The Seller and Freddie Mac agree that each and every Mortgage purchase and sale transaction entered into under the Purchase Documents (including, without limitation, any purchase and sale under the Cash, Guarantor or MultiLender Swap programs) — whether sold with or without recourse — is expressly intended by the Seller and Freddie Mac:

• To be construed as the Seller’s sale, transfer, conveyance and delivery of all such Mortgages to Freddie Mac, and
• To be construed as Freddie Mac’s purchase and receipt of such Mortgages, and
• Not to be construed as the Seller’s pledge to secure a debt or any other obligation

The Seller and Freddie Mac intend for the sale, transfer, conveyance and delivery of all Mortgages to Freddie Mac by the Seller to be true, absolute and unconditional sales.

If despite the intent of the Seller and Freddie Mac, the Mortgages (or any of them) are determined to be property of the Seller (i.e., the sale was not a true sale), Freddie Mac and the Seller agree that:

• The Purchase Documents created a security agreement within the meaning of the Uniform Commercial Code (UCC) in effect in the applicable State, conveying to Freddie Mac a security interest in all of the Seller’s right, title, and interest in and to the Mortgage and all proceeds from the Mortgage
• Freddie Mac is the secured party under such security agreement
• The possession by Freddie Mac or its designee (including, without limitation, any applicable Document Custodian) of the Notes (and any related documents) shall be deemed to be possession by the secured party for purposes of perfecting the security interest pursuant to the UCC
• The Seller shall assist Freddie Mac with any reasonable actions necessary to ensure that Freddie Mac receives a perfected security interest of first priority under applicable law; and
• Freddie Mac will have all of the rights and remedies of a secured party and creditor under the UCC and may execute and file UCC financing statements as reasonably necessary

The following eligibility requirements apply to second home Mortgages:

• The Mortgage must be secured by a 1-unit property
• The Borrower must occupy the second home for some portion of the year
• The Borrower must keep the property available primarily (i.e., more than half of the calendar year) for the Borrower’s personal use and enjoyment
• The Borrower may rent the property on a short-term basis provided that the property is not subject to any rental pools or agreements that require the Borrower to rent the property, give a management company or entity control over the occupancy of the property or involve revenue sharing between any owners and the developer or another party
• The Mortgaged Premises must be in such a location to function reasonably as a second home
• The second home must be suitable for year-round occupancy with the following exception: a second home with seasonal limitations on year-round occupancy (e.g., lack of winter accessibility) is eligible provided the appraiser includes at least one comparable sale with similar seasonal limitations to demonstrate the marketability of the subject property. See Section 5601.1 for property eligibility requirements.
• The property must not be subject to any timesharing or other shared ownership arrangement

Freddie Mac’s determination of whether a property is a second home is conclusive. A 2-unit property used as a second home is considered an Investment Property and must meet all of the requirements of Section 4201.16.

A Mortgage secured by a second home must be an Accept Mortgage to be eligible for delivery.

• Each Investment Property Mortgage must comply with Maximum LTV, TLTV and HTLTV ratios
• Each Investment Property Mortgage must be an Accept Mortgage
• Mortgages with temporary subsidy buydowns are not eligible for delivery as Investment Property Mortgages
• Freddie Mac will purchase Investment Property Mortgages made to Borrowers who own more than one financed Investment Property, provided that the Investment Property Mortgage being sold to Freddie Mac is:
  • An eligible fixed-rate, level-payment Mortgage, or
  • A 7/6-Month or 10/6-Month ARM