4304.7: Property eligibility and valuation for Enhanced Relief Refinance® Mortgages (11/01/18)

(a) Eligible Mortgaged Premises

Each Enhanced Relief Refinance® Mortgage must be secured by Mortgaged Premises that are:

1- to 4-unit Primary Residences,
Second homes, or
1- to 4-unit Investment Properties

The Mortgaged Premises must be an attached or detached dwelling, a Manufactured Home, a unit in a Condominium Project or Planned Unit Development, or, if the Seller is permitted to deliver Cooperative Share Loans under its Purchase Documents, a Cooperative Unit.

For Mortgages secured by Condominium Units or Cooperative Share Loans, the Seller is not required to evaluate if the Condominium or Cooperative Project meets the project eligibility requirements set forth in Chapter 5701 or for Cooperative Share Loans, in the Seller's Purchase Documents, provided that:

The Seller represents and warrants that the project is not located in a Condominium or a cooperative hotel (i.e., a Cooperative Project that is operated and managed as a commercial hotel or similar transient housing and has hotel type service), houseboat project, timeshare project, or a project with segmented ownership; and
The project has insurance that meets the applicable insurance requirements of Chapter 8202

For Mortgages secured by Manufactured Homes and Leasehold Estates the Seller must ensure the property meets the eligibility requirements identified in Chapters 5703 and 5704, respectively.

(b) Property valuation requirements for the Enhanced Relief Refinance Mortgage

With respect to the determination of property value for an Enhanced Relief Refinance Mortgage, the Seller has the two options identified below. The Seller's regulatory agency may require an appraisal report in instances where Freddie Mac does not; in such event, the Seller must comply with any relevant requirements of regulatory agencies that mandate an appraisal.

Option One: Home Value Explorer® (HVE®)The Seller may determine the value of the Mortgaged Premises using a point value estimate from HVE. For detailed information on HVE, visit http://www.freddiemac.com/hve/hve.html.The Seller that receives a point value estimate and other data generated by HVE (HVE data) directly from Freddie Mac (as opposed to an authorized HVE distributor or reseller) to originate an Enhanced Relief Refinance Mortgage will be deemed to have agreed to the terms and conditions relating to use of data generated by HVE as set forth in Sections 2401.1 and 2402.7.The following requirements must be met for the Seller to use an HVE point value estimate to determine property value for the Enhanced Relief Refinance Mortgage:
- The property must be a 1- or 2-unit dwelling
- The property must be an attached or detached dwelling, or a unit in a Condominium Project or PUD
- The property must not be subject to resale restrictions, a Manufactured Home, dwelling on a leasehold estate, or if the Seller is permitted to deliver Cooperative Share Loans under its Purchase Documents, a Cooperative Unit
- The HVE point value estimate must have a Forecast Standard Deviation that is no greater than 0.20 (corresponding to a Confidence Score of "H" (high) or "M" (medium))
- The Seller must maintain the HVE point value estimate for the Enhanced Relief Refinance Mortgage and any information necessary to evidence compliance with the HVE requirements. Upon Freddie Mac's request, the Seller must provide Freddie Mac with a copy of this HVE documentation.
- As of the Note Date of the Enhanced Relief Refinance Mortgage, the HVE point value estimate may not be more than 120 days old
If the above requirements are met and the Seller uses the HVE point value estimate to determine value:

The Seller is relieved of representations and warranties regarding the value, condition and marketability of the Mortgaged Premises
The Seller represents and warrants that all information provided by the Seller for the purpose of obtaining the HVE point value estimate, including the address of the Mortgaged Premises, is true, complete and accurate

If the above requirements for use of the HVE point value estimate are not met, the Seller must determine the value of the Mortgaged Premises in accordance with Option Two described below.

For special delivery instructions related to the delivery of Mortgages for which the Seller determines property value using the HVE point value estimate refer to Section 6302.40.

Option Two: New appraisal

The Seller must obtain an interior and exterior inspection appraisal that meets the requirements of the Seller's Purchase Documents. Once obtained, it must be used for the purposes of establishing the property value and determining the property eligibility.The Seller is responsible for the representations and warranties regarding the value; however, the Seller is relieved of the representations and warranties regarding condition and marketability of the Mortgaged Premises. Notwithstanding the requirements of Section 5601.12(e), Freddie Mac will accept appraisal reports with a Uniform Appraisal Dataset (UAD) condition rating of C5 or C6 and/or a UAD quality rating of Q6 completed on an "as-is" basis; the appraisal does not have to be completed "subject to" needed repairs being completed.Notwithstanding the provisions of Sections 4201.5 and 5601.8(a) and (b), the Seller is not required to obtain a new appraisal if the Settlement Date is more than 120 days after the Note Date or obtain an appraisal update if the effective date of the appraisal report is more than 120 days before the Note Date.When obtaining a new appraisal above, the special appraisal and collateral requirements in Section 4603.5 do not apply to super conforming Enhanced Relief Refinance Mortgages.

(c) Properties affected by disasters

For Enhanced Relief Refinance Mortgages secured by properties in areas affected by disasters, repairs to a property damaged as the result of a disaster will not be required prior to the Settlement Date as long as the Mortgage meets the insurance requirements in Chapter 8202.This flexibility for Enhanced Relief Refinance Mortgages does not impact Servicing requirements. Seller/Servicers must ensure that the Mortgaged Premises are covered by insurance meeting the requirements in Chapter 8202, and in accordance with the terms of the Security Instrument and applicable law.