Freddie Mac Single-Family Seller/Servicer Guide Section 4404.1 — Land contract; contract for deed

Freddie Mac Single-Family Seller/Servicer Guide Section 4404.1 — Land contract; contract for deed

4404.1: Land contract; contract for deed (02/05/25) This section contains requirements related to: ■ Purchase transaction Mortgages ■ “No cash-out” refinance Mortgages When the proceeds of a Mortgage are used to pay the outstanding balance under a land contract or contract for deed, the Mortgage may be considered either a purchase or a “no cash-out” refinance Mortgage if the requirements in this section are met. A copy of the executed land contract or contract for deed must be included in the Mortgage file. (a) Purchase transaction Mortgages For the transaction to be considered a purchase transaction: ■ The land contract or contract for deed must have been executed less than 12 months prior to the Application Received Date ■ All of the loan proceeds must be used to pay the outstanding balance under the land contract or contract for deed and no loan proceeds may be disbursed to the Borrower ■ The loan-to-value (LTV) ratio must be calculated using the lesser of the following: ❑ The current appraised value of the Mortgaged Premises, or ❑ The total acquisition cost (the purchase price indicated in the original land contract or contract for deed, plus any cost the Borrower has expended for rehabilitation, renovation, refurbishment or energy improvements). The Mortgage file must contain sufficient documentation on which to calculate the total acquisition cost. (b) “No cash-out” refinance Mortgages For the transaction to be considered a “no cash-out” refinance transaction: ■ The land contract or contract for deed must have been executed at least 12 months prior to the Application Received Date ■ The LTV ratio must be calculated using the current appraised value of the Mortgaged Premises Freddie Mac Single-Family Seller/Servicer Guide Chapter 4404 As of 02/05/25 Page 4404-2 ■ The Mortgage file must include third-party documentation evidencing payments in accordance with the land contract or contract for deed for the most recent 12-month period ■ The Mortgage must meet the requirements for “no cash-out” refinance Mortgages in Section 4301.4 Freddie Mac Single-Family Seller/Servicer Guide Chapter 4405 As of 11/13/18 Page 4405-1 Chapter 4405: Energy Conservation Improvements

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