Guide Bulletin Update 10/19/23 Chapter 17 – Page 1
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and accessible via either mf.freddiemac.com (for free) or the
AllRegs web site of ICE Mortgage Technology (with a paid subscription).
Chapter 17
Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
Multifamily Seller/Servicer Guide
17.1 Overview (04/15/21)
a. Program and related products (04/15/21)
b. Investment quality (04/30/13)
c. Types of Mortgages (04/15/21)
d. Securitization of Mortgages (03/03/14)
e. Delivery Rate Lock options (04/15/21)
f. Minimum Origination Fee (06/25/20)
g. Other requirements (04/15/21)
17.2 Fixed-rate Mortgage requirements (04/13/23)
a. Document delivery (04/15/21)
b. Eligible Mortgages, including Value-Add Mortgages and Moderate Rehabilitation Mortgages
(05/05/17)
c. Term (06/29/17)
d. Amortization (05/11/10)
e. Interest-only (05/11/10)
f. Prepayment provisions (04/15/21)
g. Yield Maintenance Prepayment Premium (02/29/12)
h. Reserved
i. Reserved
j. Sales or transfers of Property or beneficial interests in the Borrower (09/08/04)
k. Vacancy/collection loss (09/08/04)
l. Borrower recourse/third-party guaranties (04/13/23)
m. Servicing Spread (09/28/16)
n. Reserves (10/31/12)
o. Co-op requirements (09/08/04)
p. Financing of origination fees (09/08/04)
q. Late charges and default interest (04/30/13)
17.3 Floating-Rate Mortgage requirements (04/15/21)
a. Interest rate calculation (04/15/21)
b. Term (04/15/21)
c. Prohibition against prepayment (04/15/21)
d. Prepayment premium (04/15/21)
e. Reserved (03/03/14)
f. Late charges and default interest (04/15/21)
17.4 Moderate Rehabilitation (Mod Rehab Mortgages) (04/15/21)
17.5 Underwriting package requirements and review period (04/15/21)
17.6 Workforce Housing Preservation (10/19/23)
Guide Bulletin Update 10/19/23 Chapter 17 – Page 2
The current official electronic version of the Guide is published by AllRegs
®
and accessible via either mf.freddiemac.com (for free) or the AllRegs
web site of ICE Mortgage Technology (with a paid subscription).
Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
17.1 Overview (04/15/21)
a. Program and related products (04/15/21)
This chapter provides an in-depth discussion of the underwriting requirements for originating
a Mortgage under the Multifamily Conventional Cash Mortgage Purchase Program.
Certain products may have additional or different requirements as specified in the following
chapters:
• Moderate Rehabilitation (Mod Rehab) Mortgages – Section 17.4(a)
• Small Balance Loan (SBL) Mortgages – Chapter 18SBL
• Targeted Affordable Housing (TAH) Cash Mortgages – Chapter 19
• Forward Commitment TAH Cash Mortgages – Chapter 19A
• Supplemental Mortgages – Chapter 20
• Seniors Housing Mortgages – Chapter 21
• Manufactured Housing Community (MHC) Mortgages – Chapter 22
• Green Advantage – Chapter 24
• Tax-Exempt Loans – Chapter 25
• Forward Commitment Tax-Exempt Loans – Chapter 25A
• TAH Bond Credit Enhancement Mortgages – Chapter 28
• Forward Commitment TAH Bond Credit Enhancement Mortgages – Chapter 28A
With respect to the origination of cash Mortgages with certain affordability components,
Conventional Seller/Servicers may originate and sell the following, subject to certain
conditions:
• Mortgages with Low Income Housing Tax Credits (LIHTC) after year 15 of the initial
compliance period
• Mortgages with Section 8 HAP contracts
• Mortgages with Section 8 vouchers
• Mortgages with tax abatements
Conventional Seller/Servicers should contact their Freddie Mac representative for additional
information. For a chart outlining Conventional Seller/Servicer and TAH Seller/Servicer
Guide Bulletin Update 10/19/23 Chapter 17 – Page 3
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Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
eligibility for originating and selling Mortgages with certain affordability components, see
Exhibit 2, Origination Guidelines for Targeted Affordable Housing Mortgages.
