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Weighted Average Coupon (WAC) ARM Cash Execution

Sell ARMs with various margins and interest rates in a single contract

Freddie Mac's Weighted Average Coupon (WAC) ARM Cash execution lets you sell ARMs with various margins and interest rates (within specified ranges) in a single, flexible contract that's not limited by tight contracting terms. With this servicing-retained cash execution, you can reduce your exposure to interest rate fluctuations and the corresponding changes in ARM pricing on your ARMs that have not yet closed.

WAC ARM Cash offers you a liquid pipeline management tool for non-convertible Constant Maturity Treasury (CMT) and London Interbank Offered Rate (LIBOR)-indexed ARMs. You also receive additional flexibility, including commitments from 2 to 90 days, faster funding, and more.

Product Features

FeatureDescription
Eligible Mortgage Products
  • Eligible ARMs for purchase by Freddie Mac under WAC ARM Cash include:
    • First lien mortgages that are fully amortizing with an original maturity not exceeding 30 years
    • Nonconvertible CMT-indexed ARMs or LIBOR-indexed ARMs
    • Non-seasoned ARMs only
    • ARMs with a Note Rate, Margin, and a Lifetime Ceiling that are divisible by one-eighth of 1% (0.125%)
    • ARMs with a weighted average servicing spread for the contract that is no less than 0.25% and no greater than 0.375 %, and have a separate servicing spread for each mortgage allocated to the contract that is either 0.25% or 0.375%
  • Home Possible® Mortgages are also eligible for sale under WAC ARM Cash execution
  • Eligible Freddie Mac Relief Refinance MortgagesSM with LTV ratios less than or equal to 105 percent
  • Refer to Freddie Mac's Single-Family Seller/Servicer Guide Exhibit 17S for a list of eligible ARM products and their requirements
Contract Requirements
  • Contract extensions are not permitted, but two-way pairoffs are available
  • Contract requirements must be completed by the Purchase Contract Expiration Date
  • Loans must be within contract-level and loan-level tolerances to be eligible for sale, if not, a yield maintenance fee will be assessed
Settlement
  • Request a specific settlement date for each mortgage sold, or settlement will occur as soon as the requirements for sale have been met
  • Postsettlement delivery fees may apply based on certain characteristics of the mortgage

Key Benefits

  • Sell ARMs with various margins and interest rates (within specified ranges) in a single contract
  • Reduce exposure to interest rate fluctuations in the market
  • Expand the range of ARM products you can offer your borrowers, with an assured secondary market sale
  • Get faster settlement, often within the same day as certification (if edits are cleared and the loan is certified by noon)
  • Take advantage of market shifts with our two-way pairoff capability

For More Information

The information found on this page 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.

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