source:
  type: regulation
  id: fhlmc-5401
  authority: "FHLMC Single-Family Seller/Servicer Guide Chapter 5401 — Evaluation of Monthly Obligations"
  description: "FHLMC Single-Family Guide §5401.1 governs Monthly Housing Expense-\nto-Income ratio calculation: mandatory file documentation of\nmonthly housing expense; primary-residence components (P&I, hazard\ninsurance, real estate taxes, MI, flood, leasehold, HOA, etc.);\nnew-construction estimated tax based on improvements + land value;\ntax abatement/exemption 5-year continuance documentation rule;\nHELOC payment inclusion when outstanding balance exists; 1.5%\nimputed monthly payment for HELOCs lacking credit-report payment.\n"
obligations:
- id: fhlmc-5401-document-monthly-housing-expense-in-file
  canonical_id: fhlmc-5401-document-monthly-housing-expense-in-file
  section: "FHLMC Single-Family Guide §5401.1 — Document monthly housing expense in Mortgage file"
  description: "[LENDER] (Seller) shall document the monthly housing expense in\nthe Mortgage file and establish it as described in §5401.1. The\nmonthly housing expense documentation is foundational to the\nhousing expense-to-income ratio calculation used in qualifying.\n"
  type: do
  audit_question: "For every Mortgage, can [LENDER] produce documentation of the monthly housing expense in the Mortgage file, with established components per §5401.1?"
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: loan_processor
  cadence: per-loan
  consequence: Missing or undocumented monthly housing expense is a Selling Guide breach + R&W exposure.
  tags:
  - round-d
  - regulator-direct
  - fhlmc
  - selling-guide
  - qualifying-ratios
  - monthly-housing-expense
  - documentation
  - promoted
  primary_source:
    tier: 1
    authority: "FHLMC Single-Family Guide §5401.1 — Monthly housing expense-to-income ratio"
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/app/guide/
    snapshot_id: fbba421721d90cb1
    fetched_at: '2026-05-25T14:09:48Z'
    content_hash: sha256:placeholder-snapshot-content-hash-from-source-json
    paragraph_quote: 'The monthly housing expense must be documented in the Mortgage file and established as described below.

      '
    drafter_attestation: "Copied verbatim from snapshot fbba421721d90cb1. §5401.1 document-\nmonthly-housing-expense operative requirement.\n"
  promoted_at: '2026-05-25T20:16:41+00:00'
  promoted_from: fhlmc-5401-roundd-v1.yaml
  program_review: Does the program ensure the monthly housing expense is documented in every Mortgage file with components established per §5401.1?
  file_review: Confirm the file documents the monthly housing expense with §5401.1 components.
  judgment: false
- id: fhlmc-5401-new-construction-tax-based-on-improvements-and-land
  canonical_id: fhlmc-5401-new-construction-tax-based-on-improvements-and-land
  section: "FHLMC Single-Family Guide §5401.1(a) — New construction: tax based on improvements + land value when actual not available"
  description: 'For new construction Mortgages, when the actual real estate tax

    amount is not yet available, [LENDER] (Seller) shall ensure the

    real estate tax amount included in the monthly housing expense is

    based on the value of the improvements and the land. The

    improvements-plus-land basis prevents under-stating future tax

    burden for the Borrower''s qualifying ratio.

    '
  type: do
  audit_question: For every new construction Mortgage where actual real estate tax was not yet available at the time of qualifying, can [LENDER] evidence (a) the tax estimate was based on improvements + land value AND (b) the methodology used to derive the estimate?
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: loan_processor
  cadence: per-new-construction-loan
  consequence: Under-estimating real estate tax for new construction understates DTI; reps-and-warranties breach risk.
  tags:
  - round-d
  - regulator-direct
  - fhlmc
  - selling-guide
  - qualifying-ratios
  - new-construction
  - estimated-tax
  - promoted
  primary_source:
    tier: 1
    authority: "FHLMC Single-Family Guide §5401.1(a) — Establishing the monthly housing expense for Mortgages secured by Primary Residences"
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/app/guide/
    snapshot_id: fbba421721d90cb1
    fetched_at: '2026-05-25T14:09:48Z'
    content_hash: sha256:placeholder-snapshot-content-hash-from-source-json
    paragraph_quote: 'the real estate tax amount included in the monthly housing expense must be based on the value of the improvements and the land

