Freddie Mac Single-Family Seller/Servicer Guide Section 4204.4 — Shared equity plans

Freddie Mac Single-Family Seller/Servicer Guide Section 4204.4 — Shared equity plans

4204.4: Shared equity plans (05/07/25) Freddie Mac does not approve individual shared equity plans; Freddie Mac will, however, consider purchasing Mortgages subject to individual shared equity plans if all of the following requirements are met: ■ The Seller must obtain a Mortgage application, financial statements and credit reports for both the Owner-Occupant and the owner-investor ■ All requirements in the Seller’s Purchase Documents must be satisfied ■ The shared equity plan must be a written agreement and the Seller must retain a copy in the Mortgage file The Seller warrants the following: ■ The Owner-Occupant made a Down Payment of at least 5% from Borrower personal funds as described in Section 5501.3(k) ■ The owner-investor made an additional Down Payment of at least 5% ■ Both the Owner-Occupant and the owner-investor signed the Note and Security Instrument ■ Both the Owner-Occupant and the owner-investor are individuals (i.e., not corporations, limited partnerships, partnerships or trusts) ■ No agreement requiring the sale of the property or the buyout of either owner’s interest may be in effect during the first seven years after the Note Date ■ Neither the property seller nor any other interested party to the transaction (such as a builder, a real estate broker or a real estate agent) is a party to the shared equity plan ■ The Seller/Servicer is able to service the Mortgage according to the requirements of the Guide Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-1 Chapter 4205: Government funded, guaranteed or insured Mortgages 4205.1: Section 502 GRH Mortgages guaranteed by USDA Rural Housing Service (RHS) (12/03/25) This section contains: ■ Overview and defined terms ■ Eligible Mortgages ■ Loan limits ■ Requirements ■ Special RHS documentation instructions ■ Mortgage file contents ■ Special Seller warranties ■ Mortgage instruments ■ Delivery instructions ■ Credit Fees (a) Overview and defined terms Section 502 GRH Mortgages guaranteed by the United States Department of Agriculture RHS are eligible for sale to Freddie Mac in accordance with the provisions of this chapter. The Seller must obtain Freddie Mac’s written approval to sell Section 502 GRH Mortgages by contacting its Freddie Mac representative or the Contact Support Center at 800-FREDDIE. (i) Glossary definitions for Section 502 GRH Mortgages The Seller should be familiar with the Glossary definitions of the following terms: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-2 Glossary definitions for Section 502 GRH Mortgages G Government Mortgage A Mortgage funded, guaranteed or insured by a government agency. R RHS Rural Housing Service, an agency of the U.S. Department of Agriculture. Referred to on Form 65, Uniform Residential Loan Application, and Form 1077, Uniform Underwriting and Transmittal Summary, as “RD” (Rural Development). S Section 502 GRH Mortgage A Mortgage originated to qualified Borrowers living in rural areas that is guaranteed by RHS pursuant to Section 502 of the Housing Act of 1949 (42 U.S.C. 1472) and originated and serviced pursuant to the RHS Guaranteed Regulations and the terms of the Guide. The related ULDD valid value is USDA Rural Housing. (ii) Other terms used in the section The following terms apply for purposes of this section: Additional defined terms C Conditional Commitment The current Conditional Commitment for Single Family Housing Loan Guarantee — Form RD 1980-18 G Guaranteed Regulations The RD Instructions 1980D of Title 7, Part 1980, Subpart D of the Code of Federal Regulations, collectively with the forms, agreements, manuals and other material and documents issued by RHS, as may be modified by RHS from time to time. L Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-3 Additional defined terms Lender Agreement The current RHS Agreement for Participation in Single Family Guaranteed/Insured Loan Programs of the United States Government Lender Agreement — Form RD 1980-16 executed by the Seller. Lender Record Change The current Guaranteed Rural Housing Lender Record Change — Form RD 1980-11. Loan Guarantee