source:
  type: guide
  id: fhlmc-9201.6
  authority: Freddie Mac Single-Family Seller/Servicer Guide Section 9201.6 — Alternatives
    to foreclosure
  description: Freddie Mac Single-Family Seller/Servicer Guide Section 9201.6 — Alternatives
    to foreclosure.
  coverage_tier: operative
obligations:
- id: fhlmc-9201.6-full
  canonical_id: fhlmc-9201.6-full
  section: Freddie Mac Single-Family Seller/Servicer Guide Section 9201.6 — Alternatives
    to foreclosure
  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 9201.6 — Alternatives
      to foreclosure
    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: '9201.6: Alternatives to foreclosure (09/10/25) This section
      contains requirements related to: ■ Reinstatements ■ Relief options ■ Workout
      options ■ Charge-offs Alternatives to foreclosure are reinstatements and relief
      and workout options that, when used, result in a resolution of a Mortgage Delinquency
      without foreclosing on the property. Below is a list of the Freddie Mac alternatives
      to foreclosure, (a) Reinstatements A reinstatement restores a delinquent Mortgage
      to current status either with a lump-sum payment of all amounts due or a partial
      payment followed by a repayment plan. Freddie Mac has two types of reinstatements:
      ■ Full reinstatement ■ Partial reinstatement Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 9201 As of 02/11/26 Page 9201-10 Note: Refer to Chapter 9203 for
      additional information on reinstatements. (b) Relief options A relief option
      provides temporary relief to a Borrower and allows the Borrower to cure the
      Delinquency over a defined period of time. Freddie Mac’s relief options are:
      ■ Repayment plan ■ Forbearance plan ■ Payment Deferral Note: Refer to Chapter
      9203 for additional information on relief options. (c) Workout options A workout
      option is an alternative to foreclosure that eliminates or reduces the potential
      loss that Freddie Mac would incur if the property securing the Mortgage were
      acquired through a foreclosure sale. A Mortgage modification is a workout option
      that will enable the Borrower to retain homeownership. Note: Refer to Chapter
      9206 for additional information about modifications. Freddie Mac’s workout options
      for situations where it is not feasible for the Borrower to retain the property
      are: ■ Short sale ■ Deed-in-lieu of foreclosure ■ Workout mortgage assumption
      Additional information about workout options Topic Guide location Workout Mortgage
      assumption Chapter 9207 Freddie Mac Standard Short Sale Chapter 9208 Freddie
      Mac Standard Deed-in-Lieu of Foreclosure Chapter 9209 Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 9201 As of 02/11/26 Page 9201-11 (d) Charge-offs
      Freddie Mac has a charge-off option available for use under certain conditions.
      A charge-off ceases collection efforts on a Mortgage. Note: See Section 9210.1(b)
      for situations when Freddie Mac requires Servicers to make a recommendation
      for a charge-off. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9202
      As of 12/17/25 Page 9202-1 Chapter 9202: Evaluating the Borrower 9202.1: Delinquency
      and Borrower hardship assessment (09/10/25) This section contains requirements
      related to: ■ Delinquency, default and imminent danger of default ■ Verifying
      a Borrower’s hardship ■ Borrower income documentation for workout or relief
      options ■ Analyze the Mortgage characteristics and terms ■ Analyze the reason
      for Delinquency ■ Determine the best course of action for Delinquency (a) Delinquency,
      default and imminent danger of default Throughout this chapter, Chapters 9203
      through 9210 and 9301, Freddie Mac will use the term Delinquency, which is defined
      in the Glossary, rather than the term default. Many of the specific requirements
      for workout options are tied to the severity of the Delinquency. Except as set
      forth in Sections 9206.1(e), 9208.1(c) and 9209.2, a Borrower is considered
      to be in imminent danger of default, if, based upon the facts and circumstances
      of the particular Mortgage and using prudent business judgment, it appears more
      likely than not that the Borrower will default on his or her Mortgage payments
      within the next 12 months. A Borrower must be delinquent in his or her Mortgage
      payments, or be in imminent danger of default, to be considered for an alternative
      to foreclosure. The Borrower must document an eligible hardship to be eligible
      for certain workout and relief options. Additional requirements related to delinquency,
      default and imminent danger of default Topic Guide location Verifying a Borrower''s
      hardship Section 9202.1(b) Reinstatements and Relief Options Chapter 9203 Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 9202 As of 12/17/25 Page 9202-2
      Freddie Mac Workout Options Chapter 9204 Modifications Chapter 9206 Workout
      Mortgage Assumption Chapter 9207 Freddie Mac Standard Short Sale Chapter 9208
      Freddie Mac Standard Deed-in-Lieu of Foreclosure Chapter 9209 Charge-off Chapter
      9210 (b) Verifying a Borrower’s hardship (i) Eligible hardships A Borrower must
      have one or more of the eligible hardships identified below in order to be eligible
      for certain relief or workout options. The Borrower must document the financial
