Freddie Mac Single-Family Seller/Servicer Guide Section 5605.4 — Site and location analysis

Freddie Mac Single-Family Seller/Servicer Guide Section 5605.4 — Site and location analysis

5605.4: Site and location analysis (01/26/26) Refer to Bulletin 2025-7, which announced the policy requirements for Uniform Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal® appraisal reports that use UAD 3.6 before the mandatory effective November 2, 2026 version of this section. This section contains requirements related to: ■ Property characteristics ■ Environmental issues and detrimental conditions (a) Property characteristics The “Site” section of the appraisal report must accurately describe the physical characteristics of the site, site improvements, site view and available utilities, and it must fully analyze any locational factors affecting the site. Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-10 (i) Zoning The appraisal report must accurately describe: ■ The zoning classification ■ A description of the zoning classification ■ Whether the land use of the subject property represents a legal use, a legal non- conforming use (commonly referred to as grandfathered use), or an illegal use, or there is no zoning (A) Eligible zoning classification Freddie Mac does not limit Mortgage purchases to Mortgages secured by properties with specific zoning classifications; however, the Mortgaged Premises zoning classification is an important characteristic the Seller must consider when determining whether the Mortgage is eligible for sale to Freddie Mac. Example: If a property is zoned for agricultural use, the Seller must ensure the property is residential in nature, its residential use is a permissible use under the zoning classification and its use does not primarily involve commercial activities such as farming or ranching. (B) Eligible zoning compliance The zoning compliance must be either legal or legal non-conforming. A 1-unit property with an ADU that has illegal zoning compliance may be eligible if the requirements of Section 5601.2 are met. A 2- or 3-unit property with an ADU must have legal or legal non-conforming zoning compliance. A 4-unit property with an ADU is not eligible. Mortgaged Premises in jurisdictions with no zoning are acceptable security for Mortgages delivered to Freddie Mac. For Mortgaged Premises with a land use that is legal non-conforming, the appraisal report must reflect any adverse effect the non-conforming use has on the opinion of market value. A Mortgage is ineligible for sale to Freddie Mac if the Mortgage is secured by property that is subject to coastal tideland, wetland or setback laws or regulations that Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-11 prevent the rebuilding or maintenance of the property improvements if they are damaged or destroyed. (ii) Highest and best use For the Mortgage to be eligible for sale to Freddie Mac, the highest and best use of the subject property as improved (or as proposed per plans and specifications) must be the present use. (iii) Utilities The appraisal report must describe the utilities permanently connected to the site and the impact to value and marketability. The utilities serving the subject property must meet community standards. The comparable sales should have utilities similar to the subject property. When differences in utilities exist between the subject property and the comparable sales, any adjustments or lack of adjustments made to the comparable sales for significant differences must be explained in the comments area or on an attached addendum. (iv) Streets The subject property must have legal ingress and egress by streets constructed and maintained in a manner that meets community standards. Refer to Section 4702.4(e) for requirements related to access provided by a private road, joint-driveway or easement. The appraisal report should contain comparable sales with street access, ownership, maintenance and materials similar to the subject property. When differences in street access, ownership, maintenance or materials exist between the subject property and a comparable sale, the appraisal report must include justification and support for the adjustments, or lack of adjustments, made to the comparable sale. The appraisal report should include an explanation of the effect these differences have on the subject property’s value or marketability. (v) Site size Freddie Mac does not limit Mortgage purchases based on the size of the subject property site. The appraisal report must identify the total area of the site. The appraisal report should include comparable sales with similar site sizes. When differences in site size exist between the subject property and the comparable sales, the appraisal report must include an explanation in the comments area of the appraisal report or on an attached addendum for any adjustments or lack of adjustments made for significant differences in site size between the subject property and the Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-12 comparable sales and the effect these differences have on the subject property’s value or marketability. (vi) Flood hazard area The flood hazard section of the appraisal report is not required to be completed if the flood zone is determined by another party, such as a non-appraiser on the staff of the Seller, a surveyor or a specialized flood zone determination company. If the property is in a “Special Flood Hazard Area” as identified by the Federal Emergency Management Agency through the National Flood Insurance Program, the appraisal report must describe any impacts this has on the subject property’s value or marketability. See Section 