Freddie Mac Single-Family Seller/Servicer Guide Chapter 9203 — Reinstatements and Relief Options

Freddie Mac Single-Family Seller/Servicer Guide Chapter 9203

9203.1: Reinstatements and relief options (04/27/26) the new requirements prior to the mandatory October 1, 2026 version of this section if they ■ Reinstatements and relief options ■ General requirements for reinstatements and relief options ■ Types of reinstatement ■ When to accept full reinstatement ■ When to accept partial reinstatement of a Mortgage in foreclosure ■ Reporting and processing the reinstatement ■ Reimbursement of expenses related to reinstatements (a) Reinstatements and relief options The most desirable resolution to a Delinquency is reinstatement. Reinstatement is the act of restoring a delinquent Mortgage to current status. When the Servicer’s collection efforts do not result in reinstatement of a delinquent Mortgage, the Servicer should consider offering the Borrower a relief option. A relief option is an alternative to foreclosure that provides a Borrower with temporary relief or an opportunity to cure a Delinquency over a defined period of time or bring the Delinquency immediately current. If the Servicer has a Borrower whose situation does not meet Freddie Mac’s relief option eligibility requirements but the Servicer feels a relief option is still the best possible solution to cure the Delinquency, the Servicer must submit a request to Freddie Mac (see Directory 5) for Freddie Mac’s review. The Servicer must use Form 105, Multipurpose Loan Servicing Transmittal, and explain why a relief option is the best solution to the Delinquency. Page 9203-2 In lieu of having the Servicer or Borrower prepare, sign and send, return or submit paper documents necessary to process a reinstatement or relief option, the Servicer and Borrower may provide loss mitigation information and documents electronically. Note: See Section 1401.3(h) for eligible documents and related requirements. (b) General requirements for reinstatements and relief options For all reinstatements and relief options, the Servicer must: 1. Comply with the requirements of the FHA, VA, RHS or MI and obtain approval from the FHA, VA, RHS or MI, if applicable 2. Retain any written agreements in the Mortgage file 3. Within two Business Days of the date on which the Servicer receives a written request for payoff or reinstatement figures, provide complete, written figures as of the request date to the attorney, trustee, workout specialist or outsourcing vendor requesting the information For all reinstatements and relief options, the Servicer must not: 1. Demand payment of expenses from the Borrower in excess of the costs the Servicer actually incurred at the time the Borrower reinstates the Mortgage. These costs may not exceed Freddie Mac’s approved expense amounts (see Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses) unless the Servicer has obtained Freddie Mac’s approval to exceed these amounts, which approval may be requested by submitting Form 105 to Freddie Mac (see Directory 5) prior to incurring the expense. 2. Refuse to reinstate a Mortgage if the Borrower is unwilling or unable to pay a reinstatement or relief fee that is allowed by applicable law or the Purchase Documents. Among available options, the Servicer may defer collection of the fee until payoff of the 3. Charge the Borrower any of the costs itemized in Section 9701.4(a) (c) Types of reinstatement There are two types of reinstatement: full and partial. (i) Full reinstatement A full reinstatement occurs when the Borrower restores a delinquent Mortgage to current status by paying the total delinquent amount, including advances, delinquent principal and interest, legal costs and other expenses incurred and that are past due under the Note and the Security Instrument. Page 9203-3 The Servicer must not charge or collect from the Borrower an amount that exceeds the expense limits specified in Exhibit 57A, except in cases where a higher expense amount is legally allowable and recoverable. In addition, the payment must not include reimbursement for costs the Servicer incurred if applicable law prohibits collection of those costs from the Borrower. (ii) Partial reinstatement A partial reinstatement occurs when the Borrower makes at least one full contractual monthly payment on a delinquent Mortgage but does not bring the Mortgage current. Servicers must report the loan level transaction in accordance with Section 8303.3(j). (iii)Partial reinstatement and repayment plan A partial reinstatement should be coupled with a repayment plan to restore a delinquent Mortgage to current status, but doing so is not mandatory. When processing a repayment plan: ■ The Borrower must pay an amount that: ❑ Equals or exceeds at least one full contractual monthly payment on a delinquent ❑ Is less than the total delinquent amount due, including delinquent principal and interest, advances, legal costs and other expenses incurred and that are past due under the Note and the Security Instrument ■ The Borrower must agree to a repayment plan that provides for payment of the remaining arrearage, includes a stipulation that suspends the foreclosure proceedings during the repayment plan and allows the Servicer to recommence foreclosure at the point the foreclosure was suspended if the Borrower defaults on the repayment plan, unless otherwise prohibited by applicable law. Note: Exhibit 93, Evaluation Notices, includes a model repayment plan template and a model reinstatement template that the Servicer may combine and amend as necessary to comply with the requirements of this section and ■ The Servicer must not charge or collect from the Borrower an amount that exceeds the expense limits specified in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts, and Exhibit 57A unless those amounts were approved by Freddie Mac. In addition, the payment must not include reimbursement for costs the Servicer incurred if applicable law prohibits collection of those costs from the Borrower. Page 9203-4 Servicers that choose not to pair a partial reinstatement with a repayment plan must continue to attempt to resolve the Delinquency and remain responsible for adhering to foreclosure timeline requirements. (d) When to accept full reinstatement The Servicer must accept full reinstatement of a Mortgage if the payment, in cash or certified funds, includes the following: ■ Total delinquent amount ■ Accrued interest and unpaid principal ■ Actual legal costs, including any advances and additional expenses incurred ■ Costs for BPO, if applicable ■ Inspection fees ■ Accrued late charges. With the exception of inspection fees, regardless of expenses incurred, the Servicer must not charge the Borrower an amount that exceeds the expense limits specified in Exhibit 57A. In addition, the payment must not include reimbursement for costs the Servicer incurred if State law prohibits collection of those costs from the Borrower. The Servicer must not refuse to accept a full reinstatement if the Borrower offers to pay all amounts due except for the cost of the BPO, inspection fees and accrued late charges. The Servicer may make arrangements with the Borrower to pay the late charges after the Mortgage is reinstated. If the Borrower can pay all arrearages, inspection fees and costs, except for the cost of the BPO, the Servicer is not required to collect the BPO cost from the Borrower or remit the cost of the BPO to Freddie Mac. The Servicer must document the reason for nonremittance of the BPO cost in the file. The Servicer must collect the cost of the BPO before it can collect any accrued late charges. (e) When to accept partial reinstatement of a Mortgage in foreclosure The Servicer must accept partial reinstatement of a Mortgage referred to foreclosure if the following conditions are met. 1. The Borrower submits payment in cash or certified funds of: ■ All outstanding legal fees and related expenses, in amounts not to exceed the expense limits specified in Exhibit 57A, and Page 9203-5 ■ An amount equal to, at a minimum, the first payment due under the repayment plan 2. If there is an Escrow account on the Mortgage, the Borrower must enter into a repayment plan with the Servicer that includes an agreement to repay the remaining delinquent interest, principal and Escrow (if applicable) and the scheduled monthly payments, no later than 12 months from the date the Servicer receives the partial reinstatement funds. The repayment plan must be in writing if the plan exceeds three months. If the Mortgage was referred to foreclosure prior to extending the repayment plan, the Borrower must make the first payment under the agreement in order to accept the terms of the plan. If there is no Escrow account on the Mortgage, the Servicer must establish one if the repayment period exceeds three months (unless prohibited by applicable law) and then may extend the repayment period to no more than 18 months without Freddie Mac’s The plan must state: ■ The amount of the partial reinstatement payment ■ Beginning and end dates of the repayment period ■ That the Borrower must pay all scheduled monthly payments during the period of the ■ The Borrower agrees that the foreclosure proceedings are suspended during the repayment plan and that the Servicer is entitled to recommence foreclosure at the point the foreclosure was suspended if the Borrower defaults on the repayment plan Exhibit 93, includes a model repayment plan template and model reinstatement template that the Servicer may combine and amend as necessary to comply with the requirements of this section and applicable law. 3. The Borrower must submit information demonstrating his or her financial ability to make ■ Partial reinstatement payment Page 9203-6 ■ Repayment plan payments (including the scheduled monthly payment) on a monthly ■ Monthly payments at the end of the repayment plan At the end of the repayment plan, the Servicer may make arrangements with the Borrower to collect accrued late charges, inspection fees and the cost of the BPO. However, the payment must not include reimbursement for costs the Servicer incurred if State law prohibits collection of those costs from the Borrower. If the Servicer or the Borrower propose a partial reinstatement plan that does not meet Freddie Mac’s criteria, but the Servicer believes it will result in the Borrower’s reinstatement of the Mortgage, the Servicer must submit the plan on Form 105 to Freddie Mac (see Directory 5) for consideration. (f) Reporting and processing the reinstatement (i) Processing partial reinstatements and repayment plans The Servicer must also notify Freddie Mac via an EDR transmission within three Business Days of the month following the month in which it accepted the initial payment on a repayment plan or a partial reinstatement of a Mortgage that was reported in foreclosure in the previous month and needs to be moved to delinquent status from foreclosure status. The Servicer must include the following activity in the EDR transmission: 1. Default action code 12 (Repayment Plan) indicates a repayment plan once the initial repayment plan payment is received. The Servicer must continue reporting this code for each month of the repayment period except for the last month of the repayment period in which the Mortgage will be fully reinstated. 2. Default action code 20 (Reinstatement (Partial)) is only required if, as a result of the partial reinstatement without a repayment plan, the Servicer needs to change the Mortgage status from foreclosure to delinquent 3. Servicers should not report default action code 12 in the last month of the repayment The Servicer must continue to report the default action code 12 (Repayment Plan) for the Mortgage in its future monthly EDR transmissions, provided the Borrower is in compliance with the terms of the repayment plan, until the Mortgage has been fully reinstated (see above steps one through three) or paid off or a workout has been discontinue reporting default action code 12 on its EDR transmission. Page 9203-7 If the Mortgage has been inactivated by Freddie Mac, the Servicer must report partial reinstatement in the Loan-Level Transaction as required in Section 8303.3(j). (ii) Processing requirements If the Servicer accepts a full or partial reinstatement on a Mortgage that is or was in foreclosure, then it must process the transaction as follows: 1. Take all necessary actions to prevent additional foreclosure expenses from being incurred, if applicable 2. Pay any foreclosure expenses that were actually incurred 3. Apply any remaining funds to the Mortgage 4. Return the Note, if appropriate, with a paper copy of the original or electronic or system-generated version of Form 1036, Request for Physical or Constructive Possession of Documents, to the Document Custodian by certified mail. If one of Freddie Mac’s Designated Custodians is holding the Note, submit the Note and any additional documentation, if required, as directed by the Designated Seller/Servicers that use The Bank of New York Mellon Trust Company, N.A., as Designated Custodian, and use its web-based process will include a copy of the electronically generated 1036 Release Receipt Report when returning such items to the Designated Custodian (see Section 8107.1). (iii)Additional requirements for Mortgages with buydown funds Additional requirements for Mortgages with buydown funds are as follows: ■ When processing a reinstatement for a Mortgage subject to a temporary subsidy in a buydown account to bring a delinquent Mortgage current unless it is required per the terms of the buydown agreement ■ Upon reinstatement of a Mortgage that is subject to a temporary subsidy buydown plan, the Borrower must resume their monthly payment amount as specified in the terms of the buydown agreement, subject to applicable law and the terms of the buydown agreement* Page 9203-8 (g) Reimbursement of expenses related to reinstatements If applicable federal, State or local law prohibits collection of incurred expenses (e.g., legal fees and/or legal costs) from the Borrower upon reinstatement of the Mortgage, Freddie Mac will reimburse certain expenses the Servicer incurs. Note: See Section 9701.1(e)(iv) regarding unrecoverable expenses. 9203.1: Reinstatements and relief options (Future effective date 10/01/26) ■ Reinstatements and relief options ■ General requirements for reinstatements and relief options ■ Types of reinstatement ■ When to accept full reinstatement ■ When to accept partial reinstatement of a Mortgage in foreclosure ■ Reporting and processing the reinstatement ■ Reimbursement of expenses related to reinstatements (a) Reinstatements and relief options The most desirable resolution to a Delinquency is reinstatement. Reinstatement is the act of restoring a delinquent Mortgage to current status. When the Servicer’s collection efforts do Page 9203-9 not result in reinstatement of a delinquent Mortgage, the Servicer should consider offering the Borrower a relief option. A relief option is an alternative to foreclosure that provides a Borrower with temporary relief or an opportunity to cure a Delinquency over a defined period of time or bring the Delinquency immediately current. The most desirable resolution to a Delinquency is a reinstatement. When the Servicer’s collection efforts do not result in reinstatement of a delinquent Mortgage, the Servicer must evaluate Borrowers in accordance with the Freddie Mac loss mitigation evaluation hierarchy as set forth in Section 9201.2. If the Servicer has a Borrower whose situation does not meet Freddie Mac’s relief option eligibility requirements but the Servicer feels a relief option is still the best possible solution to cure the Delinquency, the Servicer must submit a request to Freddie Mac (see Directory 5) for Freddie Mac’s review. The Servicer must use Form 105, Multipurpose Loan Servicing Transmittal, and explain why a relief option is the best solution to the Delinquency. In lieu of having the Servicer or Borrower prepare, sign and send, return or submit paper documents necessary to process a reinstatement or relief option, the Servicer and Borrower may provide loss mitigation information and documents electronically. Note: See Section 1401.3(h) for eligible documents and related requirements. (b) General requirements for reinstatements and relief options For all reinstatements and relief options, the Servicer must: 1. Comply with the requirements of the FHA, VA, RHS or MI and obtain approval from the FHA, VA, RHS or MI, if applicable 2. Retain any written agreements in the Mortgage file 3. Within two Business Days of the date on which the Servicer receives a written request for payoff or reinstatement figures, provide complete, written figures as of the request date to the attorney, trustee, workout specialist or outsourcing vendor requesting the information For all reinstatements and relief options, the Servicer must not: 1. Demand payment of expenses from the Borrower in excess of the costs the Servicer actually incurred at the time the Borrower reinstates the Mortgage. These costs may not exceed Freddie Mac’s approved expense amounts (see Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses) unless the Servicer has obtained Freddie Mac’s approval to exceed these amounts, which approval may be requested by submitting Form 105 to Freddie Mac (see Directory 5) prior to incurring the expense. Page 9203-10 2. Refuse to reinstate a Mortgage if the Borrower is unwilling or unable to pay a reinstatement or relief fee that is allowed by applicable law or the Purchase Documents. Among available options, the Servicer may defer collection of the fee until payoff of the 3. Charge the Borrower any of the costs itemized in Section 9701.4(a) (c) Types of reinstatement There are two types of reinstatement: full and partial. (i) Full reinstatement A full reinstatement occurs when the Borrower restores a delinquent Mortgage to current status by paying the total delinquent amount, including advances, delinquent principal and interest, legal costs and other expenses incurred and that are past due under the Note and the Security Instrument. The Servicer must not charge or collect from the Borrower an amount that exceeds the expense limits specified in Exhibit 57A, except in cases where a higher expense amount is legally allowable and recoverable. In addition, the payment must not include reimbursement for costs the Servicer incurred if applicable law prohibits collection of those costs from the Borrower. (ii) Partial reinstatement A partial reinstatement occurs when the Borrower makes at least one full contractual monthly payment on a delinquent Mortgage but does not bring the Mortgage current. Servicers must report the loan level transaction in accordance with Section 8303.3(j). (iii)Partial reinstatement and repayment plan A partial reinstatement should be coupled with a repayment plan to restore a delinquent Mortgage to current status, but doing so is not mandatory. When processing a repayment plan: ■ The Borrower must pay an amount that: ❑ Equals or exceeds at least one full contractual monthly payment on a delinquent ❑ Is less than the total delinquent amount due, including delinquent principal and interest, advances, legal costs and other expenses incurred and that are past due under the Note and the Security Instrument Page 9203-11 ■ The Borrower must agree to a repayment plan that provides for payment of the remaining arrearage, includes a stipulation that suspends the foreclosure proceedings during the repayment plan and allows the Servicer to recommence foreclosure at the point the foreclosure was suspended if the Borrower defaults on the repayment plan, unless otherwise prohibited by applicable law. Note: Exhibit 93, Evaluation Notices, includes a model repayment plan template and a model reinstatement template that the Servicer may combine and amend as necessary to comply with the requirements of this section and ■ The Servicer must not charge or collect from the Borrower an amount that exceeds the expense limits specified in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts, and Exhibit 57A unless those amounts were approved by Freddie Mac. In addition, the payment must not include reimbursement for costs the Servicer incurred if applicable law prohibits collection of those costs from the Borrower. Servicers that choose not to pair a partial reinstatement with a repayment plan must continue to attempt to resolve the Delinquency and remain responsible for adhering to foreclosure timeline requirements. (d) When to accept full reinstatement The Servicer must accept full reinstatement of a Mortgage if the payment, in cash or certified funds, includes the following: ■ Total delinquent amount ■ Accrued interest and unpaid principal ■ Actual legal costs, including any advances and additional expenses incurred ■ Costs for BPO, if applicable ■ Inspection fees ■ Accrued late charges. With the exception of inspection fees, regardless of expenses incurred, the Servicer must not charge the Borrower an amount that exceeds the expense limits specified in Exhibit 57A. In addition, the payment must not include reimbursement for costs the Servicer incurred if State law prohibits collection of those costs from the Borrower. The Servicer must not refuse to accept a full reinstatement if the Borrower offers to pay all amounts due except for the cost of the BPO, inspection fees and accrued late charges. The Servicer may make arrangements with the Borrower to pay the late charges after the Page 9203-12 Mortgage is reinstated. If the Borrower can pay all arrearages, inspection fees and costs, except for the cost of the BPO, the Servicer is not required to collect the BPO cost from the Borrower or remit the cost of the BPO to Freddie Mac. The Servicer must document the reason for nonremittance of the BPO cost in the file. The Servicer must collect the cost of the BPO before it can collect any accrued late charges. (e) When to accept partial reinstatement of a Mortgage in foreclosure The Servicer must accept partial reinstatement of a Mortgage referred to foreclosure if the following conditions are met. 1. The Borrower submits payment in cash or certified funds of: ■ All outstanding legal fees and related expenses, in amounts not to exceed the expense limits specified in Exhibit 57A, and ■ An amount equal to, at a minimum, the first payment due under the repayment plan 2. If there is an Escrow account on the Mortgage, the Borrower must enter into a repayment plan with the Servicer that includes an agreement to repay the remaining delinquent interest, principal and Escrow (if applicable) and the scheduled monthly payments, no later than 12 months from the date the Servicer receives the partial reinstatement funds. The repayment plan must be in writing if the plan exceeds three months. If the Mortgage was referred to foreclosure prior to extending the repayment plan, the Borrower must make the first payment under the agreement in order to accept the terms of the plan. If there is no Escrow account on the Mortgage, the Servicer must establish one if the repayment period exceeds three months (unless prohibited by applicable law) and then may extend the repayment period to no more than 18 months without Freddie Mac’s The plan must state: ■ The amount of the partial reinstatement payment ■ Beginning and end dates of the repayment period ■ That the Borrower must pay all scheduled monthly payments during the period of the Page 9203-13 ■ The Borrower agrees that the foreclosure proceedings are suspended during the repayment plan and that the Servicer is entitled to recommence foreclosure at the point the foreclosure was suspended if the Borrower defaults on the repayment plan Exhibit 93, includes a model repayment plan template and model reinstatement template that the Servicer may combine and amend as necessary to comply with the requirements of this section and applicable law. 3. The Borrower must submit information demonstrating his or her financial ability to make ■ Partial reinstatement payment ■ Repayment plan payments (including the scheduled monthly payment) on a monthly ■ Monthly payments at the end of the repayment plan At the end of the repayment plan, the Servicer may make arrangements with the Borrower to collect accrued late charges, inspection fees and the cost of the BPO. However, the payment must not include reimbursement for costs the Servicer incurred if State law prohibits collection of those costs from the Borrower. If the Servicer or the Borrower propose a partial reinstatement plan that does not meet Freddie Mac’s criteria, but the Servicer believes it will result in the Borrower’s reinstatement of the Mortgage, the Servicer must submit the plan on Form 105 to Freddie Mac (see Directory 5) for consideration. (f) Reporting and processing the reinstatement (i) Processing partial reinstatements and repayment plans The Servicer must report all Mortgages subject to a repayment plan via Resolve as The Servicer must also notify Freddie Mac via an EDR transmission reflecting default action code 20 (Reinstatement (Partial)) within three Business Days of the month following the month in which it accepted a partial reinstatement of a Mortgage without a repayment plan that was reported in foreclosure in the previous month and needs to be moved from foreclosure status to delinquent status. Page 9203-14 If the Mortgage has been inactivated by Freddie Mac, the Servicer must report partial reinstatement in the Loan-Level Transaction as required in Section 8303.3(j). (ii) Processing requirements If the Servicer accepts a full or partial reinstatement on a Mortgage that is or was in foreclosure, then it must process the transaction as follows: 1. Take all necessary actions to prevent additional foreclosure expenses from being incurred, if applicable 2. Pay any foreclosure expenses that were actually incurred 3. Apply any remaining funds to the Mortgage 4. Return the Note, if appropriate, with a paper copy of the original or electronic or system-generated version of Form 1036, Request for Physical or Constructive Possession of Documents, to the Document Custodian by certified mail. If one of Freddie Mac’s Designated Custodians is holding the Note, submit the Note and any additional documentation, if required, as directed by the Designated Seller/Servicers that use The Bank of New York Mellon Trust Company, N.A., as Designated Custodian, and use its web-based process will include a copy of the electronically generated 1036 Release Receipt Report when returning such items to the Designated Custodian (see Section 8107.1). (iii)Additional requirements for Mortgages with buydown funds Additional requirements for Mortgages with buydown funds are as follows: ■ When processing a reinstatement for a Mortgage subject to a temporary subsidy in a buydown account to bring a delinquent Mortgage current unless it is required per the terms of the buydown agreement ■ Upon reinstatement of a Mortgage that is subject to a temporary subsidy buydown plan, the Borrower must resume their monthly payment amount as specified in the terms of the buydown agreement, subject to applicable law and the terms of the buydown agreement* Page 9203-15 (g) Reimbursement of expenses related to reinstatements If applicable federal, State or local law prohibits collection of incurred expenses (e.g., legal fees and/or legal costs) from the Borrower upon reinstatement of the Mortgage, Freddie Mac will reimburse certain expenses the Servicer incurs. Note: See Section 9701.1(e)(iv) regarding unrecoverable expenses. 9203.2: Repayment plan requirements and reporting (04/27/26) the new requirements prior to the mandatory October 1, 2026 version of this section if they ■ What is a repayment plan? ■ Repayment plan requirements ■ Additional requirements for Mortgages with buydown funds ■ Servicer approval authority for repayment plans ■ Reporting repayment plans (a) What is a repayment plan? A repayment plan is an agreement between the Servicer and a Borrower that gives the Borrower a defined period of time to reinstate the Mortgage by paying normal regular payments plus an additional agreed upon amount in repayment of the Delinquency. (b) Repayment plan requirements Page 9203-16 (i) Repayment plan requirements For a Borrower to enter into a repayment plan, the Borrower must have the financial capacity to bring the Mortgage current. Any repayment plan must: 1. Lead to full reinstatement or payoff at the conclusion of the plan 2. Be in writing and must specify: ■ The beginning and end dates of the repayment period ■ That the Borrower must pay all scheduled monthly payments during the period of ■ That the Borrower agrees that the foreclosure proceedings are suspended during the repayment plan and that the Servicer is entitled to recommence foreclosure at the point the foreclosure was suspended, if applicable, if the Borrower defaults on Exhibit 93, Evaluation Notices, includes a model repayment plan that a Servicer may use and amend as necessary to comply with the requirements of this section and 3. Be sent to the Borrower. The document does not have to be signed by the Borrower or returned to the Servicer as a condition of the repayment plan. However, the Borrower must make the first payment due if the Mortgage is in foreclosure at the time the repayment plan offer is extended in order to accept the terms of the plan. The repayment agreement must then contain a stipulation that the Servicer is entitled to recommence foreclosure at the point the foreclosure was suspended if the Borrower defaults on the repayment plan, unless otherwise prohibited by applicable law. The Servicer must keep as part of the Mortgage file: ■ The repayment plan (do not send Freddie Mac a copy) Page 9203-17 ■ The specifics of the repayment plan and the date the Servicer negotiated it with ■ When the Servicer sent it to the Borrower, if the plan exceeds three months ■ The reason the Servicer agreed to the repayment plan 4. Have a term greater than one month and less than or equal to 12 months, unless a greater term is approved by Freddie Mac in writing or otherwise permitted for repayment of delinquent taxes, as outlined in Section 9203.2(c) The repayment plan may include any accrued late charges due from the Borrower at the time the Servicer entered into the repayment plan with the Borrower. However, if the Borrower is paying as stipulated in the agreement, the Servicer must not accrue or collect late charges from the Borrower during the repayment plan. If the Borrower defaults on the terms of the repayment plan, late charge accrual may recommence from the date the Borrower defaulted on the plan. (ii) Failed repayment plan Once a Borrower accepts a repayment plan, the Borrower must meet the terms specified in the repayment plan agreement. The repayment plan has failed if: ■ The Servicer determines that the Borrower has failed to meet the terms specified in the repayment plan agreement ■ The Borrower no longer has the financial capacity to bring the Mortgage current ■ The Borrower accepts a repayment plan and does not make the total monthly repayment plan payment by the end of the month in which the repayment plan (iii) Failed repayment plan – solicitations and Freddie Mac Flex Modification® offers following an unsuccessful repayment plan. total monthly repayment plan payment Page 9203-18 by the end of the month in which it is due (“fails a repayment plan”), and the Payment Deferral by the 15th day of the following month (i.e., the 15th day of the month following the month Borrower fails a Repayment Plan Solicitation Cover Letter, with Exhibit 1100, Payment Deferral applicable law. While use of Exhibits 1105 and 1100 is optional, it reflects the minimum level of information that the Servicer must communicate and illustrates a level of specificity that complies with the requirements of the Guide. outreach and communication method solicitation if, as of the date of evaluation: ■ The Mortgage is 6 months delinquent, or cumulative deferred past-due principal and interest payments resulting from nondisaster Payment Deferrals month of the solicitation after receipt of the Borrower’s full monthly contractual Page 9203-19 Borrower must also make his or her full monthly contractual payment during the processing month. The Servicer must complete the Payment Deferral within the processing month after receipt of the Borrower’s full monthly contractual payment during that month. following the month the Borrower fails a Deferral, but did not accept the Page 9203-20 Modification Trial Period Plan Solicitation Offer – not based on an evaluation of a Borrower Response Package evaluation notice, or its equivalent. Exhibits 1191 and 93 (c) Additional requirements for Mortgages with buydown funds ■ When processing repayment plans for Mortgages subject to a temporary subsidy buydown plan in accordance with Section 4204.3, the Servicer must not apply funds in a buydown account to reduce the total amount to be repaid in accordance with the requirements of a repayment plan as specified in Section 9203.2(b)(i) unless it is required under the terms of the applicable buydown agreement ■ Upon entering a repayment plan, the Borrower must resume their payment amount as specified in the terms of the buydown agreement, subject to applicable law and the terms of the buydown agreement. In addition, the Borrower must pay the amount required to resolve the Delinquency within the agreed-upon repayment plan term.* available or the buydown funds are not paid, the Borrower is responsible to continue to make full monthly Mortgage payments as required by the terms of the Note (plus the amount required to resolve the delinquency within the agreed-upon repayment plan term, if any such amounts remain). ■ In addition to the repayment plan requirements in Section 9203.2(b)(i), the Servicer must make the appropriate changes to the evaluation notice as necessary to reflect any buydown fund contributions and the Borrower's portion of the payment in accordance with the buydown agreement * Application of each monthly payment must continue to be applied in accordance with the (d) Servicer approval authority for repayment plans Page 9203-21 Servicers may use Resolve® to report repayment plans to Freddie Mac. Servicers should refer to Resolve Online Help for details on the use of the Resolve to report repayment plans. Note: When repayment plans are submitted via Resolve, the system will report the associated EDR default action codes on behalf of the Servicer. The Servicer must obtain Freddie Mac’s approval for a repayment plan that exceeds 12 months in duration unless the repayment plan includes the repayment of delinquent taxes. To obtain Freddie Mac’s approval, the Servicer must submit the following to Freddie Mac (see Directory 5): 1. Form 105, Multipurpose Loan Servicing Transmittal 2. The complete Borrower Response Package. (See Section 9102.5 for a description of the Borrower Response Package.) The Servicer may approve a repayment plan that has a term greater than one month and less than or equal to 12 months without obtaining Freddie Mac’s approval, as outlined in the table ■ The monthly payment amount must not exceed 150% of the contractual Mortgage payment (including taxes and insurance if the Servicer is collecting Escrow for such expenses) ■ The Borrower may make a payment that is applied prior to the Servicer’s repayment plan evaluation (i.e., a Borrower may make a payment that may have a favorable ■ The Mortgage is less than or equal to 90 days delinquent; and term does not exceed six months in length Package is not required; ■ Quality right party contact is required to verify that the ■ The Mortgage is greater than 90 days delinquent; or term exceeds six months in length Package is required ■ Repayment plan terms that exceed 12 months in length must be submitted to Freddie Mac for review and ■ The Servicer must evaluate the Borrower for a Page 9203-22 impact to the repayment plan terms) must be in writing (refer to Section 9203.2(b) for requirements for the written notice.) streamlined offer for a Modification if the Mortgage is greater than 90 days delinquent. However, if the Servicer has established and verified that the a repayment plan, then the Servicer must offer the Borrower a repayment plan. In addition, if there is no Escrow account on the Mortgage for taxes, and taxes are not current or the Borrower has not entered into a repayment plan with the taxing jurisdiction, then the Servicer may approve a repayment plan of up to 18 months under the following conditions: ■ The Servicer must pay the delinquent taxes, and ■ The Servicer must set up an Escrow account for future taxes if the repayment period exceeds three months. In this case only, the Servicer may extend the repayment period to no more than 18 months. The Servicer must document its reasons for approving a repayment plan in the Mortgage file. (e) Reporting repayment plans In accordance with Section 9102.6, the Servicer must: ■ Notify Freddie Mac via an EDR transmission with specific repayment plan activity after the Servicer has entered into a repayment plan with a Borrower ■ Receive a repayment plan payment to validate the repayment plan and report default action code 12 (Repayment Plan) once the initial repayment plan payment is received ■ Continue reporting this code for each month of the repayment period, except for the last month of the repayment period in which the Mortgage will be fully reinstated Page 9203-23 ■ Continue to report that the Borrower is in a repayment plan until the Borrower has fully reinstated the Mortgage or the Borrower defaults on the repayment plan discontinue reporting default action code 12. 9203.2: Repayment plan requirements and reporting (Future effective date 10/01/26) ■ What is a repayment plan? ■ Repayment plan requirements ■ Additional requirements for Mortgages with buydown funds ■ Servicer approval authority for repayment plans ■ Reporting repayment plans (a) What is a repayment plan? A repayment plan is an agreement between the Servicer and a Borrower that gives the Borrower a defined period of time to reinstate the Mortgage by paying normal regular payments plus an additional agreed upon amount in repayment of the Delinquency. (b) Repayment plan requirements (i) Repayment plan requirements For a Borrower to enter into a repayment plan, the Borrower must have the financial capacity to bring the Mortgage current. Any repayment plan must: 1. Lead to full reinstatement or payoff at the conclusion of the plan 2. Be in writing and must specify: Page 9203-24 ■ The beginning and end dates of the repayment period ■ That the Borrower must pay all scheduled monthly payments during the period of ■ That the Borrower agrees that the foreclosure proceedings are suspended during the repayment plan and that the Servicer is entitled to recommence foreclosure at the point the foreclosure was suspended, if applicable, if the Borrower defaults on Exhibit 93, Evaluation Notices, includes a model repayment plan that a Servicer may use and amend as necessary to comply with the requirements of this section and 3. Be sent to the Borrower. The document does not have to be signed by the Borrower or returned to the Servicer as a condition of the repayment plan. However, the Borrower must make the first payment due if the Mortgage is in foreclosure at the time the repayment plan offer is extended in order to accept the terms of the plan. The repayment agreement must then contain a stipulation that the Servicer is entitled to recommence foreclosure at the point the foreclosure was suspended if the Borrower defaults on the repayment plan, unless otherwise prohibited by applicable law. The Servicer must keep as part of the Mortgage file: ■ The repayment plan (do not send Freddie Mac a copy) ■ The specifics of the repayment plan and the date the Servicer negotiated it with ■ When the Servicer sent it to the Borrower, if the plan exceeds three months ■ The reason the Servicer agreed to the repayment plan 4. Have a term greater than one month and less than or equal to 12 months, unless a greater term is approved by Freddie Mac in writing or otherwise permitted for repayment of delinquent taxes, as outlined in Section 9203.2(c) The repayment plan may include any accrued late charges due from the Borrower at the time the Servicer entered into the repayment plan with the Borrower. However, if the Borrower is paying as stipulated in the agreement, the Servicer must not accrue or collect Page 9203-25 late charges from the Borrower during the repayment plan. If the Borrower defaults on the terms of the repayment plan, late charge accrual may recommence from the date the Borrower defaulted on the plan. (ii) Failed repayment plan Once a Borrower accepts a repayment plan, the Borrower must meet the terms specified in the repayment plan agreement. The repayment plan has failed if: ■ The Servicer determines that the Borrower has failed to meet the terms specified in the repayment plan agreement ■ The Borrower no longer has the financial capacity to bring the Mortgage current ■ The Borrower accepts a repayment plan and does not make the total monthly repayment plan payment by the end of the month in which the repayment plan (iii) Failed repayment plan – solicitations and Freddie Mac Flex Modification® offers following an unsuccessful repayment plan. total monthly repayment plan payment by the end of the month in which it is due (“fails a repayment plan”), and the Payment Deferral by the 15th day of the following month (i.e., the 15th day of the month following the month Borrower fails a Page 9203-26 Repayment Plan Solicitation Cover Letter, with Exhibit 1100, Payment Deferral applicable law. While use of Exhibits 1105 and 1100 is optional, it reflects the minimum level of information that the Servicer must communicate and illustrates a level of specificity that complies with the requirements of the Guide. outreach and communication method solicitation if, as of the date of evaluation: ■ The Mortgage is 6 months delinquent, or cumulative deferred past-due principal and interest payments resulting from nondisaster Payment Deferrals month of the solicitation after receipt of the Borrower’s full monthly contractual Borrower must also make his or her full monthly contractual payment during the processing month. The Servicer must complete the Payment Deferral within the processing month after receipt of the Borrower’s full monthly contractual payment during that month. Page 9203-27 following the month the Borrower fails a Deferral, but did not accept the Modification Trial Period Plan Solicitation Offer – not based on an evaluation of a Borrower Response Package evaluation notice, or its equivalent. Exhibits 1191 and 93 (c) Additional requirements for Mortgages with buydown funds ■ When processing repayment plans for Mortgages subject to a temporary subsidy buydown plan in accordance with Section 4204.3, the Servicer must not apply funds in a buydown account to reduce the total amount to be repaid in accordance with the requirements of a repayment plan as specified in Section 9203.2(b)(i) unless it is required under the terms of the applicable buydown agreement ■ Upon entering a repayment plan, the Borrower must resume their payment amount as specified in the terms of the buydown agreement, subject to applicable law and the terms Page 9203-28 of the buydown agreement. In addition, the Borrower must pay the amount required to resolve the Delinquency within the agreed-upon repayment plan term.* available or the buydown funds are not paid, the Borrower is responsible to continue to make full monthly Mortgage payments as required by the terms of the Note (plus the amount required to resolve the delinquency within the agreed-upon repayment plan term, if any such amounts remain). ■ In addition to the repayment plan requirements in Section 9203.2(b)(i), the Servicer must make the appropriate changes to the evaluation notice as necessary to reflect any buydown fund contributions and the Borrower's portion of the payment in accordance with the buydown agreement * Application of each monthly payment must continue to be applied in accordance with the (d) Servicer approval authority for repayment plans Servicers must use Resolve® to report repayment plans to Freddie Mac. Servicers should refer to Resolve Online Help for details on the use of the Resolve to report repayment plans. Note: When repayment plans are submitted via Resolve, the system will report the associated EDR default action codes on behalf of the Servicer. The Servicer must obtain Freddie Mac’s approval for a repayment plan that exceeds 12 months in duration unless the repayment plan includes the repayment of delinquent taxes. To obtain Freddie Mac’s approval, the Servicer must submit the following to Freddie Mac (see Directory 5): 1. Form 105, Multipurpose Loan Servicing Transmittal 2. The complete Borrower Response Package. (See Section 9102.5 for a description of the Borrower Response Package.) The Servicer may approve a repayment plan that has a term greater than one month and less than or equal to 12 months without obtaining Freddie Mac’s approval, as outlined in the table Page 9203-29 ■ The monthly payment amount must not exceed 150% of the contractual Mortgage payment (including taxes and insurance if the Servicer is collecting Escrow for such expenses) ■ The Borrower may make a payment that is applied prior to the Servicer’s repayment plan evaluation (i.e., a Borrower may make a payment that may have a favorable impact to the repayment plan terms) must be in writing (refer to Section 9203.2(b) for requirements for the written notice.) ■ The Mortgage is less than or equal to 90 days delinquent; and term does not exceed six months in length Package is not required; ■ Quality right party contact is required to verify that the ■ The Mortgage is greater than 90 days delinquent; or term exceeds six months in length Package is required ■ Repayment plan terms that exceed 12 months in length must be submitted to Freddie Mac for review and ■ The Servicer must evaluate the Borrower for a streamlined offer for a Modification if the Mortgage is greater than 90 days delinquent. However, if the Servicer has established and verified that the a repayment plan, then the Servicer must offer the Borrower a repayment plan. In addition, if there is no Escrow account on the Mortgage for taxes, and taxes are not current or the Borrower has not entered into a repayment plan with the taxing jurisdiction, then the Servicer may approve a repayment plan of up to 18 months under the following conditions: Page 9203-30 ■ The Servicer must pay the delinquent taxes, and ■ The Servicer must set up an Escrow account for future taxes if the repayment period exceeds three months. In this case only, the Servicer may extend the repayment period to no more than 18 months. The Servicer must document its reasons for approving a repayment plan in the Mortgage file. (e) Reporting repayment plans Servicers must report repayment plans in Resolve, in accordance with criteria outlined in Resolve Online Help, no later than the last day of the month in which a repayment plan starts. submit a cancelation request in Resolve. 9203.3: Forbearance plans and requirements (05/01/26) the new requirements prior to the mandatory October 1, 2026 version of this section if they ■ What is a forbearance? ■ Requirements for a forbearance plan ■ Borrower contact requirements when transitioning from a forbearance plan ■ Borrowers in a Trial Period Plan ■ Forbearance plan termination ■ Other forbearance plan conditions and requirements (a) What is a forbearance? A forbearance plan is a written agreement between the Servicer and the Borrower (or deceased Borrower’s estate) that reflects the terms of the forbearance, including whether the Borrower may make either reduced or no monthly payments for a specific period of time. If Page 9203-31 the Servicer achieves quality right party contact and the Borrower meets the eligibility criteria for a forbearance plan in accordance with Section 9203.3(b), the Servicer must offer: ■ An initial forbearance term for a period of one to three months, and, if necessary ■ One or more forbearance term extensions of one to three months The forbearance plan may not be extended beyond a date that would cause the Delinquency to exceed a cumulative total of 12 months of the Borrower’s contractual monthly Mortgage payment, including taxes and insurance, if the Servicer is collecting Escrow for those expenses, without prior approval from Freddie Mac. Prior to the expiration of the initial and any extension to the forbearance plan, the Servicer must evaluate the Borrower’s eligibility for an extension of the initial forbearance plan based on quality right party contact. Each forbearance plan evaluation, including an evaluation for a forbearance plan extension, must be completed in accordance with all eligibility requirements described in this section and Sections 9203.3(b) through 9203.3(f). Additionally, there is no limit on the number of forbearance plans that an eligible Borrower can receive over the life of the Mortgage. Exhibit 93, Evaluation Notices, includes forbearance agreements that a Servicer may use but must amend as necessary to comply with the requirements of this section, Sections 9203.3(b) through 9203.3(f) and applicable law. At the end of the forbearance period, the Borrower must cure the Delinquency through one of the following options: ■ Full reinstatement of the Mortgage ■ Partial reinstatement followed by a repayment plan ■ Payment of the Mortgage in full ■ A repayment plan ■ A loan modification ■ Pay off the Mortgage through a short sale or deed-in-lieu of foreclosure A loan modification is a type of workout option that enables the Borrower to retain homeownership (see Section 9201.6). If the Borrower can no longer afford to retain the property, the Servicer must pursue a workout option to liquidate the Borrower’s interest in the property (see Section 9201.6), such as a short sale, deed-in-lieu of foreclosure, a workout Mortgage assumption, or a simultaneous modification and assumption. Workout options and Servicing Mortgages impacted by disaster requirements Page 9203-32 Freddie Mac Flex Modification® (b) Requirements for a forbearance plan Servicers may use Resolve® to report forbearance plans to Freddie Mac. Servicers should refer to Resolve Online Help for details on the use of the Resolve to report forbearance plans. Note: When forbearance plans are submitted via Resolve, the system will report the associated EDR default action codes on behalf of the Servicer. (i) Borrower eligibility requirements for a forbearance plan To be eligible for a forbearance plan, the Borrower: ■ Must have an eligible hardship as described in Section 9202.1(b) and Form 710, Mortgage Assistance Application. The Borrower’s hardship may be verbally stated. The Servicer must report the hardship reason via EDR in accordance with Section 9102.6. ■ May be either current or delinquent, but the forbearance plan must not result in an overall Mortgage Delinquency that exceeds 360 days (i.e., to be in an active forbearance plan, the Borrower must not have missed more than 12 contractual monthly Mortgage payments) Note: No Borrower documentation or written application (e.g., Form 710 or a Servicer’s customized equivalent of Form 710) is required from the Borrower; however, the Servicer must achieve quality right party contact in accordance with the requirements in Section 9102.3(b). (ii) Mortgage eligibility and exclusions for a forbearance plan Page 9203-33 Mortgages secured by the Borrower’s Primary Residence, even if vacant, are eligible for forbearance. The following Mortgages are ineligible for forbearance: ■ Mortgages secured by abandoned or condemned properties ■ Mortgages secured by second homes or Investment Properties (iii)Forbearance plan agreement with the Borrower The Servicer must determine the terms of the forbearance agreement based on discussions with the Borrower. The forbearance agreement: ■ Must be provided to the Borrower in writing and signed by the Servicer. The document does not have to be signed by the Borrower or returned to the Servicer as a condition of the forbearance plan. ■ Must indicate the duration of the forbearance plan, including the effective date, the expiration date of the forbearance plan and, if applicable, the due date of the first payment and the amount of such payment. Note: See Section 9203.3(b)(iv) for additional information about reduced payments (if applicable) under a forbearance plan. ■ Must state that, at the end of the forbearance period, the Borrower must either: ❑ Cure the Delinquency through a full reinstatement, partial reinstatement plus repayment plan or a repayment plan, or payoff of the Mortgage, or ❑ Submit a complete Borrower Response package to be evaluated for a workout option prior to the conclusion of the plan Note: Refer to Sections 9203.1(a) through 9203.2(d) for requirements on reinstatements and repayment plans and to Chapters 9206 through 9210 for requirements on workout options. ■ Must state that foreclosure proceedings are suspended during the forbearance period so long as the Borrower complies with the forbearance agreement and that, unless prohibited by applicable law, the Servicer may recommence foreclosure at the point it was suspended if the Borrower defaults on the forbearance plan ■ May include a requirement to pay any accrued late charges due from the Borrower at the time the Servicer entered into the forbearance agreement with the Borrower. The Servicer must not accrue or collect late charges from the Borrower during the forbearance period, or any subsequent repayment plan period, if the Borrower is Page 9203-34 complying with the terms of such agreements. If the Borrower defaults on the terms of the forbearance agreement, late charge accrual may recommence from the date the Borrower defaulted on the agreement. (iv) Reduced payments under a forbearance plan If a monthly payment is required under the terms of a forbearance plan: ■ Such payment must be less than the Borrower’s monthly contractual Mortgage payment, including, as applicable, principal, interest and Escrow payments ■ The Servicer must receive such payment from the Borrower on or before the last day of the month in which it is due. If the Borrower fails to make timely forbearance payments, the forbearance plan must be canceled unless the Servicer determines that there are mitigating circumstances that caused the payment to be late. If there are mitigating circumstances that prevents the Borrower from making the required reduced payment, the Servicer may determine whether to amend the forbearance plan to further reduce the required payment or allow the Borrower to make no payments under a new forbearance plan agreement. If the Borrower fails to make timely payments and there are no mitigating circumstances, the Servicer must: ■ Evaluate the Borrower for other alternatives to foreclosure (e.g., solicit the Borrower for a complete Borrower Response Package ■ Conduct an evaluation for a streamlined offering of the Freddie Mac Flex Modification) and otherwise, pursue foreclosure in accordance with Chapter 9301. ■ Use good business judgment to determine whether forbearance payments were received timely or if mitigating circumstances (such as a further reduction in income) caused the payment to be late. Exceptions to the timely payment requirement must be documented and retained in the Mortgage file. (c) Borrower contact requirements when transitioning from a forbearance plan (i) Contact requirements The Servicer has discretion to determine the appropriate frequency to contact the Borrower. However, the Servicer must initiate contact no later than 30 days prior to any forbearance plan end date. Borrower contact must continue until quality right party contact is achieved or until the forbearance plan has expired. If quality right party contact is achieved, the Servicer must determine whether: Page 9203-35 ■ The Borrower’s hardship has been resolved ■ The Borrower intends to remain in the Mortgaged Premises ■ The Borrower must submit a complete Borrower Response Package to be evaluated for other workout or liquidation options; and ■ The Borrower is eligible for a streamlined modification offer for a Freddie Mac Flex Modification under Chapter 9206 The Servicer may use alternative outreach methods to contact the Borrower as permitted by applicable law, including, but not limited to, e-mail, text messaging, voice response unit technology or a Servicer’s web portal. In addition, the Servicer is authorized to mail, fax or electronically transmit the Borrower Solicitation Package or its equivalent to the (ii) Post-forbearance plan – solicitations Borrower who was on a forbearance completes the forbearance plan without a solution to the Delinquency, the table below provides requirements for Servicers to conduct reviews for proactive Payment Deferral and Freddie Mac Flex Modification offers. Post forbearance plan – Payment Deferral The Borrower’s forbearance plan ends and the Servicer is unable to establish Payment Deferral by the 15th day following expiration of the forbearance plan. Page 9203-36 Forbearance Solicitation Cover Letter, with Exhibit 1100, Payment Deferral applicable law. While use of Exhibits 1102 or 1100 is optional, it reflects the minimum level of information that the Servicer must communicate and illustrates a level of specificity that complies with the requirements of the Guide. solicitation and/ or during the processing month if, as of the date of evaluation: ■ The Mortgage is six months delinquent, or cumulative deferred past-due principal and interest payments resulting from Payment Deferrals month of the solicitation or processing month after receipt of the Borrower’s full monthly contractual payment due during that month. While the current month’s payment remains due because of delinquency and/or cumulative deferred payment requirements, the Servicer must send the proactive offer with the condition that a payment or payments are required to be eligible to complete the Payment Deferral. Once the payment or payments have been received and the Mortgage becomes eligible, the Servicer can proceed to settlement. Page 9203-37 Deferral but did not accept the The Servicer must evaluate the Borrower for eligibility for a proactive offer for a Flex Modification in accordance with the requirements of Section 9206.1(c)(iii). evaluation of a Borrower Response Package evaluation notice, or its equivalent. Exhibits 1191 and 93 may be altered at the Servicer’s discretion as it deems necessary to meet the requirements of this section and Chapter 9206 and to comply with disclosure and other requirements under applicable law. (d) Borrowers in a Trial Period Plan If a Borrower was in a Trial Period Plan prior to entering into a forbearance plan, the Borrower may be re-evaluated for a new Trial Period Plan within 30 days prior to or upon completion of the forbearance plan. The Servicer must not resume or restart the terms of the previous Trial Period Plan prior to the start of the forbearance plan. Instead, the Servicer must evaluate the Borrower based on the status of the Mortgage at the time of the new evaluation. If the Borrower meets all eligibility requirements upon completion of the forbearance plan and accepts a new Trial Period Plan offer, the Borrower will be required to start a new Trial Period Plan. For any subsequent modification submissions, the Trial Period Plan prior to the start of the forbearance plan will not be considered a failed Trial Period Plan for a Freddie Mac Flex Modification evaluation. Page 9203-38 (e) Forbearance plan termination The forbearance plan must be terminated if: ■ The Servicer determines that the Borrower has failed to meet the terms specified in the forbearance plan agreement ■ Any of the eligibility criteria for the forbearance plan is no longer satisfied ■ The Servicer becomes aware that the Borrower’s hardship is resolved; or ■ The Borrower requests termination of the forbearance plan (f) Other forbearance plan conditions and requirements (i) Notifying Freddie Mac of forbearance plans via EDR At the end of the forbearance plan, the Servicer must work with the Borrower to cure the Delinquency via a reinstatement or repayment plan, or by completing a workout option. The Servicer must evaluate the Borrower in accordance with the loss mitigation hierarchy described in Section 9201.2 and must also comply with the appropriate EDR reporting requirement to inform Freddie Mac about the solution entered into. Example: If the Servicer enters into a repayment plan with the Borrower, the Servicer must report the repayment plan via EDR according to Section 9203.2(d). If the Borrower enters into a workout option that brings the account current, such as a settled modification or payment deferral, the Servicer must no longer report the EDR code for forbearance. (ii) Forbearance plans for Mortgages subject to recourse For Mortgages subject to recourse including but not limited to indemnification, Servicers are strongly encouraged, but not required, to consider eligible Borrowers for a forbearance plan. Entering into a forbearance agreement (whether approved by Freddie Mac or the Servicer) does not waive, delete, alter or supersede any recourse or indemnification requirements set forth in the Servicer’s Purchase Documents and any other documents containing recourse or indemnification obligations, and such recourse or indemnification obligations will remain in full force and effect. (iii) Credit reporting for Mortgages in a forbearance plan Servicers must continue to report a “full-file” status to the four major credit repositories for each Mortgage in a forbearance plan in accordance with the Fair Credit Reporting Act Page 9203-39 and credit bureau standards as provided by the Consumer Data Industry Association. See Exhibit 51, Credit Repositories and Information to Report. (iv) Servicer policy and procedures for forbearance plans The Servicer must have written forbearance plan policies and procedures describing how ■ Determine the Borrower’s hardship ■ Determine whether to require a reduced payment and any payment amount; and ■ Document the Servicer’s decision-making process, including, but not limited to, its application of discretion or business judgement The Servicer must consistently apply these policies and procedures. 9203.3: Forbearance plans and requirements (Future effective date 10/01/26) ■ What is a forbearance? ■ Requirements for a forbearance plan ■ Borrower contact requirements when transitioning from a forbearance plan ■ Borrowers in a Trial Period Plan ■ Forbearance plan termination ■ Other forbearance plan conditions and requirements (a) What is a forbearance? A forbearance plan is a written agreement between the Servicer and the Borrower (or deceased Borrower’s estate) that reflects the terms of the forbearance, including whether the Borrower may make either reduced or no monthly payments for a specific period of time. If the Servicer achieves quality right party contact and the Borrower meets the eligibility criteria for a forbearance plan in accordance with Section 9203.3(b), the Servicer must offer: ■ An initial forbearance term for a period of one to three months, and, if necessary Page 9203-40 ■ One or more forbearance term extensions of one to three months The forbearance plan may not be extended beyond a date that would cause the Delinquency to exceed a cumulative total of 12 months of the Borrower’s contractual monthly Mortgage payment, including taxes and insurance, if the Servicer is collecting Escrow for those expenses, without prior approval from Freddie Mac. Prior to the expiration of the initial and any extension to the forbearance plan, the Servicer must evaluate the Borrower’s eligibility for an extension of the initial forbearance plan based on quality right party contact. Each forbearance plan evaluation, including an evaluation for a forbearance plan extension, must be completed in accordance with all eligibility requirements described in this section and Sections 9203.3(b) through 9203.3(f). Additionally, there is no limit on the number of forbearance plans that an eligible Borrower can receive over the life of the Mortgage. Exhibit 93, Evaluation Notices, includes forbearance agreements that a Servicer may use but must amend as necessary to comply with the requirements of this section, Sections 9203.3(b) through 9203.3(f) and applicable law. At the end of the forbearance period, the Borrower must cure the Delinquency through one of the following options: ■ Full reinstatement of the Mortgage ■ Partial reinstatement followed by a repayment plan ■ Payment of the Mortgage in full ■ A repayment plan ■ A loan modification ■ Pay off the Mortgage through a short sale or deed-in-lieu of foreclosure A loan modification is a type of workout option that enables the Borrower to retain homeownership (see Section 9201.6). If the Borrower can no longer afford to retain the property, the Servicer must pursue a workout option to liquidate the Borrower’s interest in the property (see Section 9201.6), such as a short sale, deed-in-lieu of foreclosure, a workout Mortgage assumption, or a simultaneous modification and assumption. Workout options and Servicing Mortgages impacted by disaster requirements Freddie Mac Flex Modification® Page 9203-41 (b) Requirements for a forbearance plan Servicers must use Resolve® to report forbearance plans to Freddie Mac. Servicers should refer to Resolve Online Help for details on the use of the Resolve to report forbearance plans. Note: When forbearance plans are submitted via Resolve, the system will report the associated EDR default action codes on behalf of the Servicer. (i) Borrower eligibility requirements for a forbearance plan To be eligible for a forbearance plan, the Borrower: ■ Must have an eligible hardship as described in Section 9202.1(b) and Form 710, Mortgage Assistance Application. The Borrower’s hardship may be verbally stated. The Servicer must report the hardship reason via EDR in accordance with Section 9102.6. ■ May be either current or delinquent, but the forbearance plan must not result in an overall Mortgage Delinquency that exceeds 360 days (i.e., to be in an active forbearance plan, the Borrower must not have missed more than 12 contractual monthly Mortgage payments) Note: No Borrower documentation or written application (e.g., Form 710 or a Servicer’s customized equivalent of Form 710) is required from the Borrower; however, the Servicer must achieve quality right party contact in accordance with the requirements in Section 9102.3(b). (ii) Mortgage eligibility and exclusions for a forbearance plan Mortgages secured by the Borrower’s Primary Residence, even if vacant, are eligible for forbearance. The following Mortgages are ineligible for forbearance: ■ Mortgages secured by abandoned or condemned properties Page 9203-42 ■ Mortgages secured by second homes or Investment Properties (iii)Forbearance plan agreement with the Borrower The Servicer must determine the terms of the forbearance agreement based on discussions with the Borrower. The forbearance agreement: ■ Must be provided to the Borrower in writing and signed by the Servicer. The document does not have to be signed by the Borrower or returned to the Servicer as a condition of the forbearance plan. ■ Must indicate the duration of the forbearance plan, including the effective date, the expiration date of the forbearance plan and, if applicable, the due date of the first payment and the amount of such payment. Note: See Section 9203.3(b)(iv) for additional information about reduced payments (if applicable) under a forbearance plan. ■ Must state that, at the end of the forbearance period, the Borrower must either: ❑ Cure the Delinquency through a full reinstatement, partial reinstatement plus repayment plan or a repayment plan, or payoff of the Mortgage, or ❑ Submit a complete Borrower Response package to be evaluated for a workout option prior to the conclusion of the plan Note: Refer to Sections 9203.1(a) through 9203.2(d) for requirements on reinstatements and repayment plans and to Chapters 9206 through 9210 for requirements on workout options. ■ Must state that foreclosure proceedings are suspended during the forbearance period so long as the Borrower complies with the forbearance agreement and that, unless prohibited by applicable law, the Servicer may recommence foreclosure at the point it was suspended if the Borrower defaults on the forbearance plan ■ May include a requirement to pay any accrued late charges due from the Borrower at the time the Servicer entered into the forbearance agreement with the Borrower. The Servicer must not accrue or collect late charges from the Borrower during the forbearance period, or any subsequent repayment plan period, if the Borrower is complying with the terms of such agreements. If the Borrower defaults on the terms of the forbearance agreement, late charge accrual may recommence from the date the Borrower defaulted on the agreement. (iv) Reduced payments under a forbearance plan Page 9203-43 If a monthly payment is required under the terms of a forbearance plan: ■ Such payment must be less than the Borrower’s monthly contractual Mortgage payment, including, as applicable, principal, interest and Escrow payments ■ The Servicer must receive such payment from the Borrower on or before the last day of the month in which it is due. If the Borrower fails to make timely forbearance payments, the forbearance plan must be canceled unless the Servicer determines that there are mitigating circumstances that caused the payment to be late. If there are mitigating circumstances that prevents the Borrower from making the required reduced payment, the Servicer may determine whether to amend the forbearance plan to further reduce the required payment or allow the Borrower to make no payments under a new forbearance plan agreement. If the Borrower fails to make timely payments and there are no mitigating circumstances, the Servicer must: ■ Evaluate the Borrower for other alternatives to foreclosure (e.g., solicit the Borrower for a complete Borrower Response Package ■ Conduct an evaluation for a streamlined offering of the Freddie Mac Flex Modification) and otherwise, pursue foreclosure in accordance with Chapter 9301. ■ Use good business judgment to determine whether forbearance payments were received timely or if mitigating circumstances (such as a further reduction in income) caused the payment to be late. Exceptions to the timely payment requirement must be documented and retained in the Mortgage file. (c) Borrower contact requirements when transitioning from a forbearance plan (i) Contact requirements The Servicer has discretion to determine the appropriate frequency to contact the Borrower. However, the Servicer must initiate contact no later than 30 days prior to any forbearance plan end date. Borrower contact must continue until quality right party contact is achieved or until the forbearance plan has expired. If quality right party contact is achieved, the Servicer must determine whether: ■ The Borrower’s hardship has been resolved ■ The Borrower intends to remain in the Mortgaged Premises ■ The Borrower must submit a complete Borrower Response Package to be evaluated for other workout or liquidation options; and Page 9203-44 ■ The Borrower is eligible for a streamlined modification offer for a Freddie Mac Flex Modification under Chapter 9206 The Servicer may use alternative outreach methods to contact the Borrower as permitted by applicable law, including, but not limited to, e-mail, text messaging, voice response unit technology or a Servicer’s web portal. In addition, the Servicer is authorized to mail, fax or electronically transmit the Borrower Solicitation Package or its equivalent to the (ii) Post-forbearance plan – solicitations Borrower who was on a forbearance completes the forbearance plan without a solution to the Delinquency, the table below provides requirements for Servicers to conduct reviews for proactive Payment Deferral and Freddie Mac Flex Modification offers. Post forbearance plan – Payment Deferral The Borrower’s forbearance plan ends and the Servicer is unable to establish Payment Deferral by the 15th day following expiration of the forbearance plan. Forbearance Solicitation Cover Letter, with Exhibit 1100, Payment Deferral applicable law. While use of Exhibits 1102 or 1100 is optional, it reflects the minimum Page 9203-45 level of information that the Servicer must communicate and illustrates a level of specificity that complies with the requirements of the Guide. solicitation and/ or during the processing month if, as of the date of evaluation: ■ The Mortgage is six months delinquent, or cumulative deferred past-due principal and interest payments resulting from Payment Deferrals month of the solicitation or processing month after receipt of the Borrower’s full monthly contractual payment due during that month. While the current month’s payment remains due because of delinquency and/or cumulative deferred payment requirements, the Servicer must send the proactive offer with the condition that a payment or payments are required to be eligible to complete the Payment Deferral. Once the payment or payments have been received and the Mortgage becomes eligible, the Servicer can proceed to settlement. Page 9203-46 Deferral but did not accept the The Servicer must evaluate the Borrower for eligibility for a proactive offer for a Flex Modification in accordance with the requirements of Section 9206.1(c)(iii). evaluation of a Borrower Response Package evaluation notice, or its equivalent. Exhibits 1191 and 93 may be altered at the Servicer’s discretion as it deems necessary to meet the requirements of this section and Chapter 9206 and to comply with disclosure and other requirements under applicable law. (d) Borrowers in a Trial Period Plan If a Borrower was in a Trial Period Plan prior to entering into a forbearance plan, the Borrower may be re-evaluated for a new Trial Period Plan within 30 days prior to or upon completion of the forbearance plan. The Servicer must not resume or restart the terms of the previous Trial Period Plan prior to the start of the forbearance plan. Instead, the Servicer must evaluate the Borrower based on the status of the Mortgage at the time of the new evaluation. If the Borrower meets all eligibility requirements upon completion of the forbearance plan and accepts a new Trial Period Plan offer, the Borrower will be required to start a new Trial Period Plan. For any subsequent modification submissions, the Trial Period Plan prior to the start of the forbearance plan will not be considered a failed Trial Period Plan for a Freddie Mac Flex Modification evaluation. (e) Forbearance plan termination The forbearance plan must be terminated if: ■ The Servicer determines that the Borrower has failed to meet the terms specified in the forbearance plan agreement Page 9203-47 ■ Any of the eligibility criteria for the forbearance plan is no longer satisfied ■ The Servicer becomes aware that the Borrower’s hardship is resolved; or ■ The Borrower requests termination of the forbearance plan (f) Other forbearance plan conditions and requirements (i) Reporting forbearance plans Servicers must report forbearance plans in Resolve, in accordance with criteria outlined in Resolve Online Help, no later than the last day of the month in which a forbearance plan starts. (ii) Forbearance plans for Mortgages subject to recourse For Mortgages subject to recourse including but not limited to indemnification, Servicers are strongly encouraged, but not required, to consider eligible Borrowers for a forbearance plan. Entering into a forbearance agreement (whether approved by Freddie Mac or the Servicer) does not waive, delete, alter or supersede any recourse or indemnification requirements set forth in the Servicer’s Purchase Documents and any other documents containing recourse or indemnification obligations, and such recourse or indemnification obligations will remain in full force and effect. (iii) Credit reporting for Mortgages in a forbearance plan Servicers must continue to report a “full-file” status to the four major credit repositories for each Mortgage in a forbearance plan in accordance with the Fair Credit Reporting Act and credit bureau standards as provided by the Consumer Data Industry Association. See Exhibit 51, Credit Repositories and Information to Report. (iv) Servicer policy and procedures for forbearance plans The Servicer must have written forbearance plan policies and procedures describing how ■ Determine the Borrower’s hardship ■ Determine whether to require a reduced payment and any payment amount; and ■ Document the Servicer’s decision-making process, including, but not limited to, its application of discretion or business judgement The Servicer must consistently apply these policies and procedures. Page 9203-48 9203.4: Payment Deferral eligibility, processing, conditions and requirements (12/17/25) ■ What is a Payment Deferral? ■ Servicer approval authority for Payment Deferral ■ Eligibility requirements for a Payment Deferral ■ Eligibility exclusions for a Payment Deferral ■ Determining the terms of a Payment Deferral ■ Completing Payment Deferral ■ Submission of Payment Deferral terms and settlement ■ Other payment deferral conditions and requirements ■ Disaster Payment Deferral ■ Electronic Payment Deferral Agreements (a) What is a Payment Deferral? A Payment Deferral is a relief option to assist a Borrower who is at least 60 days but less than or equal to 180 days delinquent to cure the Delinquency by deferring the delinquent principal and interest amounts of the contractual monthly Mortgage payment(s) and eligible advances into a newly created or an existing non-interest bearing UPB. Those amounts will become due and payable at the earlier of the Mortgage maturity date, payoff date or transfer or sale of the Mortgaged Premises. All other terms of the existing Mortgage must remain (b) Servicer approval authority for Payment Deferral The Servicer must evaluate the Borrower for a Payment Deferral under Sections 9203.4(a) through 9203.4(h) in accordance with the evaluation hierarchy in Sections 9201.2 and 9203.1(a). Unless otherwise notified by Freddie Mac, all Servicers are delegated to approve and offer a Payment Deferral to eligible Borrowers in accordance with the requirements of the Guide and other applicable Purchase Documents. Page 9203-49 (c) Eligibility requirements for a Payment Deferral The Servicer must establish achieve quality right party contact with the Borrower in accordance with the requirements described in Section 9102.3(b). (i) Borrower eligibility In addition to the information required to achieve quality right party contact, the Servicer must confirm that the Borrower: ■ Has a resolved hardship ■ Has the financial capacity to continue making the existing contractual monthly Mortgage payment, including amounts due as a result of an Escrow shortage, if ■ Is unable to afford a repayment plan or full reinstatement of the Mortgage (ii) Mortgage and property eligibility The Mortgage: ■ Must be at least 60 days delinquent but less than or equal to 180 days delinquent as of the evaluation date for the Payment Deferral. Note: Refer to Section 9203.4(g)(ii) for processing instructions when additional payments may be required during the month of evaluation and/or processing month. ■ Must have been originated at least 12 months prior to the evaluation date for the ■ Must be a conventional First Lien Mortgage currently owned or guaranteed by Freddie Mac; and ■ May be a fixed-rate Mortgage, ARM or Step-Rate Mortgage The property may be a Primary Residence, second home or Investment Property and may be vacant or condemned. (iii) Borrower documentation The Servicer is not required to collect a complete Borrower Response Package to evaluate the Borrower for a Payment Deferral. If the Borrower submits a complete Borrower Response Package, the Servicer: Page 9203-50 ■ Must evaluate the Borrower in accordance with the requirements for reviewing and evaluating a complete Borrower Response Package as specified in the Guide ■ Is authorized to use an Evaluation Notice (refer to Exhibit 93, Evaluation Notices) in response to a complete Borrower Response Package and must make the appropriate changes to reflect the terms of the Payment Deferral. For those Payment Deferrals offered without a complete Borrower Response Package, the Servicer is not required to use an Evaluation Notice in addition to the Payment Deferral agreement but may do so at their discretion. (iv) Mortgages subject to indemnification agreement If the Mortgage is subject to an indemnification agreement and is otherwise eligible under the Payment Deferral requirements in Sections 9203.4(a) through 9203.4(h), the Servicer has the discretion to approve the Payment Deferral provided the following ■ The Mortgage receiving the Payment Deferral retains its credit enhancement ■ If the Servicer is not the credit enhancement provider, the Servicer must first obtain in writing any required approval under the terms of the credit enhancement from the entity providing the enhancement to enter into a Payment Deferral that complies with the requirements of Sections 9203.4(a) through 9203.4(h) ■ The Servicer remits to Freddie Mac an annual payment for the amount of all Payment Deferral-related costs (e.g., interest rate shortfall). The loss amount calculations for the Payment Deferral will be determined by Freddie Mac in the same manner as the calculations for modification loss amounts. The Payment Deferral loss amounts due will be calculated on a monthly basis and billed on an annual basis for the life of the Mortgage that is subject to a Payment Deferral. If the Mortgage is subject to a partial indemnification, each year the Servicer will be billed the appropriate percentage of the Payment Deferral loss amount that corresponds with the partial indemnification agreement. The Payment Deferral loss amounts will be determined by Freddie Mac in accordance with a process described in Bulletins 2021-14 and 2021-31. Note: The Servicer is not eligible for an incentive for completing a Payment Deferral on a Mortgage that is subject to an indemnification agreement. (v) Mortgage insurance If the Mortgage is subject to mortgage insurance and approval of the Payment Deferral is not covered by a delegation agreement, the Servicer must obtain delegation of authority from the MI or seek approval from the MI to complete the Payment Deferral. Page 9203-51 (vi) Texas Equity Section 50(a)(6) Mortgages If the Borrower is eligible and qualifies for a Payment Deferral, the Servicer must offer the Payment Deferral to the Borrower. If the Servicer receives Borrower notification classifying the Payment Deferral as a loan modification and claiming that the terms of the modification agreement do not comply with the provisions of Article XVI Section 50(a)(6) of the Texas Constitution, the Servicer must notify Freddie Mac within seven Business Days of receipt of such objection or complaint via Freddie Mac Servicing Data Corrections and include the following: ■ Transaction type (e.g., Texas Home Equity modification) ■ Accounting Cycle in which Freddie Mac settled the workout ■ Servicer’s analysis (e.g., Borrower complaint related to Section 50(a)(6) of the Texas Constitution) Upon receipt of Freddie Mac’s instructions, the Servicer must comply with any required response time frames to claims of defects and any other complaint in accordance with Section 8104.1(a) and the Texas Constitution. (d) Eligibility exclusions for a Payment Deferral The following Mortgages and Borrowers are ineligible for a Payment Deferral: ■ Mortgages that have received a prior non-disaster related Payment Deferral with an effective date within 12 months of the evaluation date ■ Borrowers who, within the 12 months prior to the evaluation date for a Payment Deferral, failed a non-disaster related modification Trial Period Plan (e.g., Freddie Mac Flex Modification Trial Period Plan and the terms of that Trial Period Plan were determined in accordance with Section 9206.2(a)) Note: Converting from a modification Trial Period Plan to a forbearance plan, regardless of whether subject to an Eligible Disaster or not, is not considered to be a failed Trial Period Plan modification. Page 9203-52 ■ Mortgages previously modified under the Freddie Mac Flex Modification®, or other nondisaster related modification, where the Modification Effective Date is within the previous 12 months of the evaluation date for a Payment Deferral ■ Mortgages that are subject to an approved short sale or deed-in-lieu of foreclosure ■ Mortgages that are currently subject to an unexpired offer to the Borrower for another Mortgage modification or repayment plan ■ Borrowers who are currently performing under another modification Trial Period Plan or ■ Mortgages for which the Payment Deferral, if completed, would result in a cumulative total of more than 12 months of deferred principal and interest payments, including amounts deferred as a result of previous non-disaster related Payment Deferrals ■ Mortgages with a maturity date that is within 36 months of the evaluation date ■ Mortgages with a projected payoff date based on payments due under the existing amortization schedule that is within 36 months of the evaluation date. Note: If the Mortgage is within 36 months of its maturity date or projected payoff date but the Servicer determines based on the Borrower’s individual circumstances that the Borrower should be considered for a Payment Deferral, the Servicer may transmit an exception request to Freddie Mac. (e) Determining the terms of a Payment Deferral (i) Servicer requirements for determining the terms of a Payment Deferral The Servicer must follow the steps below when determining the terms of the Payment Deferral. If the existing Mortgage includes a non-interest bearing UPB as a result of a prior modification, the terms impacting that non-interest bearing UPB will remain The Servicer must apply the Payment Deferral forbearance in accordance with the following steps: 1. Deferring delinquent amounts. Defer at least 2 months and up to 6 months of pastdue principal and interest payment(s) and any other expenses or amounts that are permitted to be capitalized under the Freddie Mac Flex Modification capitalization rules in Section 9206.3(b)(ii) into an existing or newly created non-interest bearing UPB (i.e., deferred UPB). The deferred UPB will become due on the earlier of: ■ The Mortgage maturity date Page 9203-53 ■ The Mortgage payoff date (e.g., refinance or payoff of the interest-bearing UPB); ■ Upon transfer or sale of the Mortgaged Premises 2. Reporting the Payment Deferral. The Servicer must advance the DDLPI in order to bring the Mortgage to current status. 3. Remaining payment schedule. Ensure the remaining payment schedule associated with the interest-bearing UPB remains unchanged, from the Mortgage’s payment schedule before applying the Payment Deferral. 4. Late charges. The Servicer must waive all accrued and unpaid late charges upon completion of the Payment Deferral. 5. Remaining Mortgage terms. When offering the Payment Deferral, the Servicer must ensure all other remaining terms of the existing Mortgage remain unchanged including, but not limited to the: ■ Remaining amortization schedule ■ Monthly P&I portion of the existing contractual monthly Mortgage payment ■ Interest rate (including maintaining the existing rate adjustment schedule for an ARM or a Step-Rate Mortgage) ■ Maturity date; and ■ Due dates of the remaining payment due under the Mortgage The maximum number of cumulative Principal and Interest Payments that may be deferred for a Mortgage subject to non-disaster Payment Deferrals over the life of the Mortgage is 12. (ii) Escrow Prior to or during the Servicer’s determination of the Borrower’s eligibility for a Payment Deferral, the Servicer must analyze the Borrower’s Escrow to estimate if there is an Escrow shortage. If the Servicer completed an estimated analysis during evaluation, then upon completion of the Payment Deferral, the Servicer must perform a new Escrow analysis in accordance with the Real Estate Settlement Procedures Act (RESPA) and any applicable federal, State or local laws. If, as a result of the analysis, the Servicer determines that there is an Escrow shortage, the Servicer must disclose the amount of the shortage to the Borrower before the Borrower Page 9203-54 accepts the Payment Deferral. If the Borrower is unable to pay the Escrow shortage as a lump sum, then the Borrower must pay the shortage as part of the monthly principal, interest, taxes and insurance (PITI) payment. If the Borrower must make monthly Escrow shortage payments, then the Servicer must: over a period of 60 months, unless the Borrower chooses to pay off the shortage over a shorter period of time, not to be less than 12 months If the Borrower is unable to afford a Payment Deferral based on the increased monthly payment resulting from an Escrow shortage repayment, the Servicer must evaluate the Borrower for a Freddie Mac Flex Modification. To complete a Payment Deferral, the Servicer must perform an actual Escrow analysis (as opposed to an estimate) in accordance with RESPA and any applicable federal, State or local law upon completion of the Payment Deferral and, if applicable, establish a repayment plan in accordance with the above requirements. Any Escrow shortage that is identified at the time of the Payment Deferral must not be deferred to the non-interestbearing UPB, and the Servicer is not required to fund any existing Escrow shortage. The Servicer is not required to revoke a previous waiver of Escrow, if applicable. (f) Completing Payment Deferral The Servicer must complete the Payment Deferral in the same month it determines the Borrower is eligible. If the Servicer is unable to complete the Payment Deferral within the same month of its determination, the Servicer may, at its option and in accordance with the “processing month” requirements below, use an additional month to allow for sufficient processing time (“processing month”) to complete the Payment Deferral. (i) Processing month requirements If the Servicer is unable to complete (i.e., submit the case via Freddie Mac’s servicing system) the Payment Deferral before the 15th day of the evaluation month, then the Servicer is authorized to use an additional month to allow for sufficient processing time (a “processing month”) to complete a Payment Deferral. The Servicer must treat all Borrowers equally in applying the processing month, as evidenced by a written policy (i.e., the criteria for requiring a processing month must be the same for all Borrowers). Page 9203-55 Additionally, the Servicer is not permitted to defer more than 6 months of principal and interest payments as part of a Payment Deferral or to exceed 12 months of cumulative deferred principal and interest payments from all Payment Deferrals completed on the Mortgage. As a result, the Borrower must make their full monthly contractual payment during the processing month if, as of the evaluation date: ■ The Mortgage is already 180 days delinquent, or ■ The Payment Deferral would cause the Mortgage to exceed 12 months of cumulative deferred past-due Principal and Interest Payments While the current month’s payment remains due because of delinquency and/or cumulative deferred payment requirements, the Servicer must send the proactive offer with the condition that a payment or payments are required for the Borrower to become eligible to complete the Payment Deferral. Once the payment or payments have been received and the Mortgage becomes eligible, the Servicer can proceed to settlement. Otherwise, the Borrower is not required to submit a payment during the processing month for a Payment Deferral. (ii) Payment Deferral agreement The Servicer must send Exhibit 1100, Payment Deferral Agreement, or equivalent to the Borrower no later than five days after the completion (i.e., a settled workout option) of the Payment Deferral. If the Servicer elects to require the Borrower to sign and return the Payment Deferral agreement, it must receive the fully executed Payment Deferral agreement prior to the settlement date. Use of Exhibit 1100 is optional. It reflects the minimum level of information that the Servicer must communicate to the Borrower, and it illustrates a level of specificity that is deemed to be in compliance with the requirements of the Guide. The Servicer must ensure the Payment Deferral agreement complies with applicable federal, State or local laws. When processing a Payment Deferral agreement, the Servicer must also comply with the (iii) Maintaining lien status The Servicer’s application of a Payment Deferral to the Mortgage must not impair Freddie Mac’s First Lien position or enforceability against the Borrower(s) in accordance with its terms. (iv) Title endorsement Title endorsement is not required. Page 9203-56 (v) Document Custodian After the Servicer has sent the executed Payment Deferral agreement to the Borrower in accordance with the requirements in this section, the Servicer must comply with the ■ If the Payment Deferral agreement is not required to be signed by the Borrower, the Servicer must send a copy of the Servicer executed Payment Deferral agreement to the Document Custodian within 25 days of the effective date of the Payment Deferral ■ If the Payment Deferral agreement is to be recorded, the Servicer must: • Send a certified copy of the fully executed Payment Deferral agreement to the Document Custodian within 25 days of the effective date of the Payment Deferral; • Send the original Payment Deferral agreement that is returned from the recorder’s office to the Document Custodian within five Business Days of receipt ■ If the Payment Deferral agreement must be signed by the Borrower but not recorded, the Servicer must send the fully executed original Payment Deferral agreement to the Document Custodian within 25 days of the effective date of the Payment Deferral (g) Submission of Payment Deferral terms and settlement Payment Deferrals can be processed and settled daily at Freddie Mac, except on the first Business Day of the month. Servicers can monitor the settlement status of all Payment Deferrals daily via the Modification Overview Report. Servicers must use Resolve® for all Mortgages for which the Borrowers are being evaluated for a Payment Deferral under this chapter. Resolve requires the submission of specific data elements in order to return a suggested workout solution. Based on the information input by the Servicer, Resolve will determine the terms of the Payment Deferral. Servicers and any Users that use or access Resolve are bound by all of the provisions of the Master System License (see Section 2401.1) and the System-Specific License for Servicing Tools (see Section 2404.2). Each Servicer shall use Resolve “in accordance with (A) the requirements in this section, (B) the Payment Deferral and other instructions provided in Resolve Online Help and any other Documentation, and (C) any other applicable provisions of the Guide, including Sections 2401.1 and 2404.2. (i) Instant settlement via Resolve To process the Payment Deferral for immediate settlement, the requirements in Sections 9203.4(a) and 9203.4(h) must be met. Page 9203-57 To complete the settlement of the Payment Deferral, the Servicer must submit the settlement request in Resolve. (ii) Payment Deferrals not eligible for instant settlement via Resolve If the settlement request is submitted but the workout is not eligible for instant settlement, the Servicer is expected to follow the response provided by Resolve and correct any issues that were highlighted in Resolve’s response and submit for settlement accordingly. As an example, a Borrower is not immediately eligible if, as of the evaluation date, ■ The Mortgage is 180 days delinquent or greater, or ■ The Payment Deferral would cause the Mortgage to exceed 12 months of cumulative deferred past-due principal and interest payments resulting from Payment Deferrals In these circumstances, the Borrower may become eligible upon subsequent receipt of a payment or payments that are due. In such instances, the Servicer can proceed to settling the Payment Deferral once the Borrower becomes eligible upon payment receipt. This may occur as a result of proactive solicitations required by Section 9203.3(c)(ii) or in other instances where a Borrower who is ineligible as a result of the Mortgage Delinquency and/or the cumulative number of payments deferred subsequently makes a payment or payments. By transmitting the data to Freddie Mac via Resolve for settlement, the Servicer represents and warrants that it has complied with all applicable requirements in the Guide and applicable Purchase Documents governing: ■ The Servicer’s delegated authority to process a Mortgage subject to the terms of the Payment Deferral, and ■ The Servicer’s use of Resolve to complete the settlement (h) Other Payment Deferral conditions and requirements (i) Delinquency status reporting The Payment Deferral does not have an associated unique EDR status code. For each Mortgage subject to the Payment Deferral, the Servicer must continue reporting the appropriate delinquency status information to Freddie Mac through the EDR Tool in accordance with requirements in Section 9102.6 and Exhibit 88, Servicing Tools. After the Payment Deferral has been completed and the Mortgage is brought current the EDR status code must reflect the Mortgage as current. Page 9203-58 If a Borrower redefaults and enters a new forbearance plan, the Servicer must report the new plan through the EDR tool in accordance with the requirements described above. (ii) Request for reimbursement of expenses Servicers may use PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88) to request reimbursement for the following fees associated with the Payment Deferral: Reimbursement expense codes and limits Title costs, if applicable Reimbursable amounts are in accordance with the limits specified in Exhibit 57A,Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses If the Servicer submits a reimbursement request for Payment Deferral expenses and the Payment Deferral settlement date does not exist in Freddie Mac’s systems, the expense reimbursement request will not be eligible for payment, All Payment Deferrals must have been submitted to Freddie Mac for settlement in its systems to be eligible for expense reimbursement. (iii)Credit reporting For each Mortgage that is subject to the Payment Deferral, the Servicer must provide a “full file” status report describing the status of the Mortgage to each of the four major credit repositories in accordance with the credit bureau standards as provided by the Consumer Data Industry Association. (iv) Incentive payment The Servicer is eligible to receive a $500 incentive payment for each completed Payment (v) Servicing fee The Servicer will continue to receive the Servicing fee it was receiving prior to completing the Payment Deferral. Page 9203-59 (vi) Future Freddie Mac Flex Modification evaluations If the Servicer is evaluating a Borrower for a future Freddie Mac Flex Modification, the Payment Deferral will not count as a previous loan modification for purposes of calculating the number of times the Mortgage has previously been modified. (vii) Failed Payment Deferral – Freddie Mac Flex Modification solicitations Failed Payment Deferrals – Freddie Mac Flex Modification solicitations The Borrower has accepted a Payment Deferral and: ■ Subsequently becomes 60 days delinquent within 6 months of the Payment Deferral effective date, and ■ The Servicer is unable to establish quality right party contact proactive offer for a Freddie Mac Flex Modification in accordance with the eligibility criteria described below. If eligible, the Servicer must send the Borrower a proactive offer for a Freddie Mac Flex Modification by the 75th day of Delinquency. 9206.1(c)(iii) except when the Mortgage is not required to be 90 days or more delinquent. Modification Trial Period Plan Solicitation Offer – Not Based on an Evaluation of a Borrower Response Package evaluation notice or its equivalent. Exhibits 1191 and 93 (viii) Additional requirements for Mortgages with buydown funds Page 9203-60 ■ When processing a Payment Deferral for Mortgages subject to a temporary subsidy in a buydown account to reduce the total amount to be deferred in accordance with the requirements of a Payment Deferral as specified in Section 9203.4(e)(i) unless it is required under the terms of the applicable buydown agreement ■ When evaluating a Borrower with a Mortgage with a temporary subsidy buydown plan for a Payment Deferral, the Servicer must confirm the Borrower’s financial capacity to continue making the existing contractual monthly Mortgage payment, including amounts due as a result of an Escrow shortage, as specified in Section 9203.4(c)(i) ■ Upon completion of the Payment Deferral, the Borrower must resume their payment amount as specified in the terms of the buydown agreement and in subject to applicable law* ■ If the Buydown term has expired or if, for any reason, the buydown funds are not to make full monthly Mortgage payments as required by the terms of the Mortgage *Application of each monthly payment must continue to be applied in accordance with the (i) Disaster Payment Deferral A Disaster Payment Deferral is a relief option to assist Borrowers who were impacted and became delinquent due to an Eligible Disaster as defined in Section 8404.1. The Disaster Payment Deferral is designed to cure the Delinquency by deferring the delinquent principal and interest amounts of the contractual monthly Mortgage payment(s) into a newly created or an existing non-interest bearing UPB. Those amounts will become due and payable at the earlier of the Mortgage maturity date, payoff date or transfer or sale of the Mortgaged Premises. All other terms of the existing Mortgage must remain unchanged. Unless otherwise notified by Freddie Mac, all Freddie Mac Servicers are delegated to approve and offer a Freddie Mac Disaster Payment Deferral to eligible Borrowers in accordance with the requirements of the Guide and other applicable Purchase Documents. Page 9203-61 (i) Eligibility requirements and exclusions The Servicer must achieve quality right party contact with the Borrower in accordance with the requirements described in Section 9102.3(b). (A) Borrower eligibility In addition to the information required to achieve quality right party contact, the Servicer must confirm that the Borrower: ■ Has a resolved hardship ■ Is capable of continuing to make the existing contractual monthly Mortgage ■ Is unable to afford a repayment plan or full reinstatement of the Mortgage (B) Delinquency and payment requirements The Mortgage must: ■ Have been current or less than 60 days delinquent (i.e., less than two months delinquent) as of the date of the Eligible Disaster, and ■ Be at least 30 days delinquent (i.e., one month) but less than or equal to 360 days delinquent (i.e., 12 months) as of the date of evaluation. (Refer to Section 9203.4(g)(ii) for processing instructions when additional payments may be required during the month of evaluation and/or processing month.) Note: If a Borrower’s hardship is the result of an Eligible Disaster but the Mortgage was 60 or more days delinquent as of the date of the disaster and the Servicer determines the Borrower can maintain the existing monthly contractual Mortgage payment, the Servicer must submit an exception request via Resolve to Freddie Mac. (C) Mortgage and property eligibility The Mortgage: ■ Must be a conventional First Lien Mortgage currently owned or guaranteed by Freddie Mac, and ■ May be a fixed-rate Mortgage, ARM or Step-Rate Mortgage The property may be a Primary Residence, second home or Investment Property and may be vacant or condemned. Page 9203-62 (D) Borrower documentation The Servicer must not require a complete Borrower Response Package to evaluate the Borrower for a Disaster Payment Deferral if the Borrower has been evaluated in accordance with all requirements in the Guide and the eligibility requirements are satisfied. (E) Eligibility exclusions The following Mortgages and Borrowers are ineligible for the Disaster Payment Deferral: ■ A Mortgage subject to a previous Disaster Payment Deferral related to the same Eligible Disaster event ■ Mortgages subject to an approved short sale or deed-in-lieu of foreclosure ■ A Mortgage currently subject to an unexpired offer to the Borrower for a mortgage modification or repayment plan ■ Borrowers currently performing under a modification Trial Period Plan or ■ A Mortgage with a maturity date that is within 36 months of the evaluation date ■ A Mortgage with a projected payoff date based on payments due under the existing amortization schedule that is within 36 months of the evaluation date Note: If the Mortgage is within 36 months of its maturity date or projected payoff date but the Servicer determines based on the Borrower’s individual circumstances that the Borrower should be considered for a Disaster Payment Deferral, the Servicer may transmit an exception request to Freddie Mac. (F) Mortgages subject to indemnification agreements If the Mortgage is subject to an indemnification agreement and is otherwise eligible under the Disaster Payment Deferral requirements in this section, the Servicer has the discretion to approve the Disaster Payment Deferral provided the following Page 9203-63 ■ The Mortgage receiving the Disaster Payment Deferral retains its credit enhancement ■ If the Servicer is not the credit enhancement provider, the Servicer first obtains in writing any required approval under the terms of the credit enhancement from the entity providing the enhancement ■ The Servicer remits to Freddie Mac an annual payment for the amount of all Disaster Payment Deferral-related costs (e.g., interest rate shortfall). The loss amount calculations for the Disaster Payment Deferral will be determined by Freddie Mac in the same manner as the calculations for modification loss amounts. The Disaster Payment Deferral loss amounts due will be calculated on a monthly basis and billed on an annual basis for the life of the Mortgage that is subject to a Disaster Payment Deferral. If the Mortgage is subject to a partial indemnification, each year, the Servicer will be billed the appropriate percentage of the Disaster Payment Deferral loss amount that corresponds with the partial indemnification agreement. The Disaster Payment Deferral loss amounts will be determined by Freddie Mac in accordance with the process described in Bulletins 2016-5 and 2017-1. Note: The Servicer is not eligible for an incentive for completing a Disaster Payment Deferral on a Mortgage that is subject to an indemnification agreement. (G) Mortgage insurance If the Mortgage is subject to mortgage insurance, and the MI is not included in Freddie Mac’s list of delegated mortgage insurance companies found in Exhibit 10, Freddie Mac-Approved Mortgage Insurers the Servicer must obtain delegation of authority from the MI or seek approval from the MI to complete the Disaster Payment (H) Texas Equity Section 50(a)(6) Mortgages If the Borrower is eligible and qualifies for a Disaster Payment Deferral, the Servicer must offer the Disaster Payment Deferral to the Borrower. If the Servicer receives Borrower notification classifying the Disaster Payment Deferral as a loan modification and claiming that the terms of the modification agreement do not comply with the provisions of Article XVI Section 50(a)(6) of the Texas Constitution, the Servicer must notify Freddie Mac within seven Business Days of receipt of such objection or complaint via Freddie Mac Servicing Data Corrections and include the Page 9203-64 ■ Transaction type (e.g., Texas Home Equity modification) ■ Accounting Cycle in which Freddie Mac settled the workout ■ Servicer’s analysis (e.g., Borrower complaint related to Section 50(a)(6) of the Texas Constitution) Upon receipt of Freddie Mac’s instructions, the Servicer must comply with any required response time frames to claims of defects and any other complaint in accordance with Section 8104.1(a) and the Texas Constitution. (ii) Determining Disaster Payment Deferral terms Based on the information provided by the Servicer, Resolve will determine the terms of the Disaster Payment Deferral as described in this Section 9203.4(i)(ii). If the existing Mortgage includes a non-interest bearing UPB as a result of a prior modification, the terms impacting that non-interest bearing UPB will remain unchanged. ■ Apply the Payment Deferral forbearance as follows: Defer the delinquent principal and interest and any other expenses or amounts that are permitted to be capitalized under the Freddie Mac Flex Modification capitalization rules in Section 9206.3(b)(ii) into an existing or newly created non-interest bearing UPB (i.e., deferred UPB). The deferred UPB will become due on the earlier of: ❑ The Mortgage maturity date ❑ The Mortgage payoff date (e.g., refinance or payoff of the interest-bearing UPB), ❑ The transfer or sale of the Mortgaged Premises ■ Advance the DDLPI to bring the Mortgage to current status ■ Ensure the remaining payment schedule associated with the interest-bearing UPB remains unchanged from the Mortgage’s pre-Disaster Payment Deferral payment schedule ■ Waive all accrued and unpaid late charges upon completion of the Payment Deferral Page 9203-65 When offering the Payment Deferral, the Servicer must ensure all other remaining terms of the existing Mortgage remain unchanged, including, but not limited to the: ■ Remaining amortization schedule ■ Monthly P&I portion of the existing contractual monthly Mortgage payment ■ Interest rate, including maintaining the existing rate adjustment schedule for an ARM or a Step-Rate Mortgage ■ Maturity date ■ Due Dates of the remaining payment due under the Mortgage Note: The maximum number of monthly payments that may be deferred as part of a Disaster Payment Deferral is 12. Prior to or during the Servicer’s determination of the Borrower’s eligibility for a Disaster Payment Deferral, the Servicer must analyze the Borrower’s Escrow to estimate if there is an Escrow shortage. If the Servicer completed an estimated analysis during evaluation, then upon completion of the Disaster Payment Deferral, the Servicer must perform a new Escrow analysis in accordance with the RESPA and any applicable federal, State or local If, as a result of the analysis, the Servicer determines that there is an Escrow shortage, the Servicer must disclose the amount of the shortage to the Borrower before the Borrower accepts the Disaster Payment Deferral. If the Borrower is unable to pay the Escrow shortage as a lump sum, then the Borrower must pay the shortage as part of the monthly PITI payment. If the Borrower must make monthly Escrow shortage payments, then the over a period of 60 months, unless the Borrower chooses to pay off the shortage over a shorter period of time (not to be less than 12 months) If the Borrower is unable to afford a Disaster Payment deferral based on the increased monthly payment resulting from an Escrow shortage repayment, the Servicer must evaluate the Borrower for a Freddie Mac Flex Modification. Page 9203-66 Any Escrow account shortage that is identified at the time of the Payment Deferral must not be capitalized, and the Servicer is not required to fund any existing Escrow account shortage. Any Escrow advances must be included in the deferred balance, as described in the “Delinquent Disaster Payment Deferral” section above. In addition, the Servicer is not required to revoke any Escrow account waiver. (iii)Completing a Disaster Payment Deferral The Servicer must send a Payment Deferral agreement (Exhibit 1100 or the Servicer’s customized equivalent of the Payment Deferral agreement) to the Borrower no later than five days after completion (e.g., a settled workout option) of the Payment Deferral. If the Servicer elects to require the Borrower to sign and return the Payment Deferral agreement, it must receive the fully executed Payment Deferral agreement prior to the settlement date. Use of the Payment Deferral agreement is optional. It reflects the minimum level of information that the Servicer must communicate to the Borrower, and it illustrates a level of specificity that is deemed to be in compliance with the requirements of the Guide. The Servicer must ensure the Payment Deferral agreement complies with applicable federal, When processing a Payment Deferral agreement, the Servicer must also comply with the (A) Maintaining lien status The Servicer’s application of a Disaster Payment Deferral to the Mortgage must not impair Freddie Mac’s First Lien position or enforceability against the Borrower(s) in accordance with its terms. (B) Title endorsement Title endorsement is not required. (C) Document Custodian After the Servicer has sent the executed Payment Deferral agreement to the Borrower as required in this section: ■ If the Payment Deferral agreement is not required to be signed by the Borrower, the Servicer must send a copy of the Servicer-executed Payment Deferral agreement to the Document Custodian within 25 days of the effective date of the Payment Deferral completion Page 9203-67 ■ If the Payment Deferral agreement is to be recorded, the Servicer must: • Send a certified copy of the fully executed Payment Deferral agreement to the Document Custodian within 25 days of the effective date of the Payment Deferral, and • Send the original Payment Deferral agreement that is returned from the recorder’s office to the Document Custodian within five Business Days of ■ If the Payment Deferral agreement must be signed by the Borrower but not recorded, the Servicer must send the fully executed original Payment Deferral agreement to the Document Custodian within 25 days of the effective date of the Disaster Payment Deferral (iv) Processing month The Servicer must complete the Disaster Payment Deferral in the same month it determines the Borrower is eligible. If the Servicer is unable to complete the Disaster Payment Deferral before the 15th day of the evaluation month, then the Servicer is authorized to use an additional month to allow for sufficient processing time (a “processing month”) to complete the Disaster Payment Deferral. The Servicer must treat all Borrowers equally in applying the processing month, as evidenced by a written policy (i.e., the criteria for requiring a processing month must be the same for all Borrowers). The Borrower must make a complete monthly contractual payment during the processing month if, as of the date of evaluation, the Mortgage is 360 days delinquent or more. In this circumstance, the Servicer must complete the Disaster Payment Deferral within the processing month after the receipt of the Borrower’s full monthly contractual payment due during that month. While the current month’s payment remains due because of delinquency and/or cumulative deferred payment requirements, the Servicer must send the proactive offer with the condition that a payment or payments are required to become eligible to complete the Payment Deferral. Once the payment or payments have been received and the Mortgage becomes eligible, the Servicer can proceed to settlement. (v) Disaster Payment Deferral agreement The Servicer must process a Disaster Payment Deferral agreement in compliance with the requirements for processing a regular Payment Deferral agreement, as described in Section 9203.4(f). (vi) Evaluation hierarchy To be eligible for a Disaster Payment Deferral, a Borrower must have been current or less than 60 days delinquent (i.e., less than two months delinquent) as of the date of the Page 9203-68 Eligible Disaster. Otherwise, the Servicer must conduct all loss mitigation evaluations in accordance with Freddie Mac’s standard loss mitigation evaluation hierarchy, as described in Section 9201.2, or must submit an exception request for Freddie Mac If quality right party contact is established with a Borrower who was current or less than 60 days delinquent (i.e., less than two months delinquent) as of the date of the Eligible Disaster and the Borrower is unable to resolve the Delinquency through a reinstatement or repayment plan, the Servicer must evaluate the Borrower for the loss mitigation options in the following Disaster evaluation hierarchy: 2. Freddie Mac Flex Modification (vii) Post-forbearance plan – solicitation for a Disaster Payment Deferral Borrower who was on a disaster-related forbearance completes the forbearance plan without a solution to the delinquency, the table below provides requirements for Servicers to conduct reviews for proactive Disaster Payment Deferral and Freddie Mac Flex Modification offers: Post forbearance plan – Disaster Payment Deferral The Borrower’s forbearance plan ends and the Servicer is unable to establish quality right party contact to evaluate for a postforbearance solution to the delinquency. Deferral in accordance with the eligibility criteria described below. If eligible, the Servicer must send the Borrower a proactive offer for a Disaster Payment Deferral by the 15th day following expiration of the forbearance plan. Page 9203-69 The Borrower must be eligible for a Disaster Payment Deferral in accordance with the requirements of this chapter, except: ■ The Servicer is not required to have established quality right party contact, as described in Section 9203.4(i), and eligibility requirements described in Section 9203.4(i)(i) Forbearance Solicitation Cover Letter, with Exhibit 1100, or its equivalent, making any appropriate changes to comply with applicable law. While use of Exhibits 1102 or 1100 is optional, it reflects the minimum level of information that the Servicer must communicate and illustrates a level of specificity that complies with the requirements of the Guide. The Servicer must include instruction on how to accept the offer in the Payment Deferral agreement. The Servicer is authorized to consider the following as acceptance by the Borrower, subject to applicable law: ■ Any other method evidencing the Borrower’s acceptance as determined by the Servicer solicitation and/or processing month if, as of the date of evaluation, the Mortgage is 12 months delinquent. In this circumstance, the Servicer must complete the Disaster Payment Deferral within the month of solicitation after receipt of the Borrower’s full contractual Borrower must also make his or her full monthly contractual payment(s) during the processing month if the Mortgage is 360 days delinquent or more. The Servicer must complete the Payment Deferral within the processing month after receipt of the Borrower’s full monthly contractual payment during that month. When processing these evaluations using Resolve, the Borrower is ineligible for a Payment Deferral until their payment is received. While the current month’s payment remains due because of delinquency and/or cumulative deferred payment requirements, the Servicer must send the proactive offer with the condition that a payment or payments are required to complete the Payment Deferral. Once the payment or payments have been received and the Mortgage becomes eligible, the Servicer can proceed to settlement. Page 9203-70 ■ The Borrowers forbearance plan ends, delinquency, and ■ The Borrower’s forbearance plan ends, delinquency, and Deferral but did not accept the offer by the acceptance date provided in the Payment Deferral agreement The Servicer must evaluate the Borrower for eligibility for a proactive offer for a Freddie The Servicer must send the Borrower Exhibit 1191A, Freddie Mac Post-Disaster Forbearance Flex Modification Solicitation Cover Letter, and the Exhibit 93 template for the Freddie Mac Flex Modification Trial Period Plan Solicitation Offer – not based on an 1191A and 93 may be altered at the Servicer’s discretion as it deems necessary to meet the (viii) Failed repayment plan - solicitation for a Disaster Payment Deferral Page 9203-71 and Freddie Mac Flex Modification offers following an unsuccessful repayment plan. total monthly repayment plan payment by the end of the month in which it is due (“fails a repayment plan”) and the Deferral, in accordance with the eligibility criteria described below. If eligible, the Servicer must send the Borrower a proactive offer for a Payment Deferral by the 15th day of the following month (i.e., the 15th day of the month following the month Borrower fails a repayment plan). The Borrower must be eligible for a Payment Deferral in accordance with the requirements of this chapter. However: described in Section 9203.4(i), and eligibility requirements described in Section 9203.4(i)(i) Repayment Plan Solicitation Cover Letter, with Exhibit 1100 or its equivalent, making any appropriate changes to comply with applicable law. While use of Exhibits 1105 and 1100 is optional, it reflects the minimum level of information that the Servicer must communicate and illustrates a level of specificity that complies with the requirements of The Servicer must include instruction on how to accept the offer in the Payment Deferral agreement. The Servicer is authorized to consider the following as acceptance by the Borrower, subject to applicable law: Page 9203-72 solicitation if, as of the date of evaluation, the Mortgage is 12 months delinquent. In this circumstance, the Servicer must complete the Disaster Payment Deferral within the month of solicitation after receipt of the Borrower’s full contractual payment due during that month. Note: If the Servicer uses a processing month to complete the Disaster Payment Deferral, the Borrower must also make his or her full monthly contractual payment(s) during the processing month if the Mortgage is 360 days delinquent or more. The Servicer must complete the Payment Deferral within the processing month after receipt of the Borrower’s full monthly contractual payment during that month. In these instances, when processing these evaluations using Resolve, the Borrower is ineligible for a Payment Deferral until their payment is received. While the current month’s payment remains due because of delinquency and/or cumulative deferred payment requirements, the Servicer must send the proactive offer with the condition that a payment or payments are required to complete the Payment Deferral. Once the payment or payments have been received and the Mortgage becomes eligible, the Servicer can proceed to settlement. ■ The Borrower fails a repayment plan, proactive offer for a Disaster following the month Borrower fails a proactive offer for a Disaster Payment Deferral but did not accept the offer by the acceptance date provided in the Payment Deferral agreement Page 9203-73 The Servicer must evaluate the Borrower for eligibility for a proactive offer for a Freddie 1191 and 93 may be altered at the Servicer’s discretion as it deems necessary to meet the requirements of this section and Chapter 9206, and to comply with disclosure and other (ix) Failed Disaster Payment Deferral – solicitations Borrower who accepted a Disaster Payment Deferral and is unable to remain current, the table below provides requirements for Servicers to conduct reviews for proactive Freddie Mac Flex Modification offers following an unsuccessful Disaster Payment Deferral. Failed Payment Deferral – Freddie Mac Flex Modification The Borrower has accepted a Disaster Payment Deferral and: ■ Subsequently becomes 60 days delinquent within 6 months of the Payment Deferral effective date, and ■ The Servicer is unable to establish Modification by the 75th day of delinquency. The Servicer must evaluate the Borrower for eligibility for a proactive offer for a Freddie 1191 or 93 may be altered at the Servicer’s discretion as it deems necessary to meet the Page 9203-74 requirements of this section and Chapter 9206, and to comply with disclosure and other (x) Reduced Freddie Mac Flex Modification requirements In lieu of the Guide requirements for Freddie Mac Flex Modification eligibility in Sections 9206.1(c) and 9206.1(d), Mortgages will be excluded from eligibility only under the following circumstances: ■ The Mortgage is an FHA, VA or Guaranteed Rural Housing Mortgage ■ The Mortgage is subject to recourse ■ The Borrower is currently performing under another forbearance plan, Trial Period Plan or repayment plan ■ The Mortgage is subject to an approved short sale or deed-in-lieu of foreclosure ■ The Mortgage is currently subject to an unexpired offer to the Borrower for another modification or other foreclosure prevention alternative, such as a forbearance plan or If the Servicer was not collecting Escrows on the existing Mortgage, the Borrower is not required to establish an Escrow account as a condition of the modification unless otherwise required by applicable law or the Servicer confirms that the taxes and insurance premiums have not been paid and are past due. (xi) Resolve To model the terms of the Disaster Payment Deferral and complete the settlement process, Servicers must use the “Payment Deferral” path in Resolve. Additionally, each Servicer shall comply with the requirements in Section 9203.4(e) to complete the submission and settlement process for a Disaster Payment Deferral. (xii) Reporting requirements In most cases, the Disaster Payment Deferral does not have an associated unique EDR status code. For each Mortgage subject to the Disaster Payment Deferral, the Servicer must continue reporting the appropriate delinquency status through the Loan Level Reporting tool in accordance with requirements in Section 8303.3(g) and default information to Freddie Mac through EDR in accordance with requirements in Section 9102.6. Once the Disaster Payment Deferral has been completed and the Mortgage is brought current, the Servicer must report the Mortgage as current through the Page 9203-75 Resolve automatically reports Status Code H6, Payment Deferral Offer, to EDR on the third Business Day of the following month in which the event occurred. Therefore, the Servicer is not required to report Status Code H6 in connection with a Payment Deferral. However, the Servicer is not prohibited from reporting and may report Status Code H6, Payment Deferral Offer, to notify Freddie Mac that the Mortgage is subject to an active Disaster Payment Deferral offer in the following instances: ■ The forbearance period ends prior to settlement of an accepted Disaster Payment Deferral (e.g., the Servicer elected to use a processing month and the forbearance plan expires), or ■ The Servicer has made a proactive offer following the expiration of a forbearance plan in accordance with the “Solicitation for a Disaster Payment Deferral” section In these instances, if the Servicer has elected to report Status Code H6, it should continue to report the code until the offer has expired or the Payment Deferral has been completed. (xiii) Other requirements for the Disaster Payment Deferral (A) Delinquency status reporting The Disaster Payment Deferral does not have an associated unique EDR status code. For each Mortgage subject to the Disaster Payment Deferral, the Servicer must continue reporting the appropriate delinquency status information to Freddie Mac through the EDR tool in accordance with requirements in Section 9102.6 and Exhibit 88. After the Disaster Payment Deferral has been completed and the Mortgage is brought current, the EDR status code must reflect the Mortgage as current. If a Borrower redefaults and enters a new forbearance plan, the Servicer must report the new plan through the EDR tool in accordance with the requirements described (B) Request for reimbursement of expenses Servicers may use PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88) to request reimbursement for the following fees associated with the Disaster Payment Deferral: Reimbursement expense codes and limits Page 9203-76 Title costs, if applicable Reimbursable amounts are in accordance with the limits specified in Exhibit 57A If the Servicer submits a reimbursement request for Disaster Payment Deferral expenses and the Disaster Payment Deferral settlement date does not exist in Freddie Mac’s systems, the expense reimbursement request will not be eligible for payment. All Disaster Payment Deferrals must have been submitted to Freddie Mac for settlement in its systems to be eligible for expense reimbursement. (C) Credit reporting For each Mortgage that is subject to the Disaster Payment Deferral, the Servicer must provide a “full file” status report describing the status of the Mortgage to each of the four major credit repositories in accordance with the credit bureau standards as provided by the Consumer Data Industry Association. (D) Incentive payment The Servicer is eligible to receive a $500 incentive payment for each completed Disaster Payment Deferral. (E) Servicing fee The Servicer will continue to receive the Servicing fee it was receiving prior to completing the Disaster Payment Deferral. (F) Future Freddie Mac Flex Modification evaluations If the Servicer is evaluating a Borrower for a future Freddie Mac Flex Modification, the Disaster Payment Deferral will not count as a previous loan modification for purposes of calculating the number of times the Mortgage has previously been modified. (xiv) Future Payment Deferral evaluations If the Servicer is evaluating a Borrower for a future non-Disaster Payment Deferral in accordance with the requirements of Sections 9203.4(b) through 9203.4(h), the Disaster Payment Deferral will not cause the Borrower to be ineligible. (xv) Additional requirements for Mortgages with buydown funds Page 9203-77 ■ When processing a Disaster Payment Deferral for Mortgages subject to a temporary subsidy buydown plan in accordance with Section 4204.3, the Servicer must not apply funds in a buydown account to reduce the total amount to be deferred in accordance with the requirements of a Disaster Payment Deferral as specified in Section 9203.4(i)(i) unless it is required under the terms of the applicable buydown ■ When evaluating a Borrower with a Mortgage with a temporary subsidy buydown plan for a Payment Deferral, the Servicer must confirm the Borrower’s financial capacity to continue making the existing contractual monthly Mortgage payment, including amounts due as a result of an Escrow shortage, as specified in Section 9203.4(i)(i) ■ Upon completion of the Disaster Payment Deferral, the Borrower must resume their payment amount as specified in the terms of the buydown agreement, subject to applicable law and the terms of the buydown agreement* ■ If the Buydown term has expired or if, for any reason, the buydown funds are not (j) Electronic Payment Deferral Agreements Page 9203-78 (i) Definitions The following defined terms are used throughout this subsection: Defined terms related to Electronic Payment Deferral Agreements Relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities, as defined in the “UETA” and/or “E-SIGN”. A “Record” created, generated, sent, communicated, received, or stored by “Electronic” means, as defined in the “UETA” and/or “E-SIGN.” The term also includes a paper document converted into an Electronic Record. Electronic Payment An agreement that is an Electronic Record that complies with the applicable Payment Deferral requirements of the Guide, as set forth in and subject to Chapter 9203. An Electronic Record that would be a promissory note if it was issued in paper, and that the Borrower has agreed to issue it as a Transferable Record. eVault An Electronic storage system that uses computer hardware and software to store and maintain eNotes and other Electronic Records. MERS eDelivery A MERS® system (operated by MERSCORP Holdings, Inc.) that is used by MERS eRegistry members to deliver documents and data from one MERS eRegistry member to another using the same infrastructure, open system-to-system interface, and standards of the MERS eRegistry. Note: Refer to Section 1401.3(h) for the meaning of loss mitigation documents (ii) Electronic Payment Deferral documents In lieu of paper documents, a Servicer may prepare, sign and send Payment Deferral documents to the Borrower for the Borrower’s Electronic signature and Electronic return to the Servicer, provided these transactions comply with the Guide, including the requirements in Section 1401.3(h) and Section 9206.4(d). Page 9203-79 All Electronic loss mitigation documents, including Payment Deferral documents and any other Electronic Mortgage file documents, are considered Electronic Records and must be able to be retrieved and printed in a manner that accurately reflects the information they originally contained. Additionally, all Electronic Records must be accessible, either electronically or on paper, and made available to Freddie Mac will not reimburse any costs resulting from a Servicer’s decision to use an Electronic Payment Deferral Agreement, and the Borrower may not be charged for any associated costs. (iii)General requirements for all Electronic Payment Deferral Agreements ■ Process, modify and store Electronic Payment Deferral Agreements for Freddie Mac Mortgages under requirements that are no less stringent than applicable industry standards when electronically processing, modifying and storing its own Electronic Payment Deferral Agreements for Mortgages that it owns or services for others ■ Consult with their legal counsel to ensure that the use, processing and storage of an Electronic Payment Deferral Agreement complies with all applicable federal, State and local laws ■ Provide for Electronic notarization when applicable and required, subject to applicable law and the requirements set forth in Section 1401.3(f) ■ Comply with all requirements in the Servicing Contract to service the Mortgage, as modified by an Electronic Payment Deferral Agreement, including, but not limited to, Servicing obligations related to a payoff or short sale (e.g., cancelation of the Mortgage, Note and Electronic Payment Deferral Agreement), grant of a deed-in-lieu of foreclosure, foreclosure, repurchase of an electronically modified Mortgage and ■ Ensure that the signing platform has a robust audit trail of all key events starting from the creation of the Electronic Payment Deferral Agreement through and including Servicer and Borrower execution (as applicable) so that the Servicer can reproduce upon request If the Servicer must have the Payment Deferral agreement recorded or in recordable format to comply with Section 9203.4(f)(i), the Servicer may use an Electronic Payment Deferral Agreement, provided the Servicer is able to comply with the recording jurisdiction’s recordation, Electronic format requirements and the requirements set forth in Section 1401.3(e). Page 9203-80 (iv) Document custodial requirements for paper Notes Document custodial requirements for managing paper Notes If the note is not Electronic Borrower signature is not Within 25 days of the effective date of the Payment Deferral, the Servicer must send an Electronic copy of the Servicer executed Electronic Payment Deferral Agreement to the Document Custodian to be maintained or logically associated with the Note. Borrower signature is required and recordation is not required Within 25 days of the effective date of the Payment Deferral, the Servicer must send an Electronic copy of the fully executed Electronic Payment Deferral Agreement to the Document Custodian to be maintained or logically associated with the Note. Recordation is required ■ Within 25 days of the effective date of the Payment Deferral, the Servicer must deliver an Electronic copy of the fully executed Electronic Payment Deferral Agreement to the Document Custodian to be maintained or logically associated with the Note, and ■ The Servicer must also deliver the recorded Electronic Payment Deferral Agreement another form of recorder’s office confirmation with recording information therein (Recording Confirmation) to the Document Custodian within five Business Days of receipt from the recorder’s office. Recordation is required ■ Within 25 days of the effective date of the Payment Deferral, the Servicer must deliver an Electronic copy of the fully executed Electronic Payment Deferral Agreement to the Document Custodian to be maintained or logically associated with the Note, and Page 9203-81 Document custodial requirements for managing paper Notes If the note is not Electronic ■ The Servicer must also deliver the electronically recorded Electronic Payment Deferral Agreement with recording Confirmation to the Document Custodian within five Business Days of receipt from the recorder’s office. If the Document Custodian is not able to accept Electronic documents, the Servicer must deliver a paper copy of the Electronic Payment Deferral Agreement to the Document Note: Refer to Section 1402.5(c) for delivery requirements of Electronic Payment Deferral Agreements related to eMortgages. (v) Storage and safekeeping of Electronic Payment Deferral Agreement Servicers must store Electronic Payment Deferral Agreements in an eVault or similar eStorage System (as defined in Section 1402.1(b)) and must store copies of Electronic Payment Deferral Agreements (including printed paper copies of facsimiles thereof) in the Mortgage file in accordance with the Guide requirements for storing Mortgage file documents. Electronic Payment Deferral Agreement must be logically associated with the paper Mortgage file so that all Servicing records (both paper and Electronic) that constitute the Mortgage file are identified and associated with the Mortgage transaction. (vi) Transfers of Servicing Upon a Transfer of Servicing involving Mortgages with an Electronic Payment Deferral Agreement, the Transferor Servicer must comply with Section 7101.1(b)(ii)(B) and inform the Transferee Servicer of the name of the eVault or eStorage System holding the Electronic Payment Deferral Agreement. The Transferor Servicer must ensure that its eVault or eStorage System provider transfers the Electronic Payment Deferral Agreement and all related data to the Transferee Servicer’s eVault or eStorage System provider in a manner that ensures the ongoing validity and enforceability of the Electronic Payment Deferral Agreement and its associated Electronic Signature (as defined in Section 1401.1(b)). A Transferor Servicer may not satisfy its obligations under this section by relying on Section 7101.5(a) by generating paper copies of the payment deferral agreement for the Page 9203-82 (vii) Disaster recovery/business continuity plan Refer to Section 1302.3 for Seller/Servicer business continuity planning Page 9204-1 Chapter 9204: Freddie Mac Workout Options 9204.1: Freddie Mac workout options and Servicer responsibilities (11/19/25) ■ Freddie Mac workout options ■ Servicer approval authority for workouts ■ Freddie Mac’s rights related to workout options (a) Freddie Mac workout options Servicers must evaluate Borrowers in accordance with the Freddie Mac loss mitigation evaluation hierarchy set forth in Section 9201.2. The evaluation hierarchy states the order in which a Servicer is to evaluate a Borrower for Freddie Mac’s available workout options which include Mortgage modifications, workout Mortgage assumptions, short sales, deedsin-lieu of foreclosure and charge-offs. If a Borrower’s situation does not meet all the requirements for a particular workout option but the Servicer believes that the workout option is still the best solution to the Delinquency, then the Servicer may submit a recommendation and rationale for the recommendation to Freddie Mac for review, in accordance with the submission procedures in this chapter. (b) Servicer approval authority for workouts Freddie Mac Servicers are delegated to approve the following: ■ A Freddie Mac Flex Modification®, which is a modification that meets the requirements of Sections 9206.1(b) through 9206.4(c) in accordance with the requirements of the Guide or other Purchase Documents. Note: Refer to Sections 1301.2(h) and 9206.1(c) for additional information about delegated authority and adverse action notice requirements. ■ A Freddie Mac Standard Short Sale (“short sale”), including the Streamlined Short Sale, that meets the requirements of Sections 9208.1(a) through 9208.3(a). All other short sales must be submitted to Freddie Mac for review and approval. ■ A Freddie Mac Standard Deed-in-Lieu of Foreclosure (“deed-in-lieu of foreclosure”), including the Streamlined Deed-in-Lieu of Foreclosure, that meets the requirements of Page 9204-2 Sections 9209.1 through 9209.6. All other deeds-in-lieu of foreclosure must be submitted to Freddie Mac for review and approval. For all other workouts in the Guide, the Servicer must submit its recommendation for a workout to Freddie Mac (see Directory 5) for review. Additionally, if the Mortgage is an FHA, VA or RHS Mortgage, the Servicer must obtain approval from the FHA, RHS, or VA, if applicable. The Servicer must also obtain any necessary approvals from the MI for any workout on a Mortgage with mortgage insurance. (c) Freddie Mac’s rights related to workout options Freddie Mac’s approval or settlement of a workout does not limit its right to review the Mortgage file and invoke its remedies under the Guide. If Freddie Mac’s review of the Mortgage file discloses any failure to comply with the Guide or any other Purchase Documents, Freddie Mac has the right to require the Servicer to: 1. Compensate Freddie Mac and hold it harmless for any loss, damage or expense (including court costs, attorney fees and incentive payments) that Freddie Mac sustains 2. Repurchase Freddie Mac’s interest in the Mortgage at any time under any of the circumstances outlined in Sections 3602.2(a) and 3602.2(b) 9204.2: Processing and documentation for workout recommendations (10/08/25) ■ Steps for processing a workout recommendation ■ Borrower documentation for workout options (a) Steps for processing a workout recommendation (i) Steps for completing a workout The following are the required steps for completing a workout: 1. The Servicer must collect and analyze the required documentation and information in accordance with this chapter and Chapter 9202 2. If the Servicer does not have delegated authority to approve the workout, the Servicer must submit the required documentation and its recommendation to Freddie Mac for review through Resolve®. Freddie Mac will review the documentation and the Page 9204-3 Servicer’s recommendation and advise the Servicer of its decision. The Servicer must ensure that all approval conditions are met. 3. If the Servicer does have delegated authority to approve the workout, the Servicer must evaluate the Borrower and process the workout in accordance with the Guide and other Purchase Documents 4. The Servicer must perform all activities required for closing a workout within Freddie Mac’s required time frames Closing a workout is the process to complete a workout transaction. Closing includes a settlement transaction (if applicable), recording any required documents with the appropriate government jurisdiction, timely and accurately reporting the transaction to Freddie Mac, remitting all funds collected as part of the workout to Freddie Mac and ensuring that Freddie Mac receives the Servicer’s request for reimbursement of any allowable expenses within 30 days of the settlement date. In addition to the steps described above, the Servicer must comply with the following requirements when submitting a workout solution via Resolve for settlement, regardless of whether the workout was approved under the Servicer’s delegated authority or approved by Freddie Mac through the exception process. (b) Borrower documentation for workout options Generally, all Borrowers must submit a complete Borrower Response Package in order to be considered for a workout option under this chapter unless otherwise specified. Section 9102.5 describes the contents of a Borrower Response Package. 9204.3: Servicer compensation, fees and mortgage insurance considerations (04/27/26) the new requirements prior to the mandatory October 1, 2026 version of this section if they ■ Servicer compensation for alternatives to foreclosure ■ Prohibition of certain Borrower fees; non-refusal of workout options due to late charges ■ Mortgage insurance claims Page 9204-4 (a) Servicer compensation for alternatives to foreclosure Servicers are eligible to receive compensation for completing certain alternatives to foreclosure. These amounts are incentives and are not considered to be base Servicing compensation. Freddie Mac may change these incentive payments at any time. (i) Compensation for settled workouts and successful repayment plans For eligible settled workouts and successful repayment plans, the Servicer will be compensated as specified in the table below: Compensation for eligible settled workouts and successful repayment plans Workout/ Relief Incentive amount Comments Repayment plan To qualify for the repayment plan incentive, the following conditions must 1. The Mortgage was 60 or more days delinquent at the time the Borrower entered into the repayment plan 2. The Borrower completely reinstated or paid off the Mortgage 3. The Servicer reported the repayment plan to Freddie Mac via EDR as (all types) Modification® Servicer incentives are capped at a total of $1,000 per Mortgage for all repayment plans, Payment Deferrals and Freddie Mac Flex Modifications. Workout and relief options completed or begun prior to July 1, 2020 are not subject to the incentive cap. Standard Short Sale $2,200 Page 9204-5 and Make-Whole Preforeclosure Sales Standard Deed-in- (“DIL”) $1,500 Servicers should direct questions regarding the status of workout incentives to [email protected]. The Servicer is not eligible to receive compensation if: ■ The Mortgage was sold to Freddie Mac with recourse ■ The Mortgage is insured by the FHA ■ The Mortgage is guaranteed by the VA or RHS ■ The Mortgage is subject to indemnification (ii) Paying compensation Servicers must elect to receive these funds via the Automated Clearing House (ACH) by following the steps outlined in Form 1132, Authorization for Automatic Transfer of Funds Through the Automated Clearing House (ACH) For Sellers/Servicers. (See Section 2405.1(a) for delivery instructions for Form 1132.) Freddie Mac will track all workouts a Servicer settles on a daily basis. Freddie Mac will also send the loan detail for all of the eligible workouts the Servicer settled and successful repayment plans that occurred during the period for which the Servicer is being compensated. Freddie Mac considers a workout settled when Freddie Mac has received and successfully processed the documentation and received the remittance and transmission(s) specified in the table below. Page 9204-6 loan modification settlement data or Payment Deferral settlement data in Resolve® Mortgage paid in full-prepaid. (Note: Servicers should remit only the net proceeds due to Freddie Mac for a short sale payoff.) short sale settlement data in Resolve The original negotiated promissory note(s), if applicable Borrower cash contribution, if Foreclosure sale/DIL to report the acquisition of the property and loan-level transaction to report Mortgage as a transfer to Freddie Mac will determine if a Servicer is entitled to compensation for a successful repayment plan of a Mortgage that was 60 or more days delinquent based on the information the Servicer transmits to Freddie Mac via EDR and the Servicer’s monthly loan-level reporting. The Servicer must have: Page 9204-7 1. Informed Freddie Mac that the Borrower has entered into a repayment plan (default action code 12) 2. Notified Freddie Mac that the Mortgage is current or is paid in full (b) Prohibition of certain Borrower fees; non-refusal of workout options due to late charges The Servicer may not charge any additional fees to the Borrower other than those provided for in Freddie Mac’s relief and workout options. The Servicer may not refuse to consider a workout option or require payment of accrued late charges as a condition of doing a workout. (c) Mortgage insurance claims Freddie Mac will file a claim for loss with the MI if the Mortgage is covered by mortgage insurance, and Freddie Mac will manage the claims payment process with the MI. The Servicer must provide all information and documentation pertaining to the claim to the MI no later than 60 days after the foreclosure sale, short sale or acceptance of a deed-in-lieu of foreclosure, or within any shorter time frame as specified by the mortgage insurance master If the MI reduces, suspends or denies the claim due to the Servicer’s actions or inactions, including, but not limited to, failure to comply with the Guide or applicable mortgage insurance requirements, then Freddie Mac may exercise its remedies provided by the Guide and the other Purchase Documents for the amount that is reduced, suspended or denied. Refer to Chapter 3602 regarding repurchases, repurchase alternatives and other remedies. 9204.3: Servicer compensation, fees and mortgage insurance considerations (Future effective date 10/01/26) ■ Servicer compensation for alternatives to foreclosure ■ Prohibition of certain Borrower fees; non-refusal of workout options due to late charges ■ Mortgage insurance claims (a) Servicer compensation for alternatives to foreclosure Servicers are eligible to receive compensation for completing certain alternatives to foreclosure. These amounts are incentives and are not considered to be base Servicing compensation. Freddie Mac may change these incentive payments at any time. Page 9204-8 (i) Compensation for settled workouts and successful repayment plans For eligible settled workouts and successful repayment plans, the Servicer will be compensated as specified in the table below: Compensation for eligible settled workouts and successful repayment plans Workout/ Relief Incentive amount Comments Repayment plan To qualify for the repayment plan incentive, the following conditions must 1. The Mortgage was 60 or more days delinquent at the time the Borrower entered into the repayment plan 2. The Borrower completely reinstated or paid off the Mortgage 3. The Servicer reported the repayment plan to Freddie Mac via Resolve® as (all types) Modification® Servicer incentives are capped at a total of $1,000 per Mortgage for all repayment plans, Payment Deferrals and Freddie Mac Flex Modifications. Workout and relief options completed or begun prior to July 1, 2020 are not subject to the incentive cap. Standard Short Sale and Make-Whole Preforeclosure Sales $2,200 Standard Deed-in- $1,500 Page 9204-9 (“DIL”) Servicers should direct questions regarding the status of workout incentives to [email protected]. The Servicer is not eligible to receive compensation if: ■ The Mortgage was sold to Freddie Mac with recourse ■ The Mortgage is insured by the FHA ■ The Mortgage is guaranteed by the VA or RHS ■ The Mortgage is subject to indemnification (ii) Paying compensation Servicers must elect to receive these funds via the Automated Clearing House (ACH) by following the steps outlined in Form 1132, Authorization for Automatic Transfer of Funds Through the Automated Clearing House (ACH) For Sellers/Servicers. (See Section 2405.1(a) for delivery instructions for Form 1132.) Freddie Mac will track all workouts a Servicer settles on a daily basis. Freddie Mac will also send the loan detail for all of the eligible workouts the Servicer settled and successful repayment plans that occurred during the period for which the Servicer is being compensated. Freddie Mac considers a workout settled when Freddie Mac has received and successfully processed the documentation and received the remittance and transmission(s) specified in the table below. loan modification settlement data or Payment Deferral settlement data in Resolve Mortgage paid in full-prepaid. (Note: Servicers should remit Page 9204-10 only the net proceeds due to Freddie Mac for a short sale payoff.) short sale settlement data in Resolve The original negotiated promissory note(s), if applicable Borrower cash contribution, if Foreclosure sale/DIL to report the acquisition of the property and loan-level transaction to report Mortgage as a transfer to Freddie Mac will determine if a Servicer is entitled to compensation for a successful repayment plan of a Mortgage that was 60 or more days delinquent based on the information the Servicer transmits to Freddie Mac via EDR and the Servicer’s monthly loan-level reporting. The Servicer must have: 1. Informed Freddie Mac that the Borrower has entered into a repayment plan (default action code 12) 2. Notified Freddie Mac that the Mortgage is current or is paid in full (b) Prohibition of certain Borrower fees; non-refusal of workout options due to late charges Page 9204-11 The Servicer may not charge any additional fees to the Borrower other than those provided for in Freddie Mac’s relief and workout options. The Servicer may not refuse to consider a workout option or require payment of accrued late charges as a condition of doing a workout. (c) Mortgage insurance claims Freddie Mac will file a claim for loss with the MI if the Mortgage is covered by mortgage insurance, and Freddie Mac will manage the claims payment process with the MI. The Servicer must provide all information and documentation pertaining to the claim to the MI no later than 60 days after the foreclosure sale, short sale or acceptance of a deed-in-lieu of foreclosure, or within any shorter time frame as specified by the mortgage insurance master If the MI reduces, suspends or denies the claim due to the Servicer’s actions or inactions, including, but not limited to, failure to comply with the Guide or applicable mortgage insurance requirements, then Freddie Mac may exercise its remedies provided by the Guide and the other Purchase Documents for the amount that is reduced, suspended or denied. Refer to Chapter 3602 regarding repurchases, repurchase alternatives and other remedies. Page 9205-1 Chapter 9205: Home Affordable Modification ProgramSM (HAMP®) 9205.1: Transfers of Servicing and document retention This chapter provides Servicing requirements with respect to those Borrowers who received a modification under the Home Affordable Modification ProgramSM (HAMP®). Servicers may no longer evaluate Borrowers for a HAMP Trial Period Plan or enter into a HAMP modification agreement with a Borrower. ■ Document retention requirements (a) Transfers of Servicing When a Transfer of Servicing includes Mortgages modified under HAMP, the Transferor Servicer must provide special notification to the Transferee Servicer. This includes: ■ Informing the Transferee Servicer that Mortgages modified under HAMP are part of the portfolio being transferred, and ■ Confirming that the Transferee Servicer is aware of and agrees to assume the additional responsibilities associated with the Servicing of these Mortgages If the portfolio being transferred includes Mortgages modified under HAMP, the Transferor ■ Indicate this in the Servicing Transfer Manager tool (see Exhibit 88, Servicing Tools) as part of its request for Freddie Mac’s approval for the Subsequent Transfer of Servicing ■ Specify if the transfer includes modified Mortgages that have a step-rate provision, where the interest rate is subject to incremental increases beginning in year 6 of the modification ■ Identify any Mortgages that include a partial principal forbearance For electronically modified Mortgages, the Transferor Servicer must: ■ Indicate that the eModification Agreement is Electronic (as defined in Section 1402.1(a)) Page 9205-2 ■ Provide a list of such Mortgages and indicate the name of the repository holding the eModification Agreement Servicers must comply with all other requirements with respect to Transfers of Servicing provided under Chapter 7101. (b) Document retention requirements Servicers must retain all documents and information received during the process of determining Borrower eligibility for a modification under HAMP, including: ■ The Borrower Response Package ■ Total monthly Mortgage payment and total monthly gross debt payment calculations ■ Net present value (NPV) calculations and results (Treasury NPV Model and version used, assumptions, inputs and outputs) ■ Evidence of the Servicer’s application of each step of the waterfall ■ Escrow analysis, Escrow advances, and Escrow set up Servicers must retain all documents and information related to the monthly payments during and after the Trial Period, as well as incentive payment calculations and such other required All documents, records, data and information required to be maintained by the Servicer under this Chapter 9205 are, will be, and will remain at all times, the property of Freddie Mac. The Servicer must retain such documents, records, data and information in a custodial capacity and otherwise comply with the Mortgage file retention requirements set forth in Chapter 3302. All documents required to be maintained under this Chapter 9205 must be maintained in the Mortgage file. As it relates to imminent default a Servicer must: ■ Document in its servicing system the basis for its determination that a Borrower is in imminent default; and ■ Retain all documentation and data used to reach its conclusion. The Servicer’s documentation must also include any Imminent Default Indicator® input and output files and data. Servicers must retain detailed records of Borrower solicitations or Borrower-initiated inquiries regarding HAMP, the outcome of the evaluation for modification under HAMP and specific justification with supporting details if the Borrower was determined to be ineligible for a modification under HAMP. Page 9205-3 Servicers must maintain appropriate documentary evidence of their HAMP-related activities, including, but not limited to, the following: ■ The Servicer’s process for pre-screening non-performing Mortgages against the basic HAMP requirements ■ All HAMP-related communications, whether verbal or written, with or to the Borrower or person identified in a written authorization by the Borrower and provided to the Servicer in accordance with Section 9102.5(c) (Authorized Person) (including, but not limited to, the dates of communications, names of contact person(s), and a summary of the conversation), including any e-mail correspondence to or from the Borrower or Authorized Person ■ Phone contact with Borrowers or Authorized Persons relating to HAMP ■ Policies and procedures that include HAMP-related activities ■ Training materials relating to HAMP ■ Pre-screening of Mortgages for HAMP prior to referring any Mortgage to foreclosure or conducting scheduled foreclosure sales ■ Postponement of scheduled foreclosure sales in applicable scenarios ■ Substitution of income documents for Borrowers in active Chapter 7 or Chapter 13 bankruptcy ■ Certification prior to foreclosure sale ■ Evidence of receipt of the Borrower Response Package from a Borrower ■ Any reports, memoranda, or other documentation relating to HAMP ■ The decision-making process when applying good business judgment in accordance with HAMP and, where applicable, referencing the Servicer’s associated policies and With respect to phone contact with Borrowers or Authorized Persons related to HAMP, welldocumented Servicer system notes (including, but not limited to date, names of contact persons, and a summary of the conversation) constitute appropriate documentation. Written correspondence should be retained in the Mortgage file and made available upon request by Records must also be retained to document the reason(s) for a Borrower’s failure to successfully complete the Trial Period, including: Page 9205-4 ■ When a HAMP modification is not pursued because the NPV test result is negative. The Servicer must document its consideration of other alternatives to foreclosure. ■ When a Borrower under a HAMP modification loses good standing by becoming 90 days or more past due (e.g., three monthly payments are due and unpaid on the last day of the third month). The Servicer must retain documentation of its consideration of the Borrower for other loss mitigation alternatives. With respect to requirements related to the request for Borrower and co-Borrower information for government monitoring purposes, the Servicer must retain the appropriate documentation in the Mortgage file. Servicers must retain required documents for the period set forth in Section 3302.1(c). If the Mortgage is subject to an indemnification agreement, the Servicer must remit to Freddie Mac an annual payment for the amount of all modification-related costs (e.g., interest rate shortfall) as calculated by Freddie Mac pursuant to Freddie Mac’s “Modification Loss Amount” methodology. The Modification Loss Amounts due will be calculated on a monthly basis and billed on an annual basis for the life of the modified Mortgage. If the Mortgage is subject to a partial indemnification, each year the Servicer will be billed the appropriate percentage of the Modification Loss Amount that corresponds with the partial indemnification agreement. Modification Loss Amounts will be determined by Freddie Mac in accordance with a process described in Bulletins 2016-5 and 2017-1. Note: Pursuant to Section 9204.3(a), the Servicer is not eligible to receive an incentive for completing a modification on a Mortgage that is subject to an indemnification agreement. 9205.2: Special investor reporting requirements and compliance with applicable law for Mortgages modified under Home Affordable Modification ProgramSM (HAMP®) (09/10/25) ■ Monthly reporting ■ Interim reporting and drafting requirements for a payoff of a Mortgage with partial principal ■ Application of partial prepayments of principal and Home Affordable Modification ProgramSM (HAMP®) Pay for Performance or HAMP Year Six Pay for Performance incentives Page 9205-5 ■ Monthly statements ■ Credit bureau reporting for all Mortgages with a partial principal forbearance ■ Compliance with applicable law on Mortgages modified under HAMP (a) Monthly reporting In addition to the loan-level reporting requirements for all Mortgages pursuant to Chapter 8303 and Exhibit 60, Loan-Level Reporting Data Description, Servicers must comply with the following monthly loan-level reporting requirements for all Mortgages modified under HAMP, including Mortgages with a partial principal forbearance: Current UPB For all Mortgages, this is the UPB of the Mortgage as of the end of the Accounting Cycle. the reported UPB must equal the sum of the interestbearing UPB (the amortizing principal balance of the Mortgage) (the “interest-bearing UPB”) and the principal forbearance balance (“deferred UPB”), as of Interest-bearing UPB report the amount of the interest-bearing UPB (the amortizing principal balance of the Mortgage) as of Note: Monthly “Interest Due Freddie Mac” must be calculated and reported based on the interest-bearing UPB only. Page 9205-6 report the amount of deferred UPB as of the end of the Note: The deferred UPB is non-interest-bearing and non-amortizing, and will be due in the form of a balloon payment upon the earlier of the transfer of all or a portion of the property, the payoff of the interestbearing UPB, or the new maturity date of the modified Borrower incentive curtailment (BIC) For all Mortgages modified under HAMP, report the amount of any Borrower “Pay for Performance” incentive payments paid by Freddie Mac and applied to the UPB during the Accounting Cycle. This is reported to Freddie Mac only once a year for each eligible Mortgage. Note: The Borrower Pay for Performance incentive is paid once a year and must be applied upon receipt to the interest-bearing UPB of the Mortgage and then to any principal forbearance amount (i.e., Deferred UPB), if applicable. See Section 9205.2(c) for additional information. Principal Due Freddie For all Mortgages, Freddie Mac’s share of principal payments, including prepayments of principal (i.e., curtailments) applied to the interest-bearing UPB of the Mortgage during the Accounting Cycle. Note: This field does not include curtailments resulting from the Borrower’s Pay for Performance incentive payment. Page 9205-7 Deferred Principal report the amount of any principal curtailment applied to the deferred UPB during the Accounting Cycle. This amount must be included in the “Deferred UPB” Note: See Section 9205.2(c) below for additional information on the application of partial prepayments of principal. Reporting corrections Servicers must comply with the requirements of Section 8303.3(k) in the event of an understatement or overstatement of principal reduction to either the interest-bearing UPB or the deferred UPB. In the event of an overpayment of disbursed funds to the Servicer, a correction of such overpayment will result in a draft back of any funds owed to Freddie Mac. If a previously applied BIC payment must be reduced or reversed, the UPB of the Mortgage will be increased in the same manner in which the BIC payment was previously applied. That is, if the BIC payment was applied as a reduction to the interest-bearing UPB, then the Servicer must report an increase in the interest-bearing UPB for the amount of the correction, using the principal balance correction exception code. Note: Refer to Exhibit 60 for information on reporting a principal balance correction exception code. (b) Interim reporting and drafting requirements for a payoff of a Mortgage with partial principal forbearance Servicers must comply with the applicable interim reporting requirements set forth in Chapter 8303 except that, when reporting the payoff of a Mortgage with a partial principal forbearance, Servicers must also comply with the following: ■ The Current UPB, Interest-bearing UPB and Deferred UPB fields must be reported as ■ The amount of deferred UPB as reported at the end of the previous Accounting Cycle must be reported in the “Deferred Principal Curtailment Amount” field Page 9205-8 ■ Ensure funds equivalent to the amount of the current UPB (i.e., combined interestbearing UPB and deferred UPB) as reported in the previous Accounting Cycle, plus or minus the exception interest, are available for Freddie Mac to draft on the Payoff Draft Date. Exception interest, as defined in Section 8303.1(a) must be based on the interestbearing UPB only. Servicers must calculate payoff proceeds in accordance with the following: Payoff proceeds calculation Interest-Bearing UPB + +/- Borrower Incentive Curtailment Amount (if applicable) +/- Exception interest (calculated based on the interest-bearing UPB) = Proceeds due Freddie Mac (c) Application of partial prepayments of principal and HAMP Pay for Performance or HAMP Year Six Pay for Performance incentives The Servicer must apply a HAMP Pay for Performance incentive or a HAMP Year Six Pay for Performance incentive as a principal curtailment in accordance with the following HAMP Pay for Performance incentive/ Year Six Pay for Performance incentive If the principal curtailment… Then the Servicer must apply the funds… Is less than the interest-bearing UPB To the interest-bearing UPB Is greater than or equal to the interestbearing UPB In the following order to the: 1. Deferred UPB, if any, and then 2. Interest-bearing UPB Note: After applying a HAMP Pay for Performance incentive or a HAMP Year Six Pay for Performance incentive in the above order, the Servicer must remit any remaining Page 9205-9 incentive payment directly to the Servicers must report the amount of any curtailment applied to the deferred UPB during the Accounting Cycle in the “Deferred Principal Curtailment Amount” data field. (d) Monthly statements Freddie Mac recommends the Servicer include the amount of the deferred UPB and the combined interest-bearing and deferred UPBs on the Borrower’s monthly statement. (e) Credit bureau reporting for all Mortgages with a partial principal forbearance Servicers can access additional information on credit reporting unique to HAMP including the reporting of Mortgages with a partial principal forbearance from the Consumer Data Industry Association, which gives general credit reporting guidelines for Mortgage and home equity loans in response to current financial conditions, at http://www.cdiaonline.org. (f) Compliance with applicable law on Mortgages modified under HAMP The Servicer’s implementation of HAMP and all actions taken under this chapter must comply with all applicable federal, State and local laws and regulations including, but not limited to, those laws set forth in Section 1301.2. 9205.3: Home Affordable Modification ProgramSM (HAMP®) electronic modification (12/17/25) ■ Electronic Home Affordable Modification ProgramSM (HAMP®) documents ■ HAMP eModification agreements Page 9205-10 Servicers should be familiar with the following definitions used in this section as defined in Chapter 1401 for: Defined terms used in this section optical, electromagnetic, or similar capabilities, as defined in the “UETA” and/or “E-SIGN” A “Record” created, generated, sent, communicated, received, or stored by “Electronic” means, as defined in the “UETA” and/or “ESIGN.” The term also includes a paper document converted into an associated with, a contract or other “Record” and executed or adopted by a person with the intent to sign the “Record,” as defined relating to the conduct of business, commercial, or governmental affairs, using “Electronic” means, as defined in the “UETA” and/or “E-SIGN” (b) Electronic HAMP documents In lieu of having the Servicer or Borrower, as applicable, prepare, sign and return paper documents, certain documents may be prepared, signed and sent electronically by a Servicer to the Borrower or by a Borrower to the Servicer, provided such Electronic Transactions comply with the requirements of Chapter 1401 and this section. With the exception of IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, or IRS Form 4506-T, Request for Transcript of Tax Return, all documentation required to be prepared, signed or sent by either the Servicer or the Borrower under HAMP are considered “loss mitigation documents” for purposes of Section 1401.3(h). Note: Refer to Section 9205.3(c) for additional requirements related to the Home Affordable Modification Agreement (the HAMP eModification Agreement). All Electronic loss mitigation documents, and any other Electronic Mortgage file documents are Electronic Records, and must be capable of being retrieved and printed in a manner that accurately reflects the information originally contained in the Electronic Records. All Electronic Records must be accessible (either electronically or on paper) and promptly made available to Freddie Mac upon request. Page 9205-11 (c) HAMP eModification agreements (i) Special representations and warranties A Servicer that allowed Borrowers to receive, transmit or electronically sign a HAMP eModification Agreement represents and warrants to Freddie Mac that it has complied with the requirements of the Guide and that the HAMP eModification Agreement is authentic, its terms are valid and enforceable against the Borrower, and the Mortgage maintains a First Lien position. (ii) General requirements applicable to all Freddie Mac HAMP eModification Agreements ■ Store HAMP eModification Agreements of Freddie Mac-owned Mortgages electronically under no less stringent requirements than the Servicer follows when electronically storing its own mortgages in its portfolio ■ Consult with their legal counsel to ensure that the Servicer’s use and storage of a HAMP eModification Agreement complies with all applicable federal, State and local laws, including, without limitation, the federal Electronic Signatures in Global and National Commerce (“E-SIGN”) Act and/or the Uniform Electronic Transactions Act (UETA), as enacted in the local jurisdiction, the Gramm-Leach-Bliley Act, and its implementing regulations, and other applicable privacy, disclosure, and data security laws and regulations ■ Provide for Electronic notarization when required, subject to applicable law ■ Be able to comply with all Guide requirements to service the Mortgage, as modified by a HAMP eModification Agreement, including, but not limited to, Servicing obligations related to payoff (e.g., cancelation of the Mortgage, Note and HAMP eModification Agreement), grant of a deed-in-lieu of foreclosure, foreclosure, repurchase of an electronically modified Mortgage, and litigation ■ Notify Freddie Mac when initiating legal action, including foreclosure, on a Mortgage that has been electronically modified, and further, must use counsel that has the experience or demonstrated ability to enforce claims under electronically created Mortgages, Notes or other financial instruments (iii)Additional requirements when the HAMP Modification Agreement must be recorded or in recordable format If, at the time a Servicer entered into a HAMP Modification Agreement, Freddie Mac required the HAMP Modification Agreement to be recorded or in recordable format, a Page 9205-12 Servicer must record any HAMP eModification Agreement in compliance with the recording jurisdiction’s recordation and electronic format requirements in order to ensure compliance with the Servicer’s obligations under Section 9206.2(c). (iv) Document custodial requirements If recordation of a HAMP eModification Agreement that is in recordable format is required, the Servicer must provide a copy of the recorded HAMP eModification Agreement or a copy of any evidence of recordation together with a copy of the executed HAMP eModification Agreement to its Document Custodian in accordance with the requirements in Section 1401.3(e) applicable to recordation of an Electronic Record. (v) Storage and safekeeping of HAMP eModification Agreements HAMP eModification Agreements (including printed paper copies of facsimiles of HAMP eModification Agreements) must be stored in accordance with the Guide requirements for storing Mortgage file documents. HAMP eModification Agreements must be associated with all paper Mortgage file documents so that all Servicing records (both paper and electronic) are identified with, and associated to, the particular Mortgage (vi) Transfers of Servicing For requirements related to the Transfers of Servicing of an eModification, refer to Section 9205.1(a). (vii) Data security requirements and data privacy protection Servicers must follow the data security requirements in Sections 1302.2 and 1401.2(c) and the data privacy protection standards in Section 8101.4(d). Servicers are required to maintain their Servicing records storage system and conduct periodic information security reviews of the data stored and maintained in their Servicing records storage system based on, but not limited to, applicable federal, State and local laws and regulations and the Guide. Freddie Mac reserves the right to require a Servicer to implement additional security measures regarding its Servicing records storage system. (viii) Disaster Recovery/Business Continuity Plan Servicers must create and maintain a Disaster Recovery/Business Continuity Plan (DR/BCP) that includes a backup storage site that is not susceptible to the same types of major disasters as the primary storage site. The DR/BCP must provide for recovery of functionality, availability, and data services back to the point of failure within a commercially reasonable period of time (usually within 48 hours of a disaster). Page 9206-1 Chapter 9206: Modifications 9206.1: Freddie Mac Flex Modification® overview, eligibility and requirements (05/01/26) ■ What is a loan modification? ■ When to consider a Freddie Mac Flex Modification® ■ Eligibility and documentation requirements for a Freddie Mac Flex Modification ■ Ineligibility for Freddie Mac Flex Modification ■ Determining imminent default for a Freddie Mac Flex Modification ■ Property valuation requirements for a Freddie Mac Flex Modification (a) What is a loan modification? A modification is a written agreement that the Servicer enters into with the Borrower that permanently changes one or more of the original terms of the Note, such as: ■ An increase in the amount of the UPB caused by capitalization of interest or non-interest arrearages, Escrow amounts and/or other advances ■ A change in the Note Rate ■ A change in the monthly payment ■ A change in the maturity date ■ A forbearance of a portion of the principal balance (no write-off or permanent reduction of the UPB, delinquent interest or other non-interest arrearages of the Mortgage is allowed) ■ Change in the product type (e.g., an ARM to a fixed-rate Mortgage) (b) When to consider a Freddie Mac Flex Modification The Servicer must evaluate the Borrower for a Freddie Mac Flex Modification under Chapter 9206 in accordance with the evaluation hierarchy in Section 9201.2. Page 9206-2 Unless otherwise notified by Freddie Mac, all Freddie Mac Servicers are delegated to approve, and must offer, a Freddie Mac Flex Modification to eligible Borrowers in accordance with the requirements of the Guide and other applicable Purchase Documents. Refer to Section 1301.2(i) for additional information about delegated authority and adverse action notice requirements. (c) Eligibility and documentation requirements for a Freddie Mac Flex Modification To be eligible for a Freddie Mac Flex Modification, the Servicer must ensure that the following Borrower and Mortgage eligibility requirements are met and that the Mortgage is not otherwise excluded from eligibility as set forth in Section 9206.1(d). If any of the eligibility requirements are not met, but the Servicer believes, based on an evaluation of a complete Borrower Response Package, that the Borrower should be considered for a Freddie Mac Flex Modification, the Servicer must transmit the exception request via Resolve® to Freddie Mac. Refer to Section 9206.2(a) for additional information on Resolve. In addition, if there is a Risk of Property Ownership (see Section 9202.2(b)) and the Mortgage is not otherwise eligible for a Freddie Mac Flex Modification, the Servicer may submit a recommendation to Freddie Mac to consider a Freddie Mac Flex Modification. In the event Freddie Mac participated in evaluating a Borrower for a Freddie Mac Flex Modification and Freddie Mac denied the request, the Servicer must refer to Section (i) Borrower eligibility The Borrower must: ■ Submit a complete Borrower Response Package and: ❑ Have an eligible hardship as described in Section 9202.1(b). The hardship must currently be causing or be expected to cause a long-term or permanent decrease in the Borrower’s income or increase in the Borrower’s expenses. Note: Unemployment is considered a temporary hardship. Servicers must consider unemployed Borrowers for a forbearance plan under Sections 9203.3(a) through 9203.3(f). ❑ Have verified income Page 9206-3 ■ Be 60 days or more delinquent, or ■ Is determined to be in imminent default in accordance with Section 9206.1(e) (ii) Mortgage eligibility ■ The Mortgage must have been originated at least 12 months prior to the evaluation date for the Freddie Mac Flex Modification ■ The Mortgage must be a conventional First Lien Mortgage currently owned or guaranteed in whole or in part by Freddie Mac ■ The Freddie Mac Flex Modification must result in a principal and interest payment that is less than or equal to the pre-modification principal and interest payment. (Refer to Section 9206.2(a) for additional payment reduction requirements that may apply.) When determining whether the modification results in a principal and interest payment that is less than or equal to the pre-modification principal and interest payment, the Servicer must consider the following: ❑ If the Borrower has been granted interest rate relief under the Servicemembers Civil Relief Act (SCRA), the Servicer must consider the principal and interest payment in effect prior to the date the SCRA relief was granted rather than the temporarily reduced monthly payment based on the SCRA interest rate cap ❑ If the Mortgage being modified is an ARM or an interest-only Mortgage, the Servicer must consider the principal and interest payment or interest-only payment as applicable, in effect at the time the Servicer determines eligibility for a Freddie Mac Flex Modification Trial Period Plan ■ If the Mortgage is subject to an indemnification agreement and is otherwise eligible under the requirements of this chapter, the Servicer has discretion to approve the Mortgage modification provided the following conditions are met: ❑ The modified Mortgage retains its credit enhancement ❑ If the Servicer is not the credit enhancement provider, the Servicer must first obtain in writing any required approval under the terms of the credit enhancement from the entity providing the enhancement to enter into a modification agreement that complies with the requirements of this chapter; and ❑ The Servicer remits to Freddie Mac an annual payment for the amount of all modification-related costs (e.g., interest rate shortfall) as calculated by Freddie Mac pursuant to Freddie Mac’s “Modification Loss Amount” methodology. The Modification Loss Amounts due will be calculated on a monthly basis and billed Page 9206-4 on an annual basis for the life of the modified Mortgage. If the Mortgage is subject to a partial indemnification, each year, the Servicer will be billed the appropriate percentage of the Modification Loss Amount that corresponds with the partial indemnification agreement. Modification Loss Amounts will be determined by Freddie Mac in accordance with a process described in Bulletins 2016-5 and 2021-14. Note: Pursuant to Section 9204.3(a), the Servicer is not eligible to receive an incentive for completing a modification on a Mortgage that is subject to an indemnification agreement. ■ If the Mortgage is secured by a leasehold estate, the term of the lease (or any exercised option to renew the lease or any renewal options that are enforceable by the leasehold mortgagee, whichever is applicable) must not terminate earlier than five years after the maturity date of the proposed modified Mortgage. In the event that the current term of the lease (or applicable renewal options) terminates earlier than five years after the maturity date of the proposed modified Mortgage, the term of the lease must be renegotiated in order to satisfy this requirement prior to offering the Borrower a Trial Period Plan. Servicers must refer to the special requirements in Section 9206.1(c)(v) for Borrowers who experience a hardship as a result of an Eligible Disaster and who were current or less than 31 days delinquent as of the date of the disaster. (iii)Streamlined eligibility for certain Borrowers Certain eligibility exceptions apply for a Borrower who: ■ Is 90 days delinquent or greater as of the evaluation date; or ■ Has a Step-Rate Mortgage and: ❑ Becomes 60 days delinquent within the 12 months following the first payment due date resulting from an interest rate adjustment ❑ Has not submitted a complete Borrower Response Package For these Borrowers, the eligibility requirements in Section 9206.1(c)(i) are not applicable. In these instances, a Borrower Response Package is not required, and the Servicer is not required to confirm a Borrower’s hardship or income. The Servicer must continue to comply with the requirements in Sections 9206.1(c)(ii) and 9206.1(d) to determine eligibility. Note: Payments received after the evaluation date do not impact Borrower eligibility even if the payments result in the Mortgage becoming less than 90 days delinquent. Page 9206-5 The Servicer must evaluate the Borrower for a Freddie Mac Flex Modification Trial Period Plan offer in accordance with the eligibility requirements described in this section and the solicitation requirements in Section 9102.5 to an eligible Borrower who: ■ Becomes 90 days delinquent, or ■ Has a Step-Rate Mortgage and becomes 60 days delinquent within the 12 months following the first payment due date resulting from an interest rate adjustment Before offering such Borrower a Freddie Mac Flex Modification Trial Period Plan, Servicers must either obtain the applicable MI’s approval of the terms of each modification on a case-by-case basis or ensure that the applicable MI has provided a delegation of authority that applies to the requested modification. Note: Payments received after the evaluation date do not impact Borrower eligibility even if the payments result in the Mortgage becoming less than 90 days delinquent. Refer to Section 9102.5 for additional information on solicitation of delinquent (iv) Complete Borrower Response Package received If the Borrower submits a complete Borrower Response Package prior to the Borrower becoming 90 days delinquent, the Servicer must acknowledge receipt of the package and review it in accordance with the evaluation hierarchy found in Section 9201.2. The Servicer must send an eligible Borrower an offer for a Freddie Mac Flex Modification in accordance with the requirements of Section 9206.1(c)(iii) once the Borrower reaches the applicable Delinquency threshold if: ■ The Servicer has not received a complete Borrower Response Package, or ■ The Servicer previously conducted an evaluation of a complete Borrower Response Package and determined that the Borrower was not eligible for any alternative to foreclosure, or ■ The Borrower has rejected all other alternatives to foreclosure offered by the Servicer In addition, if a Borrower with a Step-Rate Mortgage submits a complete Borrower Response Package prior to becoming 90 days delinquent, and the Borrower has not yet accepted the offer for a Freddie Mac Flex Modification, the Servicer must complete its review of the package for all alternatives to foreclosure in accordance with the Guide. If the Borrower is eligible for additional payment relief, then the Servicer must permit the Borrower to continue making the existing Trial Period Plan payments but must update the modification agreement to reflect the lower payment amount. The post-modification principal and interest payment must reflect the lower payment amount in these instances. Page 9206-6 (v) Special requirements for Borrowers impacted by an Eligible Disaster The requirements of this Section 9206.1(c)(v) apply to Borrowers who were current or less than 60 days delinquent as of the date the Eligible Disaster occurred, experienced a hardship as a result of the Eligible Disaster and were at least 90 days delinquent as of the evaluation date. Note: Payments received after the evaluation date do not impact eligibility even if the payment results in the Mortgage becoming less than 90 days delinquent. The following special requirements apply when the Freddie Mac Flex Modification is offered as a result of the Borrower experiencing a hardship as the result of an Eligible Disaster: ■ The Servicer is not required to have previously solicited the Borrower for a foreclosure prevention alternative ■ The following Mortgages are ineligible for a Freddie Mac Flex Modification. These exclusions are in lieu of the requirements described in Section 9206.1(c)(ii) above and Section 9206.1(d) below: ❑ The Mortgage is an FHA, VA or Guaranteed Rural Housing Mortgage ❑ The Mortgage is subject to recourse ❑ With the exception of a disaster-related forbearance plan, the Mortgage is currently performing under another forbearance plan, Trial Period Plan or ❑ The Mortgage is subject to an approved short sale or deed-in-lieu of foreclosure ❑ The Mortgage is currently subject to an unexpired offer to the Borrower for another modification or other foreclosure prevention alternative, such as a nondisaster-related forbearance or repayment plan ❑ The Mortgage is not a conventional First Lien Mortgage currently owned or guaranteed in whole or in part by Freddie Mac ❑ The Freddie Mac Flex Modification would result in a principal and interest payment that is greater than the pre-modification principal and interest payment ❑ The Mortgage is secured by a leasehold estate and the term of the lease does not meet the requirements described in Section 9206.1(c)(ii) Page 9206-7 If the Servicer was not collecting Escrows on the existing Mortgage, the Borrower is not required to establish an Escrow account as a condition of the modification unless otherwise required by applicable law, or the Servicer confirms that the taxes and insurance premiums have not been paid and are past due. For special requirements related to solicitations for streamlined offers for Freddie Mac Flex Modifications for certain Borrowers, the Servicer must refer to Section 9203.4(i). If the Borrower is ineligible for streamlined offers under the requirements of Section 9203.4(i) and this section but is at least 90 days delinquent, the Servicer must evaluate the Borrower in accordance with the requirements of Section (d) Ineligibility for Freddie Mac Flex Modification The following Mortgages and Borrowers are ineligible for a Freddie Mac Flex Modification: ■ Mortgages secured by second homes or non-owner-occupied properties (i.e., Investment Properties) where the Borrower is current or less than 60 days delinquent The following Mortgages and Borrowers are also ineligible for a Freddie Mac Flex Modification. However, if the Servicer believes, based on the Borrower’s individual circumstances, that the Borrower should be considered for a Freddie Mac Flex Modification, the Servicer should submit the request to Freddie Mac (refer to Section 9206.1(c) for information on submitting an exception request to Freddie Mac): ■ Mortgages that have been previously modified three or more times ■ Mortgages previously modified with the Freddie Mac Flex Modification terms determined in accordance with Section 9206.2(a) where: ❑ The Mortgage became 60 or more days delinquent within 12 months of the Modification Effective Date, and ❑ The Borrower has not brought the Mortgage current following the Delinquency ■ Borrowers who, within 12 months of the evaluation date, failed a Freddie Mac Flex Modification Trial Period Plan and the terms of that Trial Period Plan were determined in accordance with Section 9206.2(a) ■ The Mortgage is subject to an approved short sale or deed-in-lieu of foreclosure Page 9206-8 ■ The Borrower is currently performing under another Trial Period Plan, forbearance plan or repayment plan ■ The Mortgage is currently subject to an unexpired offer to the Borrower for another modification or other alternative to foreclosure, such as a forbearance, repayment plan or Any Borrower who is ineligible for a Freddie Mac Flex Modification must provide a complete Borrower Response Package in order to be evaluated for the most appropriate workout solution in accordance with the evaluation hierarchy in Section 9201.2. (e) Determining imminent default for a Freddie Mac Flex Modification In order to be eligible for a Freddie Mac Flex Modification, Borrowers who are current or less than 60 days delinquent must be determined to be in imminent default and must be occupying the property as a Primary Residence. The Servicer must verify that at least one Borrower is occupying the property as a Primary Residence based on a review of a credit report. If the credit report does not indicate that the property securing the Mortgage is the Primary Residence for a Borrower, then the Servicer must use good business judgment in reconciling the inconsistency. This additional due diligence on the part of the Servicer must be documented in the Mortgage file/servicing system. An imminent default evaluation is necessary when the status of the Mortgage is current or less than 60 days delinquent as of the date the Servicer commences the initial evaluation of the Borrower’s financial condition using the imminent default evaluation business rules as described in Section 9206.1(e)(ii). The Servicer must rely on the same Mortgage status used to initiate the imminent default evaluation to complete the imminent default determination process, regardless of whether the Borrower becomes 60 days or more delinquent during the imminent default evaluation. (ii) Imminent default evaluation business rules Resolve will evaluate the information the Servicer provides against the imminent default business rules. Any Borrower who is current or less than 60 days delinquent at the time the Servicer commences the initial evaluation is in imminent default if the Borrower meets the requirements of the following business rules: Page 9206-9 Imminent Default Evaluation business rules To be considered in imminent default, the Borrower must meet all requirements under Business rule 1, and must meet the requirements for either: Business rule 1 ■ Be current or less than 60 days delinquent as of the evaluation ■ Occupy the property as a Primary Residence; or at least one Borrower on the Mortgage must occupy the property as his or her ■ Have Cash Reserves less than $25,000 ■ Have an eligible hardship as described in Section 9202.1(b) Business rule 2 The Borrower is considered in imminent default if: ■ The Borrower meets the requirements of business rule 1, and ■ The Borrower’s FICO® score is less than or equal to 620 determined in accordance with Section 9206.1(e)(v); AND EITHER ❑ The Mortgage has had two or more 30-day Delinquencies in the most recent 6-month period; OR ❑ The Borrower’s pre-modification housing expense-to-income ratio is greater than 40% If the Borrower has one of the Imminent Default Hardships described below in business rule 3, the Borrower may be determined to be in imminent default even if these business rule 2 requirements are not Business rule 3 The Borrower is considered in imminent default if the Borrower meets the requirements of business rule 1, and the Borrower provided the documentation required in Section 9202.1(b) supporting one of the Imminent Default Hardships listed below: ■ Death of a Borrower or death of either the primary or secondary wage earner in the household ■ Long-term or permanent disability; or serious illness of a Page 9206-10 Imminent Default Evaluation business rules To be considered in imminent default, the Borrower must meet all requirements under Business rule 1, and must meet the requirements for either: ■ Divorce or legal separation; separation of Borrower unrelated by marriage, civil union or similar domestic partnership under applicable law; or ■ Principal and interest payment increase as a result of an interest adjustment applied to a Step-Rate Mortgage no more than 12 months prior to the evaluation date The Imminent Default Hardship must currently cause and be expected to continue to cause a long-term or permanent decrease in income or increase in expenses. The Servicer must enter all information in Resolve for business rule 1 and business rule 2 in all instances, even if the Borrower does not meet the requirements under business rule 2 and instead is approved based on the Imminent Default Hardship under business rule 3. (iii)Income and asset documentation and verification (A) Documentation and verification To be evaluated for imminent default, a Borrower must, at a minimum, provide a complete Borrower Response Package as defined in Section 9102.5(d). In addition to the income documentation required under Section 9202.1(c), the Servicer must obtain the Borrower’s FICO score in accordance with Section 9206.1(e)(v). (B) Verification of income and assets; resolution of material inconsistencies Servicers must review all documentation submitted by the Borrower to identify any material inconsistencies, including material inconsistencies with a tax return or tax transcript if one was obtained under Section 9202.1(c). If, based on the Servicer’s good business judgment, there are material inconsistencies with respect to the income or asset information disclosed by the Borrower or with other documentation relevant to the imminent default decision, the Servicer must obtain other documentation to reasonably reconcile such material inconsistencies. Servicers must also document such material differences in their servicing system. If the Servicer cannot reconcile such material differences, the Borrower cannot be considered in imminent default. (iv) Cash Reserves test Page 9206-11 imminent default. If the Borrower either discloses or provides documentation indicating the Borrower has Cash Reserves equal to or greater than $25,000, then the Borrower is not in imminent default. (A) Definition of Cash Reserves For purposes of determining imminent default, Cash Reserves are defined as follows: withdrawal from any financial institution or brokerage, including funds on deposit in the Borrower’s checking, savings, money market or certificate of deposit account or other depository account, stocks, bonds, mutual funds, U.S. Government Securities and other securities that are traded on an exchange or marketplace generally available to the public (e.g., New York Stock Exchange, National Association of Securities Dealers Automated Quotations, Midwest SE, Chicago Board of Trade or Over the Counter) for which the price can be readily verified through financial publications. Assets are only considered retirement assets if they are held in a qualified retirement account such as a 401k 403b, 457, Individual Retirement Account (IRA) or pension fund. If the assets are not held in a retirement account, the assets must be considered Cash Reserves. (B) Calculating Cash Reserves ■ The Servicer must determine that, for every Borrower on the Mortgage, all of the Borrower’s Cash Reserves have been accounted for on Form 710, Mortgage Assistance Application ■ In making the determination that all Cash Reserves have been accounted for, the Servicer must review all information provided by the Borrower to determine if the asset information stated on Form 710 is reasonably consistent with information available from all other information provided by the Borrower, including verbal information shared by the Borrower. If there are inconsistencies between the Borrower’s disclosure of assets and the information provided by the Borrower, then the Servicer must obtain the Borrower’s tax return or tax transcript in order to reconcile the inconsistencies. If, upon reviewing the Borrower’s tax return or tax transcript, if applicable, the Servicer observes interest, dividend income or gains/losses that, in total, that could not be reasonably produced by the Borrower’s disclosed Cash Reserves, and such income indicates deposits, securities holdings or other assets that could Page 9206-12 be in excess of the amounts disclosed by the Borrower on Form 710, the Servicer must reconcile the inconsistency with the Borrower. The Servicer must require the Borrower to produce a signed federal tax return and all relevant schedules, in the event the Servicer used a tax transcript in lieu of a tax return, along with any other relevant documentation that verifies the disposition and/or current status of those assets, which produced the income or gains/losses to resolve the inconsistency. The Servicer must ensure that the Borrower’s disclosure of assets is reasonably accurate despite the inconsistency between the disclosed assets and the income or gain/loss from assets reported on the tax return or tax transcript. In determining what documentation is needed to reconcile an inconsistency, the Servicer must review the detailed tax return schedules and forms, and request from the Borrower copies of recent and past statements from those asset holdings or transactions indicated on the schedules and forms that produced the income or gain/loss (e.g., checking, savings, brokerage account statements, asset sale statements or records, etc.). ■ If there are inconsistencies between the Borrower’s disclosure of assets and the tax return information that cannot be reconciled, the Borrower cannot be considered in imminent default If the Servicer determines that the Borrower has Cash Reserves of less than $25,000 and meets all other requirements of Section 9206.1(e)(ii) then the Borrower is considered to be in imminent default. (v) Imminent default Credit Score Servicers must choose one FICO score that is adequately indicative of the credit reputation of all Borrowers currently on the Mortgage. Servicers must use a Credit Score based on the FICO credit-scoring model. This score must be obtained and determined in accordance with the requirements below. (A) Obtaining FICO scores for each Borrower (I) Borrowers with FICO scores The Servicer must request a FICO score for each Borrower on the Mortgage from any one of the following three credit repositories: ■ Equifax Credit Information Services ■ Experian Information Systems and Services ■ TransUnion Credit Information Company Page 9206-13 The Borrower’s FICO score must be less than 90 days old on the date the Servicer performs the imminent default evaluation. (II) Borrowers with no available FICO score It is unusual for any Borrower who has obtained a Mortgage not to have a FICO score. If no single FICO score can be identified for a Borrower, the Servicer must recheck the information provided when ordering the FICO scores and resubmit a request. If the Servicer is still unable to obtain a FICO score for that Borrower, it may rely on the FICO scores of all other Borrowers as determined in accordance with this section. Absent a FICO score for any Borrower on the Mortgage, the Borrower may not be determined to be in imminent default under the requirements of business rule 2, and the Servicer must proceed to evaluate the Borrower under the requirements of business rule 3 in Section 9206.1(e)(ii). In such instances when a FICO score is not available for any Borrower on the Mortgage, the Servicer must: 1. Maintain documentation in the Mortgage file that demonstrates the Servicer’s attempts to obtain FICO scores from all three credit repositories on all 2. Enter the result that a FICO score is not available for any Borrower on the 3. Proceed to the Imminent Default Hardship test in Business Rule 3 to determine if an Imminent Default Hardship exists (B) Determining the Imminent Default Credit Score The Servicer must identify the Imminent Default Credit Score in accordance with the ■ The Servicer must first select a single FICO score for each Borrower on the Mortgage. If the Servicer obtains multiple FICO scores for a single Borrower, the Servicer must use the middle/lower method to select the single FICO score for that Borrower. This method is the most predictive when determining a single Borrower’s overall credit reputation. If three FICO scores are obtained for a Borrower, the single score for that Borrower is the one with the middle value. For example, if the FICO scores were 660, 656 and 640, the single FICO score selected by the Servicer should be 656. When there is a duplicate score, the Seller must select that score to be the single score. If the FICO scores for a Borrower were 660, 660 and 640, the Servicer should select 660. If two FICO scores were obtained for a Borrower, the Servicer must select the lower of the two FICO scores to be the single FICO score for that Borrower. Page 9206-14 ■ If there is only one Borrower on the Mortgage, the single FICO score, determined in accordance with the above requirements, is considered the Imminent Default Credit Score ■ If there are multiple Borrowers on the Mortgage, the Servicer must determine the single FICO score for each Borrower using the method described above. The Servicer must then select either the lowest FICO score across all Borrowers on the Mortgage or the average FICO score from all Borrowers’ single scores. (Note: Whichever method is used, the Servicer should choose the single FICO score using the same method and procedure for all Borrowers and for all Mortgages consistent with fair lending laws.) (vi) Calculating pre-modification housing expense-to-income ratio The Servicer must input verified income data into Resolve. Based on the Servicer’s input, Resolve will determine if the Borrower’s pre-modification housing expense-to-income ratio is greater than 40%. For purposes of this determination, the Borrower’s current monthly housing expense is divided by the Borrower’s monthly gross income (or the Borrowers’ combined monthly gross income in the case of co-Borrowers) plus any allowable non-obligor household income. The Borrower’s current monthly housing expense consists of the following, as applicable: ■ Any escrow shortage currently included as part of the monthly contractual payment contractual rate of interest in effect on the Note prior to the granting of the SCRA relief rather than the temporarily SCRA reduced interest rate and related SCRA monthly payment when calculating the Borrower’s current monthly housing expense-to-income If a Borrower has indicated that there are 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, or ground rents, but has not been able to provide written documentation to verify these Page 9206-15 amounts, the Servicer must rely on the information provided by the Borrower if the Servicer has made reasonable efforts to obtain the amounts in writing. payments, payments due to holders of subordinate liens, or projected escrow shortages. Based on the information provided by the Servicer, Resolve will calculate the Borrower’s housing-to-expense income ratio and determine if it meets the imminent default requirements under Business Rule 2. (vii) Imminent default evaluation results If Resolve determines the Borrower meets the requirements of business rule 1 and meets the requirements of either: (i) business rule 2, or (ii) business rule 3, the Borrower is in imminent default. The Servicer must evaluate the Borrower for a Freddie Mac Flex Modification Trial Period Plan and no further analysis is required by the Servicer to determine imminent default. (viii) General requirements and information If Resolve determines that a Borrower is in imminent default, the Servicer must continue evaluating the Borrower using the applicable underwriting requirements outlined in Chapter 9206 to determine if the Borrower qualifies for a Freddie Mac Flex Modification. (f) Property valuation requirements for a Freddie Mac Flex Modification Based on the information provided by the Servicer, Resolve will determine the property value of each Mortgage under consideration for a Freddie Mac Flex Modification. 9206.2: Modification terms, trial period and conditions of a Freddie Mac Flex Modification® (04/08/26) ■ Determining the terms of a Freddie Mac Flex Modification® ■ Trial Period Plan requirements ■ Modified Mortgage conditions ■ Other modification conditions and requirements (a) Determining the terms of a Freddie Mac Flex Modification Page 9206-16 Based on the information provided by the Servicer, Resolve® will determine the terms of the Freddie Mac Flex Modification Trial Period Plan and, following the Trial Period Plan, will determine the terms of the final modification agreement. Note: If the Borrower has previously made partial prepayments of principal (curtailments) and the monthly principal and interest installments were not recalculated in accordance with Section 8103.3(d), then the remaining Mortgage term must be calculated using the premodification interest-bearing UPB and the pre-modification principal and interest payment amount. The payment reduction target is considered satisfied once: ■ An incremental application of the steps to determine the terms of a Freddie Mac Flex Modification (i.e., interest rate application, Mortgage term extension, principal forbearance) achieves a post-modified Principal and Interest Payment reduction amount that just surpasses but is as close to 20% as possible (e.g., 20.01%) ■ The payment reduction target is not considered satisfied if the payment reduction amount is less than or precisely equal to 20% The Servicer must apply the steps to determine the terms for the Freddie Mac Flex Modification incrementally until the payment reduction target is achieved or until the steps are exhausted. The Servicer must offer the Freddie Mac Flex Modification if the modification will result in a post-modified Principal and Interest Payment amount that is less than or equal to the pre-modified payment amount. Based on the information provided by the Servicer, Resolve will determine the terms of the Freddie Mac Flex Modification according to the following steps: Determining the terms of a Freddie Mac Flex Modification Steps Step 1 Capitalize arrearages Capitalize arrearages in accordance with the requirements of Section 9206.3(b). Step 2 Establish the preliminary modification interest rate Set the preliminary modification interest rate to a fixed rate based on the following requirements using the interest rate in effect for the periodic payment due in the month of the evaluation date. Note: This step is solely to set the preliminary modification interest rate. Refer to step 3 for instructions on how to apply interest rate relief pursuant to Freddie Mac’s revised Freddie Mac Flex Modification waterfall requirements. Page 9206-17 If the existing Mortgage is: …then A fixed-rate Mortgage (including ARMs and Step-Rate Mortgages with no additional interest rate adjustments or steps scheduled) The Servicer must use the existing interest rate. An ARM or Step-Rate Mortgage that has not reached its final interest rate The Servicer must set the preliminary modification interest rate to the greater of: ■ The Freddie Mac modification interest rate in effect and posted as of the date the Servicer evaluates and determines the Borrower is eligible for a Trial Period Plan, or ■ The current interest rate Note: If the Freddie Mac modification interest rate is greater than the maximum step-rate/lifetime cap Note Rate, then the Servicer must set the modification rate to the maximum step-rate/lifetime cap Note Rate. Step 3 Determining the Freddie Mac Flex Modification interest rate If the post-modification mark-to-market loan-to-value (MTMLTV) is greater than or equal to 50% and The preliminary modification interest rate is: …then Greater than Freddie Mac’s modification interest rate in effect The Servicer must incrementally reduce the interest rate in 0.125% increments until the earlier of achieving: ■ The payment reduction target, or ■ The Freddie Mac modification interest rate Note: If the incremental reduction rate of 0.125% would cause the modification interest rate to fall below the posted modification interest rate, the Servicer must stop at the Freddie Mac modification interest rate. Page 9206-18 Less than or equal to Freddie Mac’s modification interest rate in effect The Mortgage will retain the preliminary modification interest rate as the postmodification contractual interest rate. If the post-modification MTMLTV is less than 50%, then the Borrower will retain the preliminary modification interest rate as the post-modification contractual interest rate. The interest rate used to calculate the Trial Period Plan payment must be the same rate that will be used to establish the terms of the modification agreement, and the Freddie Mac Flex Modification must result in a fixed-rate Mortgage. Step 4 Term extension If the payment reduction target has not been met after step 3, extend the remaining Mortgage term in monthly increments, if applicable, until the earlier of: A Mortgage term in which the payment reduction target is reached, or A Mortgage term of 480 months from the modification effective date Note: If a Mortgage has been subject to one or more previous principal curtailments, this could result in a post-modified maturity date that is earlier than the pre-modified maturity date. Step 5 Forbear principal If the payment reduction target has not been met after step 4 and the postmodification MTMLTV ratio (which includes capitalized amounts) is greater than 50%, forbear principal until the earlier of achieving: ■ The payment reduction target, ■ A result of 30% of the post-capitalized UPB (“the Forbearance Cap”), or ■ An amount that would create a post-modification MTMLTV ratio of 50% using the interest-bearing UPB Note: Interest must not accrue on any principal forbearance. Principal forbearance is payable upon the earliest of the maturity of the Mortgage loan modification, sale or transfer of the property, refinance of the Mortgage loan or payoff of the interest-bearing UPB. (i) Determination of eligibility based on Trial Period payment For a Freddie Mac Flex Modification, the estimated monthly modified principal and interest payment calculated when the terms of the Trial Period Plan are determined must comply with the applicable principal and interest payment reduction requirements set forth in Section 9206.1(c). Page 9206-19 If the Borrower makes all Trial Period payments timely, the Servicer must modify the Mortgage, even if, due to variances between estimated capitalization amounts and final capitalization amounts, the Freddie Mac Flex Modification does not meet the applicable requirements above. When determining eligibility for a Trial Period Plan offer, the Servicer is responsible for ensuring that its estimate of the amounts to be capitalized includes all known amounts. (ii) Resolve Servicers must use Resolve for all Mortgages for which Borrowers are being evaluated for a Trial Period Plan and modification under this chapter. Each Servicer shall use Resolve in accordance with (A) the requirements in this section, (B) the Payment Deferral and other instructions provided in Resolve Online Help and any other Documentation and (C) any other applicable provisions of the Guide, including Sections 2401.1 and 2404.2. Resolve does not adjust its terms for compliance with State-specific laws relating to loan modifications. Servicers must review the terms of any Trail Period Plan or modification agreement created using Resolve for compliance with applicable State laws and adjust the terms accordingly before transmitting them to the Borrower. The Servicer must access the Resolve application and submit all required data for Borrowers under consideration for a Freddie Mac Flex Modification: ■ For Borrowers who are current or less than 60 days delinquent, the Servicer must enter the information required for Resolve to make an imminent default determination in accordance with Section 9206.1(e) and enter the Imminent Default Hardship reason, if applicable, into Resolve ■ Upon successful completion of the Trial Period, the Servicer must update the principal balance as of the Modification Effective Date and any applicable fields to reflect the final amounts that must be capitalized If a Servicer is unable to complete a submission of a Trial Period Plan or modification agreement via Resolve, the Servicer should contact Customer Service at 800-FREDDIE. (b) Trial Period Plan requirements A Borrower who is evaluated and determined eligible for a Freddie Mac Flex Modification must enter into a Trial Period Plan under which the Borrower will be required to remit three monthly payments at the estimated post-modified payment amount. (See also Section 9206.2(b)(ii) for Trial Period extension requirements for Borrowers in bankruptcy.) The Servicer may utilize a processing month following the end of the Trial Period to facilitate processing of the modification agreement in accordance with Section 9206.4(a)(ii). A payment is not required during the interim month. Page 9206-20 (i) Processing the Trial Period Plan offer If the Borrower qualifies for a modification, the Servicer must offer the Borrower a Trial Period Plan. ■ The Freddie Mac Flex Modification Trial Period Plan Notice Within five days of an evaluation decision, but no later than 30 days following receipt of the complete Borrower Response Package, the Servicer must send the Borrower a Borrower Evaluation Notice indicating the outcome of its decision. If the Borrower is approved for a Freddie Mac Flex Modification, the Servicer must send the Borrower a Freddie Mac Flex Modification Trial Period Plan Notice – Based on an Evaluation of a Complete BRP. The Freddie Mac Flex Modification Trial Period Plan Notice communicates the qualification decision to the Borrower and is included in Exhibit 93, Evaluation Notices. ■ The Freddie Mac Flex Modification Trial Period Plan Solicitation for offers under Section 9206.1(c)(iii) If the Borrower who is eligible under Section 9206.1(c)(iii) is approved for an offer for a Freddie Mac Flex Modification, the Servicer must send the Borrower a Freddie Mac Flex Modification Trial Period Plan Solicitation Offer – Not Based on an Evaluation of a BRP with Exhibit 1191, Freddie Mac Flex Modification® Solicitation Cover Letter, or Exhibit 1191B, Freddie Mac Flex Modification® Solicitation Cover Letter for Day 60 Rate Reset, as applicable, in accordance with the requirements described in Section 9102.5(a). If the Borrower is approved for a streamlined offer for a Freddie Mac Flex Modification due to an Eligible Disaster in accordance with the requirements of Section 9206.1(c)(v), the Servicer must send the Borrower the Freddie Mac Flex Modification Trial Period Plan Solicitation Offer – Not Based on an Evaluation of a BRP, amended as set forth in Exhibit 93 for Eligible Disasters, and Exhibit 1191A, Freddie Mac Flex Modification® Post-Disaster Forbearance Solicitation Cover Letter. The Freddie Mac Flex Modification Trial Period Plan Notice communicates the qualification decision to the Borrower and is included in Exhibit 93. ■ Special requirements for Mortgages with post-modification MTMLTV ratios less than 80% In addition to the requirements above, the Servicer must ensure the Trial Period Plan Notice for a Borrower whose Mortgage has a post-modified MTMLTV ratio less than 80% includes a statement reminding the Borrower that once the Mortgage has been Page 9206-21 modified, the Borrower can always pay more than the contractual payment without penalty if he or she desires to pay down the debt faster. ■ The Disaster Relief Modification Trial Period Plan Notice If the Borrower is approved for a Disaster Relief Modification in accordance with the requirements in Section 9203.4(i), the Servicer must send the Borrower a Disaster Relief Modification Trial Period Plan Notice. The Disaster Relief Modification Trial Period Plan Notice communicates the qualification decision to the Borrower and is included in Exhibit 93. ■ Authorized changes to Trial Period Plan Notices The Servicer may amend a Trial Period Plan Notice as necessary to request any Borrower cash contribution the Borrower promises to pay for expenses and delinquent amounts not capitalized, if applicable. Servicers may also amend a Trial Period Plan to condition the approval of the Mortgage modification on obtaining any necessary court and/or trustee approvals for Borrowers in bankruptcy and to address situations where a Borrower files for bankruptcy during the Trial Period. In addition, Servicers must amend the Trial Period Plan Notice as necessary to ensure compliance with applicable laws, rules and regulations. If the Borrower previously received a Chapter 7 bankruptcy discharge but did not reaffirm the Mortgage debt under applicable law, the Servicer must add the following language to the Trial Period Plan Notice under the section “Additional Trial Period Plan Information and Legal Notices:” If you previously received a Chapter 7 bankruptcy discharge, but did not reaffirm the mortgage debt under applicable law: You agree that you were discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the Loan Documents. Based on this representation, Lender agrees that you will not have personal liability on the debt pursuant to this Trial Period Plan. If under applicable law, a Servicer may not establish an Escrow account, the Servicer must delete the following language from the Trial Period Plan Notice: Page 3: Your new monthly payment will include an escrow for property taxes, hazard insurance and other escrowed expenses. If the cost of your homeowners insurance, property tax assessment or other escrowed expenses increases, your monthly payment will increase as well. Page 9206-22 Page 3: If your monthly payment did not include escrows for taxes and insurance, you are now required to do so: You agree that any prior waiver that allowed you to pay directly for taxes and insurance is revoked. You agree to establish an escrow account and to pay required escrows into that account. ■ Effective Date of the Trial Period Plan When preparing the Trial Period Plan Notice, the Servicer must determine the Trial Period Plan Effective Date and the due date of the first Trial Period payment in accordance with the following instructions: Determining the Trial Period Plan Effective Date and the due date of the first Trial Period payment If the Servicer sends the Trial Period Plan Notice to the Borrower: … then the Trial Period Plan Effective Date and the due date of the first Trial Period payment is: On or before the 15th of the month The first day of the next month After the 15th of the month The first day of the month after the next month Example: If the Servicer sends the Trial Period Plan to the Borrower on June 10, the Trial Period Plan Effective Date and first Trial Period payment due dates are both July 1. If the Servicer sends the Trial Period Plan to the Borrower on June 17, the Trial Period Plan Effective Date and first Trial Period payment due date are both August 1. Notwithstanding the requirement above, after the Trial Period Plan Notice was sent to the Borrower, the Servicer may commence the Trial Period on the first day of the next month if the Borrower consents to commence the Trial Period earlier than the effective date requirements set forth above. If the Borrower fails to submit the first Trial Period payment on or before the last day of the first Trial Period month (e.g., on or before July 31st in the example above), the Servicer must consider the Trial Period Plan offer to be rejected by the Borrower. Page 9206-23 ■ Borrower acceptance of offer A Borrower’s notification to the Servicer indicating an intent to accept a Trial Period Plan offer within 14 days of the date of the offer constitutes sufficient notice solely for purposes of suspending foreclosure referral or sale in accordance with Sections 9301.2(c), 9301.2(d) and 9301.7(a). For purposes of legal acceptance, Borrowers are not required to sign or return the Trial Period Plan Notice. Timely receipt of the first payment due under the Trial Period Plan Notice is evidence of the Borrower’s acceptance of the Trial Period Plan terms and conditions. The Servicer must receive the Borrower’s first Trial Period payment on or before the last day of the month in which the Trial Period Plan Effective Date occurs (Trial Period Plan Offer Deadline). Otherwise, the Servicer must consider the Trial Period Plan offer to have expired. (ii) Requirements during the Trial Period The first Trial Period payment is due by the Trial Period Plan Offer Deadline. The Servicer must require the Borrower to remit timely payments. Each Trial Period payment must be received no later than the last day of the month in which the Trial Period payment is due. Borrowers who fail to make timely Trial Period payments are considered to have failed the Trial Period. Servicers must use good business judgment in determining whether Trial Period payments were received timely or if mitigating circumstances caused the payment to be late. Exceptions must be documented in the Servicer’s records. Although the Borrower may make scheduled Trial Period payments earlier than expected, the payments may not result in acceleration of the Modification Effective Date. During the Trial Period, the Servicer must: ■ Continue to report to Freddie Mac in accordance with the investor reporting requirements set forth in the Guide, which include the advancing of forecasted scheduled interest (and principal, if applicable) under the existing Mortgage terms to Freddie Mac, provided that the Servicer has not inactivated the Mortgage ■ Credit to an unapplied or suspense funds account, payments made by the Borrower during the Trial Period. Once enough funds have accumulated in the unapplied or suspense funds account to satisfy the oldest payment due under the existing Mortgage terms (including applying the portion of the Trial Period payment allocable to escrowed items to the existing or newly established Escrow account provided those amounts were due at the time of the oldest delinquent payment due date), the Servicer must apply the payment in accordance with the current Note and Security Instrument, or prior modification agreement, if applicable. Page 9206-24 ❑ Recommencement and/or initiation of collection efforts and foreclosure actions A Borrower is considered to have failed a Trial Period Plan if the Borrower fails ■ Make a Trial Period payment by the last day of the month in which the ■ Comply with the terms of the Trial Period Plan If the Borrower fails the Trial Period Plan because they did not meet the above requirements, the Servicer must begin or recommence collection efforts in accordance with Section 9102.4 or, if applicable, recommence any suspended foreclosure action or proceeding. Additionally, the Servicer must cancel the plan if the Borrower does not execute and return the modification agreement per the requirements set forth in Section 9206.4(a), the Servicer must begin or recommence collection efforts in accordance with Section 9102.4 or, if applicable, recommence any suspended foreclosure action or proceeding. After determining a Borrower has failed or the Trial Period was canceled according to the requirements under this Section 9206.2(b)(ii), the Servicer must report any initiated or resumed collection or foreclosure activity through EDR. See Section 9102.6 for information on EDR. Late charges may accrue during the Trial Period subject to the requirements of Section 9102.2. However, all accrued and unpaid late charges must be waived in the event the Mortgage is modified. ❑ Changes to tax and insurance premium payments If there are changes in a Borrower’s tax and insurance premium payments after the Borrower has been qualified for a Trial Period Plan, the Servicer is not required to re-qualify the Borrower based on the subsequent changes in taxes and insurance. However, the Servicer should provide written notice to the Borrower that explains the impact of the new Escrow payment on the modification. Page 9206-25 ❑ Borrowers in Trial Period Plans If a Borrower was in a Trial Period Plan prior to entering into a forbearance plan, the Borrower may be re-evaluated for a new Trial Period Plan within 30 days prior to or upon completion of the forbearance plan. Servicers must not resume or restart the terms of the previous Trial Period Plan prior to the start of the forbearance plan. Instead, the Servicer must evaluate the Borrower based on the status of the Mortgage at the time of the new evaluation and, if the Borrower meets all eligibility requirements, the Servicer must send a new Trial Period Plan offer to commence on or after the completion of the forbearance plan. For any subsequent modification submissions, the Trial Period Plan that the Borrower was in prior to the start of the forbearance plan will not be considered a failed Trial Period Plan for a Freddie Mac Flex Modification evaluation. ❑ Borrowers filing for bankruptcy during the Trial Period Borrowers who are in a Trial Period Plan and subsequently file for bankruptcy may not be denied a modification on the basis of the bankruptcy filing. The Servicer and its counsel must work with the Borrower or Borrower’s counsel to obtain any court and/or trustee approvals required in accordance with local court rules and procedures. Servicers should extend the Trial Period Plan as necessary to accommodate delays in obtaining court approvals or receiving a full remittance of the Borrower’s Trial Period payments when they are made to a trustee, but they must not extend the Trial Period beyond nine months, resulting in a total 12month Trial Period. In the event of a Trial Period extension, the Borrower must make a Trial Period payment for each month of the Trial Period, including any extension month, in order to remain eligible for a modification. See Section 9206.2(d)(i) for information on reporting an extended Trial Period Plan via EDR. ❑ Chapter 13 bankruptcy When a Borrower in an active Chapter 13 bankruptcy is in a Trial Period Plan and the Borrower has made post-petition payments on the Mortgage in the amount required by the Trial Period Plan, a Servicer must not object to confirmation of a Borrower’s Chapter 13 plan, move for relief from the automatic bankruptcy stay or move for dismissal of the Chapter 13 case on the basis that the Borrower paid only the amounts due under the Trial Period Plan, as opposed to the non-modified Mortgage payments. ❑ Chapter 7 bankruptcy Borrowers who have received a Chapter 7 bankruptcy discharge in a case involving the Mortgage and who did not reaffirm the Mortgage debt under applicable law, are eligible for a modification. Page 9206-26 ❑ Mortgages with temporary subsidy buydown plans When processing the Trial Period Plan offer on a Mortgage with a temporary subsidy buydown plan, the Servicer must make the appropriate changes to the applicable evaluation notice to reflect application of any buydown funds as a condition of completing the Mortgage modification, as applicable. See Section 9206.3(b)(i) for information about temporary subsidy buydown funds. (c) Modified Mortgage conditions The Servicer must ensure that the modified Mortgage: 1. Retains its First Lien position and continues to be fully enforceable in accordance with its terms at the time of modification, throughout its modified term, and during any bankruptcy or foreclosure proceeding involving the Mortgage. The Servicer must record the modification agreement only when doing so is necessary to ensure its compliance with this First Lien retention and modification enforcement requirement. If recordation is not immediately necessary but may be required in the future to comply with this First Lien retention and modification enforcement requirement, the Servicer must have the modification agreement in recordable form. The modification agreement must be executed by the Borrower(s). Notwithstanding the foregoing, the Servicer must: (a) Ensure the following are current, as applicable: property taxes ground rents and assessments or other charges that, if delinquent, are or may become First Liens on the property or that if not paid would result in the subordination of Freddie Mac’s interests. (See Section 9301.6(e) regarding expenses that may become First Liens on the property.) (b) Obtain a title endorsement or similar title insurance product issued by a title insurance company prior to or at the time of the modification whenever it is necessary to record the modification agreement to retain the modified Mortgage’s First Lien position. For Cooperative Share Loans recognized as personal property, refer to Section 8801.1(f)(i) regarding certain Servicer warranties required in the event of a loan (c) Obtain subordination agreements from any junior lienholders, if required by the title (d) Record the executed loan modification agreement, even if the jurisdiction where the property is located does not require the Servicer to do so, whenever recordation is necessary to retain the modified Mortgage’s First Lien position if, in the future, recordation is necessary to enforce the terms of the modified Mortgage (e.g., preforeclosure) or if it contains provisions related to the assignment of leases and rents. Page 9206-27 2. Retains all living signers on the existing Note as obligors. Except as otherwise provided in Section 9206.2(d)(v), all Borrowers and any other signatory to the Security Instrument must sign the modification agreement and all other required documents. 3. Contains a due-on-transfer provision if the existing Mortgage documents do not contain such a provision (see Exhibit 78, Modification Due on Transfer Rider, for an example of a due-on-transfer rider) 4. Does not have any secondary financing included in the UPB 5. Does not provide any cash-out to the Borrower 6. Except as set forth in Section 9206.1(c)(v), has an Escrow account (see Chapter 8201) even if the existing Mortgage does not have an Escrow account 7. Retains mortgage insurance coverage if the existing Mortgage has such coverage, and the loss coverage percentage must remain the same 8. Contains an assignment of rents rider if the property is a 1-unit Investment Property or a 2- to 4-unit property (see Exhibit 77 for an example of an assignment of rents rider) 9. Retains any existing credit enhancement, such as an indemnification agreement. (Note: Mortgages subject to recourse are not eligible for a Freddie Mac Flex Modification®.) If the Servicer is not the provider of the credit enhancement, it must obtain written approval from the institution providing the enhancement. 10. Contains a Modification Bankruptcy Disclosure Rider for a Borrower who has been discharged from the Freddie Mac debt (see Exhibit 78A, Modification Bankruptcy Disclosure Rider, for an example of the rider) 11. Is a fully amortizing fixed-rate Mortgage. The Mortgage after modification must not be an interest-only Mortgage, a bi-weekly Mortgage or a daily simple interest Mortgage. 12. Has flood insurance coverage if the property is located in an area that has been identified by the Director of the Federal Emergency Management Agency (FEMA) as a Special Flood Hazard Area (SFHA). The Servicer must determine if the area where the property is located has been identified as a SFHA. This step must be taken even if the property was not located in a SFHA when the Mortgage was originated. If the property is located in a SFHA, then the Servicer must require that the Borrower purchase flood insurance as required in Section 8202.2. (d) Other modification conditions and requirements (i) EDR Page 9206-28 Resolve automatically reports the below EDR default action codes when applicable. Servicers may, but are not required to, report specific Freddie Mac Flex Modification activity to Freddie Mac as follows: ■ BF – “Standard Modification Trial Period.” Report default action code BF to notify Freddie Mac that the Borrower has entered into a Trial Period for the Freddie Mac Flex Modification. Servicers may report this code along with the Trial Period Plan Effective Date each month during the Trial Period. In addition, Servicers may report this code if they elect to use the interim month option under the Trial Period Plan or extend the Trial Period Plan to accommodate a Borrower’s bankruptcy filing. See Section 9206.4(a)(ii) for information on the interim month option and Section 9206.2(b)(ii) for information on extending a Borrower’s Trial Period Plan when the Borrower is in bankruptcy; or ■ HD – “Modification in Review.” Report default action code HD to notify Freddie Mac that the Borrower is being evaluated for a modification. Servicers may report this code along with the date they began reviewing the Borrower for the modification. Report this code one time in the month following the month in which the evaluation took place. ■ HE – “Ineligible/Cancel Modification.” Report default action code HE to notify Freddie Mac that the Borrower is ineligible for a modification or the Trial Period has been canceled. Servicers may report this code along with the date they made the decision. Report this code one time in the month following the month in which the decision took place. (ii) MI approval If the Mortgage is subject to mortgage insurance and approval and the Freddie Mac Flex Modification is not covered by delegation agreement, then the Servicer must obtain MI approval of a modification before offering the Borrower a Trial Period Plan. Additionally, if the Borrower cannot pay all amounts due plus the modification expenses, the Servicer must inquire if the MI will make an advance claim payment to pay all or part of the amounts due. (iii)Servicing Spread Upon modification, the Servicing Spread for Servicing a modified mortgage is equal to the lesser of: ■ The current Servicing Spread on the modified Mortgage, or ■ 25 basis points per annum multiplied by the interest-bearing UPB. For Mortgages with a partial principal forbearance, the Servicing Spread is based on the interestbearing UPB. Page 9206-29 (iv) Escrows Servicers must establish an Escrow account on the Mortgage if an Escrow account is not currently maintained on the Mortgage, provided its establishment is not prohibited under applicable federal, State or local law. Prior to or during the Servicer’s determination of the Borrower’s eligibility for a modification, the Servicer must perform an Escrow analysis in accordance with the Real Estate Settlement Procedures Act (RESPA) and any applicable federal, State or local law. The Servicer must then establish the Escrow account at the time the Trial Period Plan becomes effective and provide any disclosures required by applicable federal, State or local law within the time periods prescribed by such laws. In addition: ■ Any advances previously made by the Servicer or any advances that will be made during the Trial Period to pay property taxes or insurance premiums must be capitalized in the modified UPB as long as they were or will be paid to third parties prior to the Modification Effective Date. ■ For taxes and insurance premiums that are not yet due before the Modification Effective Date, the Servicer must determine the amount needed to establish the escrow account (Escrow shortage) that, together with the monthly Escrow payment included in the modified monthly Mortgage payment, will be sufficient to pay all future taxes and insurance premiums when they fall due. If the Borrower is unable to pay the Escrow shortage as a lump sum payment, then the Borrower must pay the shortage as part of the monthly payment on the modified Mortgage (“Project Monthly Escrow Shortage Payments”) as set forth in Section 9206.3(b)(ii). This amount may not be capitalized in the UPB of the Mortgage. ■ Once the Escrow account is established, the Borrower must continue to make monthly Escrow payments, even if the Borrower fails to comply with the Trial Period Plan and the Mortgage subsequently reinstates. (v) Execution of documents The Servicer must require all Borrowers and any other signatory to the Security Instrument to sign the modification agreement and all other required documents to qualify for a modification except the following: ■ A Borrower, co-Borrower or any signatory to the Security Instrument who is deceased, as evidenced by a death certificate or an obituary or newspaper article reporting the death ■ A Borrower, co-Borrower or any signatory to the Security Instrument who is divorced or legally separated from another party, as evidenced by a divorce decree signed by the court or court filed separation agreement, except for the Borrower or co-Borrower retaining possession and title to the property Page 9206-30 ■ A Borrower, co-Borrower or any signatory to the Security Instrument who is unrelated by marriage, civil union or similar domestic partnership under applicable law and who purchased or owned the property and has since vacated and no longer occupies the property, provided the remaining Borrower submits a copy of a recorded quit claim deed evidencing that the departed party has relinquished all rights to the property; or ■ Any signatory to a Security Instrument who is not a Borrower obligated on the Note, provided the Security Instrument contains a provision that authorizes any Borrower to modify the terms of the Security Instrument or the Note without such signatory’s consent Servicers may evaluate requests on a case-by-case basis when the Borrower is unable to sign due to circumstances such as mental incapacity, military deployment, etc. For Mortgages secured by a property owned by an eligible Living Trust all Freddie Mac Flex Modification-related documents must be executed by the Borrower as follows: ■ In his or her individual capacity; and ■ By the trustee on behalf of the Living Trust (vi) Texas Equity Section 50(a)(6) Mortgages When the Mortgaged Premises is secured by a Texas Equity Section 50(a)(6) Mortgage: ■ If the Borrower is eligible and qualifies for a Trial Period Plan and/or modification, the Servicer must offer the Borrower a Trial Period Plan and/or modification in accordance with Freddie Mac’s requirements in Chapters 9205 and 9206 ■ If the Servicer receives Borrower notification stating that the terms of the modification agreement do not comply with the provisions of Article XVI Section, 50(a)(6) of the Texas Constitution, the Servicer must notify Freddie Mac within seven Business Days of receipt of such objection or complaint via Freddie Mac Servicing Data Corrections and include the following: ❑ Freddie Mac loan number ❑ Servicer loan number ❑ Transaction type (i.e., Texas Home Equity modification) ❑ Accounting Cycle in which Freddie Mac settled the workout Page 9206-31 ❑ Servicer’s analysis (i.e., Borrower complaint related to Section 50(a)(6) of the Texas Constitution) ■ Upon receipt of Freddie Mac’s instructions, the Servicer must comply with any required response time frames to claims of defects and any other complaint in accordance with Section 8104.1(a) and the Texas Constitution 9206.3: Loan modification expenses, capitalization and reimbursement (04/08/26) ■ Loan modification expenses ■ Expenses, delinquent amounts, capitalization rules and expense reimbursements for modifications (a) Loan modification expenses Subject to applicable law, loan modification expenses may include, but are not limited to: 1. Notary fees 2. Recordation fees if they meet the requirements in Section 9206.2(c) 3. Title report according to the requirements of Section 9206.2(c). To reduce the expenses, order any required title report from a vendor that is an agent of the current title insurer, when possible. 4. Updated title endorsement or a new title insurance policy according to the requirements of Section 9206.2(c) 5. Legal and settlement fees 6. Property inspection The Servicer may not charge the Borrower any processing fee or other administrative fee in connection with the processing of a loan modification. If the Servicer does not modify the Mortgage, the Servicer must refund to the Borrower all prepaid but unused expense funds. (b) Expenses, delinquent amounts, capitalization rules and expense reimbursements for modifications Page 9206-32 (i) Expenses and delinquent amounts Whenever possible, the Borrower must pay, subject to applicable federal, State and local law and the Mortgage, the following expenses and delinquent amounts in the form of a cash contribution as a condition of the modification: ■ Delinquent accrued interest ■ Expenses paid to a third party specifically related to the loan modification (e.g., title costs, not to exceed the reimbursable expense limits in Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses; notary fees; recordation fees, if applicable; and credit report fees) ■ Funds advanced by the Servicer, or to be advanced and paid to a third party, prior to the date the Borrower executes the loan modification agreement for the payment of any property taxes and property and mortgage insurance premiums ■ Incurred foreclosure costs, including attorney fees and title costs incurred as part of the foreclosure process, not to exceed the reimbursable expense limits in Exhibit 57A ■ Property preservation expenses and property inspection fees, not to exceed the reimbursable limits in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts, and further subject to limitations on the amount or frequency of inspections under applicable federal, State or local law ■ Any other expenses that were advanced and paid to a third party related to the preservation of Freddie Mac’s lien priority, as specified in Sections 9301.6(e) and 9701.2(e) ■ Escrow shortages (i.e., the amount needed to establish the Escrow account or to bring it current that, together with the monthly Escrow payment included in the monthly Mortgage payment, will be sufficient to pay the next twelve months of property taxes, property and mortgage insurance premiums, etc., when they fall due) ■ Any other amounts due and owing that are secured indebtedness under the current The Borrower must contribute funds held in a buydown account, if any, to reduce the Delinquency or amount capitalized unless otherwise prohibited in the buydown At the end of a Trial Period Plan, if amounts held in a suspense funds account per the requirements in Section 9206.2(b)(ii) are in excess of the total amount of arrearages and expenses and remain unapplied, those funds must be applied to reduce the postcapitalized UPB. Page 9206-33 The Servicer may not charge the Borrower or capitalize any processing fee or other administrative fees in connection with the processing of a loan modification. (ii) Capitalization rules If the Borrower has inadequate cash reserves or assets that he or she cannot liquidate to pay all of the expenses and delinquent amounts in the form of a cash contribution under Section 9206.3(b)(i), any cash contribution the Borrower is able to make must be applied to expenses and amounts that may be capitalized. Generally, a Borrower is expected to pay all expenses and other amounts due. If the Mortgage has mortgage insurance, the Servicer must contact the MI prior to capitalizing any amounts to determine if the MI will pay all or a portion of the expenses and delinquent amounts due. The Servicer may capitalize any expense or delinquent amount set forth in the table below provided that such capitalization is not prohibited by applicable federal, State or local law, the amount to be capitalized is part of the indebtedness secured by the current Mortgage, and the expense complies with Exhibits 57 and 57A. Expenses or delinquent amount that can be capitalized Expense or delinquent amount May be capitalized (if part of the secured indebtedness and subject to applicable law) Delinquent accrued interest Expenses paid to a third party specifically related to the loan modification (e.g., title costs; notary fees; recordation fees, if applicable; and credit report fees) Funds advanced by the Servicer, or to be advanced and paid to a third party, prior to the date the Borrower executes the loan modification agreement for the payment of any property taxes and property and mortgage insurance premiums Escrow shortages to fund an Escrow account for future post-modification advances Page 9206-34 Expenses or delinquent amount that can be capitalized Expense or delinquent amount May be capitalized (if part of the secured indebtedness and subject to applicable law) Incurred foreclosure costs, including attorney fees and title costs incurred as part of the foreclosure Yes (not to exceed the reimbursable expense limits in Exhibit 57A) Property preservation expenses and property inspection fees Yes (not to exceed the reimbursable limits in Exhibit 57) Any other expenses that were advanced and paid to a third party related to the preservation of Freddie Mac’s lien priority, as specified in Sections 9301.6(e) and 9701.2(e) With respect to Escrow shortages, if the Borrower is unable to pay the Escrow shortage as a lump sum, then the Borrower must pay the shortage as part of the monthly payment (“Projected Monthly Escrow Shortage Payments”) on the modified Mortgage. If the Borrower must pay Projected Monthly Escrow Shortage Payments, then the Servicer over a period of 60 months, unless the Borrower chooses to pay off the shortage as a lump sum or over a shorter period of time, not to be less than 12 months (iii)Reimbursement of expenses Servicers may use the PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools) to request reimbursement for the following mortgage modification expenses associated with all modification types that would otherwise be paid by the Borrower and that may not be capitalized: Page 9206-35 Reimbursement expense code, limit and notes Title costs, if (except with respect to title costs in connection with a proceeding) Reimbursable amounts are in accordance with the limits specified in Exhibit 57A Additionally, Freddie Mac will reimburse certain expenses (e.g., legal fees and/or legal costs) considered unrecoverable from the Borrower under applicable federal, State or local law upon completion of a mortgage modification in accordance with Section 9701.1(e)(iv). All reimbursement requests must be received by Freddie Mac in accordance with Section 9701.1(e)(i). If the Servicer submits a reimbursement request for Mortgage modification expenses and the Mortgage modification settlement date does not exist in Freddie Mac’s systems, the expense request will not be eligible for payment. All modification types, excluding modifications with Mortgages insured by the FHA or guaranteed by the VA or RHS, must have been submitted to Freddie Mac for settlement in its systems to be eligible for expense reimbursement via PAID. For modifications with Mortgages insured by the FHA or guaranteed by the VA or RHS, refer to Section 9701.1(e)(i) for requirements related to expense submission time frames. 9206.4: Settling, reporting and data submission for loan modification (04/08/26) ■ Preparing to settle the loan modification ■ Loan modification documents and settlement data submissions ■ Modification reporting and drafting requirements Page 9206-36 ■ Electronic solicitation and modification (a) Preparing to settle the loan modification The Servicer should allow sufficient processing time to prepare the modification agreement and provide it to the Borrower for execution, so that the Borrower has sufficient time to return it to the Servicer and make the first modified payment by its due date. The first modified payment due date is the first day of the month following the final Trial Period month, or, if applicable, the first day of the month following a processing month. (i) Preparing the modification agreement and providing it to the Borrower 1. Prepare an original modification agreement for the Borrower’s signature (see Exhibit 76, Loan Modification for Delinquent Mortgages, for an example of a modification agreement and Exhibit 76A, Authorized Changes to Exhibit 76, Loan Modification for Delinquent Mortgages, for authorized changes to Exhibit 76) The modification agreement: ■ Must be revised as necessary to conform with federal, State and local law and the terms of the modification ■ Must not include any language that requires the Borrower to waive rights he or she may have under applicable law, including the Consumer Credit Protection Act, as a condition of the modification ■ Must have a Modification Effective Date and a due date of the first payment due after the Trial Period (the “First Modified Payment”) of the first day of the month following the end of the Trial Period, or, if applicable, the first day of the month following the end of the processing month ■ Must be in recordable form in the following circumstances: ❑ If State or local law requires the modification agreement be recorded to be enforceable ❑ If the Mortgage is secured by property located in New York ❑ If the modification agreement must be recorded pursuant to Section 9206.2(c)(1)(d), or ❑ If the Servicer’s practice for modifying Mortgages in its portfolio is to create modification agreements in recordable form Page 9206-37 The new interest rate and new principal balance on the modified Mortgage are effective retroactive to the first day of the month just prior to the First Modified Payment due date (i.e., to allow for payment of interest in arrears). (See below for information on the “processing month option”.) 2. Deliver to the Borrower an unsigned copy of the modification agreement, together with any applicable riders and disclosures, and provide a date by which the Borrower must sign and return the executed modification agreements (and applicable riders and disclosures) 3. Once the Borrower has signed the modification agreement and made the last required monthly payment due during the Trial Period and the Servicer determines the Borrower otherwise remains in compliance with the terms of the Trial Period Plan, the Servicer must sign the modification agreement and return a copy with all signatures to the Borrower in order for the modification to take effect. The Servicer may not sign the modification agreement until the Borrower has signed the modification agreement and complied with all requirements of the Trial Period Plan. Note: While the Servicer is required to provide a date by which the modification agreement must be signed and returned, provided the Servicer receives the executed agreement by the Modification Effective Date, the modification will take effect. 4. Prepare an assignment of rents rider, if applicable (see Section 9206.2(c)) 5. Prepare a due-on-transfer rider, if applicable (see Section 9206.2(c)) 6. Prepare a Modification Bankruptcy Disclosure Rider, if applicable (see Section 9206.2(c)) 7. Prepare any documents necessary to modify the Mortgage, including applicable disclosure statements 8. Arrange to obtain a title endorsement or similar title insurance product, if applicable. Refer to Section 9206.2(c) for specific information. (ii) Processing month option In the event the Borrower does not pay the final Trial Period payment on or before the due date set forth in the Trial Period Plan Notice, then the Servicer may, at its option, prepare the modification agreement such that the Modification Effective Date and the due date of the First Modified Payment is the first day of the second month following the final Trial Period month. However, in this case, interest will not begin to accrue at the modified interest rate on the modified principal balance until the first day of the month following the final Trial Period month to accommodate the First Modified Payment’s payment of interest in arrears (“processing month option”). Page 9206-38 Example: If the final Trial Period payment is due March 1 and the Servicer elects the option described above, the Borrower is not required to make any payment during April, and the First Modified Payment under the modification agreement is due on May 1. During the month of March, interest will accrue at the current pre-modification rate under the current loan documents, which may impact the amount of the modified principal balance. The modified interest rate and the modified principal balance will take effect on April 1. The First Modified Payment due on May 1 will include interest in arrears that accrued during April on the modified principal balance at the modified interest rate. If the Servicer elects this option, the Borrower will not be required to make an additional Trial Period payment during the month (the “processing month”) between the final Trial Period month and the month in which the First Modified Payment is due. A Servicer must treat all Borrowers the same in applying this option by selecting, in its discretion and evidenced by a written policy, the date by which the final Trial Period payment must be submitted (“cutoff date”) before the Servicer applies this option. The cutoff date must be after the due date for the final Trial Period payment as set forth in the Trial Period Plan Notice. In the event the Borrower does not submit funds during the processing month, the effects of the processing month and attendant capitalization of arrearages on the terms of the modification agreement may not alter the Servicer’s previous determination of the Borrower’s eligibility. The Servicer, when sending the modification agreement for signature, must include a cover letter that informs the Borrower of: ■ The delay of the Modification Effective Date and First Modified Payment due date by one month, and ■ The effects of the processing month, including, but not limited to, the delay in the effective date of the modified interest rate, any increase in the delinquent interest capitalized EDR reporting requirements If the Servicer elects to use the processing month option in accordance with the requirements under this Section 9206.4(a)(ii), the Servicer may report the interim month to Freddie Mac through EDR. In doing so, the Servicer may report default action codes “BF” under the Freddie Mac Flex Modification® Trial Period Plan. In addition, the Servicer must also report the Trial Period Plan Effective Date as the default action date until the default action codes would no longer apply once the Mortgage is modified. Refer to Section 9206.2(d) for information on Resolve® reporting of default action code BF. Page 9206-39 Note: Refer to Section 9102.6 for information on EDR and Exhibit 82, Electronic Default Reporting Transmission Code List, for descriptions of the default action codes and default reason codes. Mortgages with temporary subsidy buydown plans When preparing and sending the modification agreement to the Borrower in accordance with Section 9206.4(a) on a Mortgage with a temporary subsidy buydown plan, the Servicer must make the appropriate changes as necessary to reflect application of any buydown funds as a condition of completing the Mortgage modification, as applicable. (b) Loan modification documents and settlement data submissions After the Servicer has sent a copy of the fully executed modification agreement to the Borrower as required by Section 9206.4(a)(i), the Servicer must comply with the following ■ If the modification agreement must be recorded (see Sections 9206.2(c) and 9206.4(a)), the Servicer must: ❑ Submit the fully executed original modification agreement for recordation within five Business Days of receiving either the Borrower executed modification agreement or the final Trial Period payment, whichever is later. (See Section 1401.3(d) for requirements pertaining to Electronic recording of paper post-closing documents.) ❑ If the original Security Instrument was registered with MERS®, execute the modification agreement on behalf of MERS ❑ Within 25 days of receiving the executed modification agreement from the Borrower: ■ If the modification agreement will not be electronically recorded, send a certified copy of the fully executed modification agreement to the Document Custodian to be maintained with the Note ■ If the modification agreement will be electronically recorded, send the fully executed modification agreement to the Document Custodian to be maintained with the Note. (See Section 1401.3(d) for requirements pertaining to Electronic recording of paper post-closing documents and related delivery requirements to the Document Custodian or Designated Custodian, as applicable.) ❑ Send the modification agreement that is returned from the recorder’s office to the Document Custodian within five Business Days of receiving it. (See Section 1401.3(d) for requirements pertaining to Electronic recording of paper post-closing documents and related delivery requirements to the Document Custodian or Designated Custodian, as applicable.) For eMortgages, if the modification agreement is electronically recorded, deliver an electronic copy of the recorded modification Page 9206-40 agreement to the eNote custodian’s eVault, using MERS eDelivery, within five Business Days of receipt from the recording office. ❑ If recordation is not required, send the fully executed modification agreement to the Document Custodian within 25 days after receiving it from the Borrower ❑ Retain a copy of the fully executed modification agreement in the Mortgage file. (See Section 1401.3(d) for requirements pertaining to Electronic recording of paper postclosing documents and related modification storage requirements by the Servicer in the Mortgage file.) ■ Per Section 1402.5(c)(i), the Servicer must update the MERS® eRegistry (as defined in Section 1402.1(b)) to provide notice of the modification agreement upon a modification of an eMortgage (as defined in Section 1402.1(b)) ■ Complete the “Settlement Request” screen in Resolve and transmit the status for all Mortgages due for settlement into Resolve no later than the fourth Business Day of the month in which the first modified payment is due. When submitting the data for a modification via the “Settlement Request” screen, the Servicer must comply with the instructions for each Freddie Mac modification offer set forth in Resolve Online Help. Before completing the “Settlement Request” screen and submitting the modification terms via the “Loan Modification Settlement” screen in Resolve, the Servicer must ensure all data entered are complete and correct, including, but not limited to: ❑ The “Current UPB (pre-modification)” and the DDLPI entered on the “Loan Modification Settlement” screen matches the UPB and DDLPI reported to Freddie Mac as of the end of the last Accounting Cycle in the month prior to the first modified payment due date, and ❑ The data entered on the “Settlement Request” screen matches the terms of the modification agreement and those terms comply with the requirements applicable to the modification In its sole discretion, Freddie Mac may choose not to accept for settlement any modification and data related to such modification undertaken by the Servicer where required settlement documentation is not provided in accordance with the time frame set forth above or that otherwise does not comply with the underwriting requirements of the Guide or other applicable Purchase Documents. If Freddie Mac does accept a modification for settlement, such acceptance does not waive any rights Freddie Mac may have available under the Guide or other applicable Purchase Documents including, without limitation, the right to withhold workout compensation for any modifications undertaken by the Servicer where required settlement documentation or accurate settlement data is not provided in accordance with the time frame set forth above or the terms of the modification do not comply with the underwriting requirements of the Guide or other applicable Purchase Documents. Page 9206-41 Once the data entered onto the “Settlement Request” screen has been submitted to Freddie Mac, Servicers should monitor the Modification Pending Update report, accessible via the “Modifications” tile of the Servicer’s Servicer Performance Profile (SPP). (See Exhibit 88, Servicing Tools.) All Mortgages that are scheduled to be processed in Freddie Mac’s systems will appear on this report in the SPP. In addition, Freddie Mac will notify Servicers that the modification has been processed in Freddie Mac’s systems via the Modification Status Overview report in the SPP. If a Servicer attempts to report a monthly loan-level transaction on a Mortgage based on the modified terms prior to the modification being processed in Freddie Mac’s systems, the Servicer will not be able to successfully complete the ■ Comply with the reporting requirements set forth in Section 9206.4(c) to complete the loan modification. Freddie Mac will enter a credit for its proportionate share of the capitalized amount, if applicable, on the Adjustment line of the Servicer’s Monthly Account Statement (MAS) plus an adjustment for any miscellaneous interest, if (c) Modification reporting and drafting requirements Freddie Mac will process and settle Mortgage modifications daily, except on the first Business Day of the month, and notify the Servicer through the Loan Modification Status Report when a loan modification has settled. During settlement, Freddie Mac will update the DDLPI to be the Modification Effective Date. The Servicer must comply with the following reporting requirements: (i) Before the first modified payment is due The Servicer must report in accordance with the Note and Security Instrument, and any modification agreement, if applicable. In doing so, the Servicer must report to Freddie Mac as follows: Modification reporting requirements If the Mortgage modification was settled in the current Accounting Cycle…. Then the Servicer must…. With the first modified payment due in the following month Report the next month’s forecasted scheduled interest based on the modified terms in the current Accounting Page 9206-42 Modification reporting requirements If the Mortgage modification was settled in the current Accounting Cycle…. Then the Servicer must…. With the first modified payment due in the current month Report the principal and forecasted scheduled interest based on the newly modified terms in the current Accounting Note: If the Mortgage modification settles after the P&I Determination Date and the Servicer does not report the modified loan data, Freddie Mac will simulate the loan And the Modification Effective Date is in a past Accounting Cycle, the Mortgage will remain inactive after the mortgage modification Complete a full reinstatement. Refer to Section 8303.3(j)(i) for reporting the corresponding payment and DDLPI date change. (The DDLPI would change to the same date as the Modification Effective Date.) If a Trial Period Payment is received in the same month that Freddie Mac settles the Mortgage modification and the pre-modified UPB is equal to the UPB reported in the current Accounting Cycle, the Trial Period Payment will be applied as a miscellaneous principal adjustment. (ii) After the modification has been executed Once the modification has been executed, the Servicer must update their Mortgage records to reflect the modified terms. In the next monthly Accounting Cycle after the effective date of the modification, the Servicer must report to Freddie Mac as follows: 1. Report the Mortgage in its Loan-Level Transaction using the modified terms and report any payments received after the modification agreement has been executed. If the modified Mortgage includes capitalized amounts, then the UPB field must reflect the modified UPB amount. Freddie Mac will enter a credit for its proportionate share of the capitalized amount, if applicable, on the Adjustment Line of the Servicer’s MAS. 2. On the P&I Draft Date, Freddie Mac will draft all modified principal and interest payments to Freddie Mac. The Servicer must update its Mortgage records to reflect Page 9206-43 the modified terms of the Mortgage as soon as the modification agreement has been executed. (iii) Drafting Freddie Mac will draft principal and interest payments in accordance with Section 8303.1(c)(ii). Adjustments for loan modification capitalized interest, miscellaneous principal, miscellaneous interest or reinstatement interest, if applicable, will be posted to the Draft Report in the month the loan modification settles on or before the P&I Determination Date. If the Loan Modification settles after the P&I Determination Date, these adjustments will be posted to the following month’s Draft Report. (iv) Postsettlement discrepancies The Servicer must report any postsettlement discrepancies to Freddie Mac via the Freddie Mac Servicing Data Corrections tool (see Exhibit 88, Servicing Tools) within 30 calendar days following the close of Freddie Mac’s Accounting Cycle in which the settlement occurred. When submitting a request to correct a postsettlement discrepancy, Servicers must upload the executed modification agreement or court documents to support the requested change in the Servicing Data Corrections tool and explain why the modification was not initially settled with data elements matching these documents. Freddie Mac may assess a contract noncompliance and contract change compensatory fee. (See Section 8303.5(i) for any postsettlement discrepancies submitted more than 60 calendar days after the close of Freddie Mac’s Accounting Cycle in which the settlement occurred.) Additionally, in the event the modification agreement did not comply with Freddie Mac’s requirements, Freddie Mac may pursue available remedies depending on the nature of the modification violation, including, but not limited to, a repurchase demand, repurchase alternative and/or recovery of any workout incentives that were paid. Note: Refer to Section 8303.2(a) for specific reporting requirements for Mortgages with partial principal forbearance. (d) Electronic solicitation and modification For purposes of this section: Defined terms pertaining to electronic solicitation and modification Page 9206-44 As applicable to eModification Agreements, in addition to the definition contained in the Glossary, a person defined as a consumer under E-SIGN, to the extent E-SIGN applies to a transaction. For the purposes of this section, “Borrower” also includes any and all persons obligated under the terms of any applicable Note as the context shall permit or require. optical, electromagnetic, or similar capabilities, as defined in the “UETA” and/or “E-SIGN”. associated with, a contract or other “Record” and executed or adopted by a person with the intent to sign the “Record,” as defined in the “UETA” and/or “E-SIGN”. relating to the conduct of business, commercial, or governmental affairs, using “Electronic” means, as defined in the “UETA” and/or “E-SIGN”. an agreement that is an Electronic Record that complies with the applicable modification requirements of the Guide and includes, with respect to paper Notes, Electronic modification agreements and Electronic assumption and release of liability agreements under Chapters 9206 and 8406, respectively. An Electronic Record that would be a promissory note if it was issued in paper, and that the Borrower has agreed to issue it as a Transferable The federal Electronic Signatures in Global and National Commerce Act (15 U.S. Code, Chapter 96). eStorage An Electronic computer storage system for storing Electronic Mortgage File Documents safely, securely, confidentially in accordance with the Guide and other Purchase Documents. eVault An Electronic storage system that uses computer hardware and software to store and maintain eNotes and other Electronic Records. Information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form Page 9206-45 as defined in the “UETA” and/or “E-SIGN.” A Record may be a paper or an “Electronic” document. The Uniform Electronic Transactions Act of 1999, promulgated by the U.S. Uniform Law Commission for consideration and enactment by the States. Reference to the UETA herein, means the UETA as promulgated by the U.S. Uniform Law Commission or the UETA as enacted by an applicable State. (ii) Electronic submission of documents Refer to Section 9102.5(d) for requirements regarding electronic submission of (iii)Electronic solicitation Servicers may solicit Borrowers for a modification electronically and may add new Borrowers and release Borrowers pursuant to Electronic assumption and release of liability agreements provided the Servicer complies with the requirements of Section 1401.3(h) and other applicable Guide sections. (iv) eModification Agreements The requirements of this Section 9206.4(d) apply only to eModification Agreements of paper Notes and related Security Instruments. See Section 1402.5(c)(i) for requirements for eModification Agreements that modify an eMortgage. ■ Special representations and warranties A Servicer allowing Borrowers to receive, transmit or electronically sign an eModification Agreement represents and warrants to Freddie Mac that it has complied with the requirements of the Guide and that the eModification Agreement is authentic, its terms are valid and enforceable against the Borrower and the modified Mortgage complies with the requirements of Section 9206.2(c). ■ Restrictions on the use of an eModification Agreement An eModification Agreement may be a Category 3 SMARTDoc (v1.02), unless this Chapter 9206 requires the eModification Agreement to be recorded or in recordable format and the recording jurisdiction does not support the Category 3 SMARTDoc format. Servicers may not use an eModification Agreement if: Page 9206-46 ❑ The Mortgage, as modified by the eModification Agreement, would be invalid or unenforceable or would no longer be in First Lien position ❑ The jurisdiction in which the eModification Agreement would be recorded, when recordation is required, does not permit or provide for recordation of Electronic documents ❑ The Servicer is unable to comply with the recording jurisdiction’s recordation and formatting requirements for an Electronic document or the jurisdiction does not permit or provide for recordation of Electronic documents, and Sections 9206.2(c) or 9206.4(a) requires the Modification Agreement to be recorded or in recordable Freddie Mac will not reimburse any costs that result from a Servicer’s decision to use an eModification Agreement, and such costs may not be assessed to the Borrower. ■ General requirements applicable to all Freddie Mac eModification Agreements ❑ Process, modify and store eModification Agreements of Freddie Mac Mortgages under requirements that are no less stringent than applicable industry standards when electronically processing, modifying and storing its own Electronic modification agreements for mortgages that it owns or services for others ❑ Consult with their legal counsel to ensure that the Servicer’s use, processing and storage of an eModification Agreement complies with all applicable federal, State and local laws ❑ Provide for Electronic notarization when required, subject to applicable law ❑ Comply with all requirements in the Servicing Contract to service the Mortgage, as modified by an eModification Agreement, including, but not limited to, Servicing obligations related to payoff or short sale (e.g., cancelation of the Mortgage, Note and eModification Agreement), grant of a deed-in-lieu of foreclosure, foreclosure, repurchase of an electronically modified Mortgage and ❑ Assure that the signing platform has a robust audit trail of all key events starting Borrower and Servicer execution that the Servicer can reproduce upon request by ■ Additional requirements when the eModification Agreement must be recorded or in recordable format Page 9206-47 When an eModification Agreement must be recorded or in recordable format as required in Sections 9206.2(c) or 9206.4(a), a Servicer may use an eModification Agreement, provided the Servicer is able to comply with the recording jurisdiction’s recordation and Electronic format requirements. ■ Document custodial requirements Upon execution of an eModification Agreement, the Servicer must provide a copy of the executed eModification Agreement to its Document Custodian in a format that is acceptable to the Document Custodian, to be maintained or logically associated with the Note. If recordation is required, the Servicer must provide a copy of the recorded eModification Agreement or a copy of evidence of recordation together with a copy of the executed eModification Agreement to its Document Custodian. ■ Storage and safekeeping of eModification Agreements eModification Agreements (including printed paper copies of facsimiles of eModification Agreements) must be stored in accordance with the Guide requirements for storing Mortgage file documents and must be stored in an eVault or eStorage System. eModification Agreements must be logically associated with all paper Mortgage file documents so that all Servicing records (both paper and Electronic) are identified and associated with the affiliated Mortgage transaction. Upon a Transfer of Servicing involving Mortgages with eModification Agreements, the Transferor Servicer must comply with Section 7101.1(b)(ii)(B)#8 and inform the Transferee Servicer of the name of the eVault or eStorage System holding the eModification Agreement. The Transferor Servicer must cause its eVault or eStorage System provider to transfer the eModification Agreement and all related data to the Transferee Servicer’s eVault or eStorage System provider in a manner that ensures the ongoing validity and enforceability of the eModification Agreement and its associated Electronic Signature. A Transferor Servicer may not satisfy its obligations under this section by relying on Section 7101.5(a) by generating paper copies of eModification Agreements for the Transferee Servicer. ■ Data security requirements and data privacy protection Servicers must follow data security requirements in Sections 1302.2 and 1401.2(c) and the data privacy protection standards in Section 8101.4(d). Servicers are required to maintain their eStorage System and conduct periodic information security reviews of the data stored and maintained in such systems based on, but not limited to, applicable federal, State and local laws and regulations and the Guide. Page 9206-48 Freddie Mac reserves the right to require a Servicer to implement additional security measures regarding its Servicing eStorage System. ■ Disaster recovery/business continuity plan Refer to Section 1302.3 for Seller/Servicer business continuity planning Page 9207-1 Chapter 9207: Workout Mortgage Assumption 9207.1: Workout Mortgage assumption, including overview, eligibility, submission, approval and closing ■ What is a workout Mortgage assumption? ■ When to consider a workout Mortgage assumption ■ Eligibility requirements for a workout Mortgage assumption ■ Submitting a workout Mortgage assumption recommendation to Freddie Mac ■ Freddie Mac’s decision about a Servicer’s recommendation for workout Mortgage assumption ■ Approval conditions for a workout Mortgage assumption ■ Closing requirements for workout Mortgage assumption ■ Servicer fee for workout Mortgage assumption (a) What is a workout Mortgage assumption? A workout Mortgage assumption permits a qualified applicant to assume title to the property and the Mortgage obligation from a Borrower who is currently delinquent or in imminent danger of default on his or her Mortgage because of an eligible hardship. This workout option has different requirements than the requirements for Transfers of Ownership allowed under certain Mortgage documents or federal law. Servicers must submit recommendations for workout Mortgage assumptions to Freddie Mac for approval. Refer to Chapter 8406 for those requirements. (b) When to consider a workout Mortgage assumption (i) Long-term hardships If the Borrower’s eligible hardship, as described in Section 9202.1(b), is permanent or long term and he or she cannot or does not want to retain ownership of the property but is Page 9207-2 cooperative and has a potential buyer for the property, then the Servicer should explore the possibility of a workout Mortgage assumption in accordance with the requirements in Sections 9207.1(c) through 9207.1(h) as a solution to the Delinquency. (ii) Simultaneous assumptions, relief options and modifications The Servicer must also consider an assumption of the Mortgage in situations where: ■ All Borrowers are deceased or ■ One or more Borrower(s) on the Note has an eligible hardship as described in Section 9202.1(b) and the hardship is expected to cause a long-term or permanent decrease in the Borrower’s income or increase in the Borrower’s expenses such that all Borrowers on the Note