      '
    drafter_attestation: "Copied verbatim from snapshot fbba421721d90cb1. §5401.1(a) new-\nconstruction-tax-improvements-plus-land operative requirement.\n"
  promoted_at: '2026-05-25T20:16:41+00:00'
  promoted_from: fhlmc-5401-roundd-v1.yaml
  program_review: Does the program account for new-construction loans where actual tax is unavailable — requiring the real estate tax in housing expense to be based on improvements + land value?
  file_review: For new-construction files lacking actual tax, confirm the tax estimate used improvements + land value and review the derivation methodology.
  judgment: false
- id: fhlmc-5401-tax-abatement-5-year-continuance
  canonical_id: fhlmc-5401-tax-abatement-5-year-continuance
  section: "FHLMC Single-Family Guide §5401.1(a) — Tax abatement requires 5-year continuance evidence"
  description: 'For [LENDER] (Seller) to reduce or exclude real estate taxes from

    monthly housing expense based on a tax abatement, the Mortgage

    file must contain (1) evidence to support the reduced real

    estate tax amount, (2) evidence of continuance for at least five

    years after the Note Date, AND (3) if the Borrower is not

    currently receiving the abatement, evidence the Borrower and/or

    property is eligible. All three documentation prongs are

    required to qualify the abatement-reduced housing expense.

    '
  type: do
  audit_question: 'For every Mortgage where [LENDER] used a tax abatement to reduce housing expense, can [LENDER] produce all three documentation prongs: (a) reduced-amount support, (b) 5-year continuance evidence, (c) Borrower/property eligibility if not currently receiving abatement?'
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: chief_credit_officer
  cadence: per-tax-abatement-loan
  consequence: Tax abatement applied without 5-year continuance evidence is a Selling Guide breach; risk of post-Note-Date tax increase invalidating qualifying ratios.
  tags:
  - round-d
  - regulator-direct
  - fhlmc
  - selling-guide
  - qualifying-ratios
  - tax-abatement
  - 5-year-continuance
  - promoted
  primary_source:
    tier: 1
    authority: "FHLMC Single-Family Guide §5401.1(a) — Tax abatements"
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/app/guide/
    snapshot_id: fbba421721d90cb1
    fetched_at: '2026-05-25T14:09:48Z'
    content_hash: sha256:placeholder-snapshot-content-hash-from-source-json
    paragraph_quote: 'Evidence of continuance for at least five years after the Note Date

      '
    drafter_attestation: "Copied verbatim from snapshot fbba421721d90cb1. §5401.1(a) 5-year-\ncontinuance-evidence operative requirement for tax-abatement\nreduction. Three-prong documentation rule (reduced-amount support,\ncontinuance evidence, Borrower eligibility) paraphrased in\ndescription.\n"
  promoted_at: '2026-05-25T20:16:42+00:00'
  promoted_from: fhlmc-5401-roundd-v1.yaml
  program_review: Does the program ensure any abatement-reduced housing expense carries all three prongs — reduced-amount support, 5-year continuance evidence, and Borrower/property eligibility if not currently receiving the abatement?
  file_review: For abatement files, confirm all three documentation prongs are present.
  judgment: false
- id: fhlmc-5401-heloc-payment-when-outstanding-balance
  canonical_id: fhlmc-5401-heloc-payment-when-outstanding-balance
  section: "FHLMC Single-Family Guide §5401.1(a) — HELOC payments included when outstanding balance exists"
  description: '[LENDER] (Seller) shall include HELOC (Home Equity Line of

    Credit) payments in the monthly housing expense when there is an

    outstanding balance on the account. Zero-balance HELOCs are

    excluded from the housing-expense calculation, but any

    outstanding balance triggers payment inclusion.