b. Investment quality (04/30/13)
Each Mortgage to be delivered to Freddie Mac under the Multifamily Conventional Cash
Mortgage Purchase Program must have characteristics that demonstrate investment quality
(see Section 10.7).
c. Types of Mortgages (04/15/21)
Under the Multifamily Conventional Cash Mortgage Purchase Program, Freddie Mac may
purchase any or all of the following types of Mortgages:
• Fixed-rate Mortgages (see Section 17.2) in which the interest rate is unchanged for the
entire Mortgage term. Fixed-rate Mortgages may be amortizing or interest-only.
• Floating-Rate Mortgages in which the interest rate is adjusted for the entire Mortgage
term. A Floating-Rate Mortgage may be amortizing or interest-only.
• Fixed to floating rate Mortgages in which the interest rate is fixed for a set term and is
adjustable during an extension term of one year at the end of the term of the Mortgage
• Other types of Mortgages as announced by Freddie Mac from time to time
d. Securitization of Mortgages (03/03/14)
Freddie Mac intends to securitize certain Mortgages by selling them in the capital markets.
At the time of a Securitization of a Mortgage, Freddie Mac will cease to own the applicable
Mortgage and Servicing of the applicable Mortgage will be terminated upon such
Securitization and transferred to a master servicer without compensation to the Freddie Mac
Servicer. The Freddie Mac Servicer must assist in the transfer of Servicing to the master
servicer by timely delivering to the master servicer all materials required by Section 42.7.
The Seller/Servicer agrees that if Freddie Mac decides to securitize or sell the Mortgage, the
Seller/Servicer will: (a) permit Freddie Mac or its representatives to provide related
information to the Rating Agencies and/or investors, and (b) cooperate with the reasonable
requests of the Rating Agencies and/or investors in connection with a Securitization of the
Mortgage.
e. Delivery Rate Lock options (04/15/21)
Freddie Mac offers both a standard delivery option under Chapter 27 and an early rate-lock
delivery option under Chapter 27.
f. Minimum Origination Fee (06/25/20)
A Seller must charge a Minimum Origination Fee in connection with the origination and sale
of a Mortgage to Freddie Mac as follows:
Guide Bulletin Update 10/19/23 Chapter 17 – Page 4
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Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
Program/Product
Minimum Origination Fee
Non-SBL Mortgages < $7.5M
1.00% of the UPB
Non-SBL Mortgages ≥ $7.5M and < $20M
Greater of 0.75% of the UPB or $75,000
Non-SBL Mortgages ≥ $20M and < $50M
Greater of 0.50% of the UPB or $150,000
Non-SBL Mortgages ≥ $50M
Greater of 0.25% of the UPB or $250,000
The Seller may satisfy the requirement for a Minimum Origination Fee with any combination
of an origination fee and a premium buy-up. Buy-ups collected at no cost to the Borrower
due to qualified loan characteristics cannot be included to meet the required Minimum
Origination Fee. The Minimum Origination Fee must be collected by the Seller and cannot
be used to reimburse closing costs.
g. Other requirements (04/15/21)
All Mortgages submitted for purchase under the Multifamily Conventional Cash Mortgage
Purchase Program must comply with the requirements of Chapters 8, 9, 10, 27 and 32 as
well as with the requirements of this chapter.
17.2 Fixed-rate Mortgage requirements (04/13/23)
A fixed-rate Mortgage submitted under the Multifamily Conventional Cash Mortgage Purchase
Program must meet the requirements listed in this section. A fixed-rate Mortgage may be
amortizing or may have an interest-only feature. For interest-only Mortgages, all other
requirements of an amortizing Mortgage will apply unless specifically noted in this section.
a. Document delivery (04/15/21)
The underwriting checklists, the Final Delivery Tables of Contents and the Final Delivery
Instructions, at https://mf.freddiemac.com/lenders/purchase/, set forth all documents required
to be delivered to Freddie Mac under this program. The Seller must make timely deliveries in
accordance with the requirements of this chapter and Chapter 32.
b. Eligible Mortgages, including Value-Add Mortgages and Moderate Rehabilitation
Mortgages (05/05/17)
Mortgages for the purpose of the refinancing or acquisition of the Property are eligible for
purchase.
