(a) Collateral representation and warrantiesIn addition to all other representations and warranties specified in the Seller's Purchase Documents, the Seller makes the following representations and warranties.
(i) Value warrantyThe Seller represents and warrants that the appraisal accurately reflects the market value of the Mortgaged Premises. See Section 5601.8 for information regarding requirements for Mortgages with Settlement Dates more than 120 days after the Note Date.
(ii) Condition warrantyAs of the Settlement Date, the Seller represents and warrants that the Mortgaged Premises is not in C5 or C6 condition. For property types not required to utilize the Uniform Appraisal Dataset (UAD) condition ratings, the Seller represents that the property is in a condition consistent with condition ratings C1 through C4.
(iii) Marketability warrantyAs of the Settlement Date, the Seller represents and warrants that the Mortgaged Premises is acceptable to typical purchasers in the market in which the property is located.
(b) Collateral representation and warranty relief – Loan Collateral Advisor®
(i) OverviewFor Mortgages that are processed by the Seller through Loan Collateral Advisor® and meet the eligibility requirements below, Freddie Mac will not exercise its remedies, including the issuance of repurchase requests, in connection with a breach of the Seller's selling representations and warranties related to value, condition, and marketability of the Mortgaged Premises. The selling representation and warranty relief described in this subsection will be referred to as "collateral representation and warranty relief."
(ii) Eligible MortgagesThe following requirements must be met for Mortgages to be eligible for collateral representation and warranty relief:
- The Mortgage must have an LTV/TLTV/HTLTV less than or equal to 95%
- The Mortgage must be secured by a 1-unit dwelling
- The Borrower must be an individual or a Living Trust
- Upon assessment of the appraisal by Loan Collateral Advisor, the following message and/or indicator must be returned:
- Uniform Collateral Data Portal® (UCDP®), feedback message FRE0000 indicating the appraisal is eligible for collateral representation and warranty relief
- Loan Collateral Advisor indicator that the appraisal is eligible for collateral representation and warranty relief
Note: Upon submission to Loan Product Advisor and/or Loan Quality Advisor®, a corresponding collateral representation and warranty relief message will also be provided in the feedback certificate.
- The final submission to Loan Selling AdvisorSM must indicate the collateral representation and warranty relief status is "Y" or "Yes"
(iii) Ineligible MortgagesThe following Mortgages are not eligible for collateral representation and warranty relief:
- Mortgages secured by Condominium Units
- Mortgages secured by Manufactured Homes
- Mortgages secured by leasehold estates
- Freddie Mac Relief Refinance MortgagesSM – Same Servicer or Open Access
(iv) Collateral representation and warranty relief exceptionsFor Mortgages that meet the eligibility requirements above, the Seller/Servicer will not be relieved from Freddie Mac's enforcement of remedies with respect to the following requirements even if such matters are related to value, condition and marketability:
- The Section 5601.11 requirement that, when applicable, a certification of completion or completion report is obtained verifying that any outstanding conditions of the appraisal have been satisfied
- The Section 5601.2 requirement that the Mortgaged Premises not be subject to a pending legal proceeding for condemnation in whole or in part
- With respect to properties affected by disasters, compliance with Section 4201.13 as it relates to the Seller's awareness of conditions or circumstances that would adversely affect the value or marketability of the Mortgage
Nothing in this Section 5601.9(b) is meant to imply that the Seller is not responsible for compliance with other requirements of the Purchase Documents, including but not limited to:
- Compliance with the Appraiser Independence Requirements set forth in Exhibit 35; and
- Compliance with the Ethics Rule of the Uniform Standards of Professional Appraisal Practice
(c) Collateral representation and warranty relief – automated collateral evaluation
(i) OverviewFor certain Loan Product Advisor Mortgages, the automated collateral evaluation provides a Seller with the option to accept an appraisal waiver and originate the Mortgage without an appraisal.When the appraisal waiver option is accepted, Freddie Mac will accept the estimated value submitted by the Seller for the purposes of underwriting the Mortgage, and will not exercise its remedies, including the issuance of repurchase requests, in connection with a breach of the Seller's selling representations and warranties related to value, condition, and marketability of the Mortgaged Premises.
(ii) Process for qualifying for and accepting the appraisal waiver offerFor a Mortgage to qualify for an appraisal waiver:
- The Seller must submit the Mortgage to Loan Product Advisor
- Upon evaluation by Loan Product Advisor, the Last Feedback Certificate must indicate that the Mortgage is eligible for collateral representation and warranty relief with an appraisal waiver (this represents the "offer"); and
- The final submission of the Mortgage to Loan Selling Advisor must indicate the collateral representation and warranty relief status is "Y" or "Yes"
For Mortgages that receive the appraisal waiver offer, in order to accept the offer, the Seller must deliver the Mortgage with the ULDD Data Points described in the data delivery instructions in Section 6302.10(c).
(iii) Eligible MortgagesThe following requirements must be met for Mortgages to be eligible to receive an appraisal waiver offer:
- The Mortgage must be secured by a 1-unit Primary Residence or second home
- The Mortgage must have a loan-to-value (LTV) ratio/total LTV (TLTV) ratio less than or equal to 80%
- The Mortgage must be a purchase transaction or a no cash-out refinance
(iv) Ineligible MortgagesThe following Mortgages are not eligible for an appraisal waiver:
- Mortgages for which an appraisal has been obtained in connection with the Mortgage
- Texas Equity Section 50(a)(6) Mortgages
- Mortgages secured by one of the following:
- A Condominium Unit
- A Manufactured Home, or
- A leasehold estate
- Mortgages secured by Mortgaged Premises subject to resale restrictions
- Construction Conversion and Renovation Mortgages
- Freddie Mac Relief Refinance MortgagesSM – Same Servicer or Open Access
- Non-arm's length transactions
- Purchases of REO properties (as identified in the sales contract)
- Mortgages with an estimate of value or purchase price greater than $1,000,000
In addition, Sellers may not accept the appraisal waiver offer if any of the following apply:
- The Seller is required by law or regulation to obtain an appraisal
- The Seller is aware of conditions it believes warrant an appraisal being obtained. Examples include, but are not limited to:
- The property is located in an area recently impacted by a disaster
- A contaminated site or hazardous substance exists affecting the property or the neighborhood in which the property is located
- Adverse physical property conditions that are apparent based on the review of the sales contract, property inspection, disclosure from the Borrower, etc.
(v) Maintaining appraisal waiver eligibilityThe appraisal waiver offer is valid for 120 days. If the offer is more than 120 days old on the Note Date, a resubmission to Loan Product Advisor is required to determine ongoing appraisal waiver eligibility.Note: If the Seller changes loan data (e.g., address of the property, loan amount, purchase price, estimate of value, loan type, property type, occupancy of the property) in a subsequent submission, the original offer will be invalidated and Loan Product Advisor may provide a different appraisal waiver eligibility determination.
(vi) Seller representation of property review or valuationA Seller that has accepted the appraisal waiver offer in connection with a Mortgage must not make any representation that Freddie Mac has performed a property review or obtained a valuation of the Mortgaged Premises.
| Related Guide Bulletins | Issue Date |
|---|---|
| Bulletin 2017-26 | November 15, 2017 |
| Bulletin 2017-23 | October 18, 2017 |
| Bulletin 2017-13 | August 23, 2017 |
| Bulletin 2017-10 | July 12, 2017 |
| Bulletin 2017-8 | May 31, 2017 |
Additional Information: https://www.allregs.com/tpl/Viewform.aspx?formid=00051759&formtype=agency#page=530