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SBL Guide Addendum Being Integrated Into the Seller/Servicer Guide

June 20, 2016

What you need to originate and service a Small Balance Loan (SBL) will now be more transparent and readily available.

On Thursday, June 30, we will retire the SBL Guide Addendum and fully integrate its contents into the searchable Freddie Mac Multifamily Seller/Servicer Guide (the Guide) published on AllRegs®. On that date, the SBL Guide Addendum will no longer be in effect.

We have simplified and clarified many SBL requirements, making it even easier to do business with Freddie Mac.  

What’s Changing

  • We are adding 10 new chapters (SBL Guide Chapters) to the Guide to house SBL-specific requirements. The requirements in the SBL Guide Chapters are exclusively for SBLs and can differ significantly from those for non-SBLs. The SBL Guide Chapter titles include an “SBL” suffix as part of their chapter number. The entire text of the new SBL Guide Chapters will appear in black on AllRegs, so we recommend that SBL Seller/Servicers review them in their entirety.
  • We are modifying existing Guide chapters, directory, and glossary to incorporate SBL-specific requirements that do not require corresponding separate SBL Guide Chapters. Guide text for changes in non-SBL Guide Chapters will be highlighted in green on AllRegs.

The following chart includes all of the revised Guide chapters that will be relevant to originating and servicing SBLs, including a “Highlights” column with notes of particular interest.

Chapter Title Highlights
1 Introduction  
2 General Freddie Mac Policies

SBL Sellers can deliver the following Borrower underwriting forms with E-Signatures from Borrowers:
1115SBL, 1116, 1117SBL, and 1144

Freddie Mac will accept Electronic Signatures on all third party reports

3 Seller/Servicer Eligibility Requirements  
4 Suspension or Termination of a Seller/Servicer  
5 General Warranties by the Seller/Servicer  
6SBL SBL -  Legal Services for SBL Mortgage Origination and Servicing  
7 Fraud Prevention, Detection and Reporting:  Reporting Suspicious Activity  
8SBL SBL Property Fundamentals

Simplified the analysis and requirements for Independent Properties, including indirect access and shared facilities

Added scattered site requirements

Confirmed that in Top Markets, as few as two units may be inspected in certain circumstances

Reorganized chapter for ease of use

9SBL SBL Borrower/Borrower Principal Fundamentals  
10 Fundamentals of Mortgages, Mortgage Origination and Credit UW  
11 Miscellaneous Fundamentals  
12 Appraiser and Appraisal Requirements  
13 Environmental Requirements  
14 Property Condition Report Requirements  
14SBL SBL  Physical Risk Report Requirements Number of days required for completion of Priority Repairs other than PR-90 Repairs is being extended from 180 to 365 days
15 Third-Party Reports and Property Inspections for Forward Commitments  
16SBL SBL Seismic Risk Assessment Requirements  
18SBL SBL  Originating a SBL Mortgage

Consolidated SBL Mortgage requirements into an easy to use chart

Updated descriptions of the standard and Early Rate Lock delivery options

27 Commitment or Early Rate-Lock Application  
29SBL SBL Title, Description, Survey and UCC Search  
30 Ground Lease Mortgages  
31 Insurance Requirements  
32SBL SBL  Final Delivery Requirements Final Delivery of an SBL Mortgage will be a single delivery package instead of "Core" and "Non-Core" packages
33 Warehousing, Secured Advances and Other Secured Lending Arrangements  
34 Retention of Mortgage File  
36 General Servicing Policies  
38 Servicing Compensation  
39 Administration of Reserves; Monitoring Repairs Servicers are permitted to extend Completion Dates for existing loans as long as the Priority Repair does not pose life, health or safety issues
40 Assessments and Other Post-purchase Reporting  
41SBL SBL  Transfers of Ownership  
42 Transfers of Servicing  
43 Specific Servicing Responsibilities  
44 Delinquency, Default and Loss Mitigation Strategies  
45 Real Estate Owned  
46SBL SBL Repurchase; Loss Share, B-Piece; Collateral  
47 Repurchases; Indemnification  
48 Termination of Servicing  
50 General Accounting and Reporting Requirements  
51 Prepayments  
52 Custodial Accounts  
53 Determining and Remitting Payments  
54 Accounting and Reporting  
55 Documentation and Deliveries  

What else

In conjunction with the June 30 Guide update, we are also making the following SBL-specific form, exhibit, and checklist revisions:

  • The Underwriting Checklist used for SBLs and the following five SBL-specific forms will be published on AllRegs:
    Item Title
    Exhibit 1, Section 1.2 Small Balance Loan Checklist
    Form 920 SBL Collateral Certification
    Form 921 Letter of Credit – SBL Certification
    Form 1104 SBL Physical Risk Report
    Form 1115SBL Borrower and Borrower Principal Certificate – SBL
    Form 1117SBL Borrower Certification of Physical and Environmental Property Condition – SBL
  • SBL Exhibit 13: SBL Prepayment Provisions is being retired; Sellers should refer to the form SBL Notes available on for applicable prepayment provisions.
  • The Small Balance Loan Checklist is being revised to add the requirement for disclosure and a legal analysis if the SBL Seller/Servicer, or any of its directors, officers, or affiliates has an ownership interest in the borrower or the property.

If you have questions about these changes, we encourage you to contact your Freddie Mac representative.

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