source:
  type: guide
  id: fhlmc-4504.4
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4504.4 — Ineligible
    HeritageOne® Mortgages
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 4504.4 — Ineligible
    HeritageOne® Mortgages.
  coverage_tier: operative
obligations:
- id: fhlmc-4504.4-full
  canonical_id: fhlmc-4504.4-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 4504.4 — Ineligible
    HeritageOne® Mortgages
  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 4504.4 — Ineligible
      HeritageOne® Mortgages
    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: '4504.4: Ineligible HeritageOne® Mortgages (03/05/25) Mortgages
      with the following characteristics are not eligible for sale to Freddie Mac
      as HeritageOne® Mortgages: ■ ARMs ■ Cash-out refinance Mortgages ■ Community
      Land Trust Mortgages ■ Cooperative Share Loans ■ Financed Permanent Buydown
      Mortgages ■ Freddie Mac Enhanced Relief Refinance® Mortgages ■ Government Mortgages
      ■ HomeOne® Mortgages ■ Home Possible® Mortgages ■ Manually Underwritten Mortgages
      for which none of the Borrowers has a usable Credit Score ■ Mortgages secured
      by Investment Properties ■ Mortgages secured by properties on Hawaiian Home
      Lands ■ Mortgages secured by second homes ■ Mortgages with associated Home Equity
      Lines of Credit (HELOCs) ■ Mortgages with capitalized balances (as described
      in Chapter 4403) ■ Mortgages with RHS Leveraged Seconds ■ Refi Possible® Mortgages
      ■ Seller-Owned Converted Mortgages Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4504 As of 04/12/26 Page 4504-6 ■ Seller-Owned Modified Mortgages
      ■ Super conforming Mortgages (as described in Chapter 4603) ■ Texas Equity Section
      50(a)(6) Mortgages 4504.4: Ineligible HeritageOne® Mortgages (Future effective
      date 07/01/26) Mortgages with the following characteristics are not eligible
      for sale to Freddie Mac as HeritageOne® Mortgages: ■ ARMs ■ Cash-out refinance
      Mortgages ■ Community Land Trust Mortgages ■ Cooperative Share Loans ■ Financed
      Permanent Buydown Mortgages ■ Freddie Mac Enhanced Relief Refinance® Mortgages
      ■ Government Mortgages ■ HomeOne® Mortgages ■ Home Possible® Mortgages ■ Manually
      Underwritten Mortgages for which none of the Borrowers has a usable Credit Score
      ■ Mortgages secured by Investment Properties ■ Mortgages secured by properties
      on Hawaiian Home Lands ■ Mortgages secured by second homes ■ Mortgages with
      associated Home Equity Lines of Credit (HELOCs) ■ Mortgages with RHS Leveraged
      Seconds ■ Refi Possible® Mortgages Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4504 As of 04/12/26 Page 4504-7 ■ Seller-Owned Converted Mortgages
      ■ Seller-Owned Modified Mortgages ■ Super conforming Mortgages (as described
      in Chapter 4603) ■ Texas Equity Section 50(a)(6) Mortgages 4504.5: General eligibility
      requirements for HeritageOne® Mortgages (04/12/26) This section contains requirements
      related to: ■ Loan limits ■ Mortgage purpose ■ Temporary subsidy buydown plans
      ■ Secondary financing ■ Rental income ■ Homebuyer education ■ Landlord education
      for 2- to 4-unit properties ■ Resale restrictions ■ Right of first refusal The
      following general eligibility requirements apply to HeritageOne® Mortgages:
      (a) Loan limits The loan amount may not exceed the applicable maximum original
      loan amount specified in Section 4203.1(c). (a) Mortgage purpose The Mortgage
      must be either a purchase transaction Mortgage or a “no cash-out” refinance
      Mortgage. Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of
      04/12/26 Page 4504-8 (b) Temporary subsidy buydown plans Temporary subsidy buydown
      plans described in Section 4204.3 are permitted if the Mortgage is: ■ Secured
      by a 1-unit property; or ■ An Accept Mortgage secured by a 2-unit property (c)
      Secondary financing The following are permitted secondary financing arrangements:
      ■ Secondary financing that meets the requirements of Section 4204.1 ■ Affordable
      Seconds® that meet the requirements of Section 4204.2, except that: ❑ For Affordable
      Seconds provided by an Agency, although Section 4204.2(a)(i)(A) provides otherwise,
      the Agency may be affiliated with, under contract to or financed (directly or
      indirectly) by the Seller as the originating lender ❑ For Seller-funded Affordable
      Seconds, although Section 4204.2(a)(i)(B) provides otherwise, the First Lien
      Mortgage cannot be a Home Possible® Mortgage and may be a HeritageOne Mortgage
      ❑ For Mortgages secured by Manufactured Homes and originated with Affordable
      Seconds, although Section 5703.5(c) provides otherwise, the Mortgage cannot
      be a Home Possible Mortgage and may be a HeritageOne Mortgage For a Mortgage
      with a temporary subsidy buydown plan, any secondary financing must have a fixed
      interest rate. (d) Rental income When determining the stable monthly income
      (as described in Section 5301.1), rental income may be considered if generated
      from: ■ A subject 1-unit property, with or without an ADU, if the rental income
      requirements in Section 4501.6(b) or 5306.1(h) are met ■ An ADU on a subject
      1-unit property, if the rental income requirements in Section 5306.1(g) are
      met ■ A subject 2- to 4-unit property, if the rental income requirements in
      Section 5306.1(e) are met and excluding any rental income generated from an
      ADU Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26
      Page 4504-9 ■ A non-subject investment property, if the rental income requirements
      in Section 5306.1(c) are met (e) Homebuyer education For purchase transaction
      Mortgages where all occupying Borrowers are First-Time Homebuyers: ■ At least
      one occupying Borrower must complete a homeownership education program before
      the Note Date or, for Construction to Permanent Mortgages and Renovation Mortgages,
      the Effective Date of Permanent Financing; and ■ As referenced in Section 5103.4(b),
