Freddie Mac Single-Family Seller/Servicer Guide 4202.1 — Legal compliance and regulation

This section contains requirements related to: ■ Compliance with law ■ State anti-predatory lending laws and regulations ■ Predatory lending practices

(a) Compliance with law (i) Applicable law The Mortgage and the Servicing of the Mortgage, Mortgage transaction and Mortgaged Premises must comply with all requirements of all applicable federal, State and local laws, rules and regulations. This includes, but is not limited to: ■ Truth-in-lending laws ■ Licensing laws ■ Doing-business laws ■ Usury laws ■ Anti-predatory lending Additionally, any right of rescission involving the Mortgage under such laws, rules or regulations must have expired. (ii) Compliance with QM requirements In addition to ensuring compliance with applicable laws, Sellers must ensure that all ATR Covered Mortgages satisfy the QM requirements of the Revised General QM Rule, even if the Seller is not required by law or regulation to comply with the Revised General QM Rule. Note: Refer to Section 4202.2(c) for additional information about the ATR/QM Rule requirements. Freddie Mac Single Family Seller/Servicer Guide

(b) State anti-predatory lending laws and regulations Mortgages secured by Mortgaged Premises in the following States that are designated as “high-cost,” “high-risk” or similar Mortgages are not eligible for purchase by Freddie Mac: Mortgages not eligible for purchase by Freddie Mac State Mortgage details Arkansas Mortgages with Note Dates on or after July 17, 2003 that are “highcost home loans” under the Arkansas Home Loan Protection Act, A.C.A. § 23-53-101, et seq. Colorado Mortgages with Note Dates on or after January 1, 2003 that are “covered loans” under the Consumer Equity Protection Act, C.R.S. 53.5-101, et seq. Georgia Mortgages with Note Dates between October 1, 2002 and March 7, 2003 that are governed by the Georgia Fair Lending Act, O.C.G.A. § 7-6A-1, et seq., and Mortgages with Note Dates on and after March 7, 2003 that are “high-cost home loans” Illinois Mortgages with Note Dates on or after January 1, 2004 that are “highrisk home loans” under the High-Risk Home Loan Act, 815 ILCS 137/1, et seq. Indiana Mortgages with Note Dates on or after January 1, 2005 that are “high cost home loans” under Article 9 (Home Loan Practices) of the Indiana Code concerning trade regulations; consumer sales and credit, Burns Ind. Code Ann. § 24-9-1-1, et seq. Kentucky Mortgages with Note Dates on or after June 25, 2003 that are “highcost home loans” under the Kentucky Revised Statutes Chapter 360, KRS § 360.100 Maine Mortgages with Note Dates on or after September 13, 2003 that are “high rate, high fee mortgages” under Article 8-A (the Maine Consumer Credit Code – Truth-in-Lending), 9-A MRSA § 8-501, et seq. Freddie Mac Single Family Seller/Servicer Guide Mortgages not eligible for purchase by Freddie Mac State Mortgage details Massachusetts Mortgages with Note Dates on or after November 7, 2004 that are “high cost home mortgage loans” under the Predatory Home Loan Practices Act, ALM GL ch. 183C, § 1, et seq. New Jersey Mortgages with Note Dates on or after November 27, 2003 that are “high-cost home loans” under the New Jersey Home Ownership Security Act of 2002, N.J. Stat. § 46:10B-22, et seq. New Mexico Mortgages with Note Dates on or after January 1, 2004 that are “highcost home loans” under the Home Loan Protection Act, N.M. Stat. Ann. § 58-21A-1, et seq. New York Mortgages with initial application dates after April 1, 2003 that are “high-cost home loans” under the New York Banking Law, NY CLS Bank § 6-l. In addition, Mortgages with Note Dates on or after September 1, 2008 that are “subprime home loans” under the New York Banking Law, NY CLS Bank § 6-m. Oklahoma Mortgages with Note Dates on or after January 1, 2004 that are “subsection 10 mortgages” under Article 1, Part 3 of the Consumer Credit Code, 14A Okl. St. § 1-301 Rhode Island Mortgages with Note Dates on or after December 31, 2006 that are “high-cost home loans” under the Rhode Island Home Loan Protection Act, R.I. Gen. Laws § 34-25.2-1, et seq. Tennessee Mortgages with Note Dates on or after January 1, 2007 that are “highcost home loans” under the Tennessee Home Loan Protection Act, Tenn. Code Ann. § 45-20-101, et seq. Such Mortgages are ineligible for purchase by Freddie Mac regardless of whether the lender and/or Seller/Servicer enjoys preemption based on its charter or whether the law provides for an exemption for particular lenders and/or Seller/Servicers based on their charters or for particular Mortgages based on their purchase by Freddie Mac or another entity. In addition, the Seller/Servicer represents and warrants that: Freddie Mac Single Family Seller/Servicer Guide ■ It has in place policies and procedures based on the requirements of each law identified above to ensure that it does not inadvertently deliver an ineligible Mortgage to Freddie Mac for purchase ■ It has received representations and warranties from any person or entity from which the Seller purchased the Mortgage that they are not “high-cost,” “high-risk” or similar Mortgages under the laws identified above, and ■ No person, with the intent to avoid the application or evade the provisions of one of the laws identified above, divided a loan transaction into separate parts (by creating a concurrent subordinate lien or otherwise) or performed any other subterfuge

(c) Predatory lending practices Freddie Mac actively opposes predatory lending and has implemented a number of policies designed to combat it. Freddie Mac-approved Seller/Servicers should have policies designed to identify and avoid predatory lending practices. In addition, Sellers must not “steer” a Borrower who qualified for a lower-cost loan product to a higher-cost loan product. A Seller should offer or direct applicants who seek financing through the Seller’s higher-priced subprime or non-prime lending channel toward its standard Mortgage line if the applicants qualify for one of the standard products. For additional information regarding Freddie Mac anti-predatory lending and compliance requirements, see the following locations: Additional anti-predatory lending and compliance requirements Topic Guide location Compliance with applicable law Section 1301.2 Compliance with law Section 4202.1(a) State anti-predatory lending laws and regulations Section 4202.1(b) Home Ownership and Equity Protection Act Mortgages Section 4202.2(a) Higher-Priced Mortgage Loans (HPML) and Higher-Priced Covered Transactions (HPCT) Section 4202.2(b) ATR/QM Rule eligibility and compliance Section 4202.2(c) Credit insurance Section 4202.3(a) Freddie Mac Single Family Seller/Servicer Guide Additional anti-predatory lending and compliance requirements Topic Guide location Mandatory arbitration Section 4202.3(c) Underwriting the Borrower Topics 5100–5500 Credit reporting requirements Section 8106.1(d)