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Constant Maturity Treasury (CMT)-indexed ARMs
Expand your product line and origination volume with Freddie Mac CMT-indexed ARMs

Related Products

Adding Constant Maturity Treasury (CMT)-indexed ARMs to your product line expands your origination volume opportunities and maintains your competitive position in any market environment.  We offer many CMT-indexed ARMs with various rate and cap structures, including 1-year, 3-year and 5-year ARMs, and 3/1, 5/1, 7/1 and 10/1 ARMs.

CMT-indexed ARMs provide an attractive alternative for purchase money and refinance borrowers, allowing them to obtain home financing at initial rates that in many cases are below those for fixed-rate mortgages – a feature particularly attractive to move-up borrowers and those who do not intend to stay in their homes for long periods.

Plus, take advantage of efficiencies with Loan Prospector® automated underwriting technology to quickly and easily assess your CMT-indexed ARMs and streamline the process for your borrowers. 

Product Features

Feature Requirements

Property Type
  • 1- to 4-unit primary residences, including condos, PUDs and manufactured homes.
  • Second homes
  • 1- to 4-unit investment properties (with additional requirements)

Eligible Mortgage Products
  • 1-, 3- and 5-year CMT-indexed ARMs
  • 3/1, 5/1, 7/1 and 10/1 CMT-indexed ARMs
  • Convertible and non-convertible
  • Originate with Streamlined Purchase for Homeowners, Financed Permanent Buydown (5/1, 7/1 and 10/1 ARMs only), Home Possible Mortgages (5/1, 7/1 and 10/1 ARMs only) Alternative Stated Income, Streamlined Refinance and A-minus Mortgages, and Mortgages for Newly Constructed Homes.
  • 7/1 and 10/1 ARMs only for mortgages secured by manufactured homes.
  • 7/1 and 10/1 CMT ARMs only for investment property mortgages where the borrower owns more than one financed investment property.
  • 1-year, 3/1, and 3-year ARMs with loan application dates on and after September 13, 2007 and margins of 400 basis points or more are not eligible for sale under flow purchase paths.

Transaction Type
  • Purchase
  • No cash-out refinance
  • Cash-out refinance
  • Streamlined refinance

Maximum LTV Ratios

  • Maximum LTV ratios must comply with Single-Family Seller/Servicer Guide (Guide) Section 23.4.

Down Payment or Closing Costs
  • Secondary financing
  • Shared equity plans
  • Temporary subsidy buydowns

Eligibility/Underwriting
  • Loan Prospector Mortgages
  • Non-Loan Prospector Mortgages
  • Loan Prospector Caution Mortgages and Non Loan Prospector Mortgages must be manually underwritten per Guide Chapter 37.
  • See Guide Section 30.16 for additional underwriting requirements.
  • See Guide Section J33.8 for requirements for Initial InterestSM ARMs

Execution Options
  • WAC ARM Cash (nonconvertible only in the selling system)
  • WAC ARM Guarantor (nonconvertible only in the selling system)

Delivery Fees
  • Postsettlement delivery fees may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 [PDF 494K ] for details on applicable fees.

Special Delivery Requirements
  • You must deliver all mortgage data required by Form 13SF, including mandatory SCCs, Indicator Score, Index Source Code, Index Lookback Days, First Rate Adjustment Minimum Rate and First Rate Adjustment Maximum Rate.

Single-Family Seller/Servicer Guide
  • Refer to Guide Chapter 30.

Download a CMT-indexed ARMs fact sheet [PDF 130K ] for more details.

Lender Benefits

CMT-indexed ARMs help you:

    • Increase your origination volume and meet the needs of more homebuyers, with over 70 different ARM products.
    • Take advantage of the benefits of a cash or securities execution, based on your individual balance sheet and risk-based capital needs.
    • Commingle ARMs with different assumability periods to increase your competitive execution.

Benefits for Your Borrowers

CMT-indexed ARMs help your borrowers:

  • Discover more alternatives when looking for lower initial rates and monthly payments and who understand that their rate will increase.
  • Leverage flexible options for refinance or move-up borrowers who may qualify for larger loan amounts.
  • Take advantage of financial savings for borrowers who only plan to stay in their homes a short period of time.

For More Information

Training Opportunities

Visit The Learning Center for live and recorded web conferences, access to classroom-style workshops and self-study tools – all designed to help you stay competitive, serve more borrowers and make it easier to do business with us.

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