Seller-owned Modified Mortgages
Seller-owned Modified Mortgages make it possible to quickly and easily meet your borrowers’ needs — without another closing. Get the flexibility you need with time savings and convenience that comes from fewer documentation and verification requirements.
Use Seller-owned Modified Mortgages to augment existing customer relationships, while also providing an exceptional enhancement to your product line to benefit borrowers.
With Seller-owned Modified Mortgages, you will be able to expand your product line with a borrower-retention alternative to refinances, reduce loan runoff from your servicing portfolio with a competitive option for your current borrowers, leverage the secondary market through Freddie Mac to effectively manage your portfolio with an outlet for your modified loans, take advantage of flexibility for your Seller-owned Modified Mortgage and seasoned mortgage sales with seasoning based on the modification date, not the original note date and enhance your relationship with your existing borrowers and benefit from cross-sell opportunities.
Who are Seller-Owned Modified Mortgages for?
- Borrowers looking for cost savings from no new closing.
- Borrowers looking for convenience.
- Borrowers in a rush.
The information on this page is not part of, and is not a replacement or substitute for, the requirements found in the Freddie Mac Single-Family Seller/Servicer Guide and your other Purchase Documents.
Product Features
- Eligible Mortgage Products
- Must be fixed-rate mortgage or ARM that has been modified prior to the delivery date.
- The term may not extend beyond 30 years from the note date or the effective date of permanent financing for a mortgage originated as a Construction Conversion or Renovation Mortgage.
- Seasoned mortgages determined using the modification date and not the original note date.
- Execution Options
- Fixed-rate Cash servicing-retained
- ARM Cash
- Fixed-rate Guarantor
- WAC ARM Guarantor
- MultiLender Swap
- Credit Fees
Credit Fees in Price may apply based on the individual characteristics of the mortgage, and include CS/LTV Credit Fees in Price for Non-Loan Product Advisor mortgages. See Guide Exhibit 19 for details on applicable fees.
- Delivery Requirements
See Guide Section 6302.27 for special delivery instructions for all Seller-owned Modified Mortgages.
- Property Type/Eligible Properties
- 1- to 4-unit primary residences
- Second homes
- Maximum LTV Ratios
LTV/TLTV/HTLV ratios did not exceed Single-Family Seller/Servicer Guide (Guide) limits on the note date; current LTV/TLTV/HTLV ratios do not exceed Guide limits as of the delivery date.
- Eligibility/Underwriting
- Mortgage must only be modified for the purpose of a reduction in interest rate of the first lien mortgage.
- Mortgage must be manually underwritten and may not be submitted to Loan Product Advisor℠ for evaluation.
- Mortgage must meet all eligibility and underwriting requirements in effect on the delivery date.
- The mortgage eligibility and underwriting requirements must be based on the loan purpose as of the note date.
- Mortgage is a conventional, full amortizing mortgage and the mortgage term may not extend beyond 30 years from the note date or from the effective date of permanent financing for a Construction Conversion or Renovation Mortgage.
- Mortgage must comply with the maximum original loan amounts stated in Guide Section 4203.3 in effect on the delivery date
- The borrower must be qualified using the converted or modified terms meeting all Freddie Mac’s eligibility, underwriting and documentation requirements
- Required documentation includes, but is not limited to:
- New Uniform Residential Loan Application
- New credit report meeting the requirements of Guide Section 5203.1
- Verification of income and employment
- The mortgage must meet the minimum Indicator Scores in Guide Exhibit 25 for the applicable mortgage product.
- Seller-owned Modified Mortgage does not receive Loan Product Advisor representation and warranty relief.
- Underwriting documentation must be obtained no more than 120 days prior to the modification date.
- Sellers must obtain a new appraisal with an effective date that is no more than 120 days prior to the conversion date and that meets Freddie Mac requirements.
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Resources for Borrowers
Reaching and educating borrowers – and helping them find the right mortgage – is essential for your business. Freddie Mac provides an array of materials you can share with your clients and business prospects.