Freddie Mac will consider purchasing Value-Add Mortgages where the Borrower expects to
add value through renovations shortly after loan closing. For additional information, contact
the Applicable Freddie Mac Multifamily Regional Office that serves the region where the
Property is located.
Freddie Mac may also consider purchasing Moderate Rehabilitation Mortgages, where the
Borrower will be making renovations to the Property beyond the Value-Add levels and needs
the ability to draw funds as the renovations are completed rather than having the entire loan
funded on the Origination Date, subject to additional conditions. For additional information,
Guide Bulletin Update 10/19/23 Chapter 17 – Page 5
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Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
contact the Applicable Freddie Mac Multifamily Regional Office that serves the region where
the Property is located.
For Mortgages secured by MHC Properties, the requirements of Section 22.3(a) apply rather
than the requirements of this Section 17.2(b).
c. Term (06/29/17)
The term of the Mortgage may be from five to 30 years.
d. Amortization (05/11/10)
For amortizing Mortgages, the standard amortization period is 30 years.
The minimum amortization period for amortizing Mortgages is 15 years.
Notwithstanding the above, Freddie Mac, in its discretion, will determine the amortization
period of the Mortgage.
e. Interest-only (05/11/10)
Interest-only debt service payments are available for up to ten years. Combinations of
interest-only and principal and interest periods are available.
f. Prepayment provisions (04/15/21)
1. Prepayment provisions for a Mortgage with a Note that provides for defeasance that is
not made a part of a Securitization prior to the Cut-Off Date (defined in the Note) are
below:
• The Borrower may prepay the Mortgage on any scheduled payment date, subject to
compliance with all prepayment terms set forth in the Note, including payment of the
applicable prepayment premium. The Borrower may not make any partial
prepayments except as set forth in the Loan Documents.
• The 2-year lockout period and Defeasance Period will not apply and the Mortgage will
be subject to the Yield Maintenance Period as set forth in the Note.
• No prepayment premium is due during the Window Period as defined in the Note
(usually the last 3 months of the term of the Mortgage).
2. Prepayment provisions for a Mortgage with a Note that provides for defeasance that is
made part of a Securitization prior to the Cut-Off Date are below:
• If a Mortgage has a term of five or more years and is made a part of a Securitization
prior to the Cut-Off Date, there is a 2-year lockout period during which prepayment
will not be permitted, followed by a Defeasance Period, as defined in the Loan
Documents. The Borrower may only defease the Mortgage in accordance with the
requirements set forth in the Loan Documents. The Borrower may not make any
partial prepayment during the Defeasance Period, except as set forth in the Loan
Guide Bulletin Update 10/19/23 Chapter 17 – Page 6
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Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
Documents.
• After the expiration of the Defeasance Period, no prepayment premium is due during
the Window Period as defined in the Note (usually the last 3 months of the term of the
Mortgage).
3. Prepayment provisions for a Mortgage with a Note that provides for yield maintenance
only are below:
• The Borrower may prepay the Mortgage in full on any scheduled payment date,
subject to compliance with all prepayment terms set forth in the Note, including
payment of the applicable prepayment premium. The Borrower may not make any
partial prepayments except as set forth in the Loan Documents.
• No prepayment premium is due during the Window Period as defined in the Note
(usually the last 3 months of the term of the Mortgage).
g. Yield Maintenance Prepayment Premium (02/29/12)
The standard Yield Maintenance Period will be as follows:
Term of Mortgage
Yield Maintenance Period
5 years
4¾ years
7 years
6½ years
10 years
9½ years
15 years
14½ years
20 years
15 years
25 years
15 years
30 years
15 years
The minimum prepayment premium due during the Yield Maintenance Period is one percent
of the amount prepaid.