    '
  type: do
  audit_question: For every Mortgage with a Borrower HELOC, can [LENDER] evidence (a) HELOC outstanding-balance check and (b) inclusion of HELOC payment in monthly housing expense if any outstanding balance exists?
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: loan_processor
  cadence: per-loan-with-heloc
  consequence: Excluding HELOC payments with outstanding balances understates housing expense; Selling Guide breach + R&W exposure.
  tags:
  - round-d
  - regulator-direct
  - fhlmc
  - selling-guide
  - qualifying-ratios
  - heloc
  - secondary-financing
  - promoted
  primary_source:
    tier: 1
    authority: "FHLMC Single-Family Guide §5401.1(a) — Payments on secondary financing including HELOC"
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/app/guide/
    snapshot_id: fbba421721d90cb1
    fetched_at: '2026-05-25T14:09:48Z'
    content_hash: sha256:placeholder-snapshot-content-hash-from-source-json
    paragraph_quote: 'HELOC payments must be included when there is an outstanding balance on the account.

      '
    drafter_attestation: "Copied verbatim from snapshot fbba421721d90cb1. §5401.1(a) HELOC-\nincluded-when-balance operative requirement.\n"
  promoted_at: '2026-05-25T20:16:42+00:00'
  promoted_from: fhlmc-5401-roundd-v1.yaml
  program_review: Does the program ensure HELOC payments are included in housing expense whenever an outstanding balance exists (zero-balance excluded)?
  file_review: For files with a Borrower HELOC, confirm the outstanding-balance check and inclusion of the HELOC payment when a balance exists.
  judgment: false
  feeds:
  - fhlmc-5401-heloc-1-5-percent-imputed-payment
- id: fhlmc-5401-heloc-1-5-percent-imputed-payment
  canonical_id: fhlmc-5401-heloc-1-5-percent-imputed-payment
  section: "FHLMC Single-Family Guide §5401.1(a) — 1.5% imputed HELOC payment when no credit-report payment"
  description: 'When a HELOC has an outstanding balance but the credit report

    does not show a monthly payment and no documentation in the

    Mortgage file indicates a monthly payment amount, [LENDER]

    (Seller) shall use 1.5% of the outstanding balance as the

    monthly payment amount included in the monthly housing expense.

    The 1.5% imputed-payment rule prevents under-stating monthly

    obligations from undocumented HELOCs.

    '
  type: do
  audit_question: For every Mortgage with a Borrower HELOC having an outstanding balance but no credit-report payment shown and no Mortgage-file payment documentation, can [LENDER] evidence the use of 1.5% of the outstanding balance as the monthly payment in housing-expense calculation?
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: loan_processor
  cadence: per-undocumented-heloc-loan
  consequence: Using zero or a lower imputed payment for an undocumented HELOC understates housing expense; Selling Guide breach.
  tags:
  - round-d
  - regulator-direct
  - fhlmc
  - selling-guide
  - qualifying-ratios
  - heloc
  - 1-5-percent-imputed
  - promoted
  primary_source:
    tier: 1
    authority: "FHLMC Single-Family Guide §5401.1(a) — HELOC payment computation"
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/app/guide/
    snapshot_id: fbba421721d90cb1
    fetched_at: '2026-05-25T14:09:48Z'
    content_hash: sha256:placeholder-snapshot-content-hash-from-source-json
    paragraph_quote: '1.5% of the outstanding balance is considered the monthly payment amount.

      '
    drafter_attestation: "Copied verbatim from snapshot fbba421721d90cb1. §5401.1(a) 1.5%-\nimputed-HELOC-payment operative requirement.\n"
  promoted_at: '2026-05-25T20:16:43+00:00'
  promoted_from: fhlmc-5401-roundd-v1.yaml
  program_review: Does the program ensure that, when a balance-bearing HELOC shows no credit-report payment and no file-documented payment, 1.5% of the outstanding balance is used as the monthly payment in housing expense?
  file_review: For undocumented balance-bearing HELOCs, confirm the 1.5%-of-balance imputed payment was used.
  judgment: false
_promotion_history:
- promoted_at: '2026-05-25T20:16:43+00:00'
  candidate_path: obligations\_remediation\round-d-investor-guides\fhlmc-5401-roundd-v1.yaml
  candidates_promoted: 5
  candidates_skipped_existing: 0