      homeownership education may be provided by a Native community development financial
      institution (CDFI), even if the Native CDFI is the originating lender and/or
      the Seller Note: See Section 5103.4 for other requirements related to homeownership
      education. (f) Landlord education for 2- to 4-unit properties For purchase transaction
      Mortgages, at least one qualifying Borrower must: ■ Complete a landlord education
      program before the Note Date or, for Construction to Permanent Mortgages and
      Renovation Mortgages, the Effective Date of Permanent Financing; or ■ Have at
      least one year of previous landlord experience For “no cash-out” refinance Mortgages,
      landlord education is not required but is recommended for Borrowers who have
      not previously completed a landlord education program. Landlord education may
      not be provided by an interested party to the Mortgage transaction, except for
      a Native CDFI. A Native CDFI may provide landlord education even if the Native
      CDFI is the originating lender and/or the Seller. (g) Resale restrictions The
      Mortgaged Premises may be subject to resale restrictions if the requirements
      of Chapter 4406 are met. (h) Right of first refusal Any right of first refusal
      must run to: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As
      of 04/12/26 Page 4504-10 ■ The Eligible Native American Tribe within whose Tribal
      Area the Mortgaged Premises is located; and ■ Any lessor other than the Eligible
      Native American Tribe (if applicable) When the Mortgage is subject to foreclosure
      proceedings and/or an approved short sale, the right of first refusal may not
      continue beyond 120 days after the date of written notice that the Mortgaged
      Premises is being offered for sale. Any right of first refusal may not adversely
      impact the rights of Freddie Mac or the Seller/Servicer to foreclose or acquire
      title to the Mortgaged Premises, accept a deed or assignment in lieu of foreclosure
      or transfer title to or lease the Mortgaged Premises, if acquired. 4504.6: Underwriting
      requirements, qualifying ratios and maximum loan-to-value (LTV)/total LTV (TLTV)
      ratios for HeritageOne® Mortgages (03/05/25) This section contains requirements
      related to: ■ Underwriting ■ Qualifying ratios ■ Maximum loan-to-value (LTV)/total
      LTV (TLTV) ratios (a) Underwriting The Mortgage must be an Accept Mortgage or
      a Manually Underwritten Mortgage. Mortgages secured by 2- to 4-unit properties
      must be Accept Mortgages. For Manually Underwritten Mortgages: ■ Each Borrower
      individually, and all Borrowers collectively, must have an acceptable credit
      reputation (as described in Topics 5100 and 5200 for Manually Underwritten Mortgages)
      ■ An individual Borrower with insufficient credit history for whom the Seller
      cannot document a credit reputation is considered to have an acceptable credit
      reputation if: ❑ No evidence of derogatory credit, such as a lien, judgment
      or collection, paid or unpaid, is reflected on the credit report or elsewhere
      in the Mortgage file with respect to such Borrower; and Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-11 ❑ At least one
      other Borrower whose income and assets are used for qualification has an acceptable
      credit reputation Any income contributed by the Borrower with insufficient credit
      history may be considered as qualifying income if the amount contributed by
      such Borrower is not more than 30% of the total qualifying income. The minimum
      Indicator Scores for Manually Underwritten Mortgages are: Minimum Indicator
      Scores for Manually Underwritten HeritageOne® Mortgages Property/Mortgage type
      Minimum Indicator Score1 Purchase transaction Mortgages secured by 1-unit properties
      660 “No cash-out” refinance Mortgages secured by 1-unit properties 680 Manufactured
      Homes 680 1 The minimum Indicator Scores are also in Exhibit 25, Mortgages with
      Risk Class and/or Minimum Indicator Score Requirements. (b) Qualifying ratios
      There is no maximum monthly housing expense-to-income ratio, except for Manually
      Underwritten Mortgages that include a non-occupying Borrower. See Section 5103.1
      for additional requirements for Mortgages that include a non-occupying Borrower.
      For Loan Product Advisor® Mortgages, the maximum monthly debt payment-to-income
      (DTI) ratio is determined by Loan Product Advisor. For Manually Underwritten
      Mortgages, the maximum monthly DTI ratios are: Maximum monthly DTI ratios for
      Manually Underwritten HeritageOne Mortgages Property/Mortgage type Maximum monthly
      DTI ratio 1-unit properties1 45% Manufactured Homes that are Caution Mortgages
      36% 1 See Section 5103.1 for additional requirements for Mortgages that include
      a non-occupying Borrower. Freddie Mac Single-Family Seller/Servicer Guide Chapter
      4504 As of 04/12/26 Page 4504-12 Note: The Borrower’s monthly DTI ratio must
      be underwritten pursuant to Section 5401.2. (c) Maximum LTV/TLTV ratios The
      value used to calculate the LTV/TLTV ratios must be established pursuant to
      Section 4203.1(a). The following maximum LTV/TLTV ratios apply to both purchase
      transaction and “no cash- out” refinance Mortgages: Maximum LTV/TLTV ratios
      for HeritageOne Mortgages Property/Mortgage type Maximum LTV/TLTV ratios 1-unit
      properties1 97%2 2- to 4-unit properties 95%2 CHOICEHomes® 97%2 Manufactured
      Homes1, 3 See Chapter 5703 1 See Section 5103.1 for additional requirements
      for Mortgages that include a non-occupying Borrower. 2 A TLTV ratio not exceeding
      105% is permitted when secondary financing is an Affordable Second®. 3 If permitted
      under the Seller’s Purchase Documents, see Section 5706.5 for additional requirements
      for Manufactured Homes on leasehold estates. Note: The maximum LTV/TLTV ratios
      may be lower for a Condominium Unit Mortgage depending on the project review
      type or whether the Mortgage is exempt from project review (see Chapter 5701).