The current RHS guarantee issued on Form RD 1980-17. Each Section 502 GRH Mortgage must be originated in compliance with all of the requirements of the Guaranteed Regulations and the Lender Agreement, unless these requirements are either: ■ Modified or waived in writing by RHS, and Freddie Mac has approved those modifications or waivers, or ■ Specifically restricted or modified by this chapter (b) Eligible Mortgages A Section 502 GRH Mortgage must be: ■ An assumable or nonassumable First Lien secured by a Primary Residence ■ A purchase transaction or “no cash-out” refinance of existing Section 502 GRH Mortgage ■ A 30-year fully amortizing fixed-rate Mortgage ■ A Non-Loan Product Advisor® Mortgage Section 502 GRH Mortgages must be sold to Freddie Mac with recourse, within the meaning of Section 6201.2(b)(i). (c) Loan limits No Section 502 GRH Mortgage may have an original principal balance in excess of the maximum principal loan amount allowed under the RHS Guaranteed Regulations or in excess of the maximum loan amounts for conventional Mortgages stated in Section 4203.1(c), whichever is less. A Section 502 GRH Mortgage may not be a super conforming Mortgage. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-4 (d) Requirements Each Section 502 GRH Mortgage must comply with the provisions of the Guide, except that if there are Guaranteed Regulations applicable to the following matters, the Guaranteed Regulations will apply: ■ Borrower underwriting ■ Financing concessions and temporary subsidy buydown plans ■ Loan-to-value (LTV) and total LTV (TLTV) ratios ■ Mortgage insurance ■ Property eligibility ■ Property insurance ■ Secondary financing ■ Sources of funds for Down Payment, Closing Costs and reserves ■ Title insurance Each Section 502 GRH Mortgage must comply with the Guaranteed Regulations for LTV/TLTV ratios, and the LTV/TLTV ratios must not exceed 115%, as calculated under the requirements in Section 4203.1(a). (e) Special RHS documentation instructions (i) Loan Guarantee Section 502 GRH Mortgages are eligible for sale to Freddie Mac prior to the receipt of the Loan Guarantee if: ■ RHS has issued its Conditional Commitment and the conditions precedent to the issuance of the Loan Guarantee stated in the Guaranteed Regulations and the Conditional Commitment have been satisfied ■ The Seller has delivered the Guaranteed Loan Closing Report, current Form RD 1980-19, to RHS and has paid the RHS Loan Guarantee fee ■ As of the Delivery Date, the Seller represents and warrants that there is no basis for RHS to fail to issue the Loan Guarantee and that it has not been notified by RHS that the Loan Guarantee has been denied Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-5 (ii) Lender Record Change The Seller must complete and execute the Lender Record Change and submit it to the appropriate RHS Servicing Office within 15 calendar days after the Delivery Date of each Section 502 GRH Mortgage. For purposes of completing the Lender Record Change, the Seller is the “Selling Lender,” Freddie Mac is the “Purchasing (Holding) Lender,” and the Seller is the “Lender’s Servicing Agent.” Freddie Mac’s lender identification number is 52-0904874. The Seller must leave the “Purchasing Lender Agency Assigned Branch No.” blank. (f) Mortgage file contents In addition to the documents required in Chapters 3301 and 3401, the Mortgage file for each Section 502 GRH Mortgage must contain: ■ A Conditional Commitment ■ A Lender Record Change ■ A Loan Guarantee (g) Special Seller warranties The Seller warrants to Freddie Mac, as of the Delivery Date of each Section 502 GRH Mortgage, that: ■ The Seller has obtained a determination from RHS that the Seller is eligible to participate as an originating lender for Section 502 GRH Mortgages ■ The Seller has executed the Lender Agreement that is and will remain in full force and effect ■ The Loan Guarantee by RHS of the Section 502 GRH Mortgage is in full force and in effect as of the Delivery Date ■ The Seller has complied and will continue to comply with the RHS Guaranteed Regulations, the RHS Lender Agreement and all other applicable RHS guidelines, regulations and requirements (h) Mortgage instruments If the Section 502 GRH Mortgage is assumable, it must be originated on Mortgage instruments approved by the FHA for FHA-insured assumable fixed-rate Mortgages with all applicable riders and addenda required by the FHA. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-6 If a Section 502 GRH Mortgage is not assumable, it must be originated on the then-current Fannie Mae/Freddie Mac Uniform Instruments, including all applicable riders required in Section 4101.2 for the jurisdiction in which the Mortgaged Premises are located. For all Section 502 GRH Mortgages, the monthly payment due date stated in the Note must be the first day of the month. (i) Delivery instructions See Section 6302.15 for delivery and pooling requirements for Section 502 GRH Mortgages sold to Freddie Mac. (j) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to Section 502 GRH Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303. 4205.2: Home Possible® Mortgages with RHS Leveraged Seconds (04/02/25) This section contains: ■ Overview ■ Eligible Mortgages ■ Maximum loan-to-value (LTV) and total LTV (TLTV) ratio limits ■ RHS requirements ■ Additional documentation ■ Special Seller warranties ■ Delivery instructions ■ Credit Fees (a) Overview Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-7 A Home Possible® Mortgage with an RHS Leveraged Second is eligible for sale to Freddie Mac in accordance with the provisions of this chapter. Freddie Mac will not purchase the RHS Leveraged Second. The following additional terms apply for the purposes of this section. Additional defined terms S Second Loan Documentation Second Loan Documents are all of the following RHS documents: ■ Promissory Note, Form RD 1940-16 (Rev. 10- 96) ■ Real Estate [Deed of Trust] or [Mortgage] for [the State in which the Mortgaged Premises is located], Form RHS 3550-14 (Rev. 10-96) ■ Subsidy Repayment Agreement, Form RD 3550- 12 (Rev.10-96) ■ Interest Credit Agreement (Section 502 RHS Loans), Form FmHA 1944-6 (Rev. 12- 95), and ■ Agreement with Prior Lienholder, Form FmHA 1927-8 (Rev. 1-92) Second Loan Regulations The provisions applicable to Section 502 direct leveraged Mortgages originated by RHS contained in Part 3550 of Title 7 of the Code of Federal Regulations and the RHS Direct Single Family Housing Loans and Grants Field Service Handbook and Centralized Servicing Center Handbook collectively with the forms, agreements, manuals and other material and documents issued by RHS, as may be modified by RHS from time to time. (b) Eligible Mortgages The Home Possible Mortgage purchased by Freddie Mac must be: ■ A First Lien secured by a 1-unit Primary Residence ■ A purchase transaction Mortgage Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-8 ■ A 30-year fully amortizing fixed-rate Mortgage (c) Maximum LTV and TLTV ratio limits The maximum LTV ratio of the Home Possible Mortgage with the RHS Leveraged Second is 50%. Note: The maximum LTV value of the Home Possible Mortgage does not include the RHS Leveraged Second. The maximum TLTV ratio of the Home Possible Mortgage with the RHS Leveraged Second, which includes the RHS Leveraged Second and all other secondary financing, is the lesser of 95% or the maximum allowed under the Second Loan Regulations. (d) RHS requirements The Seller must comply with all Freddie Mac requirements for Home Possible Mortgages. Freddie Mac may allow the Borrower underwriting and qualification flexibilities with Home Possible Mortgages that are not permitted for the first Mortgage under the Second Loan Regulations. In the following areas, the Seller must comply with the provisions of the Second Loan Regulations pertaining to the first Mortgage even in situations where the underwriting and qualification requirements for Home Possible Mortgages are more flexible: ■ Amount and source of funds for the Down Payment and Closing Costs ■ Borrower income limits ■ Borrower reserves ■ Homeownership education ■ Maximum allowable qualifying ratios ■ Property inspection ■ Rural designation as defined by RHS ■ Temporary subsidy buydown plans Financing concessions, if used as a source of funds, must be limited to such Closing Costs as are customary in the market where the Mortgaged Premises are located. (e) Additional documentation Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-9 In addition to