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Seller-Owned Converted Mortgages
A streamlined process for selling ARMs that have converted

Related Products

When you originate a convertible ARM to hold in your portfolio, know that we'll offer you a secondary market outlet once your customer converts the adjustable interest rate to a fixed rate of interest.

Our Seller-owned Converted Mortgage requirements provide a streamlined process for selling converted ARMs, so that when market conditions change or you look to restructure your balance sheet, your sale process is quick, easy and profitable.

Product Features

Feature Requirements
Property Type
  • 1- to 4-unit primary residences
  • Second homes
  • 1- to 4-unit investment properties
Eligible Mortgage Products
  • Original mortgage must be a convertible ARM that has converted to a fully amortizing fixed-rate mortgage prior to sale to Freddie Mac. The term may not extend beyond 30 years from the note date or effective date of permanent financing for a mortgage originated as a Mortgage for a Newly Constructed Home.
  • Seasoned mortgages determined using the conversion date and not the original note date.
Maximum LTV Ratios
  • LTV/TLTV/HTLV ratios did not exceed Single-Family Seller/Servicer Guide (Guide) limits on the note date; current LTV/TLTV/HTLV ratios do not exceed Guide limits as of the delivery date.
Underwriting
  • Non-Loan Prospector® mortgages with a minimum Indicator Score of 680 for primary residences and second homes; and minimum Indicator Score of 720 for investment property.
  • The minimum Indicator Score cannot be more than 120 days old at the time of delivery.
  • The borrowers are the same as the borrowers on the original mortgage except that a borrower who contributed no qualifying income, assets or reserves to the mortgage may have been removed.
  • Not eligible for Loan Prospector representation and warranty relief.
Execution Options
  • Servicing-retained Cash (mandatory only)
  • Fixed-rate Guarantor
  • MultiLender Swap
Delivery Fees
  • Postsettlement delivery fees may apply based on the individual characteristics of the mortgage, and include CS/LTV delivery fees for Non-Loan Prospector mortgages. See Guide Exhibit 19 [PDF 494K] for details on applicable fees.
Special Delivery Requirements
  • You must deliver all mortgage data required by Form 11, including Date of Note, Original Loan Amount, Modification/Conversion Date, Credit Score Value (CSV) and Credit Score Type (CST).
Single-Family Seller/Servicer Guide
  • Refer to Guide Chapter 32

 

Download a Seller-owned Converted Mortgage fact sheet [PDF 189K] for more details.

Lender Benefits

Seller-owned Converted Mortgages help you:

  • Originate convertible ARMs for your portfolio with the assurance that you’ll have a secondary market outlet once they convert to a fixed rate of interest.
  • Effectively manage your mortgage portfolio when market conditions change.
  • Easily sell ARMs that have converted when adjusting your loan-to-deposit ratios.
  • Leverage a cash execution to improve your liquidity or a guarantor execution to retain an asset on your books.

Benefits for Your Borrowers

Seller-owned Converted Mortgages help your borrowers:

  • Convert to the security of a fixed-rate mortgage when interest rates rise – in one easy process.
  • Take advantage of the convenience of no new credit documentation required in many instances.

For More Information

Training Opportunities

Resource Link
Seller-Owned Converted Mortgages Description and Fact Sheets
Seller-Owned Modified Mortgages Description and Fact Sheets
Seller-Owned Modified and Converted Mortgage Quick Reference [PDF 134K]

The information in this document is not a replacement or substitute for information found in the Single-Family Seller/Servicer Guide and/or the terms of your Master Agreement and/or Master Commitment.


© 2008 Freddie Mac