Freddie Mac Single-Family Seller/Servicer Guide 8401.1 — Release, easement and condominium conversion requirements

This section contains requirements related to: ■ Partial releases, easements and acquisitions ■ Prohibition of conversion of the Mortgaged Premises ■ Condemnation and eminent domain ■ Modification, waiver or release of terms

(a) Partial releases, easements and acquisitions (i) Processing requests for partial releases and granting of easements A Servicer may receive a request to release part of the Mortgaged Premises as security for the Mortgage (a partial release) or a request to approve the granting of an easement on a portion of the Mortgaged Premises. A partial release may be initiated at the Borrower’s request or as a result of some other action such as a condemnation or a taking of the property by eminent domain. Except as noted below, the Servicer must obtain an appraisal report with an interior and exterior inspection that meets the requirements of Topic 5600 when considering such requests in order to determine the value of the Mortgaged Premises immediately before the release and the estimated value after the release. The Servicer, under its delegated authority, may approve a partial release or grant an easement provided the following conditions are met: ■ The Borrower’s monthly Mortgage payment is current at the time of the request and there is no change in the expectation that the Borrower can continue to make the monthly payment ■ The Servicer has received written approval of the FHA, VA, RHS or MI and all superior lienholders, if applicable ■ At least 12 months have passed since the Origination Date, and ■ If either of the situations and the corresponding actions in the table below are met: Partial release and easement requirements Situation Action If: ■ The current loan-tovalue (LTV) ratio of the Mortgage based on the value obtained at origination (as described in Section 4203.1) is less than 60%, and ■ The consideration the Borrower receives for the partial release or easement is not greater than 5% of the original value (including situations in which the Borrower receives no consideration), and ■ The transaction is arm’s-length Then: ■ An appraisal is not required ■ The Borrower is not required to apply the consideration received for the partial release or easement to reduce the UPB of the Mortgage If: Then: Partial release and easement requirements Situation Action ■ The current LTV ratio of the Mortgage based on original value is equal to or greater than 60%, or ■ The consideration the Borrower receives for the partial release or easement is greater than 5% of the original value or no consideration is received Before the easement or partial release is granted, the Servicer must order a new appraisal with interior and exterior inspection that provides current and estimated after release values, and: ■ If based on the estimated value pre-release the LTV is greater than 60%, the Borrower must reduce the UPB of the Mortgage in an amount sufficient to create a post-release/easement LTV ratio, as determined by the appraisal, that is the higher of current LTV ratio or 60%, or ■ If based on the estimated value after the release the LTV ratio is less than 60%, the Borrower is not required to reduce the UPB of the Mortgage Notwithstanding the above, the Servicer may require that any consideration received by the Borrower for the released land or easement be applied to the UPB of the Mortgage, if the Servicer determines that the intended use of the released land or easement would adversely affect the value or use of the remaining Mortgaged Premises. Upon release, the Servicer must ensure that all applicable tax authorities are notified for adjustment of applicable assessments. The Servicer is responsible for ensuring that the title of the Mortgaged Premises after the partial release remains a valid First Lien as required in Section 4201.2 and the title insurance meets the requirements of Chapter 4702 after the partial release or easement has been granted. If any of the above conditions are not met, the Servicer must complete and submit Form 715, Borrower Application for Partial Release or Easement, to Freddie Mac via e-mail at [email protected] or fax at (571) 382-4933. (ii) Additional requirements for easements In addition to the requirements noted in Section 8401.1(a)(i), the Servicer must ensure that any special requirements for the granting of an easement as specified in the Security Instrument are met. (iii) Land acquisition Freddie Mac does not object to the acquisition of land if the land to be added to the Mortgaged Premises is free and clear of title and does not pose any risks that could devalue Freddie Mac’s asset.

(b) Prohibition of conversion of the Mortgaged Premises The Mortgaged Premises may not be converted from a 1- to 4-unit property to a Condominium Unit or Cooperative Unit, and any such conversion shall be treated as a transfer of the Mortgaged Premises under Section 8406.1(a). In addition, no individual units of a 2- to 4-unit property may be separately released from the Mortgaged Premises.

(c) Condemnation and eminent domain In addition to the requirements noted in Section 8401.1(a), the following conditions must be met in the case of a condemnation or a taking of the property by eminent domain: ■ The Servicer must ensure that any special requirements for a condemnation or the taking of a property by eminent domain as specified in the Security Instrument are met ■ The Servicer must submit the documentation specified in Section 8401.1(a) and any other applicable documentation to Freddie Mac (see Directory 5) if: ❑ The Mortgaged Premises will be taken in whole and the consideration to be paid to the Borrower will be insufficient to satisfy the UPB of the Mortgage, or ❑ The Mortgaged Premises will be taken in part and: ■ The value of the property being taken is greater than the consideration being paid to the Borrower; and ■ The LTV ratio does not meet the conditions specified in Section 8401.1(a) for release without any consideration Freddie Mac will review the request and provide the Servicer with instructions on how to proceed.

(d) Modification, waiver or release of terms The Servicer must not modify, waive or release any term of any Note or Security Instrument, accept any prepayment or consent to any postponement of performance by any Borrower of any obligation under a Note or Security Instrument, except as authorized by the Purchase Documents. For leasehold Mortgages, the Servicer must not approve or consent to: ■ Any partition, subdivision or modification of the ground lease community and the leasehold estate ■ Any surrender, abandonment or termination of the leasehold estate or the ground lease community ■ The termination or cancelation of the lease and any amendments to the lease that affect the rights of the leasehold mortgagee, without the written approval of Freddie Mac