Float-to-Fixed-rate Loan (Two-Plus-Seven)

Must be well-qualified.

• 2 years.
• Interest only (IO), no cap required, locked-out/no prepayments.
• No supplemental loans during floating-rate period.

• 7 years.
•  IO subject to 7-year fixed-rate IO credit parameters with defeasance.
• Amortizing loan with defeasance.
• Securitization-ready.

• Compliant with current credit parameters.
• Sized based on fixed-rate.
• Must pass Refinance Test using aggregated term (2 years floating plus 7 years fixed) with 2 years of IO.

• Terms (subject to revisions due to market fluctuations):
  • Floating-rate: 30-day Average SOFR + 20 bps.
  • Fixed-rate: 7-year UST + 7-year fixed pricing + 20 bps.
  • Fixed-rate is locked when the floating-rate spread is locked; index locks also available during underwriting.
  • No future rate adjustments.

• Conversion of floating-rate to fixed-rate is automatic.
• Permits additional loan proceeds via a supplemental mortgage (pari passu); any additional proceeds will be priced at then first-mortgage pricing.
• Freddie Mac must receive request for additional proceeds no less than 150 days prior to conversion.
• For securitization purposes, updated third-party reports required prior to fixed-rate period conversion; third-party reports paid by Freddie Mac unless additional proceeds are requested.
• If original loan fails to meet Freddie Mac’s credit parameters at conversion, Freddie Mac retains the right to restructure the transaction via a split note at time of securitization.
• Supplemental loans are allowed beginning the second year of the fixed-rate period.