mortgage must be covered by a title insurance policy that meets the requirements of Chapter 4702. (e) Mortgage file documentation requirements In addition to other requirements in the Purchase Documents, for Land Trust Mortgages, the Mortgage file also must contain: ■ Copy of Land Trust agreement: A copy of the original Land Trust agreement or an abstract if required by the jurisdiction ■ Documentation of power of direction: Documentation evidencing that the beneficiary(ies) of the Land Trust holding the power of direction as provided in the trust documents have authorized and directed the trustee of the trust to execute the Mortgage documents. If the trust documents require more than one beneficiary holding the power of direction to so authorize and direct the trustee, then the documentation must evidence that the requisite number of beneficiaries have so directed the trustee; and ■ Collateral Assignment: A fully executed or certified copy of Collateral Assignment, as described below for the applicable jurisdiction. A “Fully Executed Collateral Assignment” is the original Collateral Assignment executed by each beneficiary of the Land Trust who is a Borrower in that beneficiary’s individual capacity, accepted by the lender named in the Security Instrument and the Note in whose favor the beneficiary of the Land Trust grants a security interest under the Collateral Assignment (the “Assignee”), and received and agreed to or endorsed and/or acknowledged by the trustee. A “Certified Copy of Collateral Assignment” is a copy, certified by the trustee as a true and complete copy, of the Fully Executed Collateral Assignment. ❑ Mortgaged Premises located in Illinois: For Mortgaged Premises located in Illinois, the Mortgage file also must contain: ■ Certified Copy of Collateral Assignment: A Certified Copy of Collateral Assignment. The Seller must ensure that the Fully Executed Collateral
Freddie Mac Guide 5103.6
103-15 Assignment can be obtained from the trustee upon request by a Seller/Servicer and/or by Freddie Mac. ■ Facsimile Assignment of Beneficial Interest: Facsimile Assignment of Beneficial Interest If… Then… ■ An Illinois jurisdiction requires recording of a facsimile assignment of beneficial interest (or similar document) (“facsimile”), and ■ Until the trustee is provided with the recorded facsimile, the trustee will not receive and agree to and/or endorse and/or acknowledge the Collateral Assignment executed by each beneficiary of the Land Trust who is a Borrower in that beneficiary’s individual capacity and accepted by the Assignee ■ The Seller may retain in the Mortgage file copies of the executed and accepted Collateral Assignment and the facsimile sent for recording, provided that the Seller also retains in the Mortgage file a letter of intent confirming that the Seller will: ❑ Obtain the trustee receipt and agreement/endorsement/ acknowledgement upon receipt of the recorded facsimile, and ❑ Place the Certified Copy of Collateral Assignment in the Mortgage file ❑ Mortgaged Premises located in a State other than Illinois: For Mortgaged Premises located in any other State that by statute recognizes and permits the use of Land Trusts, the Fully Executed Collateral Assignment is required
Freddie Mac Guide 5103.6
201-1 Chapter 5201: Credit Assessment with Loan Product Advisor®
Freddie Mac Guide 5103.6
Credit assessment with Loan Product Advisor® (02/10/26) This section contains requirements related to: ■ Documenting Borrower’s credit reputation ■ Assessing Borrower’s credit reputation ■ Accept Mortgages with Borrowers who do not have a usable Credit Score ■ Inquiries on a Borrower credit report ■ Rent payment history included in the Loan Product Advisor® assessment ■ Borrower cash flow included in the Loan Product Advisor assessment (a) Documenting Borrower’s credit reputation To document the credit reputation for Loan Product Advisor Accept Mortgages, the Seller must use the following: ■ The Uniform Residential Loan Application ■ The credit reports (see Section 5203.1 for details) ■ The Last Feedback Certificate ■ An underwriting summary (e.g. Form 1077, Uniform Underwriting and Transmittal Summary) Direct verification of Mortgage debt, rental payments and other debts not shown on the credit reports are typically not required for Accept Mortgages. For Accept Mortgages with Borrowers who do not have a usable Credit Score, the requirements in Section 5201.1(c) below apply. The Seller is not required to obtain or document an explanation of adverse or derogatory credit information on Accept Mortgages.
Freddie Mac Guide 5103.6
201-2 (b) Assessing Borrower’s credit reputation For Accept Mortgages, Loan Product Advisor has assessed the Borrower’s credit reputation and determined that the credit reputation is acceptable. (c) Accept Mortgages with Borrowers who do not have a usable Credit Score (i) Mortgages where not all Borrowers have a usable Credit Score For Mortgages where not all Borrowers have a usable Credit Score, Loan Product Advisor will apply the following requirements: ■ At least one Borrower must have a usable Credit Score, as determined by Loan Product Advisor ■ The transaction must be a purchase or “no cash-out” refinance Mortgage ■ The Mortgaged Premises must be a 1-unit property, occupied by all Borrowers as their Primary Residence For Mortgages other than Refi Possible® Mortgages, if the Borrower(s) without a usable Credit Score contributes 50% or more of the total monthly income, the Seller must determine that the following additional requirements are met: ■ Each Borrower without a usable Credit Score must have at least two payment references in the United States comprised of Noncredit Payment References and/or Tradelines not appearing on the credit report that meet the requirements in the following Guide sections: Topic Guide section Written verifications 5102.3 Age of documentation 5102.4 Documentation of Tradelines and Noncredit Payment References 5202.1(b) If two or more Borrowers without a usable Credit Score have the same payment reference, then the payment reference may count for each of those Borrowers. ■ Each payment reference must have existed for at least the most recent 12 months ■ At least one Borrower without a usable Credit Score must have a housing payment history as one of the payment references and all housing payment histories must have no 30-day or greater Delinquencies in the most recent 12 months
Freddie Mac Guide 5103.6
201-3 In the event more than one Borrower without a usable Credit Score has a housing payment history, then all such housing payment histories for the most recent 12 months (or length of housing payment history if less than 12 months) must be verified ■ For all payment references other than housing, in the most recent 12 months, there must be: ❑ No more than one 30-day Delinquency; and ❑ No 60-day or greater Delinquencies ■ Each Borrower without a usable Credit Score must have no collections (other than medical), judgments or tax liens filed in the most recent 24 months (ii) Mortgages where no Borrower has a Credit Score For Mortgages where no Borrower has a Credit Score, Loan Product Advisor will apply the following requirements: ■ The transaction must be a purchase or “no cash-out” refinance Mortgage ■ The Mortgaged Premises must be a 1-unit property, occupied by all Borrowers as their Primary Residence ■ The loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios must not exceed 95% ■ The Mortgage must be a fixed-rate Mortgage ■ The Mortgage must not be a super conforming Mortgage ■ The Mortgage must not be a Refi Possible Mortgage In addition, unless the Last Feedback Certificate includes a feedback message that indicates positive Borrower cash flow was identified, the Seller must determine that the following requirements are met: ■ Each Borrower must have at least two payment references in the United States comprised of Noncredit Payment References and/or Tradelines not appearing on the credit report that meet the requirements in the following Guide sections: