Freddie Mac Single-Family Seller/Servicer Guide 8406.2 — Eligibility and application for approval of

Transfers of Ownership, assumptions and releases of liability (12/17/25) This section contains requirements related to: ■ Application for approval of Transfers of Ownership, assumptions and releases of liability ■ Determining eligibility for Transfers of Ownership, assumptions and releases of liability ■ Approval of the application for Transfers of Ownership ■ Adverse action notice requirements for declined Mortgage assumption

(a) Application for approval of Transfers of Ownership, assumptions and releases of liability For Transfers of Ownership that require the Servicer to first determine the creditworthiness of the transferee, and for all assumptions and releases of liability, the Servicer must obtain the following: ■ Form 65, Uniform Residential Loan Application, completed and executed by the transferee ■ A copy of the executed contract of sale or other document reflecting the Transfer of Ownership (e.g., quitclaim deed) ■ A current credit report for the transferee, as described in Section 5203.1 ■ Income documentation and asset documentation for the transferee as required by Topics 5100 through 5500 ■ In accordance with requirements in Chapters 5302 through 5307 and Chapter 5501 for standard documentation ❑ Written verification of the transferee’s current employment and income from a reliable source and ❑ Verification or other acceptable evidence of the source and amount of funds for the Down Payment and payment of prepaid items, as reported in the application Note: Refer to Section 8406.2(b) for underwriting requirements to determine whether a transferee is creditworthy. The Servicer must comply with the Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending Act and any other applicable law or regulation. Note: See also Section 1301.2 for additional compliance requirements. The Servicer must also notify the transferee of the decision on the application within 25 days after the Servicer receives all information that constitutes a completed application.

(b) Determining eligibility for Transfers of Ownership, assumptions and releases of liability (i) Manually reviewing transferee eligibility When required to determine the creditworthiness of a transferee for assumptions and releases of liability, and when manually underwriting a Transfer of Ownership following the requirements of Section 8406.1(d), the Servicer must review the application to ensure compliance with Freddie Mac’s credit underwriting guidelines in Topics 5100 through 5500 including, but not limited to, income and employment, source of funds for Down Payment and Closing Costs and credit history. The Servicer’s analysis must be documented on Form 1077, Uniform Underwriting and Transmittal Summary, or on another document in the Mortgage file. (ii) Use of Loan Product Advisor® to assess creditworthiness for Transfers of Ownership and Mortgage assumptions For Mortgage assumptions that require the Servicer to first determine the creditworthiness of the transferee as described in Section 8406.1(d)(iv), Servicers may use Loan Product Advisor to assess the creditworthiness of the transferee(s) as described in this section. This functionality is permitted only for transferees who request an assumption of the Mortgage obligation as part of a Transfer of Ownership and must only be used to assess creditworthiness of the transferee. All other Guide requirements regarding Transfers of Ownership and Mortgage assumptions remain in effect. Servicers that opt to use Loan Product Advisor to assess a transferee’s creditworthiness to process assumptions in Loan Product Advisor must use the “no cash-out” refinance option and the “Assumption FRE Owned Loan” Loan Program Identifier. Loan Product Advisor uses the Mortgage’s original value to assess the transferee’s creditworthiness; therefore, Servicers have the flexibility to manually underwrite an assumption for any reason, including if the transferee requests use of the Mortgage’s current value with a BPO obtained via BPODirect. If the Feedback Certificate returned from the Servicer’s last submission to Loan Product Advisor prior to the Servicer’s assumption determination (the Last Assumption Feedback Certificate) returns a Feedback Certificate with a Risk Class of “Accept”, the Servicer is not required to manually underwrite the assumption of the Mortgage in accordance with the requirements in Topics 5100 through 5500. To move forward with the assumption, the Servicer must follow the steps in Sections 8406.2(c) through 8406.3(b), as applicable, to complete the assumption and must maintain the Last Assumption Feedback Certificate in the Mortgage file. If Loan Product Advisor returns a Feedback Certificate with a Risk Class of “Caution”, the Servicer may manually underwrite the assumption of the Mortgage in accordance with the requirements in Topics 5100 through 5500. If the Servicer ultimately declines the assumption application, the Servicer must follow the requirements in Section 8406.2(d) to notify all affected parties. Loan Product Advisor may be used to assess the creditworthiness of transferees who want to assume a Mortgage with a previous Payment Deferral; however, it may not be used to assess the creditworthiness of transferees who want to assume a Mortgage that has been previously modified. Modified Mortgages are eligible to be assumed, but they must be manually underwritten using the manual underwriting requirements in Topics 5100 through 5500. (iii) Optional use of Loan Product Advisor Servicers may continue to process Mortgage assumptions manually if they choose to do so or at the request of the transferee. The following requirements must be met for all assumptions, when applicable: 1. The transferee must be determined to be creditworthy in accordance with Section 5102.2(b) and: ■ The assumption is manually underwritten, or ■ If Loan Product Advisor was used to assess Transferee creditworthiness, the assumption is one for which Borrower creditworthiness is permitted to be assessed through Loan Product Advisor and the Last Assumption Feedback Certificate includes a Risk Class of Accept 2. A written assumption and release of liability agreement must be executed by all parties concerned in accordance with Section 8406.2

(c) Note: Freddie Mac will require acceleration of the indebtedness if title is further transferred by the transferee to someone who is not an eligible transferee under Section 8406.1(c) or 8406.1(d). 3. If the Mortgage is being assumed, the transferee must pay at least 5% of the sale price in addition to all adjustments (e.g., for property taxes, and property and mortgage insurance premiums) from cash or other equity as defined in Chapter 5501. (Note: The transferee is not required to pay 5% for those Transfers of Ownership protected by federal restrictions on exercise of the due-on-transfer clause as set forth in Section 8406.1(c) or for those Transfers of Ownership permitted under Sections 8406.1(d)(i) and 8406.1(d)(ii), even if, in those cases, the transferee is also assuming the Mortgage.) 4. There must be no changes in the terms of the Security Instrument and the Note other than a change to the name of the transferee, any release and subsequent assumption of personal liability, where applicable, and any change allowed in Section 8103.3(d) 5. Mortgage insurance coverage must be maintained, if applicable If the Mortgaged Premises to be transferred secures a Mortgage that is covered by a buydown agreement, the Servicer must underwrite the transferee according to the qualification requirements provided in Section 4204.3. See Section 8406.3(d) for additional information. (c) Approval of the application for Transfers of Ownership The Servicer must approve the Transfer of Ownership if, based on its eligibility review in accordance with Section 8406.2(b), it reasonably determines that the security interest in the Mortgaged Premises will not be impaired by this transfer. The Servicer is not required to notify Freddie Mac of the Transfer of Ownership permitted under Sections 8406.1(c) and 8406.1(d), provided the Mortgage is not assumed by the transferee or the transferor is not being released of liability, unless it becomes necessary later to communicate with Freddie Mac concerning this Mortgage. The Servicer must prepare the necessary documents and have them executed by all parties concerned. In addition, if the transferor requests to be released of liability under the Note and Security Instrument, a written assumption and release of liability agreement must be executed. If State law requires Freddie Mac to execute the documents, the Servicer warrants that: ■ The documents reflect terms that are consistent with the requirements of this chapter ■ All statements set forth in the documents are accurate, and ■ The documents comply with all applicable State and local requirements The Servicer must: ■ Deliver the original executed assumption agreement and, as applicable, release of liability agreement, to the Document Custodian; and copies to all other parties concerned Note: Per Section 1402.5(b)(ii), the Servicer must update the MERS® eRegistry (as defined in Section 1402.1(b)) to provide notice of the assumption agreement upon an assumption (with or without a release of liability) of an eMortgage (as defined in Section 1402.1(b)) ■ Retain a copy of the executed assumption agreement and, as applicable, release of liability agreement, in the Mortgage file ■ Arrange for any recordation commonly required by private institutional Mortgage investors or required by law to ensure the priority of the existing lien and assess any related costs to the transferee ■ Provide all notices and disclosures required under the Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending Act and any other applicable law or regulation (see also Section 1301.2 for additional compliance requirements) ■ Ensure that all insurance policies reflect the change of ownership and take any action necessary to continue any required insurance coverage including, mortgage insurance, where applicable ■ Document transferee information in the Freddie Mac Post-Fund Data Correction tool (see Exhibit 88, Servicing Tools). Servicer must submit copies of the settlement statement and assumption agreement in accordance with instructions for use of the tool. If Servicer needs to submit more than one request to change information, Servicer may import the Post-Fund Data Correction Form excel spreadsheet (DCR Form) found on the Post-Fund Data Correction tool webpage (https://sf.freddiemac.com/tools-learning/technologytools/our-solutions/post-fund-data-correction) into the Post-Fund Data Correction tool, in accordance with the spreadsheet instructions. ■ For Cooperative Share Loans, comply with the requirements in Section 8801.3(a) When applicable, the Servicer may cancel mortgage insurance following the Transfer of Ownership of the Mortgaged Premises in accordance with Sections 8203.2 through 8203.4(a). If the Servicer is unable to approve the Transfer of Ownership or assumption following Guide requirements and believes that approval is in the Borrower’s and Freddie Mac’s best interest, the Servicer must send the request for approval to [email protected].

(d) Adverse action notice requirements for declined Mortgage assumption If the application for a Mortgage assumption is declined, the Servicer must provide an adverse action notice to all applicable parties, or any other notice or disclosure required under the Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending Act and any other applicable federal, State or local law. Freddie Mac must not be identified as a creditor in any notice or disclosure that may be required, as Freddie Mac is not participating in the decision on the application.