documentation required for the Home Possible Mortgage, the Mortgage file for Mortgages with an RHS Leveraged Second must contain: ■ A Borrower’s Certification of Eligibility, Form RD 1944.59 (Rev. 10-96) ■ Copies of the executed Second Loan Documents and any other documents executed by the Borrower in connection with the RHS Leveraged Second (f) Special Seller warranties The Seller warrants that the RHS Leveraged Second: ■ Has been closed and all proceeds advanced to the Borrower or at the Borrower’s designation, prior to the Delivery Date of the Home Possible Mortgage ■ At all times after the Note Date of the Home Possible Mortgage, the debt obligation and lien or other restriction on the Mortgaged Premises, of the RHS Leveraged Second and any recorded Second Loan Document are subordinate to the Home Possible Mortgage ■ Was originated on the Second Loan Documents. Any changes or modifications to the Second Loan Documents must be approved by Freddie Mac ■ Was originated by RHS pursuant to the Second Loan Regulations in effect on the closing date of the RHS Leveraged Second. Any waivers or modifications to the RHS Second Loan Regulations with respect to an individual Borrower must be approved by Freddie Mac. ■ Was originated by a Seller approved by RHS In addition, the Borrower must be underwritten and approved by the RHS Field Office for the RHS Leveraged Second. (g) Delivery instructions See Section 6302.14 for delivery and pooling requirements for Home Possible Mortgages with RHS Leveraged Seconds sold to Freddie Mac. (h) Credit Fees For Credit Fees and Credit Fee Caps related to Home Possible Mortgage with an RHS Leveraged Second, the Seller must refer to Exhibit 19, Credit Fees, and Exhibit 19A, Credit Fee Cap Eligibility Criteria. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-10 4205.3: Section 184 Indian Housing Loan Guarantee Program Mortgages (12/03/25) This section contains: ■ Overview ■ Eligible Mortgages and ineligible Mortgages ■ Compliance with Freddie Mac’s requirements ■ Title status report ■ Mortgage file documentation ■ Special Seller warranties ■ Delivery instructions ■ Credit Fees (a) Overview Section 184 Native American Mortgages are eligible for sale to Freddie Mac in accordance with the provisions of this chapter and the Purchase Documents. The Seller must obtain Freddie Mac’s written approval to sell Section 184 Native American Mortgages by contacting its Freddie Mac representative or the Contact Support Center at 800-FREDDIE. (i) Glossary definitions for Section 184 Native American Mortgages The Seller should be familiar with the Glossary definitions of the following terms: Glossary definitions for Section 184 Native American Mortgages G Government Mortgage A Mortgage funded, guaranteed or insured by a government agency. S Section 184 Native American Mortgages A Mortgage guaranteed by HUD pursuant to the Indian Housing Loan Guarantee Program, Section 184 of the Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-11 Glossary definitions for Section 184 Native American Mortgages Housing and Community Development Act of 1992 and originated pursuant to the Section 184 Regulations and the terms of the Guide. The related ULDD valid value is Public And Indian Housing. (ii) Other terms used in the section The following terms apply for purposes of this section: Additional defined terms I Indian Any person recognized as being Indian or Alaska Native by an Indian Tribe, the federal government or any State and includes the term “Native American”. Indian Tribe Any Indian or Alaska Native tribe, band, rancheria, colony, pueblo, nation or other organized group or community of Indians or Alaska Natives recognized as eligible for services provided to Indians or Alaska Natives by the U.S. Secretary of the Interior because of its status as such an entity, or that is an eligible recipient under Chapter 67 of Title 31, of the U.S. Code. S Section 184 Regulations The Indian Housing Loan Guarantee Program Processing Guidelines, dated February 2003, collectively with the forms, agreements, manuals and other material and documents issued by HUD, and as may be modified in writing by HUD from time to time. (b) Eligible Mortgages and ineligible Mortgages Each Section 184 Native American