      4504.7: Borrower contribution, reserves and sources of funds for HeritageOne®
      Mortgages (04/12/26) This section contains requirements related to: ■ Borrower
      contribution ■ Reserves ■ Sources of funds ■ Funds provided by a Native American
      Tribe Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26
      Page 4504-13 (a) Borrower contribution For purchase transaction Mortgages, the
      minimum Borrower contribution required to be paid from Borrower personal funds
      (as described in Section 4504.7(c)(i)), based on the loan-to- value (LTV)/total
      LTV (TLTV) ratios for the Mortgage, is: Minimum Borrower contribution for HeritageOne®
      Mortgages Property/Mortgage type LTV/TLTV ratios ≤ 80% LTV/TLTV ratios > 80%
      and ≤ 95% LTV/TLTV ratios > 95% 1-unit properties None None None 2- to 4-unit
      properties None 3% of value 3% of value Manufactured Homes None None None (a)
      Reserves Reserves are not required for: ■ Accept Mortgages secured by 1-unit
      properties, unless Loan Product Advisor® determines reserves are necessary to
      offset other underwriting factors ■ Manually Underwritten Mortgages secured
      by 1-unit properties For Mortgages secured by 2- to 4-unit properties, the Seller
      must verify all reserves required by Loan Product Advisor, as stated on the
      Last Feedback Certificate. (b) Sources of funds The following sources of funds
      may be used to qualify the Borrower if the requirements in Section 4504.7(c)(i),
      4504.7(c)(ii) or 4504.7(c)(iii), as applicable, are met: Sources of funds for
      HeritageOne Mortgages Use Permitted source(s) of funds Minimum Borrower contribution
      Borrower personal funds Down Payment ■ Borrower personal funds ■ Other eligible
      sources of funds Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504
      As of 04/12/26 Page 4504-14 Sources of funds for HeritageOne Mortgages Use Permitted
      source(s) of funds Paying down the principal balance of the Mortgage being refinanced
      for a “no cash-out” refinance Mortgage ■ Borrower personal funds ■ Other eligible
      sources of funds Closing Costs ■ Borrower personal funds ■ Other eligible sources
      of funds ■ Flexible sources of funds Reserves ■ Borrower personal funds ■ Other
      eligible sources of funds (i) Borrower personal funds Borrower personal funds
      include: ■ Borrower personal funds described in Section 5501.3 ■ Cash on hand,
      if the requirements in Section 4501.7(c)(i)(2) are met (ii) Other eligible sources
      of funds Other eligible sources of funds include: ■ Other eligible sources of
      funds described in Section 5501.4 ■ Gift or grant funds provided by the Seller
      as the originating lender, if a contribution of at least 3% of value is made
      from Borrower personal funds and/or other eligible sources of funds. The gift
      or grant may not be funded through the Mortgage transaction (i.e., through premium
      pricing). ■ Although Sections 4204.2(a)(i)(A) and 5501.4 provide otherwise,
      funds provided by an Agency affiliated with, under contract to or financed (directly
      or indirectly) by the Seller as the originating lender, if: ❑ The source of
      funds (e.g., a gift or grant, an unsecured loan, an Affordable Second®) is an
      eligible source of funds that meets all other Guide requirements; and ❑ The
      source of funds is not funded through the Mortgage transaction Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-15 ■ For purchase
      transaction Mortgages, funds from an unsecured loan. Funds from an unsecured
      loan must be from one of the following sources: ❑ A Community Savings System
      (funds exceeding the Borrower’s contribution to the Community Savings System)
      ❑ Except as stated in Section 4504.7(c)(ii) or 4504.7(d), an Agency that is
      not: ■ The Seller or participated in any aspect of the Mortgage origination
      process ■ Affiliated with, under contract to, or financed (directly or indirectly)
      by the Seller or any party that participated in the Mortgage origination process.
      For these purposes, “affiliated with” means that the Agency and the Seller or
      other party are related to each other as a consequence of one entity directly
      or indirectly controlling the other party, being controlled by the other party
      or being under common control with that party. The unsecured loan must meet
      the following requirements: ❑ Must not contain provisions that allow or could
      result in negative amortization ❑ Must have a maturity date that: ■ Does not
      exceed the maturity date of the Mortgage ■ Is at least five years after the
      Note Date of the Mortgage, unless the unsecured loan is fully amortizing ❑ Must
      have an interest rate that is no greater than the Note Rate on the Mortgage
      ❑ Must not be a cash advance from a credit card or unsecured line of credit
      ❑ Must have its source, terms and conditions documented on Form 65, Uniform
      Residential Loan Application If the monthly payment begins on or after the 61st
      monthly payment under the First Lien Mortgage or if repayment of the loan is
      due only upon sale or default, the monthly payment amount may be excluded from
      the monthly debt payment-to- income ratio; otherwise, the required monthly payments
      must be included in calculating the monthly debt payment-to-income ratio. ■
      Sweat equity as a credit towards the Down Payment and/or Closing Costs, if the
      sweat equity requirements in Section 4501.7(c)(ii)(4) are met, except that the
      maximum LTV/TLTV ratios in this chapter and the special delivery requirements
      in Section 6302.50 apply Freddie Mac Single-Family Seller/Servicer Guide Chapter
      4504 As of 04/12/26 Page 4504-16 ■ Funds from an Affordable Second or other
      secondary financing arrangement (iii) Flexible sources of funds Flexible sources
      of funds include: ■ Financing concessions described in Section 5501.6(b) that
      meet the applicable interested party contribution requirements in Section 5501.6
      ■ Lender credits described in Section 5501.7(a) that are documented on the Settlement/Closing
      Disclosure Statement ■ Unsecured loan proceeds from the Seller as the originating
      lender meeting the following requirements: ■ Must not contain provisions that
      allow or could result in negative amortization ■ Must have a maturity date that:
      ❑ Does not exceed the maturity date of the Mortgage ❑ Is at least five years
      after the Note Date of the Mortgage, unless the unsecured loan is fully amortizing
      ■ Must have an interest rate that is no greater than the Note Rate on the Mortgage
      ■ Must not be a cash advance from a credit card or unsecured line of credit
      ■ Must have its source, terms and conditions documented on Form 65 If the monthly
      payments begin on or after the 61st monthly payment under the First Lien Mortgage
      or if repayment of the loan is due only upon sale or default, the monthly payment
      amount may be excluded from the monthly debt payment-to-income ratio. Otherwise,
      the required monthly payments must be included in calculating the monthly debt
      payment-to-income ratio. (c) Funds provided by a Native American Tribe For funds
      provided by a Native American Tribe: ■ The Native American Tribe providing the
      funds must be the Eligible Native American Tribe within whose Tribal Area the
      Mortgaged Premises is located; or ■ The Borrower must be an enrolled member
      of the Native American Tribe providing the funds Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4504 As of 04/12/26 Page 4504-17 4504.8: HeritageOne® Mortgages
      that are leasehold Mortgages (03/05/25) This section contains requirements related
      to: ■ Leasehold Mortgages ■ Lease agreements ■ Form of lease agreement (a) Leasehold
      Mortgages For leasehold Mortgages, the Mortgaged Premises must be located on
      either tribal trust land or allotted trust land and cannot be located on land
      that is owned in fee simple. Leasehold Mortgages must meet the requirements
      of Chapter 5704 and all other provisions in the Seller’s Purchase Documents
      applicable to leasehold estates. If permitted under the Seller’s Purchase Documents,
      Leasehold Mortgages secured by Manufactured Homes must meet the requirements
      of Chapter 5706 and all other provisions in the Seller’s Purchase Documents
      applicable to Manufactured Homes, except that the Manufactured Home is not required
      to be located in a ground lease community (although Section 5706.2 provides
      otherwise). (b) Lease agreements The term of the lease agreement must be a minimum
      of 25 years with an automatic 25-year renewal. The term of the lease agreement
      (before renewal) must expire at least five years after the term of the Mortgage
      expires. Any necessary approvals or signatures must be obtained from the U.S.
      Secretary of the Interior or the BIA, as applicable, to extend the term of the
      lease agreement to a period longer than 25 years. The Seller must maintain in
      the Mortgage file a copy of the recorded lease agreement, including any amendments
      or riders thereto. (c) Form of lease agreement It is recommended (but not required)
      that the most recent version of the standard lease form in HUD’s Section 184
      Program be used for leasehold Mortgages. The lease agreement may not adversely
      impact the rights of Freddie Mac or the Seller/Servicer to foreclose or acquire
      title to the Mortgaged Premises, accept a deed or Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-18 assignment in
      lieu of foreclosure or transfer title to or lease the Mortgaged Premises, if
      acquired. 4504.9: Appraisal requirements for HeritageOne® Mortgages (02/04/26)
      Refer to Bulletin 2025-7, which announced the policy requirements for Uniform
      Appraisal Dataset (UAD) 3.6. Sellers may submit to the Uniform Collateral Data
      Portal® appraisal reports that use UAD 3.6 before the mandatory effective November
      2, 2026 version of this section. This section contains requirements related
      to: ■ Appraiser qualifications ■ Appraisal type, automated collateral evaluation
      (ACE) eligibility and ACE+ PDR eligibility ■ Appraised value representation
      and warranty relief ■ Appraisal cost offset credit ■ Sales comparison approach
      and cost approach ■ Additional form instructions ■ Site value ■ Uniform Collateral
      Data Portal® (UCDP®) ■ Additional resources The following appraisal requirements
      apply to HeritageOne® Mortgages: (a) Appraiser qualifications In addition to
      the appraiser qualifications in Section 5603.1, the Seller must ensure the appraiser
      has the knowledge and experience required to perform appraisals for properties
      located in Tribal Areas. By way of example and not of limitation, the appraiser
      must be knowledgeable about and have experience with the various types of land
      ownership interests (e.g., tribal trust land, allotted trust land, unrestricted
      or restricted fee simple land, etc.) and have access to all appropriate data
      sources. Although traditional appraisal data sources (e.g., multiple listing
      service, public land records, etc.) remain important sources of data, the appraiser
      may need access to other sources of data Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4504 As of 04/12/26 Page 4504-19 and information, such as those
      maintained by the BIA and the Eligible Native American Tribe within whose Tribal
      Area the Mortgaged Premises is located, to develop a fully supported and sufficiently
      documented opinion of market value. (b) Appraisal type, ACE eligibility and
      ACE+ PDR eligibility The appraisal must meet the requirements of Topic 5600.
      Unless ACE or ACE+ PDR is offered and accepted in accordance with Section 5602.3
      or 5602.4, respectively: ■ An appraisal report with an interior and exterior
      inspection is required; and ■ The Seller must maintain in the Mortgage file
      all property valuation documentation (c) Appraised value representation and
      warranty relief If an appraisal report is obtained and the sales comparison
      approach was used, the Mortgage may be eligible for appraised value representation
      and warranty relief, if the requirements for Loan Collateral Advisor® appraised
      value representation and warranty relief in Section 5602.2 are met. (d) Appraisal
      cost offset credit If an appraisal report is obtained for the Mortgage transaction,
      Freddie Mac will issue an appraisal cost offset credit, which must be passed
      to the Borrower. The appraisal cost offset credit will be detailed in the Seller’s
      Purchase Documents. (e) Sales comparison approach and cost approach When a sufficient
      number of comparable sales (i.e., a minimum of three closed comparable sales)
      are available, the sales comparison approach (with any support provided from
      the cost approach or income approach, as applicable) must be used by the appraiser.
      It is acceptable to use comparable sales that are older than, distant from or
      dissimilar to the subject property, if the applicable sales comparison approach
      requirements in Section 5605.6 are met. For Market Areas without a sufficient
      number of comparable sales to develop a fully supported and sufficiently documented
      opinion of market value using the sales comparison approach, although Sections
      5605.6 and 5605.7(a) provide otherwise, an appraisal report that relies solely
      on the cost approach for the opinion of market value is acceptable, if the appraiser:
      ■ Provides: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As
      of 04/12/26 Page 4504-20 ❑ A well-developed cost approach that includes a fully
      completed cost approach section of the report ❑ Sufficient detail to allow the
      Seller to replicate the cost approach; and ❑ In the reconciliation section of
      the report, an explanation of how the value was derived ■ Uses the revised scope
      of work, statement of assumptions and limiting conditions and appraiser’s certifications
      (which will be provided in the Seller’s Purchase Documents), and the additional
      form instructions set forth below; and ■ Completes all fields in the report,
      other than the comparable sales data in the sales comparison approach grid An
      appraisal report may not rely solely on the cost approach for the opinion of
      market value if the Mortgage is secured by a: ■ Property subject to 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
      ■ Condominium Unit ■ 2- to 4-unit property; or ■ Property with an ADU (f) Additional
      form instructions For an appraisal report that relies solely on the cost approach
      for the opinion of market value, the report must include the text identifier
      “Heritage1” in the “File #” field in the appraisal report form. The appraiser
      must complete all applicable fields for the subject property in the sales comparison
      approach grid, including, but not limited to: ■ Location ■ View ■ Quality of
      Construction ■ Condition ■ Gross Living Area Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4504 As of 04/12/26 Page 4504-21 (g) Site value For properties
      on land that is owned in fee simple, for appraisal reports that rely solely
      on the cost approach for the opinion of market value, a site value must be developed
      and reported. For leasehold Mortgages, if there is no ground rent due under
      the lease agreement and no upfront payment was made, the leased fee value is
      zero, and no value is attributable to the underlying land. (h) UCDP If an appraisal
      report is obtained for the Mortgage transaction, the report must be submitted
      to the UCDP and receive a “Successful” status prior to delivery of the Mortgage.
      (i) Additional resources Sellers are encouraged to review the Appraisal Institute’s
      appraisal training curriculum for performing property valuations in tribal areas.
      4504.9: Appraisal requirements for HeritageOne® Mortgages (Future effective
      date 11/02/26) This section contains requirements related to: ■ Appraiser qualifications
      ■ Appraisal type, automated collateral evaluation (ACE) eligibility and ACE+
      PDR eligibility ■ Appraised value representation and warranty relief ■ Appraisal
      cost offset credit ■ Sales comparison approach and cost approach ■ Additional
      form instructions ■ Site value ■ Uniform Collateral Data Portal® (UCDP®) ■ Additional
      resources The following appraisal requirements apply to HeritageOne® Mortgages:
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26
      Page 4504-22 (a) Appraiser qualifications In addition to the appraiser qualifications
      in Section 5603.1, the Seller must ensure the appraiser has the knowledge and
      experience required to perform appraisals for properties located in Tribal Areas.
      By way of example and not of limitation, the appraiser must be knowledgeable
      about and have experience with the various types of land ownership interests
      (e.g., tribal trust land, allotted trust land, unrestricted or restricted fee
      simple land, etc.) and have access to all appropriate data sources. Although
      traditional appraisal data sources (e.g., multiple listing service, public land
      records, etc.) remain important sources of data, the appraiser may need access
      to other sources of data and information, such as those maintained by the BIA
      and the Eligible Native American Tribe within whose Tribal Area the Mortgaged
      Premises is located, to develop a fully supported and sufficiently documented
      opinion of market value. (b) Appraisal type, ACE eligibility and ACE+ PDR eligibility
      The appraisal must meet the requirements of Topic 5600. Unless ACE or ACE+ PDR
      is offered and accepted in accordance with Section 5602.3 or 5602.4, respectively:
      ■ An appraisal report with an interior and exterior inspection is required;
      and ■ The Seller must maintain in the Mortgage file all property valuation documentation
      (c) Appraised value representation and warranty relief If an appraisal report
      is obtained and the sales comparison approach was used, the Mortgage may be
      eligible for appraised value representation and warranty relief, if the requirements
      for Loan Collateral Advisor® appraised value representation and warranty relief
      in Section 5602.2 are met. (d) Appraisal cost offset credit If an appraisal
      report is obtained for the Mortgage transaction, Freddie Mac will issue an appraisal
      cost offset credit, which must be passed to the Borrower. The appraisal cost
      offset credit will be detailed in the Seller’s Purchase Documents. (e) Sales
      comparison approach and cost approach When a sufficient number of comparable
      sales (i.e., a minimum of three closed comparable sales) are available, the
      sales comparison approach (with any support provided from the cost approach
      or income approach, as applicable) must be used by the appraiser. It is acceptable
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26
      Page 4504-23 to use comparable sales that are older than, distant from or dissimilar
      to the subject property, if the applicable sales comparison approach requirements
      in Section 5605.7 are met. For Market Areas without a sufficient number of comparable
      sales to develop a fully supported and sufficiently documented opinion of market
      value using the sales comparison approach, although Sections 5605.7 and 5605.8(a)
      provide otherwise, an appraisal report that relies solely on the cost approach
      for the opinion of market value is acceptable, if the appraiser: ■ Provides:
      ❑ A well-developed cost approach that includes a fully completed cost approach
      section of the report ❑ Sufficient detail to allow the Seller to replicate the
      cost approach; and ❑ In the reconciliation section of the report, an explanation
      of how the value was derived ■ Uses the revised scope of work, statement of
      assumptions and limiting conditions and appraiser’s certifications (which will
      be provided in the Seller’s Purchase Documents), and the additional form instructions
      set forth below; and ■ Completes all fields in the report, other than the comparable
      sales data in the sales comparison approach grid An appraisal report may not
      rely solely on the cost approach for the opinion of market value if the Mortgage
      is secured by a: ■ Property subject to 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 ■ Condominium Unit
      ■ 2- to 4-unit property; or ■ Property with an ADU (f) Additional form instructions
      For an appraisal report that relies solely on the cost approach for the opinion
      of market value, the report must include the text identifier “Heritage1” in
      the “File #” field in the appraisal report form. Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4504 As of 04/12/26 Page 4504-24 The appraiser must complete all
      applicable fields for the subject property in the sales comparison approach
      grid, including, but not limited to: ■ Location ■ View ■ Quality of Construction
      ■ Condition ■ Gross Living Area (g) Site value For properties on land that is
      owned in fee simple, for appraisal reports that rely solely on the cost approach
      for the opinion of market value, a site value must be developed and reported.
      For leasehold Mortgages, if there is no ground rent due under the lease agreement
      and no upfront payment was made, the leased fee value is zero, and no value
      is attributable to the underlying land. (h) UCDP If an appraisal report is obtained
      for the Mortgage transaction, the report must be submitted to the UCDP and receive
      a “Successful” status prior to delivery of the Mortgage. (i) Additional resources
      Sellers are encouraged to review the Appraisal Institute’s appraisal training
      curriculum for performing property valuations in tribal areas. 4504.10: Mortgage
      insurance and title insurance requirements for HeritageOne® Mortgages (03/05/25)
      This section contains requirements related to: ■ Mortgage insurance ■ Title
      insurance (a) Mortgage insurance Information related to mortgage insurance for
      HeritageOne® Mortgages will be detailed in the Seller’s Purchase Documents.
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 4504 As of 04/12/26
      Page 4504-25 (b) Title insurance See Section 4702.7 for title insurance requirements
      for HeritageOne Mortgages. 4504.11: Mortgage file requirements for HeritageOne®
      Mortgages (03/05/25) For HeritageOne® Mortgages, the Seller must maintain in
      the Mortgage file: ■ Evidence that the Eligible Native American Tribe within
      whose Tribal Area the Mortgaged Premises is located is included in the BIA’s
      most recent publication of the notice titled “Indian Entities Recognized by
      and Eligible To Receive Services From the United States Bureau of Indian Affairs”
      and: ❑ A copy of the fully executed memorandum of understanding between the
      Eligible Native American Tribe and Freddie Mac, if applicable ❑ A printout showing
      the Eligible Native American Tribe in the list of Eligible Native American Tribes
      on Freddie Mac’s website ❑ A printout showing the Eligible Native American Tribe
      in HUD’s most recent Section 184 Participating Tribes List; or ❑ Documentation
      issued by HUD indicating unconditional approval of the Eligible Native American
      Tribe as a participating tribe ■ Documentation verifying the Borrower is an
      enrolled member of a Native American Tribe: ❑ A copy of the Borrower’s tribe-issued
      enrollment card; or ❑ A copy of a tribe-issued letter indicating the Borrower’s
      enrollment as a member of the Native American Tribe ■ Evidence of the land ownership
      interest (e.g., tribal trust land, allotted trust land, unrestricted or restricted
      fee simple land, etc.) of the Mortgaged Premises and the court system that has
      jurisdiction over the Mortgaged Premises ■ A copy of the certified title status
      report(s) obtained from the BIA, if applicable ■ To the extent possible, the
      following contact information for the Eligible Native American Tribe within
      whose Tribal Area the Mortgaged Premises is located: Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4504 As of 04/12/26 Page 4504-26 ❑ If different
      from the contact information listed in the Tribal Leaders Directory maintained
      by the BIA, documentation listing the Eligible Native American Tribe’s contact
      information in a substantially similar format ❑ Contact information for the
      Eligible Native American Tribe’s office of real estate services, if applicable;
      and ❑ For leasehold Mortgages, contact information for the party that manages
      lease agreements on behalf of the Eligible Native American Tribe or the lessor
      (e.g., management company), if applicable ■ For purchase transaction Mortgages
      secured by 2- to 4-unit properties, evidence of completion of the landlord education
      program, if required 4504.12: Credit Fees for HeritageOne® Mortgages (03/05/25)
      Credit Fees related to HeritageOne® Mortgages will be detailed in the Seller’s
      Purchase Documents. Freddie Mac Single-Family Seller/Servicer Guide Chapter
      4601 As of 07/02/25 Page 4601-1 Chapter 4601: Financed Permanent Buydown Mortgages
      4601.1: Financed Permanent Buydown Mortgages (07/02/25) A Financed Permanent
      Buydown Mortgage is a Mortgage for which the Borrower has permanently reduced
      the interest rate by financing discount points in the loan amount. This section
      contains requirements related to: ■ Eligible Financed Permanent Buydown Mortgages
      ■ Ineligible Financed Permanent Buydown Mortgages ■ Underwriting Financed Permanent
      Buydown Mortgages ■ Calculation of applicable Credit Fees for Financed Permanent
      Buydown Mortgages (a) Eligible Financed Permanent Buydown Mortgages The Mortgage
      must be an eligible fixed-rate, level-payment Mortgage or a 5/6-Month, 7/6-
      Month or 10/6-Month ARM. (b) Ineligible Financed Permanent Buydown Mortgages
      Financed Permanent Buydown Mortgages must not be: ■ Community Land Trust Mortgages
      ■ Government Mortgages ■ HeritageOne® Mortgages ■ Home Possible® Mortgages ■
      HomeOne® Mortgages ■ Mortgages with a temporary subsidy buydown ■ Secured by
      property subject to income-based resale restrictions that terminate upon foreclosure
      (or expiration of any applicable legally required foreclosure redemption Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 4601 As of 07/02/25 Page 4601-2
      period) or recordation of a deed-in-lieu of foreclosure, where the property
      value must be determined in accordance with Section 4406.4(c) (c) Underwriting
      Financed Permanent Buydown Mortgages For purposes of this chapter, the following
      definitions apply: Defined terms for Financed Permanent Buydown Mortgages B
      Base Mortgage Amount The Mortgage amount without the financed discount points
      G Gross loan-to-value (LTV), total LTV (TLTV) and Home Equity Line of Credit
      (HELOC) TLTV (HTLTV) ratios The LTV, TLTV or HTLTV ratio calculated using the
      Mortgage amount, which includes the financed discount points Eligibility of
      Financed Permanent Buydown Mortgages is determined using the Gross LTV, TLTV
      and HTLTV ratios. Financed Permanent Buydown Mortgages must comply with the
      following requirements: 1. The Gross LTV, TLTV and HTLTV ratios must not exceed
      the LTV, TLTV or HTLTV ratios specified in Section 4203.1(b) 2. The amount of
      the mortgage insurance coverage must meet the coverage level requirements in
      Section 4701.1, using the Gross LTV ratio 3. The maximum amount a Borrower can
      finance for a permanent buydown is three discount points, calculated based upon
      the Base Mortgage Amount 4. For fixed-rate Mortgages, Borrower qualification
      is based on the monthly housing expense-to-income ratio calculated using the
      monthly payment at the permanent bought down Note Rate. For ARMs, Borrower qualification
      is based on monthly payments calculated in accordance with Section 4401.2. 5.
      For ARMs, the permanent buydown is in effect for the initial Note Rate and each
      Note Rate adjustment for the entire term of the Mortgage. The Lifetime Ceiling
      will be calculated using the permanent bought down initial Note Rate. The permanent
      buydown does not affect the Margin, Initial Cap or Periodic Cap. Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 4601 As of 07/02/25 Page 4601-3
      (d) Calculation of applicable Credit Fees for Financed Permanent Buydown Mortgages
      Applicable Credit Fees will be assessed and billed based on the UPB of the Mortgage
      (including the financed permanent buydown points) and the Gross LTV ratio. The
      Seller must refer to Exhibit 19, Credit Fees. Credit Fees are paid in accordance
      with the Credit Fee provisions stated in Chapter 6303. Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-1 Chapter 4602:
      Construction to Permanent Mortgages and Renovation Mortgages 4602.1: Construction
      to Permanent Mortgages and Renovation Mortgages (02/04/26) Refer to Bulletin
      2025-7, which announced the policy requirements for Uniform Appraisal Dataset
      (UAD) 3.6. Sellers may submit to the Uniform Collateral Data Portal® appraisal
      reports that use UAD 3.6 before the mandatory effective November 2, 2026 version
      of this section. The requirements of this section apply to all Construction
      to Permanent Mortgages and Renovation Mortgages. Additionally, One-Time Close
      transactions must meet the requirements in 4602.2 and Two-Time Close transactions
      must meet the requirements in Section 4602.3. This section contains requirements
