Freddie Mac Single-Family Seller/Servicer Guide 5501.5 — Employer Assisted Homeownership (EAH) Benefit

Freddie Mac Single-Family Seller/Servicer Guide 5501.5 — Employer Assisted Homeownership (EAH) Benefit

Effective 2025-05-07 · Freddie Mac's stamp for this section

This section contains requirements related to: ■ General requirements ■ Types of benefits ■ Documentation requirements ■ Special delivery requirement (a) General requirements An Employer Assisted Homeownership (EAH) Benefit may be used as a source of funds to qualify the Borrower if the terms of the EAH Benefit meet the following requirements: ■ The EAH Benefit is provided to an employee from the employer pursuant to an established, ongoing and documented employer benefit program, provided: ❑ The employer is not an interested party (as described in Section 5501.6); and ❑ The funds were not obtained from an interested party either directly or through a third party ■ The Mortgage is secured by a 1- to 4-unit Primary Residence (b) Types of benefits The EAH Benefit may be any of the following types of benefits meeting the requirements in the table below: Requirements based on type of EAH Benefit Type of EAH Benefit Requirements Grant See requirements for gift or grant from an Agency in Section 5501.4. With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply. Individual Development Account (IDA) See requirements for matching funds for IDAs in Sections 5501.3(a) and 5501.4(b). With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply. Unsecured loan An unsecured loan may be fully repayable, deferred payment or forgivable. The source, terms and conditions must be documented on Form 65, Uniform Residential Loan Application. Proceeds from an unsecured loan that is an EAH Benefit may be used to fund all or part of the Down Payment or Closing Costs. The terms of the EAH Benefit may not require repayment in full unless either: ■ The Borrower terminates their employment for any reason ■ The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force If the EAH Benefit is fully repayable, the required monthly payment must be included when calculating the monthly debt payment-to-income (DTI) ratio. However, if the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio. Note: See Section 4408.1 for requirements when an EAH Benefit is used as a source of funds to qualify for a Mortgage made pursuant to an employee relocation program. Secondary financing Secondary financing may be fully repayable, deferred payment or forgivable and must meet the secondary financing requirements in Sections 4204.1(a) and 4204.1(b). The terms of the EAH Benefit may not require repayment in full unless either: ■ The Borrower terminates their employment for any reason ■ The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force If the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio; otherwise, the required monthly payments must be included in calculating the monthly housing expense-to-income ratio. Note: See Section 4408.1 for requirements when an EAH Benefit is used as a source of funds to qualify for a Mortgage made pursuant to an employee relocation program. Affordable Second® An Affordable Second may be fully repayable, deferred payment or forgivable, and must meet the Affordable Seconds requirements of Section 4204.2. With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply. The terms of the EAH Benefit may not require repayment in full unless either: ■ The Borrower terminates their employment for any reason ■ The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force If the monthly payment of principal and interest or interest only begins on or after the 61st monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio; otherwise, the required monthly payments must be included in calculating the monthly housing expense-to-income ratio. (c) Documentation requirements In addition to the documentation requirements for specific benefit types, the following requirements must be met: ■ EAH Benefits must be documented with a copy of the employer benefit program that provides the amount of the benefit and the terms of the program ■ Evidence of receipt of the EAH Benefit must be provided (e.g., funds on deposit in Borrower’s account or funds reflected on the Settlement/Closing Disclosure Statement) (d) Special delivery requirement The Seller must deliver ULDD Data Point Investor Feature Identifier valid value “D25” when delivering a Mortgage with EAH Benefits. See Section 6302.29 for more information.

Source: Freddie Mac Single-Family Seller/Servicer Guide 5501.5 — Employer Assisted Homeownership (EAH) Benefit · source URL · snapshot 4c94f67729042dd6