After the expiration of the Yield Maintenance Period, with any prepayment, the Borrower
must pay a prepayment premium of one percent of the amount prepaid, with the exception of
Mortgages with a five-year term for which there is not a one percent prepayment premium
period at the expiration of the Yield Maintenance Period. No prepayment premium is due
during the Window Period as defined in the Note (usually the last three months of the term of
the Mortgage).
h. Reserved
i. Reserved
Guide Bulletin Update 10/19/23 Chapter 17 – Page 7
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and accessible via either mf.freddiemac.com (for free) or the AllRegs
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Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
j. Sales or transfers of Property or beneficial interests in the Borrower (09/08/04)
The Mortgage will permit Transfer of Ownership to a qualified purchaser on terms approved
by Freddie Mac, in accordance with the terms of the Mortgage.
k. Vacancy/collection loss (09/08/04)
The vacancy and collection loss rate used in underwriting may not be less than 5 percent and
must be adjusted upward if property and/or market conditions require.
l. Borrower recourse/third-party guaranties (04/13/23)
Freddie Mac typically will not require Borrower recourse, except upon the occurrence of
certain events specified in the Note executed by the Borrower. However, Freddie Mac, in its
discretion, may require additional Borrower recourse.
See Section 10.2(b) in the event Freddie Mac requires one or more of the Key Borrower
Principals, in the Key Borrower Principal’s individual capacity, to guaranty the payment of all
or a portion of the amounts due under the Mortgage.
m. Servicing Spread (09/28/16)
The Servicing Spread will be as follows:
Servicing Spread
Original Principal Balance between
Servicing Spread in basis points
$0
$2,000,000
20
$2,000,001
$5,000,000
16
$5,000,001
$10,000,000
14
$10,000,001
$15,000,000
12
$15,000,001
$20,000,000
11
$20,000,001
$25,000,000
10
$25,000,001
$30,000,000
9
$30,000,001
$50,000,000
8
$50,000,001 and above
7
n. Reserves (10/31/12)
Pursuant to Section 39.2, the Seller must establish Reserves for taxes, water and sewer
charges, ground rents and other charges and assessments, if applicable, and insurance
meeting the requirements of the Purchase and Servicing Documents. If required by Freddie
Mac, the Seller must establish a Replacement Reserve and/or a Repair Reserve, in
accordance with Section 39.3.
Guide Bulletin Update 10/19/23 Chapter 17 – Page 8
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Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
o. Co-op requirements (09/08/04)
Freddie Mac may adjust the program requirements in this section on a case-by-case basis for
Mortgages secured by properties owned by cooperative housing corporations.
p. Financing of origination fees (09/08/04)
It is Freddie Mac's policy not to purchase Mortgages that finance payment of loan origination
fees or comparable fees to the Seller in excess of reasonable amounts. The proceeds of the
Mortgage may be used to pay loan origination fees or comparable fees to the Seller only to
the extent that such fees are reasonable and in accordance with general industry standards.
q. Late charges and default interest (04/30/13)
The fixed-rate Note must provide that if an installment of principal (if applicable) and interest
is received more than 10 days after its Due Date, a late charge will accrue equal to 5 percent
of the amount of that installment. If applicable law prohibits imposition of a late charge until
an installment is more than 10 days past due or provides for a maximum late charge of less
than 5 percent, the Seller must use the minimum time period and the maximum late charge
permitted by applicable law. The Seller/Servicer may not change any provisions regarding
late charges without Freddie Mac's prior approval. Freddie Mac reserves the right to waive
any late charge, in its discretion.
The fixed-rate Note must also provide that if any installment due under the Note remains past
due for 30 days or more, or if the Borrower is in default under any other provision of the Note
or other Loan Documents, the Note will bear default interest at a rate that is not less than 4
percent per annum in excess of the Note rate. If applicable law provides for a maximum rate
of default interest that is lower than 4 percent per annum in excess of the Note rate, the
Seller must use the maximum rate of default interest permitted by applicable law.