      related to: ■ Eligible Mortgages ■ Ineligible Mortgages ■ Eligible use of Interim
      Construction Financing proceeds ■ Permanent Financing proceeds ■ Eligible property
      ■ Borrower eligibility ■ Completion status of the Mortgaged Premises ■ Mortgage
      file documentation ■ Seller-Owned Modified Mortgages and Seller-Owned Converted
      Mortgages ■ Credit Fees (a) Eligible Mortgages Mortgages must be First Lien
      Mortgages and may be any Mortgage Product or offering eligible under the Guide
      unless specifically described as ineligible in this section. (b) Ineligible
      Mortgages Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of
      02/04/26 Page 4602-2 The following Mortgages are ineligible as Construction
      to Permanent Mortgages and Renovation Mortgages: ■ Community Land Trust Mortgages
      ■ Government Mortgages ■ Mortgages secured by properties subject to income-based
      resale restrictions ■ Special purpose cash-out refinance Mortgages (c) Eligible
      use of Interim Construction Financing proceeds For purchase transaction Mortgages,
      the proceeds of the Interim Construction Financing may be used as described
      in the table below: Eligible use of Interim Construction Financing proceeds
      Purchase transaction Construction to Permanent Mortgage Renovation Mortgage
      ■ Purchase the land or acquire a leasehold interest in the land ■ Pay construction
      costs of the site-built home or Manufactured Home ■ Pay costs for site preparation,
      including the removal of an existing Manufactured Home ■ For Mortgages secured
      by Manufactured Homes, acquire the Manufactured Home and pay construction costs,
      including costs to affix the Manufactured Home to a permanent foundation ■ Purchase
      the site-built home ■ Pay renovation costs of the site-built home For refinance
      Mortgages, the proceeds of the Interim Construction Financing may be used as
      described in the table below: Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 4602 As of 02/04/26 Page 4602-3 Eligible use of Interim Construction
      Financing proceeds Refinance transaction Construction to Permanent Mortgage
      Renovation Mortgage ■ Pay off any existing liens on the land ■ Pay construction
      costs of the site- built home or Manufactured Home ■ Pay costs for site preparation,
      including the removal of an existing Manufactured Home ■ For Mortgages secured
      by Manufactured Homes, acquire the Manufactured Home and pay construction costs,
      including costs to affix the Manufactured Home to a permanent foundation ■ Pay
      all Closing Costs ■ Pay off any existing liens on the land and on the improvements
      ■ Pay renovation costs of the site-built home ■ Pay all Closing Costs (d) Permanent
      Financing proceeds Permanent Financing proceeds are used to replace Interim
      Construction Financing after construction or renovations are complete and must
      not be used for the purpose of making a single disbursement of funds to a builder
      or contractor or for the assumption of an existing Mortgage. (e) Eligible property
      A Construction to Permanent Mortgage must be secured by: ■ A newly built or
      constructed 1- to 4-unit site-built home, or ■ A newly purchased Manufactured
      Home that has never been attached to a foundation A Renovation Mortgage must
      be secured by an existing 1-to 4-unit site-built home. Prior to the start of
      construction or renovation work, the Borrower must own the land or Mortgaged
      Premises in fee simple or have a leasehold estate meeting the requirements of
      Chapter 5704. The Borrower may have acquired the land through a purchase, inheritance,
      gift or legal award in accordance with a final judgment or decision from a legal
      body (e.g., court, jury, judge or arbitrator) such as in a case of divorce,
      separation or dissolution of a domestic partnership. Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-4 (f) Borrower eligibility
      The Borrower on the Permanent Financing must be the Borrower on, and obligated
      to repay, the Interim Construction Financing, and any other outstanding prior
      financing, including installation financing or outstanding prior Mortgages.
      Exceptions: ■ A Borrower may be omitted in the event of death or divorce ■ A
      Borrower who is a Related Person may be added, provided that all Borrowers on
      the Permanent Financing are owner-occupants of the Mortgaged Premises and considered
      in the underwriting of the Permanent Financing The builder/developer must not
      be obligated to repay the Interim Construction Financing or any Mortgage on
      the land or the improvements except when the builder/developer is the Borrower
      on the Permanent Financing and will occupy the Mortgaged Premises as their Primary
      Residence. (g) Completion status of the Mortgaged Premises All improvements
      to the Mortgaged Premises must be fully completed before the Settlement Date,
      except for Mortgages secured by site-built homes meeting the requirements in
      Section 5601.3. For Manufactured Homes, the installation must be fully complete,
      including permanent utility connections and construction of any site-built improvements
      such as garages, decks, or porches, before the Settlement Date as evidenced
      by a satisfactory completion report. For both site-built homes and Manufactured
      Homes, the Seller must obtain a completion report in accordance with the requirements
      in Section 5605.8. (h) Mortgage file documentation For Construction to Permanent
      Mortgages and Renovation Mortgages, the Mortgage file must include: ■ Documentation
      that supports classification of the Mortgage as a Construction to Permanent
      Mortgage or a Renovation Mortgage ■ Sufficient documentation (e.g., purchase
      contracts, plans and specifications, receipts, invoices, lien waivers) on which
      to validate the actual cost to construct or renovate the home ■ A document that
      clearly shows the Seller’s calculation of the purchase price and/or cost to
      construct Freddie Mac Single-Family Seller/Servicer Guide Chapter 4602 As of
      02/04/26 Page 4602-5 ■ The Settlement/Closing Disclosure Statement or an alternative
      form required by law evidencing all costs to homebuyer and property seller for
      the Interim Construction Financing ■ The Settlement/Closing Disclosure Statement
      for the Permanent Financing ■ For a Mortgage secured by a Manufactured Home,
      the manufacturer’s invoice and the Manufactured Home Purchase Agreement (i)
      Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages Seller-Owned
      Modified Mortgages and Seller-Owned Converted Mortgages (as described in Chapter
      4402) may not be used to modify or convert Interim Construction Financing to
      Permanent Financing. After the Effective Date of Permanent Financing, if the
      terms of the Permanent Financing have been modified or if an ARM converted to
      a fixed-rate Mortgage, the resulting Mortgage is a Seller-Owned Modified Mortgage
      or Seller-Owned Converted Mortgage, as applicable, and must meet the requirements
      of Chapter 4402 and other provisions related to these Mortgages. (j) Credit
      Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit Fees related
      to Construction to Permanent Mortgages and Renovation Mortgages. Credit Fees
      are paid in accordance with the Credit Fee provisions stated in Chapter 6303.
