source:
  type: guide
  id: fhlmc-9603.3
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 9603.3 — Financial
    and legal obligations
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 9603.3 — Financial
    and legal obligations.
  coverage_tier: operative
obligations:
- id: fhlmc-9603.3-full
  canonical_id: fhlmc-9603.3-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 9603.3 — Financial
    and legal obligations
  type: do
  tags:
  - regulator-direct
  - fhlmc
  - freddie-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Freddie Mac Single-Family Seller/Servicer Guide Section 9603.3 — Financial
      and legal obligations
    source_class: fhlmc-guide
    source_url: https://guide.freddiemac.com/ci-guide
    snapshot_id: 5869ee9e606cd4ae
    fetched_at: '2026-05-23T00:27:40Z'
    content_hash: sha256:9a1b23e5024bb369e7a59d36b3702383c11ace68b5d209fdef791bc8f955c637
    paragraph_quote: '9603.3: Financial and legal obligations (09/10/25) This section
      contains requirements related to: ■ Property Condition Certificate (PCC) process
      ■ Condominium/homeowners association (HOA) or Cooperative Corporation assessments,
      ground rents and property taxes for REO ■ Eviction requirements for REO ■ Reimbursement
      of expenses incurred on an REO property ■ Final settlement between the Servicer
      and Freddie Mac for REO ■ Late execution of REO repurchase (a) PCC process The
      Servicer may review the REO Overview report, accessible via the “REO” tile of
      the Servicer’s Servicer Performance Profile (see Exhibit 88, Servicing Tools),
      for the property status, including the PCC completion date. The Servicer may
      also call Customer Service at 800-FREDDIE to obtain this information. Freddie
      Mac will not send the Servicer a written notice of the sale of the REO. (b)
      Condominium/HOA or Cooperative Corporation assessments, ground rents and property
      taxes for REO (i) REO located in a Condominium Project, Planned Unit Development
      (PUD) or Cooperative Project or subject to a leasehold estate Pursuant to Section
      9603.1(a), the Servicer is no longer responsible for paying condominium/ HOA
      or Cooperative Corporation assessments (see Chapter 8801 for special Servicing
      requirements for Cooperative Share Loans), Condominium Unit maintenance fees
      or Cooperative Unit Maintenance Fees, and ground rents, as applicable, upon
      the successful reporting of the foreclosure sale or deed-in-lieu of foreclosure
      to Freddie Mac via Resolve®. In special circumstances, Freddie Mac may require
      the Servicer to pay assessments after the foreclosure sale date, in order to
      protect Freddie Mac’s interests. Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 9603 As of 11/19/25 Page 9603-7 (ii) Reimbursement of duplicate assessments
      and property tax payments In the event the Servicer has complied with the requirements
      of this section and the duplication of assessments and property tax payments
      exists, Freddie Mac will reimburse the Servicer for its portion of the duplicate
      payment(s) in accordance with the requirement in this chapter and Chapter 9701.
      To receive reimbursement for the duplicate payment(s), the Servicer must submit
      a request for reimbursement to Freddie Mac via e-mail (see Directory 6) and
      include in that request proof of the Servicer’s compliance with the applicable
      requirements and proof of the payment of the expenses. Freddie Mac will not
      reimburse the Servicer for any such duplicate payments if the Servicer does
      not meet the requirements in this section and/or the requirements in Chapter
      9701. In such instances, the Servicer may seek a refund from the condominium
      association, HOA or Cooperative Corporation or taxing authority to which duplicate
      payments were made. (c) Eviction requirements for REO Freddie Mac will conduct
      the eviction proceedings if the property is occupied. If Freddie Mac requests
      information or documentation from the Servicer pertaining to the eviction, then
      the Servicer must provide the information or documentation to Freddie Mac within
      the requested time frames. (d) Reimbursement of expenses incurred on an REO
      property For an REO not acquired by a third party at the foreclosure sale or
      for legal expenses not legally collectible from the third-party purchaser, Freddie
      Mac will reimburse the Servicer for reasonable expenses incurred in accordance
      with the provisions in Chapter 9701; Exhibit 57A, Approved Attorney, Foreclosure,
      Mediation, Postponement Fees and Title Expenses; and/or those approved by Freddie
      Mac during the foreclosure process. (e) Final settlement between the Servicer
      and Freddie Mac for REO After Freddie Mac has received all proceeds from the
      sale of the REO and the Servicer has submitted all expense reimbursement requests
      to Freddie Mac through PAID (Payments Automated Intelligent and Dynamic) (see
      Exhibit 88), Freddie Mac will calculate and complete the final settlement of
      foreclosure expenses between the Servicer and Freddie Mac. Freddie Mac will
      bill the Servicer for the Servicer’s proportionate share of any expenses Freddie
      Mac has advanced during the REO holding period if Freddie Mac is not able to
      recover them from the Servicer’s share of the proceeds. Otherwise, Freddie Mac
      will net these expenses against the Servicer’s proportionate share of the sale
      proceeds, and Freddie Mac will send the balance of the Servicer’s share to the
      Servicer. Freddie Mac will also Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 9603 As of 11/19/25 Page 9603-8 collect any fees, charges or other amounts
      the Servicer owes Freddie Mac with this settlement. (f) Late execution of REO
      repurchase Freddie Mac may request a Servicer to repurchase a Mortgage post-foreclosure
      and after investor reporting ceases and the loan has been transferred to REO.
