Freddie Mac Single-Family Seller/Servicer Guide 5501.1 — Funds required for the Mortgage transaction

Refer to Bulletin 2026-10, which announced updates related to accumulated assets as income. Sellers may implement the new requirements prior to the mandatory February 3, 2027 version of this section. This section contains requirements related to: ■ Verification of Borrower funds for a purchase transaction ■ Verification of Borrower funds for a refinance transaction ■ Eligible sources of funds ■ Prorated real estate tax credits ■ General documentation requirements ■ Evaluation of deposits in the Borrower’s accounts

(a) Verification of Borrower funds for a purchase transaction For purchase transaction Mortgages, the Seller must verify that the Borrower has sufficient funds to qualify for the Mortgage, which includes any funds required to be paid by the Borrower and Borrower reserves. Funds required to be paid by the Borrower include, but are not limited to, funds needed for Down Payment, for Closing Costs and to pay off or pay down debt.

(b) Verification of Borrower funds for a refinance transaction For refinance Mortgages, the Seller must verify that the Borrower has sufficient funds to qualify for the Mortgage, which includes any funds required to be paid by the Borrower (e.g., funds needed for Closing Costs and to pay off or pay down debt) and Borrower reserves when any of the following apply: ■ The funds required to be paid by the Borrower are more than $500 ■ Reserves are required for the transaction (i.e., as specified in Section 5501.2 or required by the Feedback Certificate) ■ The Mortgage is a Manually Underwritten Mortgage

(c) Eligible sources of funds All funds required to be verified must come from the eligible sources described in Sections 5501.3 and 5501.4. Refer to Section 5501.6 for interested party contributions requirements and Section 5501.7(a) for lender credit requirements.

(d) Prorated real estate tax credits Prorated real estate tax credits contributed by the property seller in areas where real estate taxes are paid in arrears may be considered when determining the funds required to be verified for the Mortgage transaction only when the Settlement/Closing Disclosure Statement indicates that an Escrow account is established and includes the portion of real estate taxes owed by the property seller for the period they owned the property. In such cases, the prorated tax credit from the property seller offsets that portion of the charge for the establishment of the Escrow account.

(e) General documentation requirements (i) Documentation Level For Loan Product Advisor® Mortgages, the Documentation Level shown on the Feedback Certificate indicates the minimum level of documentation acceptable for a Loan Product Advisor Mortgage. The Seller must provide the documentation required in this chapter for the Documentation Level returned. All Manually Underwritten Mortgages must at a minimum be documented according to Standard Documentation requirements. (ii) Documentation requirements for Borrower’s accounts Assets held in an account at a financial institution may be verified using account statements, direct account verifications or third-party asset verifications. The following table contains the requirements for these types of verifications: Documentation requirements for assets held in an account at a financial institution Documentation type Documentation requirements Asset account statements Asset account statements must: Documentation requirements for assets held in an account at a financial institution Documentation type Documentation requirements ■ Identify the financial institution ■ Identify the account owner(s) ■ Identify the account number, which at a minimum must include the last four digits) ■ Show all transactions ■ Show the period covered ■ Show the ending balance ■ Show any outstanding loans secured by the asset A computer-generated transaction history that is downloaded by the Borrower from the internet or by a financial institution representative from the institution’s system is acceptable. The transaction history must identify the name of the institution and the source and include the information required above for asset account statements, unless: ■ It is used in combination with other asset verifications containing the missing information, and ■ It can clearly establish that the transaction history pertains to the same account Direct account verifications (i.e., verification of deposit form (VOD)) Direct account verifications must: ■ Identify the financial institution ■ Identify the account owner(s) ■ Identify the account number, which at a minimum must include the last four digits ■ Identify the type of account ■ Identify account open date ■ Identify the current account balance ■ Identify the average balance for the previous two months ■ Identify any outstanding loans secured by the asset ■ Include the title, signature and phone number of the depository representative who completed the verification, unless the direct Documentation requirements for assets held in an account at a financial institution Documentation type Documentation requirements account verification is generated electronically by the financial institution For purchase transaction Mortgages: the Seller must include documentation of the source of funds when an account is opened within 90 days of verification and/or when the current balance in an account exceeds the average balance by more than 50% of the sum of: ■ The total monthly qualifying income for the Mortgage, and ■ The amount derived from the asset calculation for establishing the debt payment-to-income (DTI) ratio in accordance with the requirements of Section 5307.1 when assets are used as a basis for repayment of obligations Third-party asset verifications Asset verifications obtained through third-party verification service providers must: ■ Be received by the originator directly from the third-party verification service provider; and ■ Contain the same information as required for direct account verifications or asset account statements above. Exception: Verifications that are generated electronically and are not completed or provided by a representative of the employer or the depository institution, as applicable: ❑ Are not required to contain the representative’s information, and ❑ May identify the account with a minimum of the last two digits of the account number If any required information is missing, the Seller must obtain additional documentation to supplement the third-party verification. The Seller is responsible for ensuring the accuracy and integrity of the information provided by the third-party verification services. In lieu of the requirements above for third-party asset verifications, refer to Section 5501.8 for requirements for Mortgages using automated asset assessment with Loan Product Advisor using account data that receive a result of “Eligible for Asset Representation and Warranty Relief” or “Eligible for Partial Documentation requirements for assets held in an account at a financial institution Documentation type Documentation requirements Asset Representation and Warranty Relief” on the Last Feedback Certificate.

