Eligible Mortgage Requirements

Eligible Adjustable Rate Mortgages (ARMs) for purchase by Freddie Mac include:

  • First lien mortgages that are fully amortizing with an original maturity not exceeding 30 years
  • Non-convertible SOFR-indexed ARMs.
  • Non-seasoned ARMs only
  • Mortgages with a servicing spread for the contract that is no less than 0.25% and no greater than 0.375%, and have a separate servicing spread for each mortgage allocated to the contract that is no less than the contract servicing spread.
  • Home Possible® mortgages are also eligible for sale under the mandatory ARM execution
  • Eligible Freddie Mac Relief Refinance MortgagesSM with LTV ratios less than or equal to 105%

Refer to Freddie Mac's Single-Family Seller/Servicer Guide (Guide) Exhibit 17S for a list of eligible ARM products and their requirements, or Section 6102.4 of the Guide for more information on mandatory ARM contract requirements

Contract Requirements

Contract requirements must be completed by the contract expiration date. These requirements include:

  • Loans delivered must meet contract parameters for product, note rate, and UPB, subject to our contract purchase tolerance
  • Eligible contract interest rate range is determined by the contract interest rate specified at the time of taking out an ARM cash contract. The following applies:
    • If the contract interest rate is on a 1/8th (.125), then the contract interest rate range is 50 bps. For example, if the contract interest rate is 3.000%, the eligible interest rate range is 2.750% to 3.250%.
    • If the contract interest rate is not on the 1/8th (.125), then the contract interest rate range is 37.5 bps. For example, if the contract interest rate is 3.100%, the eligible interest rate range is 2.875% to 3.250%.
  • Purchase tolerance is equal to the greater of 2.5% of the contract amount or $10,000.
  • Yield maintenance fees are no longer assessed.
  • Loan substitution is permitted

Extensions

If a mandatory ARM contract will not close on or prior to the contract expiration date, you may extend the contract at any time on or prior to the contract expiration date.

  • You may extend the contract in Loan Selling Advisor® as many times as needed, as long as the total extension period does not exceed 30 days from the original contract expiration date.
  • You will be assessed a fee for each contract extension.

Pairoffs

In the event a mandatory ARM contract will not be fulfilled, you may request a pairoff in Loan Selling Advisor or wait until the contract expires and Loan Selling Advisor will automatically calculate the pairoff fee.

Settlements

  • View settlement statements in real time using Freddie Mac's Loan Selling Advisor.
  • Request a specific settlement date for each mortgage sold, or settlement will occur as soon as the requirements for sale have been met.