17.3 Floating-Rate Mortgage requirements (04/15/21)
A Floating-Rate Mortgage submitted under the Multifamily Conventional Cash Mortgage Purchase
Program must meet the requirements of Section 17.2, as modified by this section.
a. Interest rate calculation (04/15/21)
Freddie Mac will calculate interest on a Floating-Rate Mortgage on the basis of a 360-day
year and the actual number of days in the period for which interest is being calculated. As
interest on a Floating-Rate Mortgage will accrue at a variable interest rate, there will not be a
fixed annual debt service amount for the Mortgage.
b. Term (04/15/21)
The term of the Floating-Rate Mortgage may be 5, 7 or 10 years.
c. Prohibition against prepayment (04/15/21)
The Borrower will be prohibited from voluntarily prepaying the Floating-Rate Mortgage in
whole or in part during the closed period, as set forth in Section 17.3(d), if the Borrower has
chosen this prepayment premium option.
Guide Bulletin Update 10/19/23 Chapter 17 – Page 9
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Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
d. Prepayment premium (04/15/21)
Freddie Mac offers the following prepayment provisions that may be structured with the
origination of a Floating-Rate Mortgage:
• One year closed period followed by 1 percent thereafter
• Declining yearly prepayment premium of 3 percent, 2 percent and 1 percent thereafter
• Declining yearly prepayment premium of 5 percent, 4 percent, 3 percent, 2 percent and 1
percent thereafter, or
• For 10-year capped Floating-Rate Mortgages only, declining yearly prepayment premium
of 7 percent, 6 percent, 5 percent, 4 percent, 3 percent, 2 percent and 1 percent
thereafter
Based on the prepayment provision chosen above, starting in year 2, 4, 6 or 8, Freddie Mac
will waive the 1 percent prepayment premium if the Borrower voluntarily prepays the Floating-
Rate Mortgage with the proceeds of a fixed-rate Mortgage that is the subject of a binding
commitment for purchase between Freddie Mac and the Seller/Servicer.
No prepayment premium will be due during the Window Period as defined in the Note
(usually the last three months of the term of the Floating-Rate Mortgage.)
e. Reserved (03/03/14)
f. Late charges and default interest (04/15/21)
The Floating-Rate Mortgage Note must provide that if an installment of principal (if
applicable) and interest is received more than five days after its Due Date, a late charge will
accrue equal to 5 percent of the amount of that installment. If applicable law prohibits
imposition of a late charge until an installment is more than five days past due or provides for
a maximum late charge of less than 5 percent, the Seller must use the minimum time period
and the maximum late charge permitted by applicable law.
The Seller/Servicer may not change any provisions regarding late charges without Freddie
Mac's prior approval. Freddie Mac reserves the right to waive any late charge, in its
discretion.
The Floating-Rate Mortgage Note must also provide that if any installment due under the
Floating-Rate Mortgage Note remains past due for 30 days or more, or if the Borrower is in
default under any other provision of the Floating-Rate Mortgage Note or Loan Documents,
the Note will bear default interest at a rate that is not less than 4 percent per annum in
excess of the Note rate. If applicable law provides for a maximum rate of default interest that
is lower than 4 percent per annum in excess of the Floating-Rate Mortgage Note rate, the
Seller must use the maximum rate of default interest permitted by applicable law.
Guide Bulletin Update 10/19/23 Chapter 17 – Page 10
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®
and accessible via either mf.freddiemac.com (for free) or the AllRegs
web site of ICE Mortgage Technology (with a paid subscription).
Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
17.4 Moderate Rehabilitation (Mod Rehab Mortgages) (04/15/21)
A Mod Rehab Mortgage is collateralized by a well-constructed Property that can benefit from a
capital infusion by the Borrower to upgrade the Property and increase its value.