(f) Evaluation of deposits in the Borrower’s accounts Except as stated below, the Seller is not required to document the sources of unverified deposits for purchase or refinance transactions. However, the Seller must consider any liabilities resulting from all borrowed funds. When the source of funds can be clearly identified from the deposit information on the account statement (e.g., direct payroll deposits) or other documented income or asset source in the Mortgage file (e.g., tax refund amounts appearing on the tax returns in the file), the Seller is not required to obtain additional documentation. (i) Deposits requiring verification for all transactions When an unverified deposit is used to pay off or pay down an existing debt in order to qualify for the Mortgage, the source of funds must be documented. (ii) “Large deposits” requiring verification for purchase transactions For purchase transaction Mortgages, the Seller must document the source of funds for any “large deposit” that is needed to qualify the Borrower when all of the following apply. The deposit must have been: ■ No more than 60 calendar days preceding the Application Received Date ■ On or prior to the Note Date ■ Reflected on documentation in the Mortgage file Note: The Seller is only required to document assets in the Mortgage file when such documentation is required in Section 5501.3. A “large deposit” is any single deposit exceeding 50% of the sum of: ■ The total monthly qualifying income for the Mortgage, and ■ The amount derived from the asset calculation for establishing the DTI ratio in accordance with the requirements of Section 5307.1 when assets are used as a basis for repayment of obligations When a single deposit consists of both verified and unverified portions, the Seller may use just the unverified amount when determining whether the deposit is a “large deposit.” When a “large deposit” is not verified and is not needed to qualify the Borrower, the Seller must reduce the funds used for qualification by the amount of the unverified deposit. For Loan Product Advisor Mortgages, refer to Section 5101.3 to determine when resubmission to Loan Product Advisor is required. (iii)Acceptable sources of deposit When a deposit requires verification as stated above, the Seller must determine all of the following: ■ Whether the source of the deposit is acceptable, as described below ■ That the funds belong to the Borrower ■ That the funds are eligible for the transaction The only acceptable sources of deposit are the following: ■ The Borrower’s income ■ Funds awarded to the Borrower (e.g., disaster relief funds, lottery winnings, courtawarded settlement) provided the source is not an interested party to the real estate or Mortgage transaction ■ Funds derived from eligible asset types stated in Sections 5501.3 and 5501.4

(Future effective date 02/03/27) This section contains requirements related to: ■ Verification of Borrower funds for a purchase transaction ■ Verification of Borrower funds for a refinance transaction ■ Eligible sources of funds ■ Prorated real estate tax credits ■ General documentation requirements ■ Evaluation of deposits in the Borrower’s accounts

(a) Verification of Borrower funds for a purchase transaction For purchase transaction Mortgages, the Seller must verify that the Borrower has sufficient funds to qualify for the Mortgage, which includes any funds required to be paid by the Borrower and Borrower reserves. Funds required to be paid by the Borrower include, but are not limited to, funds needed for Down Payment, for Closing Costs and to pay off or pay down debt.

(b) Verification of Borrower funds for a refinance transaction For refinance Mortgages, the Seller must verify that the Borrower has sufficient funds to qualify for the Mortgage, which includes any funds required to be paid by the Borrower (e.g., funds needed for Closing Costs and to pay off or pay down debt) and Borrower reserves when any of the following apply: ■ The funds required to be paid by the Borrower are more than $500 ■ Reserves are required for the transaction (i.e., as specified in Section 5501.2 or required by the Feedback Certificate) ■ The Mortgage is a Manually Underwritten Mortgage

(c) Eligible sources of funds All funds required to be verified must come from the eligible sources described in Sections 5501.3 and 5501.4. Refer to Section 5501.6 for interested party contributions requirements and Section 5501.7(a) for lender credit requirements.

(d) Prorated real estate tax credits Prorated real estate tax credits contributed by the property seller in areas where real estate taxes are paid in arrears may be considered when determining the funds required to be verified for the Mortgage transaction only when the Settlement/Closing Disclosure Statement indicates that an Escrow account is established and includes the portion of real estate taxes owed by the property seller for the period they owned the property. In such cases, the prorated tax credit from the property seller offsets that portion of the charge for the establishment of the Escrow account.

