source:
  type: guide
  id: fhlmc-9701.5
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 9701.5 — Audit
    and compliance requirements
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 9701.5 — Audit
    and compliance requirements.
  coverage_tier: operative
obligations:
- id: fhlmc-9701.5-full
  canonical_id: fhlmc-9701.5-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 9701.5 — Audit
    and compliance requirements
  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 9701.5 — Audit
      and compliance requirements
    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: '9701.5: Audit and compliance requirements (09/10/25) This section
      contains requirements related to: ■ Standard supporting documentation for expense
      reimbursement ■ Expense reimbursement audits ■ Consent Agreement terms and conditions
      (a) Standard supporting documentation for expense reimbursement With the exception
      of Mortgages insured by the FHA or guaranteed by the VA or RHS not subject to
      recourse or indemnification, Freddie Mac generally will not require the Servicer
      to submit supporting documentation with its expense reimbursement requests and
      resubmission of denied reimbursement requests. However, there are situations,
      such as audits of reimbursement requests, where Freddie Mac will instruct the
      Servicer to provide standard supporting documentation. Standard supporting documentation
      for expense reimbursement requests includes, but is not limited to: 1. Proof
      of all disbursements: Copies of original bills/invoices of services performed
      for expenses submitted on the claim that include, but are not limited to, the
      following: ■ Legal fees and costs, ■ Property inspection, ■ Property preservation
      costs, ■ Primary mortgage insurance premiums, and Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-23 ■ Condominium/homeowners
      association (HOA) or Cooperative Corporation assessments. (See Chapter 8801
      for special Servicing requirements for Cooperative Share Loans.) 2. A copy of
      the project declaration highlighting, if applicable, the portion of the condominium/HOA
      assessments that may take priority over the Mortgage. For Cooperative Share
      Loans, refer to Section 8801.2(d) regarding standard supporting documentation
      for reimbursement of expenses incurred on a Cooperative Share Loan. 3. Copy
      of the Mortgage history beginning 12 months prior to the DDLPI through the date
      Freddie Mac requests the Mortgage history. Proof of payment of normal Escrow
      items is not required if shown in the history. However, if property tax payments
      are not consistent with the other taxes or if they were paid in a lump sum,
      the Servicer must submit documentation from the taxing authority providing the
      breakdown of the tax amount, including any late charges, penalties and interest
      (if applicable). 4. The buydown account balance, if applicable For expense reimbursement
      requests on Mortgages insured by the FHA or guaranteed by the VA or RHS not
      subject to recourse or indemnification, Freddie Mac requires the Servicer to
      provide supporting documentation, including, but not limited to: ■ A copy of
      the claim for benefits filed with the applicable entity ■ Any communication
      or requests for information from the applicable entity regarding the claim,
      including any response, and ■ Documentation showing the itemization of the distribution
      of the claim payment received from the applicable entity (e.g., loss claim packet
      or advice of payment letter) In the event a Servicer is required to submit supporting
      documentation for Freddie Mac to process the claim, the Servicer’s submission
      must meet the appropriate submission deadline in Section 9701.1(e) or any deadline
      given in Freddie Mac’s request for documentation. (b) Expense reimbursement
      audits Freddie Mac will perform audits of expenses to ensure compliance with
      Freddie Mac’s requirements. If Freddie Mac finds that an expense is not in compliance
      with applicable requirements, Freddie Mac may deny the reimbursement or adjust
      the claim. Freddie Mac will communicate an audit request to the Servicer via
      PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing
      Tools). The Servicer will then be required to submit the standard supporting
      documentation via PAID within seven Business Days (refer to Section 9701.5(a)).
      If the Servicer fails to submit the required documentation by the deadline,
      the Servicer’s expense reimbursement request will be denied, and the Servicer
      will not be permitted to resubmit the claim to Freddie Mac. Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-24 If Freddie Mac
      determines through the audit that an expense was not eligible for reimbursement,
      Freddie Mac will: ■ Provide the Servicer with an explanation of Freddie Mac’s
      audit findings, and ■ Release the expense back to the Servicer or adjust the
      expense based on Freddie Mac’s audit findings If Freddie Mac determines through
      an audit that a previously reimbursed expense was not eligible for reimbursement,
      Freddie Mac will bill the Servicer for the amounts due back to Freddie Mac on
      its monthly Servicer Non-Performing Loans Invoice. (Refer to Section 9102.1
      for information on the payment of Servicing Non-Performing Loans Invoices via
      an Automated Clearing House draft.) If Freddie Mac determines through the audit
      that Freddie Mac owes funds to the Servicer, Freddie Mac will remit the funds
      to the Servicer within 30 calendar days of the date Freddie Mac notifies the
      Servicer of the audit findings. (c) Consent Agreement terms and conditions (i)
      Defined terms For purposes of this Section 9701.5(c), the following terms have
      the prescribed meaning: Definitions from Exhibit 103, Consent Agreement Incorporated
      Provisions A Advances Advances of delinquent principal and interest (subject
      to the provisions of Article III of this Exhibit 103), advances of taxes and
      insurance, and all other advances, including foreclosure and liquidation and
      related expenses required to be made by Servicer under the Guide and/or the
      other Purchase Documents, including, but not limited to, the requirements of
      Guide Chapter 9701, and Guide Sections 8301.4(g) and 7101.6(a), or other replacement
      chapters or sections of the Guide governing reimbursement of advances, with
      respect to the Covered Mortgages. Advance Financing Financing made by Secured
      Party to Servicer to fund Advances subject to reimbursement from Freddie Mac.
      Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26
      Page 9701-25 C Consent Agreement The agreement entered into by and among Freddie
      Mac, Servicer and Secured Party pursuant to which Freddie Mac gives its consent
      to an Advance Financing (as such term is defined in Exhibit 103) as set forth
      in Section 9701.5(c) and Exhibit 103, and any modifications, supplements or
      amendments to the same. R Reimbursement Amounts Amounts available for reimbursement
      to Servicer by Freddie Mac in connection with Advances related to the Covered
      Mortgages. (ii) Eligibility This Section 9701.5(c) is not a general offering
      and is only available to specific Servicers. This Section 9701.5(c) does not
      apply unless and until Freddie Mac and the Servicer execute and deliver a Consent
      Agreement, in form and substance acceptable to Freddie Mac in its sole and absolute
      discretion, implementing these terms and conditions. (iii)Consent Agreements
      With the prior express written consent of Freddie Mac, a Servicer, in order
      to obtain Advance Financing, may grant a security interest to a third-party
      lender in all of such Servicer’s present and future rights, as expressly set
      forth in and subject to the limitations of the Guide and/or the other Purchase
      Documents, for the reimbursement of Advances required to be made by the Servicer
      under the Guide and/or the other Purchase Documents, including, but not limited
      to, the reimbursement of expense requirements of Chapter 9701, Servicer advances
      required in Section 8301.4(g) and transfer of funds requirements in Section
      7101.6(a). If Freddie Mac consents to an Advance Financing, it will indicate
      its consent only by executing a Consent Agreement, which must also be executed
      by the Servicer and its Secured Party, in form and substance acceptable to Freddie
      Mac in its sole and absolute discretion. All Consent Agreements must include
      the following language: This Consent Agreement incorporates the provisions of
      Section 9701.5(c) of the Guide and the provisions of Guide Exhibit 103 by reference
      and such provisions are a substantive contractual part of this Consent Agreement
      such that each of the Servicer and its Secured Party expressly agrees: Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-26
      ■ That Guide Section 9701.5(c) is operative as to the Servicer and its Secured
      Party and ■ Each of the Servicer and its Secured Party is bound by the terms
      and conditions set forth in Guide Section 9701.5(c) and Guide Exhibit 103 Any
      purported or attempted assignment, sale, hypothecation, pledge or transfer of,
      or grant of a security interest in Reimbursement Amounts or any other purported
      or attempted Advance Financing transaction, without execution and delivery of
      a Consent Agreement is prohibited and shall be null and void. The Reimbursement
      Amounts are not an interest in nor a component of Servicing Contract Rights,
      nor are they proceeds or cashflow derived from Servicing Contract Rights. No
      Advance Financing shall be construed as a division of the Servicing Contract
      Rights. A Servicer may make a separate request to Freddie Mac for consent to
      enter into a financing transaction secured by Servicing Contract Rights, and
      the proceeds and cashflow derived from the Servicing Contract Rights (a “Servicing
      Contract Rights Financing”), pursuant to Guide Section 1101.2(c) and Guide Exhibit
      33A, Acknowledgment Agreement Incorporated Provisions, Exhibit 33B, Acknowledgment
      Agreement (Syndication) Incorporated Provisions, Exhibit 33C, Acknowledgment
      Agreement (Cashflow) Incorporated Provisions, or Exhibit 33D, Acknowledgment
      Agreement (Combination) Incorporated Provisions, as applicable. In no event
      shall any Advance Financing be cross-collateralized with any Collateral under
      any Servicing Contract Rights Financing. Any collateral under any Advance Financing
      is and will continue to be at all times separate and distinct from any and all
      Collateral under any Servicing Contract Rights Financing.” (iv) Collateral Pledge
      Agreements Freddie Mac reserves the right to condition its entry into a Consent
      Agreement on the Servicer’s pledge of collateral pursuant to a Collateral Pledge
      Agreement in substantially the form and substance of Exhibit 104, Collateral
      Pledge Agreement.'
  judgment: false
