|A Mortgage may finance the purchase
of a property that is to be retrofitted with energy conservation
components, rehabilitated, renovated or refurbished. If the
Seller considers the cost of such improvements in setting
the terms of the Mortgage, the purchase price may be considered
the price paid for the Mortgaged Premises by the purchaser
plus the actual cost of improvements. The appraisal must
state the estimated market value after completion of the
improvements and be supported by a satisfactory completion
certificate. (See Form 442 for suggested format.)
(a) Energy retrofit not completed before Mortgage
Unless Escrows are established in accordance with the
requirements of Section 22.17 or for energy retrofit
in accordance with the requirements of this Section 23.8(a),
all improvements must be completed before delivery of
the Mortgage to Freddie Mac. If the improvements are
energy conservation components retrofitted to the Mortgaged
Premises and the retrofit has not been completed before
delivery of the Mortgage to Freddie Mac, the Seller/Servicer
may disburse the funds required for the completion of
the improvements into an Escrow account (meeting the
requirements of Section 23.8(b)) in the Borrower's name
and then deliver the Mortgage to Freddie Mac.
(b) Seller Warranties
By delivering a Mortgage secured by a property that has
an incomplete energy retrofit (as described above), the
Seller warrants that the following requirements are met:
When completing Form 11 or Form 13SF, the Seller should enter
the date of Mortgage funding for "Date of Note," not
the anticipated date of final disbursement of Escrow Funds.
- The improvements will be satisfactorily completed
within 120 days after the Delivery Date.
- An Escrow account in the Borrower's name has been
established and disbursements from that account are controlled
by the Seller or the Servicer.
- The amount of the Escrow account is not less than
the funds required to complete the improvements and not
more than 10 percent of the original amount of the Mortgage.
- An Escrow agreement exists in the Seller's file which
includes a description of the energy work to be completed
and a provision stating that , in the event of default
or if the improvements are not completed within 120 days
after the Deliver Date, the Seller or the Servicer must
either close the Escrow account and apply the remaining
balance in the Escrow account to curtail the Mortgage
if the work on the improvements has not begun, or complete
the improvements if the work has begun.
- Upon completion of the improvements, the Seller or
the Servicer will have the property inspected and will
retain in the Mortgage file a Form 442 certifying completion
of the improvements.