source:
  type: guide
  id: fhlmc-4202.1
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4202.1 — Legal
    compliance and regulation
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 4202.1 — Legal
    compliance and regulation.
  coverage_tier: operative
obligations:
- id: fhlmc-4202.1-full
  canonical_id: fhlmc-4202.1-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 4202.1 — Legal
    compliance and regulation
  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 4202.1 — Legal
      compliance and regulation
    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: '4202.1: Legal compliance and regulation (11/05/25) This section
      contains requirements related to: ■ Compliance with law ■ State anti-predatory
      lending laws and regulations ■ Predatory lending practices (a) Compliance with
      law (i) Applicable law The Mortgage and the Servicing of the Mortgage, Mortgage
      transaction and Mortgaged Premises must comply with all requirements of all
      applicable federal, State and local laws, rules and regulations. This includes,
      but is not limited to: ■ Truth-in-lending laws ■ Licensing laws ■ Doing-business
      laws ■ Usury laws ■ Anti-predatory lending Additionally, any right of rescission
      involving the Mortgage under such laws, rules or regulations must have expired.
      (ii) Compliance with QM requirements In addition to ensuring compliance with
      applicable laws, Sellers must ensure that all ATR Covered Mortgages satisfy
      the QM requirements of the Revised General QM Rule, even if the Seller is not
      required by law or regulation to comply with the Revised General QM Rule. Note:
      Refer to Section 4202.2(c) for additional information about the ATR/QM Rule
      requirements. Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As
      of 02/04/26 Page 4202-2 (b) State anti-predatory lending laws and regulations
      Mortgages secured by Mortgaged Premises in the following States that are designated
      as “high-cost,” “high-risk” or similar Mortgages are not eligible for purchase
      by Freddie Mac: Mortgages not eligible for purchase by Freddie Mac State Mortgage
      details Arkansas Mortgages with Note Dates on or after July 17, 2003 that are
      “high- cost home loans” under the Arkansas Home Loan Protection Act, A.C.A.
      § 23-53-101, et seq. Colorado Mortgages with Note Dates on or after January
      1, 2003 that are “covered loans” under the Consumer Equity Protection Act, C.R.S.
      5- 3.5-101, et seq. Georgia Mortgages with Note Dates between October 1, 2002
      and March 7, 2003 that are governed by the Georgia Fair Lending Act, O.C.G.A.
      § 7-6A-1, et seq., and Mortgages with Note Dates on and after March 7, 2003
      that are “high-cost home loans” Illinois Mortgages with Note Dates on or after
      January 1, 2004 that are “high- risk home loans” under the High-Risk Home Loan
      Act, 815 ILCS 137/1, et seq. Indiana Mortgages with Note Dates on or after January
      1, 2005 that are “high cost home loans” under Article 9 (Home Loan Practices)
      of the Indiana Code concerning trade regulations; consumer sales and credit,
      Burns Ind. Code Ann. § 24-9-1-1, et seq. Kentucky Mortgages with Note Dates
      on or after June 25, 2003 that are “high- cost home loans” under the Kentucky
      Revised Statutes Chapter 360, KRS § 360.100 Maine Mortgages with Note Dates
      on or after September 13, 2003 that are “high rate, high fee mortgages” under
      Article 8-A (the Maine Consumer Credit Code – Truth-in-Lending), 9-A MRSA §
      8-501, et seq. Freddie Mac Single Family Seller/Servicer Guide Chapter 4202
      As of 02/04/26 Page 4202-3 Mortgages not eligible for purchase by Freddie Mac
      State Mortgage details Massachusetts Mortgages with Note Dates on or after November
      7, 2004 that are “high cost home mortgage loans” under the Predatory Home Loan
      Practices Act, ALM GL ch. 183C, § 1, et seq. New Jersey Mortgages with Note
      Dates on or after November 27, 2003 that are “high-cost home loans” under the
      New Jersey Home Ownership Security Act of 2002, N.J. Stat. § 46:10B-22, et seq.
