Freddie Mac Single-Family Seller/Servicer Guide 4205.1 — Section 502 GRH Mortgages guaranteed by USDA Rural Housing Service (RHS)

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: 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 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.

(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 (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. 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.