Each Mod Rehab Mortgage is made in two phases. The first phase (“Interim Phase”) is structured
to accommodate the proposed renovation work, while the second phase (“Permanent Phase”) is
structured using the requirements of a standard cash loan. The Interim Phase consists of the
initial funding issued at Mortgage origination and renovation draws issued throughout the
renovation period. The renovation period cannot extend beyond the Interim Phase, and is subject
to the time limits set forth in the Disbursement Agreement. At the end of the Interim Phase, the
loan (with an unpaid principal balance reflecting the aggregate of the initial funding and all
subsequent draws) converts to the Permanent Phase.
A Mod Rehab Mortgage must use the standard delivery option. In addition to complying with all
standard requirements under the Multifamily Conventional Cash Mortgage Purchase Program
noted under this Chapter 17, the following sections detail further requirements applicable to Mod
Rehab Mortgages:
• Exhibit 1, Section 1.1, Conventional Checklist
• Section 60.28, Appraisals for Moderate Rehabilitation (Mod Rehab) Mortgages
• Chapter 63, Construction Reports
• Section 39.9, Servicing Moderate Rehabilitation (Mod Rehab) Mortgages
• Section 55.2, Requirements for documents contained in the underwriting package
1. Timing of renovation completion
All units must be habitable no later than six months prior to Conversion to the Permanent
Phase. Minor unit renovations such as installation of light fixtures can be ongoing.
All renovation work must be completed no later than three months prior to Conversion.
2. Timing of additional proceeds request
If additional proceeds are requested, the Seller/Servicer must provide notice within six months
of Conversion to the Permanent Phase and must deliver a full underwriting package four
months prior to Conversion. All renovation work must be completed no later than three
months prior to Conversion.
The Seller/Servicer must prepare the full underwriting package following the requirements for
a standard delivery found in Exhibit 1, Section 1.1, Conventional Checklist. However, the
property condition report must comment on whether the renovation work is still ongoing or
already completed, and incorporate the latest construction monitoring report or the post-
construction analysis report, whichever is available. The construction reports are described in
Chapter 63.
Guide Bulletin Update 10/19/23 Chapter 17 – Page 11
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web site of ICE Mortgage Technology (with a paid subscription).
Guide Chapter 17 – Originating a Mortgage under the Multifamily
Conventional Cash Mortgage Purchase Program
17.5 Underwriting package requirements and review period (04/15/21)
See Section 27.5 for information regarding the content of underwriting packages.
Instructions for preparing and delivering the underwriting packages and remitting any required
fees to Freddie Mac are found in Chapter 55. Chapter 55 also contains a complete description of
Freddie Mac’s requirements for each document in an underwriting package, including a
description of the required content and whether the document must be certified.
The Seller should plan for a reasonable period for Freddie Mac to process and review the LST or
underwriting package before receipt of the Quote, the early rate-lock application or the Letter of
Commitment, as appropriate.
17.6 Workforce Housing Preservation (10/19/23)
A Workforce Housing Preservation Mortgage will have rent restrictions in place to preserve
middle-income housing rental stock. Either the Loan Documents for the Workforce Housing
Preservation Mortgage will contain Borrower-elected rent restrictions that are more restrictive by
income or unit count than those existing pursuant to any federal, state or local requirements or the
Property will be subject to third-party, non-governmental restrictions subject to Freddie Mac review
and approval of the third-party agreement terms.
Workforce Housing Preservation Mortgages must comply with all standard requirements under the
Multifamily Conventional Cash Mortgage Purchase Program noted under this Chapter 17, and the
Workforce Housing Preservation Mortgage must:
• Require a market-based percentage of units to be set aside for middle-income tenants with a
minimum of 20% of units
• Meet market-based affordability thresholds, which are measured as a percentage of area
median income
• Be a fixed-rate Mortgage
• Have a preservation period that is the lesser of the term of the loan or 10 years (flexibility may
be available in the last year of the loan term)
• Require annual borrower certification of rent affordability levels
