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Mandatory Cash Contracts FAQ

Freddie Mac offers Sellers the option to take out a mandatory cash contract for eligible mortgage products. Refer to these FAQs as you prepare to sell your loans for cash.

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  1. What is the minimum amount for a mandatory cash contract?

    The minimum amount for an individual mandatory cash contract is $1,000.

  2. What is the maximum amount for a mandatory cash contract?

    Loan Selling Advisor® restricts the maximum individual cash contract amount to $50M for 30yr, $25M for 20yr, $25M for 15yr and $15M for 10yr. If you have a contract that exceeds these thresholds, please contact the Single-Family cash desk at 571-382-5960.

  3. Is there a purchase tolerance for a mandatory cash contract and if so, what is it?

    Yes, the purchase tolerance is equal to the greater of 2.5% of the purchase contract amount or $10,000.

  4. Does Freddie Mac purchase seasoned loans?

    Freddie Mac purchases loans with settlement dates no more than six months after the note date or, for Construction Conversion and Renovation Mortgages, the effective date of permanent financing. We suspended purchases through our bulk sales unit in 2020.

  5. What if I fail to deliver on a mandatory cash contract?

    If you fail to deliver on a mandatory cash contract, you will be assessed a pairoff fee. See question "What is a pairoff?" for details on pairoffs.

  6. How are mandatory cash contracts priced?

    Pricing is available in Loan Selling Advisor each business day and is based on prices Freddie Mac expects to receive in the securities market. The price also reflects the mortgage note rate, the minimum contract servicing spread, the delivery period and the value of any cash-specified payup, if indicated when taking out a contract.

  7. What is the purchase contract effective period?

    The purchase contract effective period is the period of time during which a price for eligible mortgages provided to you by Loan Selling Advisor remains in effect. You may select a purchase contract effective period of between two and 90 days.

  8. Can I extend a mandatory cash contract?

    Yes, in the event the contract amount specified in a mandatory cash contract will not be fulfilled on or prior to the contract expiration date, you may extend the contract in Loan Selling Advisor at any time on or prior to the contract expiration date.

    You may extend the contract as many times as needed, as long as the cumulative extension period does not exceed 30 days from the original contract expiration date. You will be assessed a fee for each contract extension.

  9. How will I be billed for extending a mandatory cash contract?

    Fees will be assessed in your monthly billing statement.

  10. Do extension days include weekends or holidays?

    Yes. Weekends and holidays are included, but if the new expiration date falls on a weekend or holiday, it will move to the next business day.

  11. Can I extend a portion of the unfulfilled balance of a mandatory cash contract?

    No, extensions are performed using the total remaining unfulfilled amount.

  12. What is a pairoff?

    In the event the contract amount will not be fulfilled by delivery of mortgages, you may request a pairoff via Loan Selling Advisor or may wait until the contract expires and Loan Selling Advisor automatically calculates the pairoff fee. The pairoff calculation in Loan Selling Advisor may result in either a pairoff fee due from the Seller to Freddie Mac, or a pairoff credit from Freddie Mac back to the Seller, depending on market conditions. Fees will be assessed in your monthly billing statement. You may also choose to allocate mortgages to pairoff and transfer to a new contract (or "pairoff and recommit"). With this functionality, you may:

    • Pairoff part or all of a current contract
    • Take out a new contract with different terms and/or a different amount
    • Transfer non-funded loans to a new contract to extend the purchase contract effective period or increase the purchase contract amount
  13. What are the hours of operation for executing pairoffs and extensions in Loan Selling Advisor?

    Pairoffs can be executed in Loan Selling Advisor Monday – Friday, 8:15 a.m. – 5 p.m. ET. Extensions can be executed in Loan Selling Advisor 24/7, subject to system availability.