Freddie Mac Single-Family Seller/Servicer Guide Section 4202.3 — Prohibited practices and restrictions

Freddie Mac Single-Family Seller/Servicer Guide Section 4202.3 — Prohibited practices and restrictions

4202.3: Prohibited practices and restrictions (11/05/25) This section contains requirements related to: ■ Credit insurance Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-12 ■ Mortgages with private transfer fee covenants ■ Mandatory arbitration (a) Credit insurance Freddie Mac will not purchase or securitize any Mortgage if the Borrower obtained a prepaid single-premium credit-life, credit disability, credit unemployment or credit property insurance policy in connection with the origination of the Mortgage, regardless of whether the premium was financed in the Mortgage amount or paid from the Borrower’s funds. This prohibition does not apply to credit insurance products where premiums are calculated, earned and paid on a monthly or other regular periodic basis or to prepaid hazard, flood or mortgage insurance policies. (b) Mortgages with private transfer fee covenants Mortgages on properties encumbered by private transfer fee covenants prohibited by 12 C.F.R. Part 1228 are ineligible for purchase by Freddie Mac if those covenants were created on or after February 8, 2011. In addition, the Seller/Servicer represents and warrants that: ■ It has controls in place to ensure that it does not inadvertently deliver an ineligible Mortgage to Freddie Mac as described above, and ■ If applicable, it has received representations and warranties from any person or entity from which the Seller purchased the Mortgage that the property securing the Mortgage is not encumbered by private transfer fee covenants created on or after February 8, 2011 However, private transfer fees are permissible if all of the following conditions are met for the Mortgage secured by a property encumbered by a private transfer fee: ■ The Mortgage is a shared equity loan ■ The Mortgage meets the Duty to Serve shared equity loan program criteria identified in 12 CFR 1282.34(d)(4) (other than the Duty to Serve 100% of Area Median Income limit) ■ The Mortgage has a Note Date on or after July 1, 2023 (c) Mandatory arbitration Freddie Mac will not purchase any Mortgage if any of the Mortgage documents—including the Note, any Note addendum, the Security Instrument or any Security Instrument rider— contain a “mandatory arbitration” clause (i.e., a clause that obligates the Borrower to submit to arbitration any dispute arising out of or relating in any way to the Mortgage transaction). Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-13 Freddie Mac’s Uniform Instruments do not provide for mandatory arbitration, and the addition of a mandatory arbitration clause is not an authorized change to the Uniform Instruments. No ancillary Mortgage document may contain a mandatory arbitration provision. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-1 Chapter 4203: Loan-to-Value (LTV), Total LTV (TLTV) and Home Equity Line of Credit (HELOC) TLTV (HTLTV) Ratios and Maximum Loan Amounts 4203.1: Loan-to-value (LTV), total LTV (TLTV) and Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios and maximum loan amounts (03/03/26) Effective for Mortgages with Application Received Dates on or after March 3, 2026. This section contains requirements related to: ■ Calculating loan-to-value (LTV), total LTV (TLTV) and Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios ■ Maximum LTV, TLTV and HTLTV ratios ■ Maximum original loan amounts (a) Calculating LTV, TLTV and HTLTV ratios Ratios are calculated using the total amount of outstanding liens and “value”, as described in this section. (i) Determining “value” (A) For purposes of calculating LTV, TLTV and HTLTV ratios For purposes of calculating LTV, TLTV and HTLTV ratios, “value” is determined as follows: Determining “value” Mortgage offering or characteristic “Value” is… Purchase transaction Mortgages The lesser of the appraised value of the Mortgaged Premises as of the appraisal report Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-2 Determining “value” Mortgage offering or characteristic “Value” is… effective date and the purchase price of the Mortgaged Premises. Note: For newly constructed homes, multiple contracts may be combined to determine the purchase price (e.g., the purchase contract for the house and a contract to install a swimming pool may be added together to establish the purchase price). Refinance Mortgages The appraised value of the Mortgaged Premises as of the appraisal report effective date Community Land Trust Mortgages As described in Section 4502.5 Mortgages secured by properties subject to resale restrictions As described in Section 4406.5 One-Time Construction to Permanent Mortgages