      If the Servicer does not remit proceeds to Freddie Mac in accordance with the
      time frame and requirements in Section 8303.3(f), the Servicer will be assessed
      a late execution of REO repurchase compensatory fee. The compensatory fee will
      be calculated by multiplying the amount of the remittance shortage by the highest
      quoted prime rate on the last Business Day of the month in which the REO repurchase
      occurred in the print edition of The Wall Street Journal in its regular column
      entitled “Money Rates” plus 3%. If the prime rate is not published, then Freddie
      Mac will determine the comparable rate. The amount of the late remittance and
      the number of days that the remittance is late is based on a 365-day year and
      determines the amount of the late execution of REO repurchase compensatory fee
      due to Freddie Mac. There is a minimum charge of $50 on any late remittance.
      For purposes of calculating the charge, Freddie Mac uses the rate described
      above for any late remittances occurring between the first day after the Accounting
      Cycle and up to and including the last day of the following Accounting Cycle.
      Note: Refer to Section 8303.5(h) for the compensatory fee assessed for late
      execution of a repurchase request if not an REO. Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 9701 As of 04/08/26 Page 9701-1 Chapter 9701: Reimbursement of
      Expenses 9701.1: General expense reimbursement policies (09/10/25) This section
      contains requirements related to: ■ Reimbursement of expenses ■ Servicer expense
      approval authority ■ Request for pre-approval (RPA) ■ Freddie Mac’s rights concerning
      expense reimbursement ■ Expense reimbursement submission time frames (a) Reimbursement
      of expenses This chapter contains Freddie Mac’s guidelines and requirements
      for using PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88,
      Servicing Tools) to request and obtain reimbursement for eligible expenses incurred
      in connection with a workout or foreclosure of a Mortgage serviced for Freddie
      Mac. The expense reimbursement process is governed by the requirements in this
      chapter, Sections 2401.1 and 2404.2, Chapter 2405, other Purchase Documents
      and the following: 1. The terms and conditions of the Mortgage documents 2.
      Applicable law 3. Requirements of the FHA, RHS, VA or MI, if applicable If foreclosure
      proceedings are discontinued, all fees and costs the Servicer incurs must be
      collected from the Borrower (unless prohibited by applicable law). The Servicer
      must not charge the Borrower for: ■ Any costs or fees that the Servicer has
      not incurred, and ■ Reinstatement or relief fees that are not allowed by applicable
      law or the Purchase Documents Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 9701 As of 04/08/26 Page 9701-2 If applicable law prohibits reimbursement
      from the Borrower, Freddie Mac will share the expenses with the Servicer in
      proportion to Freddie Mac’s interest in the Mortgage. (b) Servicer expense approval
      authority Servicers may incur legal and other expenses in accordance with the
      established limits in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts;
      Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and
      Title Expenses, and Exhibit 57B, Approved Bankruptcy Attorney Fees, without
      Freddie Mac’s prior approval. (c) RPA Prior to the Servicer incurring the expense
      or expenses, if possible, the Servicer must obtain written pre-approval from
      Freddie Mac by submitting an RPA via the RPA functionality in PAID to: ■ Exceed
      the expense limits in Exhibits 57, 57A and Exhibit 57B ■ Incur certain expenses
      as set forth in Exhibit 74, Expense and Income Codes for Expense Reimbursement
      Requests ■ Incur expenses not set forth in Exhibit 74 All RPAs will require
      the Servicer to submit supporting documentation. Freddie Mac will not provide
      pre-approval for, or reimbursement of expenses considered non-reimbursable (as
      set forth in Section 9701.4(a)). (d) Freddie Mac’s rights concerning expense
      reimbursement Freddie Mac reserves the following rights: 1. Freddie Mac may
      deny the Servicer’s request for reimbursement or curtail a portion of such expenses
      if Freddie Mac does not receive the Servicer’s request within the required time
      frames specified in Section 9701.1(e) 2. Freddie Mac will not reimburse the
      Servicer for expenses incurred on Mortgages repurchased by the Servicer or Mortgages
      subject to full recourse or indemnification. However, when applicable, the Servicer
      must submit expenses on any Mortgage that is pending repurchase. If the Servicer
      is required to repurchase Freddie Mac’s interest in a Mortgage in accordance
      with Chapter 3602, Freddie Mac’s calculation of the repurchase price will include
      all amounts the Servicer was reimbursed. 3. If Freddie Mac does not exercise
      its right to set off amounts owed to Freddie Mac against other funds owed to
      a Servicer, Freddie Mac will bill the Servicer for expenses and/or losses incurred
      or discovered after the repurchase notification date and/or the date of Freddie
      Mac’s receipt of the repurchase proceeds from the Servicer Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-3 4. If Freddie
      Mac audits the Servicer’s reimbursement requests and determines that a previously
      reimbursed expense was not eligible for reimbursement, Freddie Mac may bill
