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Cash out for many purposes

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Cash-out Refinance Mortgages With this mortgage option, borrowers are able to receive cash out from the value of their home to use for debt consolidation or any other purpose. This mortgage also allows borrowers to roll all related closing costs, financing costs, and prepaid items into the new loan amount, further maximizing cash flow potential. In addition, our special purpose cash-out refinance mortgage allows borrowers in unique circumstances to use the proceeds of the refinance transaction to buy out the equity of a co-owner.
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  • Added: October, 27th 2010
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Content Preview
Cash-out Refinance Mortgages
Cash out for many
With this mortgage option, borrowers are able to receive cash out from
purposes
the value of their home to use for debt consolidation or any other
purpose. This mortgage also allows borrowers to roll all related closing
costs, financing costs, and prepaid items into the new loan amount,
further maximizing cash flow potential. In addition, our special purpose
cash-out refinance mortgage allows borrowers in unique circumstances
to use the proceeds of the refinance transaction to buy out the equity of
a co-owner.
Refinance borrowers who want
Maximum LTV ratio of 80 percent
Provide cash-out to consolidate
to receive cash from the value
for 1-unit primary residences
debt or for any other purpose
of their home
1- to 4-unit primary residences,
Allow borrowers to pay off junior
second homes, and 1- to 4-unit
liens, including HELOCs, pay off
investment properties
a leasehold interest, pay for
home improvements or buy out
May use proceeds of the
the equity of an ex-spouse, joint
refinance to pay off junior liens or
heir, or joint devisee
other needs
Eliminate up front costs by rolling
Roll all related closing costs and
in all related closing costs,
prepaid items into the new loan
financing costs, and prepaid
amount
items into the new loan amount
No seasoning requirement for the
mortgage being refinanced, as
long as the mortgage does not
exceed our maximum loan
amounts and maximum LTV
ratios

www.FreddieMac.com
The information in this document is not a replacement or
Publication Number 389
substitute for information found in the Single-Family Seller/
October 9, 2009
Servicer Guide and/or the terms of your Master Agreement

and/or Master Commitment.


ORIGINATION & UNDERWRITING REQUIREMENTS
Eligible Property Types
1- to 4-unit primary residence
1- to 4-unit investment property
Second home
Eligible Mortgages
15-, 20-, and 30-year fixed-rate mortgages
5- and 7-year balloon/reset mortgages
Most standard ARMs
No seasoning requirement for eligible mortgages and inherited properties.
Super conforming mortgages. See Guide Chapter L33 for requirements.

Note:
Freddie Mac-owned Streamlined Refinance Mortgages:
May not be balloon/reset mortgages
May be a 5/1, 7/1,or 10/1 ARM
May not be an ARM if the mortgage being refinanced is a fixed-rate mortgage.
Maximum LTV for New
1-unit primary residence:
Mortgage
o Max. LTV without secondary financing: 80%
o Max. LTV with secondary financing: 75%
o Max. TLTV with secondary financing: 80%
o Max. HTLTV: 80%
2- to 4-unit primary residence:
o Max. LTV without secondary financing: 75%
o Max. LTV with secondary financing: 70%
o Max. TLTV with secondary financing: 75%
o Max. HTLTV: 75%
Second home:
o Max. LTV without secondary financing: 75%
o Max. LTV with secondary financing: 70%
o Max. TLTV with secondary financing: 75%
o Max. HTLTV: 75%
1-unit investment property:
o Max. LTV without secondary financing: 75%
o Max. LTV with secondary financing: 70%
o Max. TLTV with secondary financing: 75%
o Max. HTLTV: 75%
2- to 4-unit investment property:
o Max. LTV without secondary financing: 70%
o Max. LTV with secondary financing: 65%
o Max. TLTV with secondary financing: 70%
o Max. HTLTV: 70%

