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FAQs on Land Trust Mortgages

Land Trust Mortgages are eligible for sale to Freddie Mac. The following FAQs provide supplemental information about our requirements, but are not a replacement or substitute for information found in the Single-Family Seller/Servicer Guide (Guide) or a Seller’s other Purchase Documents. Our complete requirements for Land Trust Mortgages are found in Guide Section 5103.7.

  1. How does Freddie Mac define a land trust?
  2. Do Freddie Mac requirements for Land Trust Mortgages apply to loans secured by a property owned by a community land trust?
  3. Who must be a borrower on a Land Trust Mortgage?
  4. Are there any requirements about who can be a Land Trust beneficiary?
  5. Does Freddie Mac have specific requirements about who can serve as a trustee of a land trust?
  6. Does the Land Trust agreement have to contain any specific provisions?
  7. Does Freddie Mac require that the property securing a Land Trust Mortgage be located in specific jurisdictions?
  8. Are there any restrictions on property type or occupancy?
  9. Guide Section 4101.8 has signature requirements for the note and security instrument. Are there any additional requirements for Land Trust Mortgages?
  10. Are there any special or additional documentation requirements?
  11. I am using the sample form of CABI that is an exhibit to my negotiated term of business for Land Trust Mortgages. I noticed that Guide Form 50 has a date of 12/06/17 and a copyright date of 2017. Can I continue to use the sample form with a date of April 2014 and a copyright date of 2014?
  12. Are there any special delivery requirements?
  13. Can the Land Trust Mortgage be delivered as a mortgage for a first-time homebuyer?
  14. Are there any special LTV ratio, collateral or underwriting requirements for Land Trust Mortgages?
  1. How does Freddie Mac define a land trust?

    In the Guide Glossary, Freddie Mac defines a land trust as follows:

    A land trust is a trust arrangement that meets all the following requirements:

    • The legal and equitable title to the trust property is held by a trustee;
    • The interest of any beneficiary of the trust is personal property, and
    • The beneficiary(ies) of the trust possesses (possess) the sole:
      • Power of direction and control over the trustee in dealing with title to the trust property;
      • Control of the management, operation, renting, and selling of the trust property; and
      • Right to the earnings and proceeds of the sale or rental of the trust property


    A Land Trust Mortgage is a mortgage secured by property for which the title is held by a land trust.

  2. Do Freddie Mac requirements for Land Trust Mortgages apply to loans secured by a property owned by a community land trust?

    No, a community land trust is not a trust. It is an approach to affordable housing preservation, under which a nonprofit organization or public entity purchases property and leases individual lots to moderate- and low-income individuals.

    Freddie Mac currently does not purchase mortgages secured by property owned in a community land trust arrangement, but plans to develop policies that are focused on shared equity programs such as those administered by community land trusts under our Duty to Serve Underserved Markets Plan.
  3. Who must be a borrower on a Land Trust Mortgage?

    At least one beneficiary of the land trust must be a borrower.
  4. Are there any requirements about who can be a land trust beneficiary?
    All beneficiaries of the land trust must be individuals.
  5. Does Freddie Mac have specific requirements about who can serve as a trustee of a land trust?
    Yes, we require that the trustee of the land trust is a corporation or financial institution customarily engaged in the business of acting as trustee for land trusts in the applicable jurisdiction.
  6. Does the Land Trust agreement have to contain any specific provisions?
    We do not require any specific provisions. We do require that a copy of the land trust agreement is retained in the mortgage file.
  7. Does Freddie Mac require that the property securing a Land Trust Mortgage be located in specific jurisdictions?
    Yes, we require that the property be located in a state that by statute, recognizes and permits the use of Land Trusts, such as Illinois.
  8. Are there any restrictions on property type or occupancy?

    All property types are eligible if the following occupancy requirements are met:

    • A 1- to 4-unit primary residence if it is occupied by a beneficiary of the land trust who is a borrower, or
    • A second home if it is occupied for some portion of the year by a beneficiary of the land trust who is a borrower.


    A 1- to 4-unit investment property also is eligible, provided at least one beneficiary of the land trust is a borrower.

  9. Guide Section 4101.8 has signature requirements for the note and security instrument. Are there any additional requirements for Land Trust Mortgages?
    Yes. Guide Section 5103.7(b) requires that a beneficiary of a land trust who is a borrower sign the note in that beneficiary’s individual capacity, and the trustee of the land trust execute the security instrument. For more information on Uniform Instrument signature requirements, see also Guide Section 4101.8.
  10. Are there any special or additional documentation requirements?
    Yes, each beneficiary of the land trust who is a borrower must execute a Collateral Assignment of Beneficial Interest (CABI). The requirements for the CABI can be found in Guide Section 5103.7(b)(ii). That provision also includes the signature requirements for the Seller and for the trustee of the land trust. Guide Form 50 is a sample form of CABI for Land Trust Mortgages secured by mortgaged premises located in Illinois.
  11. I am using the sample form of CABI that is an exhibit to my negotiated term of business for Land Trust Mortgages. I noticed that Guide Form 50 has a date of 12/06/17 and a copyright date of 2017. Can I continue to use the sample form with a date of April 2014 and a copyright date of 2014?
    Yes, Form 50 is unchanged from the sample form of CABI previously provided as part of a negotiated term of business. The 2017 date and copyright date of 2017 reflect the date of Guide Bulletin publication.
  12. Are there any special delivery requirements?
    No, there are no special delivery requirements.
  13. Can the Land Trust Mortgage be delivered as a mortgage for a first-time homebuyer?
    Yes. See the Guide Glossary definition of first-time homebuyer.
  14. Are there any special LTV ratio, collateral or underwriting requirements for Land Trust Mortgages?
    No. Each beneficiary of the land trust who is a borrower must be fully underwritten and must be a qualified borrower in the beneficiary’s individual capacity.

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