      4602.1: Construction to Permanent Mortgages and Renovation Mortgages (Future
      effective date 11/02/26) The requirements of this section apply to all Construction
      to Permanent Mortgages and Renovation Mortgages. Additionally, One-Time Close
      transactions must meet the requirements in 4602.2 and Two-Time Close transactions
      must meet the requirements in Section 4602.3. This section contains requirements
      related to: ■ Eligible Mortgages ■ Ineligible Mortgages ■ Eligible use of Interim
      Construction Financing proceeds ■ Permanent Financing proceeds Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-6 ■ Eligible property
      ■ Borrower eligibility ■ Completion status of the Mortgaged Premises ■ Mortgage
      file documentation ■ Seller-Owned Modified Mortgages and Seller-Owned Converted
      Mortgages ■ Credit Fees (a) Eligible Mortgages Mortgages must be First Lien
      Mortgages and may be any Mortgage Product or offering eligible under the Guide
      unless specifically described as ineligible in this section. (b) Ineligible
      Mortgages The following Mortgages are ineligible as Construction to Permanent
      Mortgages and Renovation Mortgages: ■ Community Land Trust Mortgages ■ Government
      Mortgages ■ Mortgages secured by properties subject to income-based resale restrictions
      ■ Special purpose cash-out refinance Mortgages (c) Eligible use of Interim Construction
      Financing proceeds For purchase transaction Mortgages, the proceeds of the Interim
      Construction Financing may be used as described in the table below: Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-7
      Eligible use of Interim Construction Financing proceeds Purchase transaction
      Construction to Permanent Mortgage Renovation Mortgage ■ Purchase the land or
      acquire a leasehold interest in the land ■ Pay construction costs of the site-built
      home or Manufactured Home ■ Pay costs for site preparation, including the removal
      of an existing Manufactured Home ■ For Mortgages secured by Manufactured Homes,
      acquire the Manufactured Home and pay construction costs, including costs to
      affix the Manufactured Home to a permanent foundation ■ Purchase the site-built
      home ■ Pay renovation costs of the site-built home For refinance Mortgages,
      the proceeds of the Interim Construction Financing may be used as described
      in the table below: Eligible use of Interim Construction Financing proceeds
      Refinance transaction Construction to Permanent Mortgage Renovation Mortgage
      ■ Pay off any existing liens on the land ■ Pay construction costs of the site-
      built home or Manufactured Home ■ Pay costs for site preparation, including
      the removal of an existing Manufactured Home ■ For Mortgages secured by Manufactured
      Homes, acquire the Manufactured Home and pay construction costs, including costs
      to affix the Manufactured Home to a permanent foundation ■ Pay all Closing Costs
      ■ Pay off any existing liens on the land and on the improvements ■ Pay renovation
      costs of the site-built home ■ Pay all Closing Costs Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-8 (d) Permanent
      Financing proceeds Permanent Financing proceeds are used to replace Interim
      Construction Financing after construction or renovations are complete and must
      not be used for the purpose of making a single disbursement of funds to a builder
      or contractor or for the assumption of an existing Mortgage. (e) Eligible property
      A Construction to Permanent Mortgage must be secured by: ■ A newly built or
      constructed 1- to 4-unit site-built home, or ■ A newly purchased Manufactured
      Home that has never been attached to a foundation A Renovation Mortgage must
      be secured by an existing 1-to 4-unit site-built home. Prior to the start of
      construction or renovation work, the Borrower must own the land or Mortgaged
      Premises in fee simple or have a leasehold estate meeting the requirements of
      Chapter 5704. The Borrower may have acquired the land through a purchase, inheritance,
      gift or legal award in accordance with a final judgment or decision from a legal
      body (e.g., court, jury, judge or arbitrator) such as in a case of divorce,
      separation or dissolution of a domestic partnership. (f) Borrower eligibility
      The Borrower on the Permanent Financing must be the Borrower on, and obligated
      to repay, the Interim Construction Financing, and any other outstanding prior
      financing, including installation financing or outstanding prior Mortgages.
      Exceptions: ■ A Borrower may be omitted in the event of death or divorce ■ A
      Borrower who is a Related Person may be added, provided that all Borrowers on
      the Permanent Financing are owner-occupants of the Mortgaged Premises and considered
      in the underwriting of the Permanent Financing The builder/developer must not
      be obligated to repay the Interim Construction Financing or any Mortgage on
      the land or the improvements except when the builder/developer is the Borrower
      on the Permanent Financing and will occupy the Mortgaged Premises as their Primary
      Residence. (g) Completion status of the Mortgaged Premises Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-9 All improvements
      to the Mortgaged Premises must be fully completed before the Settlement Date,
      except for Mortgages secured by site-built homes meeting the requirements in
      Section 5601.3. For Manufactured Homes, the installation must be fully complete,
      including permanent utility connections and construction of any site-built improvements
      such as garages, decks, or porches, before the Settlement Date as evidenced
      by a satisfactory completion report. For both site-built homes and Manufactured
      Homes, the Seller must obtain documentation verifying completion in accordance
      with the requirements in Section 5605.9. (h) Mortgage file documentation For
      Construction to Permanent Mortgages and Renovation Mortgages, the Mortgage file
      must include: ■ Documentation that supports classification of the Mortgage as
      a Construction to Permanent Mortgage or a Renovation Mortgage ■ Sufficient documentation
      (e.g., purchase contracts, plans and specifications, receipts, invoices, lien
      waivers) on which to validate the actual cost to construct or renovate the home
      ■ A document that clearly shows the Seller’s calculation of the purchase price
      and/or cost to construct ■ The Settlement/Closing Disclosure Statement or an
      alternative form required by law evidencing all costs to homebuyer and property
      seller for the Interim Construction Financing ■ The Settlement/Closing Disclosure
      Statement for the Permanent Financing ■ For a Mortgage secured by a Manufactured
      Home, the manufacturer’s invoice and the Manufactured Home Purchase Agreement
      (i) Seller-Owned Modified Mortgages and Seller-Owned Converted Mortgages Seller-Owned
      Modified Mortgages and Seller-Owned Converted Mortgages (as described in Chapter
      4402) may not be used to modify or convert Interim Construction Financing to
      Permanent Financing. After the Effective Date of Permanent Financing, if the
      terms of the Permanent Financing have been modified or if an ARM converted to
      a fixed-rate Mortgage, the resulting Mortgage is a Seller-Owned Modified Mortgage
      or Seller-Owned Converted Mortgage, as applicable, and must meet the requirements
      of Chapter 4402 and other provisions related to these Mortgages. Freddie Mac
      Single-Family Seller/Servicer Guide Chapter 4602 As of 02/04/26 Page 4602-10
      (j) Credit Fees The Seller must refer to Exhibit 19, Credit Fees, for Credit
      Fees related to Construction to Permanent Mortgages and Renovation Mortgages.
      Credit Fees are paid in accordance with the Credit Fee provisions stated in
      Chapter 6303.'
  judgment: false