See Guide Chapter L33.3 for LTV/TLTV/HTLTV ratio requirements for super conforming mortgages.
Borrower Eligibility
The Seller must make the determination regarding borrower creditworthiness in accordance with the requirements of
Requirements
the Guide Chapter 37.4(b), Establishing Borrower Credit Reputation for Manually Underwritten Mortgages.
At least one borrower must have been on the title to the subject property for at least six months prior to the note date of
the cash-out refinance mortgage.
Closing Costs, Financing
All closing costs, financing costs, and prepaids can be rolled into the new loan amount.
Costs & Prepaids/Escrows
Cash Back to Borrower
No limit on cash back for cash-out refinances.
.
Special Underwriting
Loan Prospector (Accept or A-minus) Mortgages, or manually underwritten mortgages.
Requirements
A minimum Indicator Score of 620 unless otherwise specified in the Guide (Loan Prospector A-minus Mortgages are
exempt).
All mortgages must meet the risk class and/or minimum Indicator Score requirements in Guide Exhibit 25A, where
applicable.
When a Seller originates a cash-out refinance mortgage, and that mortgage is refinanced as a no cash-out refinance
mortgage, the refinance mortgage is ineligible for sale to Freddie Mac.
New loan application required.
At least one borrower on the refinance mortgage must have
o Been a borrower on the mortgage being refinanced
o Held title to and lived on the property for 12 months and the mortgage file contains documentation evidencing that
the borrower either:
Has been making timely mortgage and secondary financing payments for the most recent 12 months
Is related to a borrower on the mortgage being refinanced, or
Inherited or been legally awarded the property by a court
See Guide Section 24.4 for requirements on continuity of borrower ownership or obligation for Freddie Mac-owned
Streamlined Refinance Mortgages.
Mortgage payment history and minimum income documentation in accordance with Loan Prospector credit
risk/documentation class or Guide requirements.
No asset documentation is required. Seller must verify reserves if they are entered in Loan Prospector.

Subordinate Liens
Can be paid off from the proceeds of the new loan regardless of purpose; may be subordinated or paid off with
borrower funds.
Pay off purchase money junior liens secured by the mortgaged premises that were not used in their entirety to acquire
the subject property.
Special Requirements for
Freddie Mac considers a cash-out refinance mortgage made to a borrower buying out the equity of a co-owner to be a
Special Purpose Cash-out
special purpose cash-out refinance mortgage. For these mortgages:
Refinances
o The borrower and co-owner must have jointly owned the property for at least 12 months prior to the loan application.
(Parties who inherit an interest in the property are exempt.)
o The borrower and co-owner must have occupied the property as their primary residence. (Parties who inherit an
interest in the property are exempt.)
o Borrower retaining sole ownership of the property may not receive any proceeds from the refinance transaction.
o The borrower and the co-owner receiving the buy out proceeds must provide a written agreement, signed by all
parties, stating the terms of the property transfer and the disposition of the proceeds from the refinancing transaction.
For our special purpose cash-out refinance mortgages, the borrower is not required to use loan proceeds to satisfy
existing junior liens (including home equity lines of credit) if the liens are subordinated to the new refinance mortgage
and meet Freddie Mac requirements.
Collateral Assessment
The Seller must provide an appraisal with an interior and exterior inspection that meets Freddie Mac requirements.
DELIVERY REQUIREMENTS
Eligible Executions
Servicing-released cash*
Servicing-retained cash
Fixed-rate Guarantor
WAC ARM Guarantor
MultiLender Swap
*See our selling system availability matrix for a list of specific mortgages eligible for sale through cash under mandatory
contracts servicing released and best efforts contracts servicing released or servicing retained.
Delivery Requirements
SCC: 003
SCC: 203 for a special purpose cash-out refinance mortgage
Refinance mortgages must be documented with a new note and security instrument or with a new note date and a
modification of the existing security instrument. If there is no new security instrument, the refinance mortgage must be
delivered to Freddie Mac as a Seller-owned Modified mortgage.
Mortgages with delivery or settlement dates more than 120 days after the note date require an appraisal update
meeting Chapter 44 requirements with an effective date no more than 60 days prior to the delivery or settlement date. If
the property value has declined since the effective date of the original appraisal, the mortgage is only eligible for
negotiated sale through our bulk sales path.
Delivery Fees
A cash-out refinance postsettlement delivery fee applies, in addition to any other fees assessed based on the individual
characteristics of the mortgage. See Guide Exhibit 19 for details at www.FreddieMac.com/singlefamily/pdf/ex19.pdf.
Freddie Mac's cash-out refinance delivery fee is not billed for special purpose cash-out refinance mortgages delivered
in accordance with the requirements of Guide Section 17.18.

Learn more about Freddie Mac Cash-out Refinances
• Refer to Chapter 24 of the Single-Family Seller/Servicer Guide
• Call (800) FREDDIE
• Visit www.FreddieMac.com



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