source:
  type: guide
  id: fhlmc-4204.2
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.2 — Affordable
    Seconds®
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.2 — Affordable
    Seconds®.
  coverage_tier: operative
obligations:
- id: fhlmc-4204.2-full
  canonical_id: fhlmc-4204.2-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 4204.2 — Affordable
    Seconds®
  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 4204.2 — Affordable
      Seconds®
    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: '4204.2: Affordable Seconds® (10/01/25) This section contains
      information related to: ■ Special requirements for Affordable Seconds® ■ Special
      requirements for Affordable Seconds secured by properties subject to equity
      sharing agreements ■ Special delivery instructions Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4204 As of 04/12/26 Page 4204-4 (a) Special requirements
      for Affordable Seconds® Affordable Seconds must comply with the requirements
      of Section 4204.1(a) and the requirements of this section, regardless of whether
      the Affordable Second is originated simultaneously with the First Lien Mortgage
      (i.e., the First Lien Mortgage and the Affordable Second are originated on the
      same day) or is being subordinated to the First Lien Mortgage through a refinance
      transaction. Note: A checklist for Affordable Seconds is available as an additional
      resource at https://sf.freddiemac.com/docs/pdf/affordable-seconds-checklist.pdf.
      The special requirements in Section 4204.2(b) must be met if an Affordable Second
      is secured by a property that is subject to an equity sharing agreement. Affordable
      Seconds secured by Manufactured Homes or CHOICEHomes® must meet the additional
      requirements in Sections 5703.5(c) and 5703.12(g). Note: Refer to Section 4504.5
      for special requirements for HeritageOne® Mortgages with Affordable Seconds.
      (i) Funding source The Affordable Second must not be funded in any way through
      the First Lien Mortgage transaction, including differential pricing in rate,
      discount points or fees for individual loans. The Seller may not participate
      in an equity sharing agreement with respect to the Mortgaged Premises, unless
      the equity sharing agreement meets the requirements of Section 4204.2(b). The
      Affordable Second must not be funded by the property seller or another interested
      party to the transaction, except as permitted in Section 4204.2(a)(i)(B), Section
      4406.10 for Mortgages secured by properties subject to income-based resale restrictions
      or Section 4502.3(a) for Community Land Trust Mortgages. The terms and conditions
      of the Seller’s secondary financing or financial assistance program must be
      made available by the Seller to Freddie Mac upon request. (A) Non-Seller-funded
      Affordable Seconds An Affordable Second must be provided by an Agency, a credit
      union or a community development financial institution (CDFI) pursuant to an
      established, ongoing, documented secondary financing or financial assistance
      program. With respect to the subject Mortgage, an Agency or credit union must
      not: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4204 As of 04/12/26
      Page 4204-5 ■ Be the Seller or have participated in any aspect of the Mortgage
      origination process, other than to assess the Borrower’s ability to meet the
      requirements of the program and to fund the Affordable Second ■ Be affiliated
      with, under contract to, or financed (directly or indirectly) by the Seller
      or by any party that participated in the Mortgage origination process such as
      the property seller, builder, developer or real estate agent With respect to
      the subject Mortgage, a CDFI working with an Agency must: ■ Be a CDFI that has
      received CDFI certification from the Treasury’s CDFI Fund (a “Certified CDFI”)
      ■ Remain a Certified CDFI through the date the Mortgage is sold to Freddie Mac
      ■ Not be the Seller The Agency with which the CDFI is working may participate
      in the origination of the subject Mortgage. The Agency may be affiliated with,
      under contract to or financed by the Certified CDFI if the Agency is a nonprofit
      entity and third-party originator that works with the Certified CDFI. 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 First Lien Mortgage must be: ■ A fixed-rate
      Mortgage or an ARM with an initial fixed-rate period of five years or more,
      ■ A purchase transaction or a “no cash-out” refinance, and ■ Secured by a 1-4
      unit Primary Residence (B) Seller-funded Affordable Seconds A Seller may be
      the source of an Affordable Second if the following requirements are met: ■
      If the Seller is not a CDFI, the Seller must: ❑ Be a depository institution
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 4204 As of 04/12/26
      Page 4204-6 ❑ Have an Affordable Seconds program that supports its affordable
      lending and/or mission focused program(s), or a program designed to broadly
      support its Community Reinvestment Act (CRA) requirements ■ If the Seller is
      a credit union that is not required by law to participate in the CRA, the credit
      union must have an Affordable Seconds program that supports its affordable lending
      and/or mission-focused program ■ If the Seller is a CDFI, the Seller may be
      a non-depository institution if the established Affordable Seconds program supports
      affordable lending and the credit needs of prospective homebuyers in the Seller’s
      market(s) ■ The First Lien Mortgage must be: ❑ A Home Possible® Mortgage ❑ A
      fixed-rate Mortgage or an ARM with an initial fixed-rate period of five years
      or more ❑ An Accept Mortgage ❑ A purchase transaction Mortgage ❑ Secured by
      a 1-unit Primary Residence, and ❑ A Retail Mortgage (ii) Maturity date The terms
      of the Affordable Second must not require a balloon payment that becomes due
      before the maturity date or before payment in full of the First Lien Mortgage.