      New Mexico Mortgages with Note Dates on or after January 1, 2004 that are “high-
      cost home loans” under the Home Loan Protection Act, N.M. Stat. Ann. § 58-21A-1,
      et seq. New York Mortgages with initial application dates after April 1, 2003
      that are “high-cost home loans” under the New York Banking Law, NY CLS Bank
      § 6-l. In addition, Mortgages with Note Dates on or after September 1, 2008
      that are “subprime home loans” under the New York Banking Law, NY CLS Bank §
      6-m. Oklahoma Mortgages with Note Dates on or after January 1, 2004 that are
      “subsection 10 mortgages” under Article 1, Part 3 of the Consumer Credit Code,
      14A Okl. St. § 1-301 Rhode Island Mortgages with Note Dates on or after December
      31, 2006 that are “high-cost home loans” under the Rhode Island Home Loan Protection
      Act, R.I. Gen. Laws § 34-25.2-1, et seq. Tennessee Mortgages with Note Dates
      on or after January 1, 2007 that are “high- cost home loans” under the Tennessee
      Home Loan Protection Act, Tenn. Code Ann. § 45-20-101, et seq. Such Mortgages
      are ineligible for purchase by Freddie Mac regardless of whether the lender
      and/or Seller/Servicer enjoys preemption based on its charter or whether the
      law provides for an exemption for particular lenders and/or Seller/Servicers
      based on their charters or for particular Mortgages based on their purchase
      by Freddie Mac or another entity. In addition, the Seller/Servicer represents
      and warrants that: Freddie Mac Single Family Seller/Servicer Guide Chapter 4202
      As of 02/04/26 Page 4202-4 ■ It has in place policies and procedures based on
      the requirements of each law identified above to ensure that it does not inadvertently
      deliver an ineligible Mortgage to Freddie Mac for purchase ■ It has received
      representations and warranties from any person or entity from which the Seller
      purchased the Mortgage that they are not “high-cost,” “high-risk” or similar
      Mortgages under the laws identified above, and ■ No person, with the intent
      to avoid the application or evade the provisions of one of the laws identified
      above, divided a loan transaction into separate parts (by creating a concurrent
      subordinate lien or otherwise) or performed any other subterfuge (c) Predatory
      lending practices Freddie Mac actively opposes predatory lending and has implemented
      a number of policies designed to combat it. Freddie Mac-approved Seller/Servicers
      should have policies designed to identify and avoid predatory lending practices.
      In addition, Sellers must not “steer” a Borrower who qualified for a lower-cost
      loan product to a higher-cost loan product. A Seller should offer or direct
      applicants who seek financing through the Seller’s higher-priced subprime or
      non-prime lending channel toward its standard Mortgage line if the applicants
      qualify for one of the standard products. For additional information regarding
      Freddie Mac anti-predatory lending and compliance requirements, see the following
      locations: Additional anti-predatory lending and compliance requirements Topic
      Guide location Compliance with applicable law Section 1301.2 Compliance with
      law Section 4202.1(a) State anti-predatory lending laws and regulations Section
      4202.1(b) Home Ownership and Equity Protection Act Mortgages Section 4202.2(a)
      Higher-Priced Mortgage Loans (HPML) and Higher-Priced Covered Transactions (HPCT)
      Section 4202.2(b) ATR/QM Rule eligibility and compliance Section 4202.2(c) Credit
      insurance Section 4202.3(a) Freddie Mac Single Family Seller/Servicer Guide
      Chapter 4202 As of 02/04/26 Page 4202-5 Additional anti-predatory lending and
      compliance requirements Topic Guide location Mandatory arbitration Section 4202.3(c)
      Underwriting the Borrower Topics 5100–5500 Credit reporting requirements Section
      8106.1(d) 4202.2: Specific Mortgage types and regulations (02/04/26) This section
      contains requirements related to: ■ Home Ownership and Equity Protection Act
      of 1994 (HOEPA) Mortgages ■ Higher-Priced Mortgage Loans (HPMLs) and Higher-Priced
      Covered Transactions (HPCTs) ■ ATR/QM Rule eligibility and compliance (a) HOEPA
      Mortgages For Primary Residences, purchase transaction Mortgages and refinance
      Mortgages that exceed the thresholds under HOEPA and its implementing regulations
      are ineligible for purchase by Freddie Mac. (b) HPMLs and HPCTs For Mortgages
      with Application Received Dates on or after October 15, 2014, Freddie Mac will
      purchase HPMLs and HPCTs, as defined in the Glossary, under the terms of the
      Purchase Documents and this section. HPMLs and HPCTs eligible for sale to Freddie
      Mac must be one of the following Mortgage Products: ■ A fixed-rate Mortgage
      ■ An ARM with an Initial Period of five, seven or 10 years For additional information
      regarding Freddie Mac HPML and HPCT requirements, see the following: Freddie
      Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-6
      Additional information regarding Freddie Mac HPML and HPCT requirements Topic
      Guide location Compliance with applicable law Section 1301.2 Compliance with
      law Section 4202.1(a) Refi Possible® Mortgages Chapter 4302 Freddie Mac Enhanced
      Relief Refinance® Mortgages Chapter 4304 General ARM eligibility requirements
      Section 4401.1 Underwriting requirements for ARMs Section 4401.2 (c) ATR/QM
      Rule eligibility and compliance This section provides the requirements related
      to the ATR/QM Rule and specifies which Mortgages Freddie Mac will purchase and
      under what conditions those Mortgages will be purchased. Note: For ATR Covered
      Mortgages originated under the GSE Patch, Construction One- Time Close Construction
      to Permanent Mortgages with Application Received Dates prior to July 1, 2021
      and Settlement Dates before March 1, 2022 are eligible for sale to Freddie Mac
      if originated in accordance with the GSE Patch. (i) Definitions related to the
      ATR/QM Rule The following table contains Glossary definitions related to the
      ATR/QM Rule and are incorporated within this section for ease of use: Glossary
      definitions related to the ATR/QM Rule A ATR Covered Mortgage An ATR Covered
      Mortgage is a consumer credit transaction secured by a dwelling that is covered
      by the ATR/QM Rule and is not an Exempt Mortgage. ATR/QM Rule Regulation Z’s
      Ability to Repay (ATR) rule (12 C.F.R. § 1026.43) that implements the Truth
      in Lending Act’s provisions requiring a creditor to determine a Borrower’s ability
      to repay a Mortgage loan. QMs are a subset of loans under the ATR requirements.
      Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26
      Page 4202-7 Glossary definitions related to the ATR/QM Rule E Exempt Mortgage
      There are two classifications of Exempt Mortgages, as follows: ■ TILA Exempt
      Mortgage: A TILA Exempt Mortgage is a Mortgage exempt from TILA and, as such,
      is exempt from the ATR requirements in Regulation Z. TILA Exempt Mortgages include
      business purpose loans as defined in 12 C.F.R. § 1026.3. ■ ATR Exempt Mortgage:
      An ATR Exempt Mortgage is a Mortgage that is exempt from the ATR requirements
      in Regulation Z as set forth in 12 C.F.R. § 1026.43(a)(3) G GSE Patch GSE Patch
      refers to the Consumer Financial Protection Bureau (CFPB) temporary QM rule
      definition in Regulation Z, 12 C.F.R. § 1026.43(e)(4), that became effective
      January 10, 2014, under which Mortgages were considered to be QMs if they satisfied
      certain requirements and were eligible for purchase by Freddie Mac. P PSPA Amended
      Senior Preferred Stock Purchase Agreement by and between Freddie Mac and the
      Treasury. Q QM A qualified mortgage as defined in the ATR/QM Rule. R Revised
      General QM Rule Revised General QM Rule refers to the CFPB QM rule in Regulation
      Z, 12 C.F.R. § 1026.43(e)(2) that became effective on March 1, 2021. Freddie
      Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-8
      (ii) Eligibility requirements for ATR Covered Mortgages and Exempt Mortgages
      (A) ATR Covered Mortgages All ATR Covered Mortgages must meet the requirements
      of the Revised General QM Rule. Revised General QM Rule Requirement reference
      summary1 Regulatory reference2 Requirement 1026.43(e)(2)(i) Mortgage must be
      fully amortizing with regular periodic payments that are substantially equal
      and that do not result in an increase of the principal balance or allow the
      Borrower to defer repayment of principal. 1026.43(e)(2)(ii) Mortgage term cannot
      exceed 30 years. 1026.43(e)(2)(iii) Mortgage must not exceed the applicable
      points and fees limitations specified in the Revised General QM Rule. 1026.43(e)(2)(iv)
      The monthly payment for Mortgage-related obligations must be taken into account
      when underwriting the Mortgage using: ■ The maximum interest rate that may apply
      during the first five years after the date on which the first regular periodic
      payment will be due ■ Periodic payments of principal and interest that will
      repay the loan amount over the loan term 1026.43(e)(2)(v) Mortgage must meet
      consider and verify requirements specified in the ATR/QM Rule. 1026.43(e)(2)(vi)
      Mortgage must not equal or exceed the applicable APR-APOR QM spread thresholds
      specified in the Revised General QM Rule. 1 Chart is included for illustrative
      purposes only. Sellers remain responsible for compliance with all aspects of
      the ATR/QM Rule, including the Revised General QM Rule requirements. 2 Regulatory
      section references are to the Revised General QM Rule at 12 C.F.R. § 1026.43.
      Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26
      Page 4202-9 (B) Exempt Mortgages Exempt Mortgages are not subject to the Revised
      General QM Rule; however, they must meet: ■ Points and fees limitations set
      forth below for Exempt Mortgages; and ■ Annual percentage rate (APR)/average
      prime offer rate (APOR) threshold limitations set forth below for Exempt Mortgages
      Sellers are responsible for determining whether the Mortgage is an Exempt Mortgage.
      (iii) Points and fees limitations (A) Points and fees limitations for ATR Covered
      Mortgages ATR Covered Mortgages with points and fees exceeding 3% of the total
      loan amount (or such other applicable limits for lower-balance Mortgages) as
      specified under the Truth in Lending Act and its implementing regulations, 12
      C.F.R. 1026.43(e)(3), will not be eligible for sale to Freddie Mac. Sellers
      must use the points and fees calculation that is required for QMs under the
      Truth in Lending Act and its implementing regulations that are found at 12 C.F.R.