      the Servicer for any amounts due to Freddie Mac on the Servicer’s monthly Servicer
      Non-Performing Loans Invoice. Note: Refer to Section 9102.1 for information
      on the payment of Servicing Non- Performing Loans Invoices via an Automated
      Clearing House draft. 5. The expenses submitted on the final claim for a Mortgage
      insured by the FHA or guaranteed by the VA or RHS not subject to recourse or
      indemnification will not be reimbursed until Freddie Mac has received the full
      amount of claim proceeds from the applicable entity. Note: Freddie Mac will
      reimburse the Servicer for additional expenses that appear on the claim forms
      the Servicer submits to the applicable entity only if Freddie Mac receives these
      funds in the claim proceeds from the applicable entity. 6. Freddie Mac reserves
      the right to require the Servicer to obtain competitive bids from multiple vendors
      on property preservation work that exceeds the expense limits specified in Exhibit
      57 (e) Expense reimbursement submission time frames Expenses for which the Servicer
      is seeking reimbursement must be submitted in PAID. Servicers may enter expenses
      in PAID as they are accrued; however, Servicers will not receive reimbursement
      until the mortgage modification, short sale or charge-off has settled on Freddie
      Mac systems or the deed-in-lieu of foreclosure, third-party sale or foreclosure
      sale has been successfully reported to Freddie Mac. Expense reimbursement submission
      time frames provided for in this Section 9701.1(e) are not applicable for Mortgages
      insured by the FHA or guaranteed by the VA or RHS. For expenses incurred on
      Mortgages insured by the FHA or guaranteed by the VA or RHS not subject to recourse
      or indemnification, the Servicer must submit expenses in PAID after Freddie
      Mac has received the claim payment from the applicable entity (see Section 9603.2(a)
      on FHA/VA/RHS claim filing and Section 9603.2(d) on receipt of claim payment),
      but no later than 60 days after Freddie Mac has received the claim payment.
      (i) Reimbursement of loan modification expenses With the exception of recordation
      fees, Servicers must enter all loan modification-related expenses in PAID that
      were not capitalized in the modification or otherwise paid by the Borrower (including
      unrecoverable expenses described in Section 9701.1(e)(iv)) no later than 90
      days after the settlement date in Freddie Mac systems. Recordation fees (expense
      code 300003) must be submitted no later than 180 days after the settlement date
      in Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26
      Page 9701-4 Freddie Mac systems. (ii) Reimbursement of expenses for short-sales,
      charge-offs, deeds-in-lieu of foreclosure, third-party sales and foreclosure
      sales Servicers must enter the initial expenses related to a short-sale, charge-off,
      deed-in-lieu of foreclosure, third-party foreclosure sale or a foreclosure sale
      in PAID that were not paid by the Borrower (including unrecoverable expenses
      described in Section 9701.1(e)(iv)) no later than 45 days after the workout
      is settled on Freddie Mac systems or the foreclosure sale is successfully reported
      to Freddie Mac. Additional expenses must be entered no later than 60 days after
      the workout is settled on Freddie Mac systems or the foreclosure sale is successfully
      reported to Freddie Mac. Note: During the REO holding period (i.e., the time
      period from Freddie Mac’s acquisition of the property to the sale of the REO),
      the Servicer may review the status of the REO by monitoring the REO Overview
      Report, accessible via the “REO” tile of the Servicer’s Servicer Performance
      Profile (see Exhibit 88). The Servicer may also call Customer Service at 800-FREDDIE
      to obtain this information. Freddie Mac will not send the Servicer a written
      notice of the sale of the REO. Usually, the Servicer only needs to submit one
      claim, referred to as the “final” claim. Any additional claim submissions are
      referred to as “supplemental.” (iii)Reimbursement of other expenses Servicers
      must enter the initial expenses for the following expenses in PAID no later
      than 45 days after completion of the event, and any additional expenses must
      be entered no later than 60 days: ■ Expenses (e.g., legal fees and/or legal
      costs) considered unrecoverable from the Borrower under applicable federal,
      State or local law upon reinstatement or payoff of the Mortgage (including unrecoverable
      expenses described in Section 9701.1(e)(iv)) ■ Bankruptcy completion on a current
      Mortgage for which the Servicer obtained Freddie Mac’s written pre-approval
      to incur the legal expense via the RPA functionality in PAID pursuant to Section
      9401.2(c)(i) (iv) Unrecoverable expenses Freddie Mac will reimburse certain
      expenses (e.g., legal fees and/or legal costs), as set forth in Exhibit 74 considered
      unrecoverable from the Borrower under applicable federal, State or local law
      upon reinstatement or pay off of the Mortgage or upon completion of a mortgage
      modification. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As
      of 04/08/26 Page 9701-5 For any other expense a Servicer believes to be unrecoverable
      from the Borrower under applicable federal, State or local law, the Servicer
      must obtain written pre-approval from Freddie Mac by submitting an RPA via the
      RPA functionality in PAID.'
  judgment: false
