Fast Track Early-Rate Lock Term Sheet

Fast Track Early Rate-Lock
Updated Offering:
Freddie Mac is introducing enhancements to its Fast Track Early Rate-Lock (ERL) option. Specifically, Fast Track ERL offers qualified
borrowers the opportunity to rate-lock the entire coupon, establish the mortgage amount, and set all key provisions with reduced
documentation and no breakage fees. Freddie Mac is pleased to announce expanded eligibility by increasing the maximum loan amount to
$75 million, including acquisitions (as well as refinances), and removing the “double-nickel” credit restriction.
Eligibility:
Fast Track ERL is available to repeat borrowers who have had a loan purchased for securitization by Freddie Mac within the last two years,
subject to Freddie Mac final approval.
This option applies to cash (fixed- or floating-rate) transactions (refinances and acquisitions) capped at $75 million. The following additional
parameters also apply:
 2% good faith deposit
 Must meet current credit parameters
 Must pass Refinance Test
 Tier 5 markets or better
 Policy-compliant interest only
 Loans of acceptable complexity
Benefits:
The primary benefits of the Fast Track ERL process for eligible borrowers include:
 Eliminating coupon risk
 Lock of both the Treasury index and spread
 No breakage fees
 Simple, streamlined legal agreement and process
 No changes to underwriting requirements or standards
 Borrower principal “certification” replaces previously required forms
 Transaction terms/structure/delivery set at rate-lock
See the next page for a comparison of our lock options
April 2014
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Comparison of Lock Options
Index Lock
Fast Track ERL
Early Rate-Lock
Standard Delivery
What is Being Locked?
Treasury yield only; Freddie Mac
spread and servicing spread are
determined at full rate-lock
Interest rate for a fixed-rate loan
or the gross spread for a floatingrate loan
Interest rate for a fixed-rate loan
or the gross spread for a floatingrate loan
Interest rate for a fixed-rate loan
or the gross spread for a floatingrate loan
Eligible Borrowers
Borrowers in good standing that
have closed a securitized loan
within 24 months
Existing Borrowers in good
standing that have closed a
securitized loan within 24
months, subject to Freddie Mac
final approval
Standard underwriting
requirements
Standard underwriting
requirements
Eligible Loans



Loans to be securitized
Acquisition or refinance loans
Fixed-rate loans






Loans to be securitized
Acquisition or refinance loans
Fixed- or floating-rate loans
Must pass the Refinance Test
Acceptable loan complexity
Seniors housing mortgages
and Freddie Mac Student
SM
Housing Mortgages
Targeted Affordable Housing
bond loans are not eligible



Loans to be securitized or held
in portfolio
Acquisition or refinance loans
Fixed- or floating-rate loans



Loans to be securitized or held
in portfolio
Acquisition or refinance loans
Fixed- or floating-rate loans
Maximum Loan Amount
$75,000,000
$75,000,000
No maximum
No maximum
Which Loan Terms are
Determined Prior to Lock?
Term of the loan and loan
amount (loan amount is subject
to change)
Most material loan terms
Most material loan terms (loan
amount is subject to change)
All loan terms
Estimated Time for Credit
Approval
N/A
A few hours to 1 business day
2 to 5 business days
2 to 3 weeks
Good Faith Deposit (GFD)
2% (retained by Seller)
2% (submitted to Freddie Mac)
2% (submitted to Freddie Mac)
Not required
Duration of Lock
Index is locked for up to 90 days
until full rate-lock; time until
Freddie Mac purchase to be set
forth in Commitment, Rate Lock
Agreement for FT ERL, or ERL
Application (ERLA), as applicable
Either 90 or 120 days until
Freddie Mac purchase
Varying durations, typically
ranging from 60 days to 120 days
until Freddie Mac purchase
Typically 45 days until Freddie
Mac purchase
Exposure to Sponsor upon
Breach/Breakage
Standard breakage formula,
subject to a minimum of (a) 1.0%
before submission of full
underwriting package or early
rate-lock or (b) 2.0% after
submission of full package
GFD retained as 2.0% Borrower
Termination Fee
Fixed-rate: Standard breakage
formula, subject to a minimum of
2.0%
Floating-rate: 2.0%
Fixed-rate: Standard breakage
formula, subject to a minimum of
2.0%
Floating-rate: 2.0%
April 2014
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