source:
  type: guide
  id: fhlmc-4204.4
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.4 — Shared
    equity plans
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.4 — Shared
    equity plans.
  coverage_tier: operative
obligations:
- id: fhlmc-4204.4-full
  canonical_id: fhlmc-4204.4-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.4 — Shared
    equity plans
  type: do
  tags:
  - regulator-direct
  - fhlmc
  - freddie-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.4 — Shared
      equity plans
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/ci-guide
    snapshot_id: 5869ee9e606cd4ae
    fetched_at: '2026-05-23T00:27:40Z'
    content_hash: sha256:9a1b23e5024bb369e7a59d36b3702383c11ace68b5d209fdef791bc8f955c637
    paragraph_quote: '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.'
  judgment: false