      hardship by: ■ Signing and submitting to the Servicer a completed Form 710,
      Mortgage Assistance Application; and ■ Providing to the Servicer the applicable
      hardship documentation described below. Applicable hardship documentation Hardship
      Required hardship documentation Unemployment ■ Not required Reduction in income:
      a hardship that has caused a decrease in the Borrower’s income due to circumstances
      outside the Borrower’s control (e.g., elimination of overtime, reduction in
      regular working hours, or a reduction in base pay) ■ Not required Increase in
      housing expenses: a hardship that has caused an increase in the Borrower’s housing
      expense due to circumstances outside the Borrower’s control (e.g., uninsured
      losses, increased ■ Not required Freddie Mac Single-Family Seller/Servicer Guide
      Chapter 9202 As of 12/17/25 Page 9202-3 Applicable hardship documentation Hardship
      Required hardship documentation property taxes, or an HOA special assessment)
      Disaster (natural or man-made) impacting the property or Borrower’s place of
      employment ■ Not required Long-term or permanent disability; serious illness
      of a Borrower/co-Borrower or dependent family member ■ Written statement from
      the Borrower, or other documentation verifying disability or illness Note: Detailed
      medical information is not required, and information from a medical provider
      is not required Divorce or legal separation ■ Final divorce decree or final
      separation agreement; OR ■ Recorded quitclaim deed Separation of Borrowers unrelated
      by marriage, civil union or similar domestic partnership under applicable law
      ■ Recorded quitclaim deed; OR ■ Legally binding agreement evidencing that the
      non-occupying Borrower or co-Borrower has relinquished all rights to the property
      Death of a Borrower or death of either the primary or secondary wage earner
      ■ Death certificate; OR ■ Obituary or newspaper article reporting the death
      Distant employment transfer/ Relocation (transfer or relocation must be greater
      than 50 miles one-way from Borrower’s current Primary Residence) For active-duty
      service members: Permanent Change of Station (PCS) orders or letter showing
      transfer For employment transfers/new employment: Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 9202 As of 12/17/25 Page 9202-4 Applicable hardship
      documentation Hardship Required hardship documentation ■ Copy of signed offer
      letter or notice from employer showing transfer to a new location or notice
      from employer showing transfer to a new location or written explanation if employer
      documentation is not applicable; AND ■ Documentation that reflects the amount
      of any relocation assistance provided (not required for those with PCS orders)
      Other hardship that is not covered above ■ Written explanation describing the
      details of the hardship and relevant documentation (ii) Situations not considered
      to be an eligible hardship Any other events or circumstances other than those
      described above in Section 9202.1(b)(i) are not considered eligible hardships
      for purposes of eligibility for a workout option or certain relief options under
      the Guide. Example: The following are not considered eligible hardships: 1.
      Depreciation in the value of the Mortgaged Premises 2. Temporary income interruption,
      but the Borrower has assets (liquid or that can be liquidated) available to
      pay the Mortgage 3. Interest rate adjustment on an ARM or re-amortization of
      an interest only Mortgage upon expiration of the interest only period (c) Borrower
      income documentation for workout or relief options (i) Verification of income
      A Servicer must verify the income for all Borrowers on the Note when evaluating
      a Borrower for certain workout or relief options. The Borrower’s income must
      be supported by documentation that is not more than 90 days old as of the date
      the Servicer Freddie Mac Single-Family Seller/Servicer Guide Chapter 9202 As
      of 12/17/25 Page 9202-5 first determines that the Borrower submitted a complete
      Borrower Response Package. (Refer to Section 9102.5 for information on the Borrower
      Response Package.) In addition to the income documentation required in Section
      9202.1(c)(ii), in the following circumstances, a Servicer must obtain a Borrower’s
      tax transcript by processing Internal Revenue Service (IRS) Form 4506-C, Request
      for Transcript of Tax Return. < There are inconsistencies in the information
      the Borrower provided (e.g., information the Borrower provided in Form 710,
      Mortgage Assistance Application, and the income documentation); The Borrower
      is self-employed or is a fiscal year tax filer (i.e., files federal income tax
      returns based on a fiscal year – a tax year beginning in one calendar year and
      ending in the following year) and the Borrower has not provided any of the required
      documentation specified in Section 9202.1(c)(ii) to support the income type;
      or < As otherwise requested by Freddie Mac IRS Form 4506-C is available at http://www.irs.gov.
      Servicers are encouraged to use the IRS Income Verification Express Service
      (IVES), which uses secure e-mail to deliver tax return transcripts to Servicers.