      If the Affordable Second is an Employer Assisted Homeownership Benefit, the
      terms of the secondary financing must not require immediate repayment in full,
      except when: ■ The Borrower terminates their employment for any reason, or ■
      The employer terminates the Borrower’s employment for any reason other than
      the Borrower’s long-term disability, elimination of the Borrower’s position
      or a reduction in force (iii) Scheduled payments The Affordable Second may be
      forgivable or repayable. The interest rate of the Affordable Second must not
      be more than 2% higher than the interest rate of the First Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 4204 As of 04/12/26 Page 4204-7 Lien Mortgage.
      Accrued interest that is added to principal may not at any time during the term
      of the First Lien Mortgage increase the total loan-to-value (TLTV) ratio beyond
      the maximum TLTV ratio allowed for the First Lien Mortgage. If monthly payments
      on the Affordable Second are required and begin before the due date of the 61st
      monthly payment under the First Lien Mortgage, such monthly payments must be
      included in the Borrower’s monthly housing expense-to-income ratio and monthly
      debt payment-to-income ratio. If monthly payments on the Affordable Second begin
      on or after the due date of the 61st monthly payment under the First Lien Mortgage,
      or if repayment of the Affordable Second is due only upon sale or default, the
      amount of the Affordable Second monthly payment may be excluded from both ratios.
      (iv) Financing structure The Affordable Second must not be a Home Equity Line
      of Credit (HELOC). (v) Documentation requirements The Seller must retain in
      the Mortgage file the following documentation for the Affordable Second: ■ A
      Note or other evidence of the terms of the Affordable Second ■ The Settlement/Closing
      Disclosure Statement or an alternative form required by law that evidences the
      fees and costs related to the Affordable Second paid by the Borrower at closing
      ■ For refinance transactions, evidence of the subordination of any existing
      Affordable Second (vi) Affordable Seconds proceeds Proceeds from the Affordable
      Second may be used toward the Down Payment or Closing Costs. (b) Special requirements
      for Affordable Seconds secured by properties subject to equity sharing agreements
      For-profit entities may not share in the appreciation of the Mortgaged Premises.
      If the terms of an Affordable Second permit the Agency or subsidy provider to
      share in the appreciation of the Mortgaged Premises, the following requirements
      must be met: Freddie Mac Single-Family Seller/Servicer Guide Chapter 4204 As
      of 04/12/26 Page 4204-8 ■ At the time of the origination of the Affordable Second,
      the share of appreciation to which the Agency or subsidy provider is entitled,
      expressed as a percentage, must not exceed the original principal amount of
      the Affordable Second divided by value as determined in accordance with Section
      4203.1 (“the percentage of the Affordable Second”), except as stated in the
      next bullet. Example: If the original principal amount of the Affordable Second
      is equal to 5% of value, the percentage of the Affordable Second is 5%, and
      the maximum share of appreciation the Agency or subsidy can receive is 5%. ■
      The share of appreciation to which the Agency or subsidy provider is entitled
      may exceed the percentage of the Affordable Second if the following requirements
      are met: ❑ The Agency or subsidy provider must not charge interest on the Affordable
      Second ❑ The share of appreciation must not exceed 75%, unless the Affordable
      Second provider is a subsidy provider or program administrator managing an income-based
      resale restriction program and the Seller confirms that: ■ The special requirements
      for Mortgages secured by properties subject to income- based resale restrictions
      in Chapter 4406 are met, and ■ The subsidy provider or program administrator
      has processes in place to allow the Borrower to receive a share of the proceeds
      of a subsequent sale of the property in instances where the resale sales price
      is higher than the subsidized sales price paid by the Borrower to purchase the
      property ■ The terms of the Affordable Second must allow the Borrower to recover
      all the following before the Agency or subsidy provider is able to share in
      the appreciation: ❑ Any portion of the Down Payment paid from Borrower funds
      ❑ Customary costs incurred by the Borrower in selling the property ❑ Payments
      of principal made under the First Lien Mortgage ■ The right of the Agency or
      subsidy provider to share in the appreciation must be clearly subordinate to
      the First Lien Mortgage (c) Special delivery instructions Refer to Section 6302.34(b)(iv)
      for special delivery instructions for Mortgages with Affordable Seconds. Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 4204 As of 04/12/26 Page 4204-9'
  judgment: false