      1026.43(e)(3) and 12 C.F.R. § 1026.32(b) to determine compliance with applicable
      requirements. (B) Points and fees limitations for Exempt Mortgages Exempt Mortgages
      will be eligible for sale to Freddie Mac if the following conditions are met:
      ■ Such Mortgages are exempt from Regulation Z, 12 C.F.R. § 1026.43(a) (ATR Exempt
      Mortgages) or are not subject to the Truth in Lending Act (TILA Exempt Mortgages);
      and ■ The points and fees do not exceed 5% of the total loan amount. Sellers
      must use the points and fees calculation that is required for high-cost Mortgages
      under HOEPA and its implementing regulations, 12 C.F.R. § 1026.32(b). (iv) APR-APOR
      threshold limitations (A) Permissible spread The permissible spread between
      the APR and the APOR on the date the interest rate is set depends on ATR coverage:
      ■ ATR Covered Mortgages: The Mortgage’s APR may not exceed the APOR by 2.25
      percentage points or more or such other applicable threshold as specified in
      Freddie Mac Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26
      Page 4202-10 the Revised General QM Rule for ATR Covered Mortgages, calculated
      in accordance with the provisions of that rule; and ■ Exempt Mortgages: The
      Mortgage’s APR may not exceed the APOR by 6.5 percentage points or more for
      TILA Exempt and ATR Exempt Mortgages calculated in accordance with the provisions
      of the ATR/QM Rule (B) Short-term ARMs QM APR Calculation For all ARMs with
      an initial fixed period of five years or less that are ATR Covered Mortgages,
      Sellers must calculate the APR in accordance with the Revised General QM Rule.
      Note: When calculating the APR for APR-APOR threshold purposes for 3/6-Month
      SOFR and 5/6-Month SOFR ARMs that are ATR Covered Mortgages, Sellers must calculate
      the APR using the maximum interest rate that may apply during the first five
      years after the date on which the first regular periodic payment will be due.
      (v) Term – Interim Construction Financing Sellers must structure any Interim
      Construction Financing to be exempt from the ability to repay provisions of
      Regulation Z, 12 C.F.R. § 1026.43(a)(3) so that the Mortgage term does not exceed
      30 years. (vi) Life of loan representation and warranty Sellers are responsible
      for representations and warranties related to requirements set forth in Section
      4202.2(c) for the life of the loan, and Freddie Mac’s rights to exercise remedies
      related to violations of these requirements will not be waived. (vii) Determination
      of regulatory compliance with the ATR/QM Rule Freddie Mac will not determine
      whether a Mortgage, including a Mortgage assessed through Loan Product Advisor®
      or Loan Product Advisor asset and income modeler, or delivered through Loan
      Selling Advisor®, complies with or is exempt from the ATR/QM Rule, including
      the Revised General QM Rule, or whether a Seller’s designation of the status
      of a Mortgage under the Revised General QM Rule is correct. These determinations
      of compliance with the Revised General QM Rule and other applicable laws are
      the Seller’s responsibility. (viii) Responsible lending In addition to ensuring
      compliance with applicable laws, Sellers must ensure that all ATR Covered Mortgages
      satisfy the QM requirements of the Revised General QM Rule, even Freddie Mac
      Single Family Seller/Servicer Guide Chapter 4202 As of 02/04/26 Page 4202-11
      if the Seller is not required by law or regulation to comply with the Revised
      General QM Rule. (ix) Government funded, guaranteed or insured Mortgages Refer
      to Chapter 4205 for government funded, guaranteed or insured Mortgages. (x)
      Assumptions Sellers must comply with the Revised General QM Rule with respect
      to a Borrower’s assumption of a Mortgage when the assumption is being used,
      in whole or in part, to acquire title to the Mortgaged Premises or is otherwise
      an ATR Covered Mortgage. (xi) Other Guide provisions related to the ATR/QM Rule
      Refer to the following Guide provisions for additional information related to
      ATR/QM Rule eligibility and compliance: Guide provisions for additional information
      related to ATR/QM Rule eligibility and compliance Guide provision Guide location
      Compliance with applicable law Sections 1301.2 and 4202.1(a) Representation
      and warranties Sections 1301.6(a) and 1301.6(c) HPCTs Section 4202.2(b) and
      Glossary Investment quality Mortgage Section 4201.1 Amortization and term Section
      4201.1 ARM qualifying rates Section 4401.2 Temporary subsidy buydown plans Section
      4204.3(a)'
  judgment: false