      (ii) Required income documentation The Borrower must document all types of income
      by providing the following income documentation as part of the Borrower Response
      Package: Borrower Response Package documentation requirements Income types Required
      documentation Income that requires IRS Form 4506-C to be obtained and processed
      Borrowers who (i) are self-employed or (ii) are fiscal year tax filers and who
      have not provided any of the required documentation specified below, must provide
      IRS Form 4506-C, Request for Transcript of Tax Return. Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 9202 As of 12/17/25 Page 9202-6 Borrower Response
      Package documentation requirements Income types Required documentation Gross
      (pre-tax) wages, salaries and overtime pay, commissions, tips, and bonuses ■
      Most recent pay stub and documentation of year-to-date earnings if not on paystub;
      OR ■ Two most recent bank statements showing income deposit amounts (Note: When
      bank statements provide net income, for this and subsequent income types, refer
      to Section 9202.1(c)(iii), below, for instructions on how to calculate gross
      income) Self-employment income ■ Two most recent bank statements showing self-employed
      income deposits amounts; OR ■ Most recent signed and dated quarterly or year-to-date
      profit/loss statement; OR ■ Most recent complete and signed business tax return;
      OR ■ Most recent complete and signed individual federal income tax return Rental
      income ■ Two most recent bank statements demonstrating receipt of rent; OR ■
      Two most recent deposited rent checks Taxable Social Security, disability or
      death benefits, pension, public assistance, housing allowance or adoption assistance
      ■ Two most recent bank statements showing deposit amounts; OR ■ Award letter
      or other documentation showing the amount and frequency of the benefits such
      as letters, exhibits, a disability policy or benefits statement from the provider
      Non-taxable Social Security or disability income ■ Two most recent bank statements
      showing deposit amounts; OR ■ Award letter or other documentation showing the
      amount and frequency of the benefits such as letters, exhibits, a disability
      policy or benefits statement from the provider Freddie Mac Single-Family Seller/Servicer
      Guide Chapter 9202 As of 12/17/25 Page 9202-7 Borrower Response Package documentation
      requirements Income types Required documentation Unemployment benefits ■ Not
      required Non-Borrower income Servicers must include non-Borrower household income
      in the monthly gross income if: ■ It is voluntarily provided by the Borrower
      ■ The Servicer verifies that the non-Borrower occupies the subject property
      as a Primary Residence based on a review of a credit report or other documentation
      (e.g., utility bills, paystubs, benefits statements); and ■ There is documentary
      evidence to support that the income has been, and reasonably can continue to
      be, relied upon to support the Mortgage payment A Servicer should not consider
      expenses of non-Borrower household members, but may only consider the percentage
      of his or her income that the non-Borrower routinely contributes to the household.
      Investment or insurance income ■ Two most recent investment or insurance income
      statements showing receipt of income; OR ■ Two most recent bank statements supporting
      receipt of the income Other types of income not listed above (Note: Only include
      alimony, child support, or separate maintenance income if the Borrower chooses
      to have it considered for repaying the Mortgage) ■ Two most recent bank statements
      showing receipt of income; OR ■ Other documentation showing the amount and frequency
      of the income Freddie Mac Single-Family Seller/Servicer Guide Chapter 9202 As
      of 12/17/25 Page 9202-8 As outlined in Section 5302.4, the following are acceptable
      alternatives for the Borrower’s signature on the tax return(s): ■ Evidence the
      tax returns were filed electronically (e.g., signed Form 8879, IRS e-file Signature
      Authorization or equivalent), or ■ Tax transcripts that validate the information
      on the unsigned tax returns, or ■ A completed IRS Form 4506-C signed by the
      Borrower, or alternate form acceptable to the IRS that authorizes the release
      of comparable tax information to a third party Note: All income must comply
      with all applicable federal, State and local laws, ordinances, regulations,
      orders and regulatory guidance in accordance with Section 1301.2. (iii)Determining
      gross monthly income The Borrower’s gross income includes all taxable and non-taxable
      income, before any payroll deductions, including, but not limited to: ■ Base
      wages and salaries, overtime pay, commissions ■ Fees, tips, bonuses, housing
      allowances ■ Other compensation for personal services, Social Security payments,
      including Social Security received by adults on behalf of minors or by minors
      intended for their own support ■ Payments from annuities, insurance policies,
      retirement funds, and pensions ■ Disability or death benefits, and positive
      net rental income, except that the Borrower may, but is not required to, provide
      alimony, child support or separation maintenance income The Servicer must gross
      up all non-taxable income received by the Borrower only if the Borrower is able
      to provide documentation verifying that the income is not taxable. The Servicer
      must maintain such documentation in the Mortgage file. To gross up non-taxable
      income, the Servicer must multiply the amount of the non-taxable income by 1.25;
      if the actual amount of federal or State taxes that would be paid is more than
      25% of the Borrower’s nontaxable income, the Servicer may use the actual percentage.