(e) General documentation requirements (i) Documentation Level For Loan Product Advisor® Mortgages, the Documentation Level shown on the Feedback Certificate indicates the minimum level of documentation acceptable for a Loan Product Advisor Mortgage. The Seller must provide the documentation required in this chapter for the Documentation Level returned. All Manually Underwritten Mortgages must at a minimum be documented according to Standard Documentation requirements. (ii) Documentation requirements for Borrower’s accounts Assets held in an account at a financial institution may be verified using account statements, direct account verifications or third-party asset verifications. The following table contains the requirements for these types of verifications: Documentation requirements for assets held in an account at a financial institution Documentation type Documentation requirements Asset account statements Asset account statements must: ■ Identify the financial institution ■ Identify the account owner(s) ■ Identify the account number, which at a minimum must include the last four digits) ■ Show all transactions ■ Show the period covered ■ Show the ending balance ■ Show any outstanding loans secured by the asset A computer-generated transaction history that is downloaded by the Borrower from the internet or by a financial institution representative from the institution’s system is acceptable. The transaction history must identify the name of the institution and the source and include the information required above for asset account statements, unless: ■ It is used in combination with other asset verifications containing the missing information, and Documentation requirements for assets held in an account at a financial institution Documentation type Documentation requirements ■ It can clearly establish that the transaction history pertains to the same account Direct account verifications (i.e., verification of deposit form (VOD)) Direct account verifications must: ■ Identify the financial institution ■ Identify the account owner(s) ■ Identify the account number, which at a minimum must include the last four digits ■ Identify the type of account ■ Identify account open date ■ Identify the current account balance ■ Identify the average balance for the previous two months ■ Identify any outstanding loans secured by the asset ■ Include the title, signature and phone number of the depository representative who completed the verification, unless the direct account verification is generated electronically by the financial institution For purchase transaction Mortgages: the Seller must include documentation of the source of funds when an account is opened within 90 days of verification and/or when the current balance in an account exceeds the average balance by more than 50% of the sum of: ■ The total monthly qualifying income for the Mortgage, and ■ The qualifying amount derived from accumulated assets as income in accordance with the requirements of Section 5307.1(b) Third-party asset verifications Asset verifications obtained through third-party verification service providers must: ■ Be received by the originator directly from the third-party verification service provider; and ■ Contain the same information as required for direct account verifications or asset account statements above. Documentation requirements for assets held in an account at a financial institution Documentation type Documentation requirements Exception: Verifications that are generated electronically and are not completed or provided by a representative of the employer or the depository institution, as applicable: ❑ Are not required to contain the representative’s information, and ❑ May identify the account with a minimum of the last two digits of the account number If any required information is missing, the Seller must obtain additional documentation to supplement the third-party verification. The Seller is responsible for ensuring the accuracy and integrity of the information provided by the third-party verification services. In lieu of the requirements above for third-party asset verifications, refer to Section 5501.8 for requirements for Mortgages using automated asset assessment with Loan Product Advisor using account data that receive a result of “Eligible for Asset Representation and Warranty Relief” or “Eligible for Partial Asset Representation and Warranty Relief” on the Last Feedback Certificate.

(f) Evaluation of deposits in the Borrower’s accounts Except as stated below, the Seller is not required to document the sources of unverified deposits for purchase or refinance transactions. However, the Seller must consider any liabilities resulting from all borrowed funds. When the source of funds can be clearly identified from the deposit information on the account statement (e.g., direct payroll deposits) or other documented income or asset source in the Mortgage file (e.g., tax refund amounts appearing on the tax returns in the file), the Seller is not required to obtain additional documentation. (i) Deposits requiring verification for all transactions When an unverified deposit is used to pay off or pay down an existing debt in order to qualify for the Mortgage, the source of funds must be documented. (ii) “Large deposits” requiring verification for purchase transactions For purchase transaction Mortgages, the Seller must document the source of funds for any “large deposit” that is needed to qualify the Borrower when all of the following apply. The deposit must have been: ■ No more than 60 calendar days preceding the Application Received Date ■ On or prior to the Note Date ■ Reflected on documentation in the Mortgage file Note: The Seller is only required to document assets in the Mortgage file when such documentation is required in Section 5501.3. A “large deposit” is any single deposit exceeding 50% of the sum of: ■ The total monthly qualifying income for the Mortgage, and ■ The amount derived from the asset calculation for determining the qualifying amount to be used as Borrower’s income in accordance with the requirements of Section 5307.1(b) when accumulated assets are used as income When a single deposit consists of both verified and unverified portions, the Seller may use just the unverified amount when determining whether the deposit is a “large deposit.” When a “large deposit” is not verified and is not needed to qualify the Borrower, the Seller must reduce the funds used for qualification by the amount of the unverified deposit. For Loan Product Advisor Mortgages, refer to Section 5101.3 to determine when resubmission to Loan Product Advisor is required. (iii)Acceptable sources of deposit When a deposit requires verification as stated above, the Seller must determine all of the following: ■ Whether the source of the deposit is acceptable, as described below ■ That the funds belong to the Borrower ■ That the funds are eligible for the transaction The only acceptable sources of deposit are the following: ■ The Borrower’s income ■ Funds awarded to the Borrower (e.g., disaster relief funds, lottery winnings, courtawarded settlement) provided the source is not an interested party to the real estate or Mortgage transaction ■ Funds derived from eligible asset types stated in Sections 5501.3 and 5501.4