and Renovation Mortgages As described in Section 4602.2 for One-Time Close transactions Two-Time Close Construction to Permanent Mortgages and Renovation Mortgages The appraised value of the Mortgaged Premises, as completed, as of the appraisal report effective date CHOICERenovation® Mortgages As described in Section 4607.4 GreenCHOICE Mortgages® As described in Section 4606.2 Freddie Mac Enhanced Relief Refinance® Mortgages As described in Section 4304.7 (B) For Mortgaged Premises located in the State of New York Solely for the purpose of determining whether mortgage insurance is required or should be canceled, for Loan Product Advisor® and Non-Loan Product Advisor Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-3 Mortgages, the “value” of the Mortgaged Premises located in the State of New York is the appraised value of the Mortgage Premises on the Note Date. For purchase transaction Cooperative Share Loans, solely for the purpose of determining whether mortgage insurance is required, the sales price of the Cooperative Interest may be used. If mortgage insurance is required, see Section 4701.5. (This definition of the value of the Mortgaged Premises located in the State of New York applies only to the above-stated mortgage insurance requirements and is not applicable for any other purposes under the terms of the Purchase Documents.) Refer to Chapter 4701 for mortgage insurance requirements. (ii) Calculation of LTV, TLTV and HTLTV ratios for Loan Product Advisor Mortgages Loan Product Advisor calculates the LTV, TLTV and HTLTV ratios based on data submitted by the Seller. Note: For certain Loan Product Advisor Mortgage transactions, Freddie Mac may accept the “value” to be the Seller-provided estimate of value or the purchase price as the basis for the Loan Product Advisor assessment of the Mortgage. Refer to Section 5602.3 and 5602.4 for more information on automated collateral evaluation (ACE) and ACE+ PDR, respectively. (iii) Calculation of LTV, TLTV and HTLTV ratios for Non-Loan Product Advisor Mortgages Calculation of LTV, TLTV and HTLTV ratios for Non-Loan Product Advisor Mortgages Ratio Calculation LTV Divide the First Lien Mortgage amount by “value” determined as described above. TLTV Divide the sum of the First Lien Mortgage amount and the disbursed amount of any secondary financing (including HELOCs) by “value” determined as described above. HTLTV Divide the sum of the First Lien Mortgage amount and the total HELOC credit line limit and any other secondary financing by “value” determined as described above. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-4 (b) Maximum LTV, TLTV and HTLTV ratios (i) Rounding requirements To determine whether a Mortgage complies with the maximum LTV, TLTV and HTLTV ratio requirements, the calculated ratio must be rounded up to the next whole number. For example, 94.01% must be rounded up to 95%. At delivery, Freddie Mac will calculate the LTV, TLTV and HTLTV ratios for each Mortgage based on data delivered by the Seller. Each ratio will be calculated to two decimal places, and the result will be rounded up to the next whole number. (ii) Maximum LTV, TLTV and HTLTV ratios Except as stated in (b)(iii) below, the maximum LTV, TLTV and HTLTV ratios are: Purchase and “no cash-out” refinance Mortgages (fixed-rate and ARMs) Property type Maximum LTV/TLTV/HTLTV ratio Accept Mortgages, excluding super conforming Mortgages Manually Underwritten Mortgages and super conforming Mortgages 1-unit Primary Residence 95% 95% 2-unit Primary Residence 95% 85% 3- and 4-unit Primary Residences 95% 80% Second home 90% 90% 1-unit Investment Property 85% 85% 2- to 4-unit Investment Property 75% 75% Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-5 Cash-out refinance Mortgages (fixed-rate and ARMs) Property type Maximum LTV/TLTV/HTLTV ratio Accept Mortgages and Manually Underwritten Mortgages; all eligible loan amounts 1-unit Primary Residence 80% 2- to 4-unit Primary Residence 75% Second home 75% 1-unit Investment Property 75% 2- to 4-unit Investment Property 70% (iii) LTV, TLTV and HTLTV ratios for certain Mortgages The maximum LTV, TLTV and HTLTV ratios for the following Mortgages may differ from the maximum ratios identified above; additional information can be found in the following sections: Maximum LTV, TLTV and HTLTV ratios for certain Mortgages Mortgage offering or characteristic Guide reference Community Land Trust Mortgages Section 4502.5 Freddie Mac Enhanced Relief Refinance Mortgages Section 4304.3 HeritageOne® Mortgages Section 4504.6 Home Possible® Mortgages Section 4501.7 HomeOne® Mortgages Section 4605.1 Mortgages secured by a Manufactured Home Section 5703.8(a) Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-6 Maximum LTV, TLTV and HTLTV ratios for certain