      The Servicer must gross up all net income when the Borrower submits bank statements
      to support the income type. To gross up net income, the Servicer must: Freddie
      Mac Single-Family Seller/Servicer Guide Chapter 9202 As of 12/17/25 Page 9202-9
      1. Establish the Borrower’s monthly net income in accordance with this Section
      9202.1(c); and 2. Multiply the amount of the monthly net income by 1.25 to determine
      the Borrower’s monthly gross income Refer to Exhibit 101, Income Calculation
      Guidelines for Alternative to Foreclosure Options, for additional instructions
      on calculating income. (iv) Substitution of income documents When a Borrower
      is in an active Chapter 7 or Chapter 13 bankruptcy, the Servicer may accept
      copies of the bankruptcy schedules and tax returns (if returns are required
      to be filed) in lieu of Form 710, and IRS Form 4506-C, and may use this information
      to determine Borrower eligibility (with the income documentation). Servicers
      should request the schedules and tax returns from the Borrower, Borrower’s counsel
      or bankruptcy court. If the bankruptcy schedules are more than 90 days old as
      of the date that such schedules are received by the Servicer, the Borrower must
      provide updated evidence of income in accordance with this section. (v) Use
      of Third Party Vendors Servicers are reminded that per existing guidance around
      the use of outsourced vendors in Section 8102.1(f), they may utilize Third Party
      Vendors for the verification of income as outlined in Section 9202.1(c) above
      as long as they comply with all requirements in the Guide. (d) Analyze the Mortgage
      characteristics and terms The Servicer must review the Mortgage characteristics
      and terms to determine what effect they might have on determining a course of
      action to resolve the Delinquency. The Servicer must compare the UPB and any
      delinquent amounts to the probable sale price of the property to determine the
      Borrower’s equity position and Freddie Mac’s potential loss should Freddie Mac
      have to acquire the property, if the Delinquency cannot be cured or resolved.
      The Servicer must also review the Mortgage product type and the current interest
      rate compared to current market interest rates to identify potential roadblocks
      in curing a Delinquency. For example, if the Mortgage is an adjustable-rate
      Mortgage, the Borrower may be facing a new monthly payment that he or she cannot
      afford. (e) Analyze the reason for Delinquency In the course of performing collection
      activities, the Servicer should have determined why the Borrower has not remitted
      its Mortgage payments. Additionally, the Servicer should have Freddie Mac Single-Family
      Seller/Servicer Guide Chapter 9202 As of 12/17/25 Page 9202-10 determined the
      Borrower’s willingness to resolve the Delinquency problem and have counseled
      the Borrower about the consequences of the Delinquency. If the Servicer has
      determined that the Borrower’s reason for not paying the Mortgage payment is
      temporary, it may consider whether a partial reinstatement, a repayment plan
      or forbearance plan may be a solution to cure the Delinquency. For the Servicer
      to consider such alternatives, the Borrower must have the ability to make payments
      and bring the Mortgage current within one year. If the Borrower’s financial
      situation and/or circumstances will not permit him or her to bring the Mortgage
      current within a year, the Servicer must analyze the Borrower’s financial situation
      and determine the Borrower’s desire to retain ownership of the home to determine
      the appropriate solution to the Delinquency. See Section 9201.2 for the sequence
      in which a Borrower must be evaluated for loss mitigation solutions. (f) Determine
      the best course of action for Delinquency After evaluating the Borrower’s financial
      information and circumstances, the value and condition of the property, and
      the Mortgage characteristics and terms, the Servicer must begin to determine
      the best course of action to resolve the Delinquency. Based on the information
      provided by the Borrower, the Servicer must determine which of the various relief
      and workout options is appropriate. If the Borrower’s property has been damaged
      by a natural or man-made disaster, or the Borrower has an extraordinary circumstance,
      the Servicer should consider recommending a forbearance plan. If the Borrower
      wants to keep the property and has a source of stable monthly income, the Servicer
      should consider whether to consider a repayment plan, reinstatement or forbearance
      plan, or recommend a loan modification. If the Borrower cannot or does not want
      to retain ownership of the property, the Servicer should consider recommending
      workout options that allow the Borrower to sell or transfer the property. If
      a relief or workout option will not resolve the Delinquency, the Servicer must
      initiate foreclosure in accordance with the requirements in Chapter 9301. Note:
      Refer to Chapter 8404 for additional requirements for Mortgages secured by properties
      affected by a disaster.'
  judgment: false
