source:
  type: guide
  id: fhlmc-4403.1
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4403.1 — Mortgages
    with capitalized balances
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 4403.1 — Mortgages
    with capitalized balances.
  coverage_tier: operative
obligations:
- id: fhlmc-4403.1-full
  canonical_id: fhlmc-4403.1-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 4403.1 — Mortgages
    with capitalized balances
  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 4403.1 — Mortgages
      with capitalized balances
    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: '4403.1: Mortgages with capitalized balances (12/04/24) (a) Overview
      Mortgages having principal balances that include capitalization of interest,
      taxes, hazard insurance premiums and/or late charges are eligible for purchase
      under certain conditions. The following Mortgages are not eligible for sale
      as Mortgages with capitalized balances: ■ Community Land Trust Mortgages ■ Mortgages
      secured by properties 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) (b) General
      requirements By delivery of Mortgages with capitalized balances, the Seller
      represents and warrants the following requirements have been met as of the Delivery
      Date: 1. Capitalization is permitted under the Mortgage documents and applicable
      State law 2. The Note is negotiable, and the entire indebtedness, including
      all amounts capitalized, is fully enforceable against the Borrower and secured
      by a First Lien 3. The UPB of the Mortgage, including all amounts capitalized,
      does not exceed the original loan amount as reflected in the Note 4. No capitalization
      will occur after the Purchase Contract Date of Acceptance 5. The Mortgage is
      fully amortizing in substantially equal monthly installments of principal and
      interest over a period of up to 10, 15, 20 or 30 years, respectively (depending
      on whether the Mortgage is to be included in a 10-, 15-, 20- or 30-year Pool)
      following the Delivery Date. If, as a result of the capitalization, the Note
      maturity date could have exceeded the maximum term to maturity for the related
      Pool after delivery to Freddie Mac or could have resulted in a balloon payment
      at maturity, the Seller must have reamortized the Mortgage before delivery to
      Freddie Mac. For each Mortgage that has been reamortized or for which the stated
      maturity date has been extended, the Seller makes the following additional representations
      and warranties: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4403
      As of 04/01/26 Page 4403-2 ■ Each affected Borrower has been informed of the
      capitalization, and ■ If such Borrower’s Mortgage contains a stated maturity
      date, that capitalization will result in installments becoming due after such
      stated maturity date or an increase in the monthly payment 6. All computations
      of maturity dates are correct (c) Delivery requirements Refer to Section 6302.22
      for delivery requirements for Mortgages with capitalized balances. 4403.1: Mortgages
      with capitalized balances (Future effective date 07/01/26) Mortgages having
      principal balances that include capitalization of interest, taxes, hazard insurance
      premiums and/or late charges are not eligible for sale to Freddie Mac. Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 4404 As of 02/05/25 Page 4404-1
      Chapter 4404: Land Contract; Contract for Deed'
  judgment: false