Mortgages Mortgage offering or characteristic Guide reference Mortgages that use a streamlined project review Section 5701.4 Mortgages to Borrowers with a credit history that includes a previous Mortgage foreclosure, a conveyance of a deed-in- lieu of foreclosure or a short sale Section 5202.1(d) Refi Possible® Mortgages Section 4302.5 (c) Maximum original loan amounts The following maximum original loan amounts* apply to Home Mortgages with Funding Dates or Settlement Dates on or after January 1, 2026. Except for the Mortgage offerings and characteristics identified in the table below, the loan amount used to determine compliance with the original loan amount limits is the original loan amount: Maximum original loan amounts Number of units Property in the contiguous 48 States, the District of Columbia or Puerto Rico Property in Alaska, Guam, Hawaii or U.S. Virgin Islands 1 $832,750 $1,249,125 2 $1,066,250 $1,599,375 3 $1,288,800 $1,933,200 4 $1,601,750 $2,402,625 *Mortgages with higher loan amounts may be eligible for sale if they meet the requirements of Chapter 4603. The following table identifies, for each Mortgage offering or characteristic listed, the loan amount to be used to determine compliance with the original loan amount limits: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-7 Determining compliance with the original loan amount limits Mortgage offering or characteristic Loan amount to be used to determine compliance with maximum loan amounts Seller-Owned Modified Mortgages (as described in Chapter 4402 and Section 6302.27) The loan amount of the Mortgage as stated in the original Note Seller-Owned Converted Mortgages (as described in Chapter 4402 and Section 6302.19) The loan amount of the Mortgage as stated in the ARM Note One-Time Close with automatic conversion Construction to Permanent Mortgages and Renovation Mortgages (as described in Sections 4602.2(b) and 6302.28) The loan amount of the Mortgage stated in the Note One-Time Close with modification agreement Construction to Permanent Mortgages and Renovation Mortgages (as described in Sections 4602.2(c) and 6302.28) The higher of: ■ The loan amount of the Mortgage stated in the Note prior to the modification executed at Interim Construction Financing or ■ The loan amount of the Permanent Financing as stated in the Construction to Permanent Modification Agreement Two-Time Close Construction to Permanent Mortgages and Renovation Mortgages (as described in Sections 4602.3(a) and 6302.28) The loan amount of the Mortgage as stated in the Note for the Permanent Financing Mortgages with future advances made before the Delivery Date consolidated with the outstanding principal amount (as described in Section 4101.10(a)) The loan amount of the Mortgage as stated in the original Note (which must be equal to or greater than the consolidated principal amount) Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-8 Determining compliance with the original loan amount limits Mortgage offering or characteristic Loan amount to be used to determine compliance with maximum loan amounts Mortgages with a principal curtailment made before the Delivery Date (as described in Section 6302.32) The loan amount of the Mortgage as stated in the Note Mortgages with financed mortgage insurance premiums (as described in Section 4701.2) The loan amount of the Mortgage as stated in the Note (which includes the financed mortgage insurance premium) Note: For the Mortgage offerings and characteristics listed in the table above, the loan amount used to determine compliance with the maximum loan amount limits may be different from the amount delivered in the ULDD Data Point Note Amount and from the amount used to calculate the LTV ratio. Refer to Chapter 6302 for delivery instructions. 4203.1: Loan-to-value (LTV), total LTV (TLTV) and Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios and maximum loan amounts (Future effective date 08/03/26) Effective for Mortgages with Application Received Dates on or after August 3, 2026. This section contains requirements related to: ■ Calculating loan-to-value (LTV), total LTV (TLTV) and Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios ■ Maximum LTV, TLTV and HTLTV ratios ■ Maximum original loan amounts (a) Calculating LTV, TLTV and HTLTV ratios Ratios are calculated using the total amount of outstanding liens and “value”, as described in this section. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-9 (i) Determining “value” (A) For purposes of calculating LTV, TLTV and HTLTV ratios For purposes of calculating LTV, TLTV and HTLTV ratios, “value” is determined as follows: Determining “value” Mortgage offering or characteristic “Value” is… Purchase transaction Mortgages The lesser of the appraised value of the Mortgaged Premises as of the appraisal report effective date and the purchase price of the Mortgaged Premises. Note: For newly constructed homes, multiple contracts may be combined to determine the purchase price (e.g., the purchase contract for the house and a contract to install a swimming pool may be added together to establish the purchase price). Refinance Mortgages The appraised value of the Mortgaged Premises as of the appraisal report effective date Community Land Trust Mortgages As described in Section 4502.5 Mortgages secured by properties subject to resale restrictions As described in Section 4406.5 One-Time Construction to Permanent Mortgages and Renovation Mortgages As described in Section 4602.2 for One-Time Close transactions Two-Time Close Construction to Permanent Mortgages and Renovation Mortgages The appraised value of the Mortgaged Premises, as completed, as of the appraisal report effective date CHOICERenovation® Mortgages As described in Section 4607.4 Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-10 Determining “value” Mortgage offering or characteristic “Value” is… GreenCHOICE Mortgages® As described in Section 4606.2 Freddie Mac Enhanced Relief Refinance® Mortgages As described in Section 4304.7 (B) For Mortgaged Premises located in the State of New York Solely for the purpose of determining whether mortgage insurance is required or should be canceled, for Loan Product Advisor® and Non-Loan Product Advisor Mortgages, the “value” of the Mortgaged Premises located in the State of New York is the appraised value of the Mortgage Premises on the Note Date. For purchase transaction Cooperative Share Loans, solely for the purpose of determining whether mortgage insurance is required, the sales price of the Cooperative Interest may be used. If mortgage insurance is required, see Section 4701.5. (This definition of the value of the Mortgaged Premises located in the State of New York applies only to the above-stated mortgage insurance requirements and is not applicable for any other purposes under the terms of the Purchase Documents.) Refer to Chapter 4701 for mortgage insurance requirements. (ii) Calculation of LTV, TLTV and HTLTV ratios for Loan Product Advisor Mortgages Loan Product Advisor calculates the LTV, TLTV and HTLTV ratios based on data submitted by the Seller. Note: For certain Loan Product Advisor Mortgage transactions, Freddie Mac may accept the “value” to be the Seller-provided estimate of value or the purchase price as the basis for the Loan Product Advisor assessment of the Mortgage. Refer to Section 5602.3 and 5602.4 for more information on automated collateral evaluation (ACE) and ACE+ PDR, respectively. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-11 (iii) Calculation of LTV, TLTV and HTLTV ratios for Non-Loan Product Advisor Mortgages Calculation of LTV, TLTV and HTLTV ratios for Non-Loan Product Advisor Mortgages Ratio Calculation LTV Divide the First Lien Mortgage amount by “value” determined as described above. TLTV Divide the sum of the First Lien Mortgage amount and the disbursed amount of any secondary financing (including HELOCs) by “value” determined as described above. HTLTV Divide the sum of the First Lien Mortgage amount and the total HELOC credit line limit and any other secondary financing by “value” determined as described above. (b) Maximum LTV, TLTV and HTLTV ratios (i) Rounding requirements To determine whether a Mortgage complies with the maximum LTV, TLTV and HTLTV ratio requirements, the calculated ratio must be rounded up to the next whole number. For example, 94.01% must be rounded up to 95%. At delivery, Freddie Mac will calculate the LTV, TLTV and HTLTV ratios for each Mortgage based on data delivered by the Seller. Each ratio will be calculated to two decimal places, and the result will be rounded up to the next whole number. (ii) Maximum LTV, TLTV and HTLTV ratios Except as stated in (b)(iii) below, the maximum LTV, TLTV and HTLTV ratios are: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-12 Purchase and “no cash-out” refinance Mortgages (fixed-rate and ARMs) Property type Maximum LTV/TLTV/HTLTV ratio Accept Mortgages, excluding super conforming Mortgages Manually Underwritten Mortgages and super conforming Mortgages 1-unit Primary Residence 95% 95% 2-unit Primary Residence 95% 85% 3- and 4-unit Primary Residences 95% 80% Second home 90% 90% 1-unit Investment Property 85% 85% 2- to 4-unit Investment Property 75% 75% Cash-out refinance Mortgages (fixed-rate and ARMs) Property type Maximum LTV/TLTV/HTLTV ratio Accept Mortgages and Manually Underwritten Mortgages; all eligible loan amounts 1-unit Primary Residence 80% 2- to 4-unit Primary Residence 75% Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-13 Cash-out refinance Mortgages (fixed-rate and