4703.3 for flood zone determination and flood insurance requirements. (b) Environmental issues and detrimental conditions (i) Impact of Contaminated Sites, Hazardous Substances and other adverse conditions If the Seller knows of the existence of a Contaminated Site in the Neighborhood where the property is located, it must inform the appraiser of the Contaminated Site when ordering the appraisal. The appraisal report must identify any known environmental issues, such as Contaminated Sites, Hazardous Substances or other adverse conditions, that affect the property or the Neighborhood in which the property is located. The appraisal report must include adjustments to reflect any impact on market value and commentary on any effect to the marketability of the subject property. Examples of conditions that require analysis and commentary include, but are not limited to: ■ Presence of asbestos, urea-formaldehyde or any similar insulation in the dwelling ■ Proximity of the subject property to: ❑ A Contaminated Site ❑ Ground water contamination, chemical or petroleum spills or other Hazardous Substances that are expected to impact the area for more than one year ❑ Areas that may affect the value or marketability of the subject property, including, but not limited to: Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-13 ■ Industrial sites ■ Waste or water treatment facilities ■ Commercial establishments (other than retail establishments that serve the Neighborhood) ■ Airport approach paths ■ Floodplains ■ Landslide areas (ii) Detrimental conditions The appraisal report must identify the presence of detrimental conditions, such as expansive soils, underground mines or subsidence, in the immediate area or on the subject property site. If the detrimental condition(s) is located on the subject property site, the appraisal report must be made “subject to” an inspection by an appropriately licensed professional or another person trained in the particular field of concern to determine if a repair or alteration is required. The appraiser must consider the effect the condition(s) may have on estimating the subject property’s market value and marketability. For any appraisal report that is made subject to an inspection(s) due to a detrimental condition(s), the Seller must include in the Mortgage file evidence of repair, alteration or an inspection report indicates the condition does not require or alteration. (See Section 5605.8 for additional information related to appraisal reports completed “subject to” and inspection.) 5605.4: Site (Future effective date 11/02/26) This section contains requirements related to: ■ Site characteristics ■ Environmental issues and detrimental conditions ■ Utilities ■ Hazard zones Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-14 ■ Property restrictions (a) Site characteristics The “Site” section of the appraisal report must accurately describe the characteristics of the site, such as size, number of parcels, property access, site influences, view, site features, and utilities. The appraisal report must identify any impact the site features or view have on the value and marketability of the subject property. (i) Site size and parcels Freddie Mac does not limit Mortgage purchases based on the size of the subject property site. The appraisal report must identify the total area of the site. If the Mortgaged Premises is situated on more than one parcel, the appraisal report must identify whether the parcels have at least one common boundary or an object or element separates the parcels. When the Mortgaged Premises is situated on two or more parcels: ■ The parcels must be adjoining. Exception: Parcels that would otherwise be adjoined but are separated by a road (e.g., a waterfront property where the parcel without the residence offers access to the water) are eligible if the parcel without the residence is non-buildable (but may include non-residential improvements such as a garage or dock) and the Mortgage file contains evidence that the parcel without the residence cannot be improved with a dwelling. ■ The Mortgaged Premises must contain only one residence. (An ADU is allowed on the parcel that contains the residence if the eligibility requirements of Section 5601.2 are met.) ■ The Mortgage must be a valid First Lien on each parcel ■ Each parcel must have the same basic zoning (e.g., residential, agricultural) ■ Each parcel must be conveyed in its entirety ■ The site description must accurately describe the land and any improvements included on each parcel ■ The residence or improvements may be situated across lot lines ■ Non-residential improvements (e.g., garages, outbuildings) are acceptable on any parcel Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-15 (ii) Zoning The appraisal report must accurately describe: ■ The zoning classification code as defined by the local governing authority (e.g., R-1, R-2) ■ A description of the zoning classification code and the details of the classification code as used and defined by the local governing authority (e.g., residential single- family dwellings on 1-acre lots, residential 2-4 family dwellings) ■ The level of compliance of the site or improvements with zoning regulations. Acceptable responses include: ❑ Legal use ❑ Legal non-conforming use (any illegal use that is grandfathered or allowed by special exception) ❑ Illegal use ❑ There is no zoning (A) Eligible zoning classification Freddie Mac does not limit Mortgage purchases to Mortgages secured by properties with specific zoning classifications; however, the Mortgaged Premises zoning classification is an important characteristic the Seller must consider when determining whether the Mortgage is eligible for sale to Freddie Mac. Example: If a property is zoned for agricultural use, the Seller must ensure the property is residential in nature, its residential use is a permissible use under the zoning classification and its use does not primarily involve commercial activities such as farming or ranching. (B) Eligible zoning compliance The zoning compliance must be either legal or legal non-conforming. A 1-unit property with an ADU that has illegal zoning compliance may be eligible if the requirements of Section 5601.2 are met. A 2- or 3-unit property with an ADU must have legal or legal non-conforming zoning compliance. A 4-unit property with an ADU is not eligible. Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-16 Mortgaged Premises in jurisdictions with no zoning are acceptable security for Mortgages delivered to Freddie Mac. For Mortgaged Premises with a land use that is legal non-conforming, the appraisal report must reflect any adverse effect the non-conforming use has on the opinion of market value. A Mortgage is ineligible for sale to Freddie Mac if the Mortgage is secured by property that is subject to coastal tideland, wetland or setback laws or regulations that prevent the rebuilding or maintenance of the property improvements if they are damaged or destroyed. (iii)Property access The Mortgaged Premises must have legal ingress and egress by streets constructed and maintained in a manner that meets community standards. Refer to Section 4702.4(e) for requirements related to access provided by a private road, joint-driveway or easement. The appraisal report should contain comparable sales with street access, ownership, maintenance and materials similar to the subject property. (b) Environmental issues and detrimental conditions (i) Impact of Contaminated Sites, Hazardous Substances and other adverse conditions If the Seller knows of the existence of a Contaminated Site in the Neighborhood, the Seller must inform the appraiser of the Contaminated Site when ordering the appraisal. The appraisal report must identify any known environmental issues, such as Contaminated Sites, Hazardous Substances or other adverse conditions, that affect the subject property or are within the vicinity of the property. The appraisal report must include adjustments to reflect any impact on market value and commentary on any effect to the marketability of the subject property. Examples of conditions that require analysis and commentary include, but are not limited to: ■ Hazardous Above Ground Storage Tank ■ Hazardous Substances ■ Landfill ■ Radon Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-17 ■ Slush Pit ■ Soil Contamination ■ Superfund Site ■ Underground Storage Tank ■ Water Contamination (ii) Detrimental conditions The appraisal report must identify the presence of detrimental conditions, such as expansive soils, underground mines or subsidence, in the immediate area or on the subject property site. If the detrimental condition(s) is located on the subject property site, the appraisal report must be made “subject to” an inspection by an appropriately licensed professional or another person trained in the particular field of concern to determine if a repair or alteration is required. The appraiser must consider the effect the condition(s) may have on the subject property’s market value and marketability. For any appraisal report that is made subject to an inspection(s) due to a detrimental condition(s), the Seller must include in the Mortgage file evidence of repair, alteration or an inspection report indicates the condition does not require or alteration. (See Section 5605.9 for additional information related to appraisal reports completed “subject to” and inspection.) (c) Utilities The appraisal report must describe the utilities that are permanently connected to the site and the impact of the utilities on the value and marketability of the subject property. The utilities that serve the subject property must meet community standards. The comparable sales should have utilities that are similar to the subject property’s utilities. When differences exist between the utilities that serve subject property and those that serve the comparable sales, any adjustments or lack of adjustments to the comparable sales must be explained in the appraisal report. (d) Hazard zones If the subject property is in a hazard zone (i.e., flood zone, lava zone), the appraiser must include that information in the appraisal report. Freddie Mac Single-Family Seller/Servicer Guide Chapter 5605 As of 02/04/26 Page 5605-18 If the flood zone determination is made by another party other than the appraiser, such as a non-appraiser on the staff of the Seller, a surveyor or a specialized flood zone determination company, the flood hazard section of the appraisal report is not required to be completed. If the property is in a “Special Flood Hazard Area” (SFHA) as identified by the Federal Emergency Management Agency (FEMA) through the National Flood Insurance Program (NFIP), the appraisal report must describe any impacts of the SFHA on the subject property’s value or marketability. See Section 4703.3 for flood zone determination and flood insurance requirements. (e) Property restrictions The appraisal report must identify any property restrictions or encumbrances that affect the subject property and identify the impact of such restrictions or encumbrances on the subject property including commentary describing any impact to the subject property’s value or marketability.

Source: Freddie Mac Single-Family Seller/Servicer Guide Section 5605.4 — Site and location analysis · source URL · snapshot 5869ee9e606cd4ae