source:
  type: guide
  id: fhlmc-4701.2
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4701.2 — Mortgage
    insurance premiums
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 4701.2 — Mortgage
    insurance premiums.
  coverage_tier: operative
obligations:
- id: fhlmc-4701.2-full
  canonical_id: fhlmc-4701.2-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 4701.2 — Mortgage
    insurance premiums
  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 4701.2 — Mortgage
      insurance premiums
    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: '4701.2: Mortgage insurance premiums (02/04/26) This section
      contains requirements related to: Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 4701 As of 02/04/26 Page 4701-4 ■ Eligible mortgage insurance
      premiums ■ Borrower-paid financed premiums ■ Lender-paid mortgage insurance
      (a) Eligible mortgage insurance premiums Eligible Mortgage insurance premiums
      include the following: Eligible mortgage insurance premiums Premium type When
      premiums are paid Annual premium An initial premium paid at closing to cover
      the first year’s premium and annual renewal premium payments thereafter paid
      from accumulated escrow deposits Monthly premium Premiums paid monthly from
      accumulated escrow deposits Single-premium A lump-sum premium paid at closing
      to purchase life of Mortgage coverage Split-premium An initial up-front payment
      premium paid at closing and an ongoing monthly premium paid from accumulated
      escrow deposits (i) Borrower-paid mortgage insurance premiums For Borrower-paid
      mortgage insurance premiums, the Borrower must pay the mortgage insurance premium
      by a single payment at closing, through monthly Escrow payments or as a combination
      of the two. A Mortgage that includes a Borrower-paid mortgage insurance premium
      in the Note Rate is not eligible for sale to Freddie Mac. (ii) Lender-paid mortgage
      insurance premiums Lender-paid mortgage insurance premiums for annual and monthly
      premium programs must be included in the Servicing Spread included in the Note
      Rate on the Mortgage (see Section 4701.2(b)). Mortgages with single-premium
      lender-paid mortgage insurance do not require an adjustment to the Minimum Servicing
      Spread. (b) Borrower-paid financed premiums For purposes of this section, the
      definitions below apply. Freddie Mac Single-Family Seller/Servicer Guide Chapter
      4701 As of 02/04/26 Page 4701-5 Definitions applicable to this section B Base
      LTV ratio The loan-to-value (LTV) ratio calculated using the Mortgage amount
      without the financed mortgage insurance premium G Gross LTV ratio The LTV ratio
      calculated using the Mortgage amount, which includes the financed mortgage insurance
      premium Mortgages for which the Borrower-paid mortgage insurance premium is
      included as part of the principal amount of the Mortgage (i.e., a financed premium)
      are eligible for purchase provided the Mortgage complies with the following
      requirements: ■ The Base LTV ratio must not exceed the maximum LTV ratio permitted
      for the Mortgage Product or offering ■ The Gross LTV ratio must not exceed 95%,
      except for Home Possible® Mortgages, HomeOne® Mortgages and HeritageOne® Mortgages,
      for which the Gross LTV ratio must not exceed 97% ■ The Mortgaged Premises must
      be a 1- to 4-unit Primary Residence or a 1-unit second home ■ The Mortgage is
      a fixed-rate, fully amortizing Mortgage or an ARM ■ The amount of coverage meets
      the standard coverage level requirements in Section 4701.1 using the Base LTV
      ratio (i) Financed mortgage insurance premium endorsement The mortgage insurance
      policy must include an endorsement, generally referred to as the “financed mortgage
      insurance premium endorsement.” This endorsement states that adjustments will
      be made to the claim calculation to meet the required exposure level for the
      Base LTV ratio. (ii) Maximum original loan amount The maximum original loan
      amounts provided in Section 4203.1(c) apply to Mortgages with financed mortgage
      insurance premiums. The original loan amount of the Mortgage inclusive of the
      amount of any financed mortgage insurance premium may not exceed the maximum
      original loan limits provided in Section 4203.1(c). (iii)Delivery requirements
      for Mortgages with financed mortgage insurance premium Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4701 As of 02/04/26 Page 4701-6 See Section 6302.21
      for delivery requirements. Any applicable Credit Fees will be assessed based
      on the Mortgage’s Gross LTV ratio and the UPB, which includes the financed mortgage
      insurance premium. (c) Lender-paid mortgage insurance Freddie Mac will purchase
      Mortgages with single, annual or monthly premium lender-paid mortgage insurance
      that meet the requirements below. (i) Annual and monthly premiums For annual
      and monthly premiums: ■ The Mortgage must be a fixed-rate, fully amortizing
      Mortgage or a non-convertible ARM ■ For monthly and annual premium programs,
      premium payments must be made from the Servicing Spread compensation. To ensure
      that the Servicer receives sufficient Servicing compensation after premium payments
      are made: ❑ For fixed-rate Mortgages, the Minimum Contract Servicing Spread
      must be at least 0.250% and the maximum Servicing Spread may not exceed 0.500%.
      The Minimum Contract Servicing Spread must be equal to or greater than the Minimum
      Servicing Spread. The Minimum Contract Servicing Spread must be no less than
      the sum of the Minimum Servicing Spread plus the amount necessary to pay the
      mortgage insurance premium when due and must not exceed 0.500%. ❑ For non-convertible
      ARMs, the Minimum Contract Servicing Spread requirements in Sections 6102.4(b)
      and 6201.4(b)(iii) must be met ❑ For Mortgages that are modified in accordance
      with Chapter 9206, the Servicing Spread will be reduced to 0.250% in accordance
      with Section 9206.2(d)(iii). This potential change in the Servicing Spread does
      not change a Servicer’s responsibility to continue making premium payments.
      ■ Coverage must be maintained for the life of the Mortgage. A change in MI may
      be allowed if approved by Freddie Mac (see Chapter 8203). ■ The Mortgage must
      be sold under the Guarantor or MultiLender Swap program Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4701 As of 02/04/26 Page 4701-7 (ii) Single premiums
      For single premiums: ■ The Mortgage must be a Mortgage eligible for purchase
      under the Purchase Documents ■ Coverage must be maintained for the life of the
      Mortgage. A change in MI may be allowed if approved by Freddie Mac (see Chapter
      8203). The Seller must ensure that the required mortgage insurance for the Mortgage
      is in full force and effective on the Delivery Date of the Mortgage regardless
      of whether the entire mortgage insurance premium is paid by the Seller prior
      to the Delivery Date. The Seller must obtain and be able to produce evidence
      of any required mortgage insurance (including, but not limited to, a certificate
      of insurance). Note: See Section 6302.21 for delivery requirements for Mortgages
      with lender-paid mortgage insurance. 4701.3: Commissions, fees or other compensation
      on insurance (03/02/16) The Seller warrants that in connection with the placement
      or renewal of any mortgage insurance, including insurance on any other Mortgages
      it owns, to the Seller’s knowledge, the insurer (including its parent company
      or any affiliate thereof) has not caused or permitted any consideration or thing
      of value (other than the protection provided by its mortgage insurance) to be
      paid to or received by any of the following: ■ The Mortgage lender ■ Any officer,
      director or employee of the lender or any member of their immediate families
      ■ Any insurance agency, corporation (other than the insurer), partnership, trust
      or other business entity (including any service corporation, whether organized
      for profit or otherwise) in which the lender or any of its officers, directors,
      employees or their immediate family members have financial interest, or ■ Any
      designee, trustee, nominee or other agent or representative of any of the foregoing
      This requirement applies to any commission, fee or other compensation on all
      mortgage insurance presently in force or to be placed in the future. Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 4701 As of 02/04/26 Page 4701-8'
  judgment: false