ARMs) Property type Maximum LTV/TLTV/HTLTV ratio Accept Mortgages and Manually Underwritten Mortgages; all eligible loan amounts Second home 75% 1-unit Investment Property 75% 2- to 4-unit Investment Property 70% (iii) LTV, TLTV and HTLTV ratios for certain Mortgages The maximum LTV, TLTV and HTLTV ratios for the following Mortgages may differ from the maximum ratios identified above; additional information can be found in the following sections: Maximum LTV, TLTV and HTLTV ratios for certain Mortgages Mortgage offering or characteristic Guide reference Community Land Trust Mortgages Section 4502.5 Freddie Mac Enhanced Relief Refinance Mortgages Section 4304.3 HeritageOne® Mortgages Section 4504.6 Home Possible® Mortgages Section 4501.7 HomeOne® Mortgages Section 4605.1 Mortgages secured by a Manufactured Home Section 5703.8(a) Mortgages to Borrowers with a credit history that includes a previous Mortgage foreclosure, a conveyance of a deed-in- lieu of foreclosure or a short sale Section 5202.1(d) Refi Possible® Mortgages Section 4302.5 Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-14 (c) Maximum original loan amounts The following maximum original loan amounts* apply to Home Mortgages with Funding Dates or Settlement Dates on or after January 1, 2026. Except for the Mortgage offerings and characteristics identified in the table below, the loan amount used to determine compliance with the original loan amount limits is the original loan amount: Maximum original loan amounts Number of units Property in the contiguous 48 States, the District of Columbia or Puerto Rico Property in Alaska, Guam, Hawaii or U.S. Virgin Islands 1 $832,750 $1,249,125 2 $1,066,250 $1,599,375 3 $1,288,800 $1,933,200 4 $1,601,750 $2,402,625 *Mortgages with higher loan amounts may be eligible for sale if they meet the requirements of Chapter 4603. The following table identifies, for each Mortgage offering or characteristic listed, the loan amount to be used to determine compliance with the original loan amount limits: Determining compliance with the original loan amount limits Mortgage offering or characteristic Loan amount to be used to determine compliance with maximum loan amounts Seller-Owned Modified Mortgages (as described in Chapter 4402 and Section 6302.27) The loan amount of the Mortgage as stated in the original Note Seller-Owned Converted Mortgages (as described in Chapter 4402 and Section 6302.19) The loan amount of the Mortgage as stated in the ARM Note Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-15 Determining compliance with the original loan amount limits Mortgage offering or characteristic Loan amount to be used to determine compliance with maximum loan amounts One-Time Close with automatic conversion Construction to Permanent Mortgages and Renovation Mortgages (as described in Sections 4602.2(b) and 6302.28) The loan amount of the Mortgage stated in the Note One-Time Close with modification agreement Construction to Permanent Mortgages and Renovation Mortgages (as described in Sections 4602.2(c) and 6302.28) The higher of: ■ The loan amount of the Mortgage stated in the Note prior to the modification executed at Interim Construction Financing or ■ The loan amount of the Permanent Financing as stated in the Construction to Permanent Modification Agreement Two-Time Close Construction to Permanent Mortgages and Renovation Mortgages (as described in Sections 4602.3(a) and 6302.28) The loan amount of the Mortgage as stated in the Note for the Permanent Financing Mortgages with future advances made before the Delivery Date consolidated with the outstanding principal amount (as described in Section 4101.10(a)) The loan amount of the Mortgage as stated in the original Note (which must be equal to or greater than the consolidated principal amount) Mortgages with a principal curtailment made before the Delivery Date (as described in Section 6302.32) The loan amount of the Mortgage as stated in the Note Mortgages with financed mortgage insurance premiums (as described in Section 4701.2) The loan amount of the Mortgage as stated in the Note (which includes the financed mortgage insurance premium) Note: For the Mortgage offerings and characteristics listed in the table above, the loan amount used to determine compliance with the maximum loan amount limits may be Freddie Mac Single-Family Seller/Servicer Guide Chapter 4203 As of 05/06/26 Page 4203-16 different from the amount delivered in the ULDD Data Point Note Amount and from the amount used to calculate the LTV ratio. Refer to Chapter 6302 for delivery instructions. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4204 As of 04/12/26 Page 4204-1 Chapter 4204: Secondary Financing and Other Financing Arrangements

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