Mortgage must: ■ Be a First Lien ■ Be a purchase transaction ■ Be a fully amortizing, fixed-rate Mortgage ■ Be assumable Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-12 ■ Have an original UPB within the maximum loan amount allowed under the Section 184 Regulations or the maximum loan amount for conventional Mortgages stated in Section 4203.1(c), whichever is less ■ Be a Non-Loan Product Advisor® Mortgage Each Section 184 Native American Mortgage must not be: ■ Originated in connection with other FHA and VA programs, such as Section 203(k) of the National Housing Act ■ A super conforming Mortgage ■ A Community Land Trust Mortgage ■ A Mortgage secured by a property subject to income-based resale restrictions that terminate upon foreclosure (or expiration of any applicable legally required foreclosure redemption period) or recordation of a deed-in-lieu of foreclosure, where the property value must be determined in accordance with Section 4406.4(c) Each Section 184 Native American Mortgage must be sold to Freddie Mac with recourse, within the meaning of Section 6201.2(b)(i). (c) Compliance with Freddie Mac’s requirements Each Section 184 Native American Mortgage must comply with the provisions of the Guide, except that if there are Section 184 Regulations applicable to the following matters, the Section 184 Regulations apply: ■ Appraisals ■ Borrower underwriting ■ Eligible Borrowers ■ Interested party contributions ■ Loan-to-value (LTV) and total LTV (TLTV) ratios ■ Mortgage and property insurance ■ Mortgage instruments ■ Reserves ■ Secondary financing Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-13 ■ Sources of funds for the Down Payment and Closing Costs ■ Temporary subsidy buydown plans (d) Title status report When the title to the Mortgaged Premises is an unrestricted fee simple, the provisions of Chapter 4702 apply. When title to the Mortgaged Premises is other than unrestricted fee simple, the Seller must obtain a title status report and any other documentation required by the Section 184 Regulations. The Seller must record the Security Instrument, and all other Mortgage documents required to be recorded, in accordance with the terms of the Section 184 Regulations. (e) Mortgage file documentation In addition to the documents required by Chapters 3301 and 3401, the Mortgage file must contain the following documents: ■ Documentation of the land status and court system that has jurisdiction over the property ■ The Indian Loan Guarantee Certificate (HUD Form 53039) (f) Special Seller warranties The Seller represents and warrants with respect to each Section 184 Native American Mortgage that: ■ The HUD guarantee on each Section 184 Native American Mortgage is in full force and effect as of the Delivery Date and will not be canceled while Freddie Mac has an ownership interest in the Mortgage ■ Each Section 184 Native American Mortgage was originated in compliance with all the requirements of the Section 184 Regulations, unless those requirements were modified or waived in writing by HUD and the Bureau of Indian Affairs and Freddie Mac approved the modifications and waivers ■ The Borrower’s Indian Tribe received authorization from HUD to participate in the Mortgage loan program described in the Section 184 Regulations and adopted, and is enforcing, a legal and administrative framework and procedures for foreclosure, evictions, establishing priority of liens and leasing that meets the requirements of the Section 184 Regulations ■ The HUD guarantee fee was paid Freddie Mac Single-Family Seller/Servicer Guide Chapter 4205 As of 12/03/25 Page 4205-14 ■ The Seller received the Indian Loan Guarantee Certificate (HUD Form 53039) endorsed for guarantee by an authorized agent of the Assistant Secretary for Public and Indian Housing (g) Delivery instructions See Section 6302.13 for delivery and pooling requirements for Section 184 Native American Mortgages sold to Freddie Mac. (h) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related to Section 184 Native American Mortgages. Credit Fees are paid in accordance with the Credit Fee provisions stated in Chapter 6303.

Source: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.4 — Shared equity plans · source URL · snapshot 5869ee9e606cd4ae