Constant Maturity Treasury (CMT)-indexed ARMs

Expand your product line and origination volume with Freddie Mac CMT-indexed ARMs

Adding Constant Maturity Treasury (CMT)-indexed adjustable-rate mortgages (ARMs) to your product line expands your origination volume opportunities. 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	Description
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- and5-year CMT-indexed ARMs 3/1, 5/1, 7/1 and 10/1 CMT-indexed ARMs Originate with Financed Permanent Buydown (5/1, 7/1 and 10/1 ARMs only), Home Possible Mortgages® (5/1, 7/1 and 10/1 ARMs only), A-minus Mortgages, Construction Conversion Mortgages and Renovation Mortgages. 7/1 and 10/1 ARMs only for mortgages secured by manufactured homes. 7/1 and 10/1 CMT-indexed 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 margins of 400 basis points or more are not eligible for sale under flow purchase paths. See Single-Family Seller/Servicer Guide (Guide) Chapter L33 for super conforming ARM requirements.
Transaction Type	Purchase No cash-out refinance Cash-out refinance
Maximum LTV Ratios	Maximum LTV ratios must comply with Guide Section 23.4.1 See Guide Chapter L.33.3 for LTV/TLTV/HTLTV ratio requirements for super conforming mortgages
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. Minimum Indicator Score of 620 unless otherwise specified in the Guide (Loan Prospector A-minus mortgages are exempt). Maximum debt-to-income ratio of 45 percent for manually underwritten mortgages. All mortgages must meet the risk class and/or minimum Indicator Score requirements in Guide Exhibit 25A, where applicable. See Guide Section 30.16 for additional underwriting requirements.
Execution Options	WAC ARM Cash WAC ARM Guarantor
Delivery Fees	Postsettlement delivery fees may apply based on the individual characteristics of the mortgage. See Guide Exhibit 19 for details on applicable fees.
Special Delivery Requirements	See Guide Section 17.10 (b) for special delivery instructions for CMT-indexed ARMs.
*Single-Family Seller/Servicer Guide*	Refer to Guide Chapter 30.

Download a CMT-indexed ARMs fact sheet for more details.

Lender Benefits

CMT-indexed ARMs help you:

Increase your origination volume and meet the needs of more homebuyers with multiple CMT-indexed ARMs with various rate and cap structures.
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

Call your Freddie Mac representative.
Print out a CMT-indexed ARMs fact sheet.

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.