are unable or unlikely to continue making the monthly Mortgage payment obligation In this circumstance, if a natural person with a legal or beneficial interest in the Mortgaged Premises wishes to assume the Mortgage obligation (“non-Borrower applicant”), then the Servicer must first determine if the non-Borrower applicant meets the Transfer of Ownership requirements under Chapter 8406. If the non-Borrower applicant does not meet the Transfer of Ownership requirements under Chapter 8406 and the due-on-transfer clause has been triggered or the Mortgage is delinquent, the Servicer must explore all available relief options as described in Chapter 9203, including forbearance and payment deferral. Defined term: For purposes of this section, a natural person with a beneficial interest in the Mortgaged Premises includes: ■ An heir or legatee who will inherit the Mortgaged Premises following completion of probate or distribution of the assets of the estate of the deceased Borrower; or ■ A person awarded title to the Mortgaged Premises pursuant to a court decree or courtapproved separation agreement where a quitclaim deed has not been executed or recorded. If a Servicer is uncertain whether a person has a beneficial interest in the Mortgaged Premises, it should consult its legal counsel or submit the case to Freddie Mac via Resolve®. If the non-Borrower applicant meets the Transfer of Ownership requirements under Chapter 8406 and the due-on-transfer clause has not been triggered or the Mortgage is delinquent, and the Servicer determines that a relief option is unlikely to lead to a resolution of the default or Delinquency, the non-Borrower applicant may be considered for a simultaneous assumption and modification under the Freddie Mac Flex Modification® requirements. The non-Borrower applicant must provide the Servicer with a complete Borrower Response Package, and the Servicer must evaluate the nonBorrower applicant as if he or she were a Borrower. Page 9207-3 Servicers may first consider whether the non-Borrower with a legal or beneficial interest in the property can qualify using the non-Borrower income requirements specified in Section 9202.1(c)(ii). If the applicant does not meet the non-Borrower income criteria in Section 9202.1(c)(ii) and/or wishes to assume the Mortgage obligation, then Servicers must follow the requirements below to submit a recommendation to Freddie Mac for a simultaneous assumption and modification. Servicers must obtain Freddie Mac’s approval prior to offering an otherwise eligible nonBorrower applicant a simultaneous assumption and modification. To submit a recommendation for a simultaneous assumption and Freddie Mac Flex Modification, the Servicer must submit its recommendation to Freddie Mac via the Resolve User Interface. See Resolve Online Help for additional details. Freddie Mac’s decision will be available in the Resolve Dashboard accessible via Freddie Mac Gateway®. Supporting documentation must be submitted to Freddie Mac (see Directory 5) upon request If Freddie Mac does not approve the request for a simultaneous assumption and modification, the Servicer must refer to Section 1301.2(i) for information on adverse action notices that must be provided to the non-Borrower applicant on behalf of Freddie The requirements in this Section 9207.1(b) also apply in cases where the only remaining Borrower is a trust and to other transfers that require acceleration of the Note. Note: Refer to Chapter 8406 for additional information regarding Transfers of Ownership. (c) Eligibility requirements for a workout Mortgage assumption To recommend a Borrower for a workout Mortgage assumption, the Servicer must complete Form 1077, Uniform Underwriting and Transmittal Summary, and ensure that all of the following eligibility requirements are met: ■ The Borrower must have an eligible hardship ■ The Borrower must be delinquent in his or her payments or in imminent danger of default ■ The Borrower must submit a complete Borrower Response Package. (See Section 9102.5 for information on the Borrower Response Package.) ■ The Borrower must be cooperative and allow access to the interior of the property for a BPO for: Page 9207-4 ❑ A Mortgage secured by a 2- to 4-unit property, a Manufactured Home or a dwelling subject to a leasehold estate ❑ A Cooperative Share Loan secured by a First Lien on the Cooperative Interest to a Cooperative Unit. (See Chapter 8801 for special Servicing requirements for Cooperative Share Loans.) ■ The indebtedness-to-value (ITV) ratio must be equal to or greater than 85%. The total ITV ratio is the total indebtedness under the terms of the Mortgage, which includes the UPB, accrued interest, Escrow advances and expenses (see Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses, for the applicable expense limits) divided by the probable sales price determined by Freddie ■ The applicant assuming the Mortgage must meet Freddie Mac’s underwriting guidelines in Topics 5100 through 5500 and Section 8406.2(a) as documented on Form 1077 ■ The applicant must pay a Down Payment of at least 5% of the total indebtedness unless the Transfer of Ownership meets the criteria listed in Section 8406.1(c) or 8406.1(d) (d) Submitting a workout Mortgage assumption recommendation to Freddie Mac To recommend a workout Mortgage assumption, the Servicer must: ■ Obtain a property valuation through BPOdirect® (see Section 2406.1 regarding obtaining a property value via BPOdirect). ❑ For a Mortgage secured by a 1-unit property (excluding a Manufactured Home, a dwelling subject to a leasehold estate or a Cooperative Unit), the Servicer must, unless otherwise noted below, use an available automated value ❑ If an automated value is not available for the Mortgage secured by a 1-unit property, or, pursuant to Section 9207.1(c), the Borrower must be cooperative and allow access to the interior of the property for a BPO, then the Servicer must order a new property valuation in accordance with Sections 2406.1, 9202.4(b) and 9202.4(d), if necessary ❑ The property valuation must be less than 90 days old on the date the Servicer recommends the workout Mortgage assumption to Freddie Mac Note: The Servicer does not need to submit the valuation to Freddie Mac because Freddie Mac will have access to the value via BPOdirect. Notwithstanding the requirements above, if the Servicer has previously obtained a Freddie Mac-compliant property valuation (i.e., Freddie Mac-provided BPO, Freddie Mac-provided appraisal or an appraisal obtained in compliance with Topic 5600), the Page 9207-5 Servicer must use the Freddie Mac-compliant property valuation in connection with a workout Mortgage assumption evaluation. ■ Submit all of the following to Freddie Mac (see Directory 5): ❑ The Borrower’s complete Borrower Response Package (see Section 9102.5 for a description of the Borrower Response Package) ❑ Completed Form 1077 detailing the Servicer’s underwriting of the applicant ❑ A copy of the fully executed sales contract and addenda ❑ Estimated seller Closing Costs, if applicable ❑ If the Mortgage is covered by mortgage insurance, a faxed copy of the approval from the MI to Freddie Mac within two Business Days of the Servicer’s receipt of the MI’s (e) Freddie Mac’s decision about a Servicer’s recommendation for workout Mortgage assumption Freddie Mac will review the documentation the Servicer submits and make a decision to approve or deny the workout Mortgage assumption request. (i) Approval of request If Freddie Mac approves the assumption request, it will send the Servicer an approval letter detailing any conditions of Freddie Mac’s approval. (ii) Denial of request If Freddie Mac denies the assumption request, it will send the Servicer an explanation of why Freddie Mac denied the request and provide the Servicer with the course of action it must take to resolve the Delinquency. The Servicer must provide an adverse action notice to all applicable parties, in addition to any other notice or disclosure required under the Equal Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending Act and any other applicable law or regulation. Refer to Section 1301.2(i) for more information about adverse action notice (f) Approval conditions for a workout Mortgage assumption If Freddie Mac approves the Servicer’s recommendation to allow an assumption of the Mortgage, the Servicer must ensure that all conditions listed on Freddie Mac’s approval letter are met and must: Page 9207-6 1. Obtain approval from the FHA, RHS, VA or MI, if applicable; for leasehold Mortgages, obtain the consent of the fee simple landowner/lessor to the assignment of lease, if required under the lease 2. Complete an Escrow analysis or establish an Escrow account to ensure that there are sufficient funds to pay the property taxes, property and mortgage insurance premiums, etc. 3. Process the assumption so that the settlement occurs within 30 days of Freddie Mac’s approval and submit the assumption agreement for recordation within one Business Day of the settlement. Note: Per Section 1402.5(c)(ii), the Servicer must update the MERS® eRegistry (as defined in Section 1402.1(b)) to provide notice of the assumption agreement upon a workout Mortgage assumption (with or without a release of liability) of an eMortgage (as defined in Section 1402.1(b)). 4. Comply with the documentation requirements in Section 8406.3(a) 5. Ensure that the Borrower does not receive any cash-out from the transaction unless Freddie Mac receives all sums due to it 6. Ensure that all delinquent amounts are brought current at the time of settlement 7. Retain any credit enhancement if the existing Mortgage has a credit enhancement. (If the Servicer is not the provider of the credit enhancement, it must obtain written approval from the institution providing the enhancement.) 8. For leasehold Mortgages, ensure the transferee has acquired the transferor’s leasehold interest either by obtaining a new lease or assuming the existing lease and that the transfer of the leasehold interest is recorded 9. For Cooperative Share Loans, comply with the requirements in Section 8801.3(a) (g) Closing requirements for workout Mortgage assumption After the workout Mortgage assumption has been closed, submit the following to Freddie Mac (see Directory 5) to settle the workout: ■ A copy of the settlement statement ■ A copy of the executed assumption agreement ■ A copy of the deed Page 9207-7 ■ The Borrower’s contribution or promissory note, if applicable ■ A copy of the written approval from the provider of the credit enhancement, if applicable (h) Servicer fee for workout Mortgage assumption The Servicer may charge the applicant a fee not to exceed the greater of $400 or 1% of the UPB of the Mortgage, to a maximum fee of $900. Page 9208-1 Chapter 9208: Freddie Mac Standard Short Sale 9208.1: Short sale eligibility, Borrower requirements and approval (09/10/25) ■ What is a short sale? ■ Short sale eligibility requirements and Servicer approval authority ■ Borrower documentation for a short sale ■ Short sale Borrower contributions and relocation assistance (a) What is a short sale? A Freddie Mac Standard Short Sale (“short sale”) is the sale of the Mortgaged Premises for less than the total amount necessary to satisfy the Mortgage. When the sale proceeds are less than the total amount due but there is a mortgage insurance claim payment or a Borrower cash contribution that results in Freddie Mac’s receiving all sums owed on the Mortgage, then Freddie Mac considers the transaction a “make-whole” preforeclosure sale rather than a short sale. The Servicer does not need to obtain Freddie Mac’s prior approval for a make-whole preforeclosure sale. Note: Refer to Section 9208.3(a) for Freddie Mac’s reporting and closing requirements for a make-whole preforeclosure sale. (b) Short sale eligibility requirements and Servicer approval authority If the Borrower’s eligible hardship is permanent or long term and the Borrower is unable or unwilling to sustain homeownership, then the Servicer should determine if the Borrower meets the eligibility requirements for a short sale. The Servicer must evaluate the Borrower for a short sale under this chapter once the Servicer has otherwise complied with the evaluation hierarchy in Section 9201.2. If the Mortgage is subject to a recourse or indemnification agreement, the Servicer may approve a short sale provided the Servicer reports and Freddie Mac drafts a full payoff to Freddie Mac and the Servicer absorbs any losses and expenses related to the Delinquency. If the Mortgage is an FHA, VA or Guaranteed Rural Housing Mortgage, the Servicer must comply with the requirements of the applicable agency when approving a short sale in a manner that ensures continued coverage of the Mortgage. Page 9208-2 The Servicer must use the Borrower’s Delinquency status to determine eligibility, documentation requirements and Borrower contributions. The Servicer determines the Delinquency status at the time of evaluation for eligibility and Borrower contribution in accordance with the following: ■ When determining eligibility in accordance with this section, the Servicer must use the Delinquency status of the Mortgage on the date the Servicer begins the evaluation using required documentation pursuant to Section 9208.1(c)(i) ■ When the Servicer’s evaluation for eligibility did not include a review of a purchase offer, the Servicer must evaluate the Borrower for a contribution, if applicable, once the purchase offer is received. The Servicer must determine the Delinquency status of the Mortgage when beginning the review of the purchase offer. If the credit report is now greater than 90 days old from the date of initial evaluation for eligibility, the Servicer must order a new credit report. (i) Eligibility requirements for a short sale Every Borrower, regardless of Delinquency status, is eligible to be considered for a short sale, provided the following requirements are met: ■ Borrowers who do not meet the requirements for a Streamlined Short Sale (as defined in Section 9208.1(c)(i)(A)) must be experiencing or have experienced one of the eligible hardships listed in Section 9202.1(b)(i) ■ The sale must be an arm’s length transaction as defined in Section 9208.2(c) ■ The Borrower has listed the Mortgaged Premises for sale with a licensed real estate broker who in turn must have listed the Mortgaged Premises on the Multiple Listing Service (MLS) covering the market in which the Mortgaged Premises is located for at least five consecutive days. The listing requirements are as follows: ❑ The listing period must include at least one weekend (i.e., Saturday and Sunday) ❑ The listing must be in an “active” status for at least the five days immediately preceding the day on which the purchase offer is accepted by the Borrower and submitted to the Servicer for approval ❑ If the Mortgaged Premises is located in an area that is not covered by an MLS, then it must be advertised for sale by the real estate broker in a manner customary for that real estate market at least five consecutive calendar days, which must include at least one weekend ❑ The Servicer must retain a copy of the MLS listing of the Mortgaged Premises in the Mortgage file (or documentation of the advertisement(s) if the Mortgaged Page 9208-3 Premises is located in an area not covered by an MLS). The Borrower may not act as the listing agent or attempt to sell the Mortgaged Premises without a licensed real estate professional. ■ The Borrower has not acquired a new Mortgage in the six months preceding the Borrower’s Delinquency or, if the Borrower is current, in the six months preceding the evaluation of the Borrower for a short sale. The Borrower is only permitted to have obtained a new Mortgage if the Borrower’s eligible hardship was distant employment transfer. ■ The Borrower must not have entered into a program or arrangement where a third party takes title to the Mortgaged Premises and arranges a short sale in exchange for a fee A Borrower who is current or less than 60 days delinquent must meet the imminent default requirements as described in Section 9208.1(c)(iii). (ii) Servicer approval authority Unless otherwise notified by Freddie Mac, all Servicers are delegated to approve a short sale that meets the eligibility requirements of Section 9208.1(b)(ii). Additional circumstances servicers are not delegated to approve short sale Section 8801.3(c) Borrower documentation for a short sale Section 9208.1(c) Short sale Borrower contributions and relocation assistance Section 9208.1(d) Property valuation and minimum net proceeds for short sales Section 9208.2(a) Communication timelines for short sales Section 9208.2(b) Short sale transactions and processing requirements Section 9208.2(c) (iii)Submitting a short sale recommendation to Freddie Mac For situations where the Borrower does not meet the eligibility requirements for a short sale and the Servicer determines a short sale may be the best option for addressing the Delinquency or imminent Delinquency, the Servicer must use Resolve® to submit a recommendation to Freddie Mac for review with the following required documentation: Page 9208-4 1. Complete Borrower Response Package or other documentation as permitted in Section 9208.1(c) 2. A copy of the fully executed sales contract on the Mortgaged Premises, with addenda, stating that it is being purchased in “as-is” condition. If the buyer obtains FHA, RHS or VA financing, then the contract does not need to include the “as-is” condition if the FHA, RHS or VA requires the condition to be removed. 3. Preliminary Settlement/Closing Disclosure Statement 4. For Mortgages secured by properties subject to resale restrictions (in accordance with Chapter 4406, 4502 or 4504, as applicable), the applicable resale restrictions containing details on the property valuation and/or the restricted resale price as well as any other terms and conditions that must be met 5. For Cooperative Share Loans, the additional documentation listed in Section 8801.5(c)(i) In addition, the Servicer may submit a recommendation to Freddie Mac for consideration if the Borrower does not have an eligible hardship but one of the following conditions exists and, in the Servicer’s judgment, the short sale is an appropriate resolution to the Delinquency: ■ There is a Risk of Property Ownership to Freddie Mac (see Section 9202.2(b)) ■ Litigation is pending that affects the Mortgaged Premises or the Mortgage and could jeopardize a successful foreclosure sale ■ Other special circumstances (e.g., the Mortgaged Premises deteriorated resulting in an unexpected decline in the value) Note: All non-delegated short sales submitted through Resolve will be available for review in the Resolve dashboard. (c) Borrower documentation for a short sale (i) Borrower documentation In addition to the requirements below, all Borrowers must provide the Servicer a copy of the fully executed sales contract with any addenda and the preliminary Settlement/Closing Disclosure Statement once those documents are available. (A) Borrower documentation requirements for a short sale Page 9208-5 Borrower documentation requirements for a short sale by Delinquency status If the Delinquency status at of the time of evaluation is… The Servicer must… Current or less than 90 days Evaluate the Borrower based on a complete Borrower Response Package as defined in Section 9102.5. Note: If the Mortgage is current or less than 60 days delinquent, the Servicer must determine that the Borrower’s monthly payment is in non-retention imminent default in accordance with Section 9208.1(c)(iii)(A). Between 90 days and 18 Evaluate the Borrower based on a complete Borrower Response Package, unless one of the following conditions applies: ■ The Borrower failed a Freddie Mac Flex Modification® Trial Period Plan within the 12 months prior to evaluation for a short sale or deed-in-lieu of foreclosure ■ The Borrower previously received a Freddie Mac Flex Modification and became 60 days or more delinquent within the first 12 months of the effective date of the modification without curing the Delinquency ■ The Borrower previously completed three or more modifications; ■ The Borrower received a forbearance plan as a result of a hardship due to their Mortgaged Premises or places of employment being located in an Eligible Disaster Area or COVID-19 and became 90 days or more delinquent prior to the evaluation for a short sale; or ■ The Mortgage is not secured by an Investment Property, as identified at origination, and the Borrower’s Credit Score is less than or equal to 620 In these cases, the Servicer must evaluate the Borrower for a Streamlined Short Sale or Streamlined Deed-in-Lieu of Foreclosure. Greater than 18 Evaluate the Borrower for a Streamlined Short Sale. A Streamlined Short Sale is a Standard Short Sale where the Servicer is not required to obtain the Borrower Response Package or to verify an eligible hardship. Page 9208-6 If the debt secured by the Mortgaged Premises has been discharged in a bankruptcy proceeding filed pursuant to Chapter 7 of the U.S. Bankruptcy Code, the Borrower is eligible for a short sale evaluation regardless of delinquency, occupancy or property type and without requiring a Borrower Response Package. The Borrower must provide the Servicer a copy of the order and accompanying documents showing that the debt was discharged. The Servicer must retain those documents in the Mortgage (B) Borrower’s Credit Score requirements The Borrower’s Credit Score must be no more than 90 days old as of the date the Servicer evaluates the Borrower for a short sale. If there is more than one Borrower on the Mortgage, the Servicer must choose one Credit Score that is adequately indicative of the credit reputation of all Borrowers currently on the Mortgage. The following method must be used: 1. The Servicer must first select a single Credit Score for each Borrower on the 2. If the Servicer obtains multiple Credit Scores for a single Borrower, the Servicer must use the middle/lower method to select the single Credit Score for that 3. If there are multiple Borrowers on the Mortgage, the Servicer must determine the single Credit Score for each Borrower using the method described above 4. The Servicer must then select either the lowest Credit Score across all Borrowers on the Mortgage or the average Credit Score from all Borrowers’ single scores. Whichever method is used, the Servicer must choose the single Credit Score using the same method and procedure for all Borrowers and for all Mortgages consistent with fair lending laws. If the Borrower was previously determined to be eligible for a Streamlined Short Sale and had yet to receive a purchase offer, then when a subsequent purchase offer is received, the Servicer may use the same Credit Score obtained for the Servicer’s initial evaluation of the Borrower for a short sale even if the Credit Score has become more than 90 days old. However, if the Borrower has since brought the Mortgage current, then the Borrower is no longer eligible for a Streamlined Short Sale and is required to submit a complete Borrower Response Package to the Servicer to be evaluated for the short sale. (ii) Evaluating the Borrower Page 9208-7 (A) Evaluating the credit report The Servicer must obtain a credit report for each Borrower on the Mortgage (or a joint report for co-Borrowers). The credit report must be no more than 90 days old as of the date the Servicer evaluates the Borrower for a short sale. The Servicer must review the credit report to verify that the Borrower meets the relevant requirements for a short sale and to evaluate the Borrower’s ability to make a contribution. (I) Verifying occupancy For Borrowers who are current or less than 60 days delinquent, the Servicer must review the credit report to verify that at least one of the Borrowers is occupying the Mortgaged Premises as a Primary Residence. If the credit report does not indicate that the Mortgaged Premises is the Primary Residence for at least one Borrower, then the Servicer must use good business judgment in reconciling the inconsistency. (II) New Mortgages Unless a Borrower is eligible for a Streamlined Short Sale, the Servicer must review the Borrower’s credit report to determine whether the Borrower obtained a new Mortgage(s) in the six months preceding the Borrower’s Delinquency or, if the Borrower is current, in the six months preceding the evaluation of the Borrower for a short sale. If the Servicer’s review of the credit report reveals a new Mortgage, the Servicer may approve the short sale only if the hardship was due to distant employment transfer, relocation due to new employment or Permanent Change of Station (PCS) orders and the Servicer verifies that: ■ The Borrower intends to occupy the property securing the new Mortgage as the Borrower’s Primary Residence ■ The new employment location is greater than 50 miles one-way from the ■ The new property address is reasonably near the Borrower’s new employment If the Borrower has any other hardship and the Servicer determines a new Mortgage has been obtained, the Servicer is not delegated to approve the short sale and must submit the request to Freddie Mac for consideration. If the Servicer’s review of the credit report indicates that a mortgage creditor has made an inquiry within the previous four-month period, the Servicer must contact the Borrower to determine the following on the Mortgage sought: Page 9208-8 ■ The address of the property, ■ The purpose of the inquiry (e.g., refinance or purchase Mortgage), and ■ The result of the inquiry (e.g., refinance or purchase Mortgage is pending, closed or canceled) If a purchase Mortgage was obtained, then the Servicer is not delegated to approve the short sale, and the file must be sent to Freddie Mac. Refer to Section 9208.1(b) regarding submission of a short sale to Freddie Mac. (iii)Special requirements for Borrowers who are current or less than 60 days If a Borrower is current or less than 60 days delinquent at the time of initial evaluation, he or she must be considered to be in non-retention imminent default following the business rules in the chart below unless the Borrower was discharged from a Chapter 7 bankruptcy in order to be eligible for a short sale. (A) Non-retention Imminent default evaluation business rules Resolve will evaluate the information the Servicer provides against the imminent default business rules. Any Borrower who is current or less than 60 days delinquent at the time the Servicer begins the initial evaluation is in imminent default if the Borrower meets the requirements of the following business rules: ■ Be current or less than 60 days delinquent (i.e., less than three monthly payments past due) on the Mortgage as of the evaluation date ■ Occupy the property as a Primary Residence (or at least one Borrower on the Mortgage must occupy the property as his or her Primary Residence) Page 9208-9 ■ Have Cash Reserves (as defined in Section 9208.1(c)(iii)(C)(I)) less than $25,000 ■ Have an eligible hardship as described in Section 9202.1(b) Note: Requirements related to occupancy and non-retirement liquid assets do not apply if the Borrower is a Servicemember with PCS orders and the property securing the Mortgage is or was the Borrower’s Primary Residence where the transfer or new employment location is greater than 50 miles one way from the property securing the Mortgage. The Borrower is considered in non-retention imminent default if the Borrower meets the requirements of business rule 1, and ■ The Borrower’s Credit Score is less than or equal to 620 determined in accordance with Section 9206.1(e)(v); AND ■ The Mortgage has had two or more 30-day Delinquencies in the most recent 6-month period; OR ■ The Borrower’s housing expense-to-income ratio is greater than 40% as of the evaluation date If the Borrower has one of the Imminent Default Hardships described below in business rule 3, the Borrower may be determined to be in imminent default even if these business rule 2 requirements are not met. The Borrower is considered in non-retention imminent default if the Borrower meets the requirements of business rule 1, and the Borrower provided the documentation required in Section 9202.1(b) supporting one of the Imminent Default Hardships listed ■ Death of a Borrower or death of either the primary or secondary wage earner in the household ■ Long-term or permanent disability or serious illness of a Page 9208-10 ■ Divorce or legal separation or separation of Borrower unrelated by marriage, civil union or similar domestic partnership under applicable law; or ■ Distant employment transfer or relocation due to new employment or PCS orders where the property securing the Mortgage being evaluated is the Borrower’s Primary Residence. The new employment location must be more than 50 miles one way from the property securing the Mortgage being evaluated. The Imminent Default Hardship must currently cause and be expected to continue to cause a long-term or permanent decrease in income or increase in expenses. The Servicer must always submit all information for business rule 1 and business rule 2, even if the Borrower does not meet the requirements under business rule 2 and instead is approved based on the Imminent Default Hardship under business rule 3. (B) Income and asset documentation and verification (I) Documentation verification To be evaluated for non-retention imminent default, a Borrower must, at a minimum, provide a complete Borrower Response Package as defined in Section 9102.5(c). In addition to the income documentation required under Section 9202.1(c), the Servicer must obtain the Borrower’s Credit Score in accordance with Section 9208.1(c)(iii). (II) Verification of income and assets; resolution of material inconsistencies Servicers must review all documentation submitted by the Borrower to identify any material inconsistencies, including material inconsistencies with a tax return or tax transcript if one was obtained under Section 9202.1(c). If, based on the Servicer’s good business judgment, there are material inconsistencies with respect to the income or asset information disclosed by the Borrower or with other documentation relevant to the imminent default decision, the Servicer must: Page 9208-11 1. Obtain other documentation to reasonably reconcile such material inconsistencies 2. Document such material differences in their servicing system. If the Servicer cannot reconcile such material differences, the Borrower cannot be (C) Cash Reserves test imminent default. If the Borrower either discloses or provides documentation indicating the Borrower has Cash Reserves equal to or greater than $25,000, then the Borrower is not in imminent default. (I) Definition of Cash Reserves For purposes of determining imminent default, Cash Reserves are defined as withdrawal from any financial institution or brokerage, including funds on deposit in the Borrower’s checking, savings, money market or certificate of deposit account or other depository account, stocks, bonds, mutual funds, U.S. government securities and other securities that are traded on an exchange or marketplace generally available to the public (e.g., New York Stock Exchange, National Association of Securities Dealers Automated Quotations, Midwest SE, Chicago Board of Trade or Over the Counter) for which the price can be readily verified through financial publications. Assets are only considered retirement assets if they are held in a qualified retirement account such as a 401k, 403b, 457, Individual Retirement Account or pension fund. If the assets are not held in a retirement account, the assets must be considered Cash Reserves. (II) Calculating Cash Reserves 1. The Servicer must determine that, for every Borrower on the Mortgage, all of the Borrower’s Cash Reserves have been accounted for on Form 710, Mortgage Assistance Application 2. In making the determination that all Cash Reserves have been accounted for, the Servicer must review all information provided by the Borrower to Page 9208-12 determine if the asset information stated on Form 710 is reasonably consistent with information available from all other information provided by the Borrower, including verbal information shared by the Borrower. If there are inconsistencies between the Borrower’s disclosure of assets and the information provided by the Borrower, then the Servicer must obtain the Borrower’s tax return or tax transcript in order to reconcile the inconsistencies. If, upon reviewing the Borrower’s tax return or tax transcript, if applicable, the Servicer observes interest, dividend income or gains/losses that, in total, could not be reasonably produced by the Borrower’s disclosed Cash Reserves, and such income indicates deposits, securities holdings or other assets could be in excess of the amounts disclosed by the Borrower on Form 710, the Servicer must reconcile the inconsistency with the Borrower. The Servicer must require the Borrower to produce a signed federal tax return and all relevant schedules, in the event the Servicer used a tax transcript in lieu of a tax return, along with any other relevant documentation that verifies the disposition and/or current status of those assets, which produced the income or gains/losses to resolve the inconsistency. The Servicer must ensure that the Borrower’s disclosure of assets is reasonably accurate despite the inconsistency between the disclosed assets and the income or gain/loss from assets reported on the tax return or tax transcript. In determining what documentation is needed to reconcile an inconsistency, the Servicer must review the detailed tax return schedules and forms and request from the Borrower copies of recent and past statements from those asset holdings or transactions indicated on the schedules and forms that produced the income or gain/loss (e.g., checking, savings, brokerage account statements, asset sale statements or records). 3. If there are inconsistencies between the Borrower’s disclosure of assets and the tax return information that cannot be reconciled, the Borrower cannot be If the Servicer determines that the Borrower has Cash Reserves of less than $25,000 and meets all other requirements of Section 9208.1(c)(iii), then the Borrower is considered to be in imminent default. (D) Imminent Default Credit Score Servicers must choose one Credit Score that is adequately indicative of the credit reputation of all Borrowers currently on the Mortgage. Servicers must use a Credit Score based on the credit-scoring model. This score must be obtained and determined in accordance with the requirements below. (I) Obtaining Credit Scores for each Borrower Page 9208-13 The Servicer must request a Credit Score for each Borrower on the Mortgage from any one of the following three credit repositories: ❑ Equifax Credit Information Services ❑ Experian Information Systems and Services ❑ TransUnion Credit Information Company The Borrower’s Credit Score must be less than 90 days old on the date the Servicer performs the imminent default evaluation. (II) Borrowers with no available Credit Score It is unusual for any Borrower who has obtained a Mortgage not to have a Credit Score. If no single Credit Score can be identified for a Borrower, the Servicer must recheck the information provided when ordering the Credit Scores and resubmit a request. If the Servicer is still unable to obtain a Credit Score for that Borrower, it may rely on the Credit Scores of all other Borrowers as determined in accordance with this section. Absent a Credit Score for any Borrower on the Mortgage, the Borrower may not be determined to be in imminent default under the requirements of business rule 2, and the Servicer must proceed to evaluate the Borrower under the requirements of business rule 3 in Section 9208.1(c)(i). In such instances when a Credit Score is not available for any Borrower on the Mortgage, the Servicer must: 1. Maintain documentation in the Mortgage file that demonstrates the Servicer’s attempts to obtain Credit Scores from all three credit repositories on all 2. Enter the result that a Credit Score is not available for any Borrower on the 3. Proceed to the Imminent Default Hardship test in business rule 3 to determine if an Imminent Default Hardship exists (III) Determining the Imminent Default Credit Score The Servicer must identify the Imminent Default Credit Score in accordance with ❑ The Servicer must first select a single Credit Score for each Borrower on the Mortgage. If the Servicer obtains multiple Credit Scores for a single Borrower, the Servicer must use the middle/lower method to select the single Page 9208-14 Credit Score for that Borrower. This method is the most predictive when determining a single Borrower’s overall credit reputation. If three Credit Scores are obtained for a Borrower, the single score for that Borrower is the one with the middle value. For example, if the Credit Scores were 660, 656 and 640, the single Credit Score selected by the Servicer should be 656. When there is a duplicate score, the Seller must select that score to be the single score. If the Credit Scores for a Borrower were 660, 660 and 640, the Servicer should select 660. If two Credit Scores were obtained for a Borrower, the Servicer must select the lower of the two Credit Scores to be the single Credit Score for that Borrower. ❑ If there is only one Borrower on the Mortgage, the single Credit Score, determined in accordance with the above requirements, is considered the Imminent Default Credit Score ❑ If there are multiple Borrowers on the Mortgage, the Servicer must determine the single Credit Score for each Borrower using the method described above. The Servicer must then select either the lowest Credit Score across all Borrowers on the Mortgage or the average Credit Score from all Borrowers’ single scores. (Note: Whichever method is used, the Servicer should choose the single Credit Score using the same method and procedure for all Borrowers and for all Mortgages consistent with fair lending laws.) (E) Calculating housing expense-to-income (HTI) ratio The Servicer must input verified income data into Resolve. Based on the Servicer’s input, Resolve will determine if the Borrower’s HTI ratio is greater than 40%. For purposes of this determination, the Borrower’s current monthly housing expense is divided by the Borrower’s monthly gross income (or the Borrowers’ combined monthly gross income in the case of co-Borrowers) plus any allowable non-obligor household income. The Borrower’s current monthly housing expense consists of the following, as ■ Any escrow shortage currently included as part of the monthly contractual Page 9208-15 contractual rate of interest in effect on the Note prior to the granting of the SCRA relief rather than the temporarily SCRA-reduced interest rate and related SCRA monthly payment when calculating the Borrower’s current monthly HTI ratio. If a Borrower has indicated that there are condominium/HOA or Cooperative Maintenance Fees or ground rents but has not been able to provide written documentation to verify these amounts, the Servicer must rely on the information provided by the Borrower if the Servicer has made reasonable efforts to obtain the amounts in writing. payments or payments due to holders of subordinate liens. Based on the information provided by the Servicer, Resolve will calculate the Borrower’s HTI ratio and determine if it meets the imminent default requirements under business rule 2. (F) Payment history Based on the information provided by the Servicer, Resolve will review the Borrower’s payment history and determine if it meets the imminent default requirements under business rule 2. (G) Imminent default evaluation results If the Borrower meets the requirements of business rule 1 and meets the requirements of either business rule 2 or business rule 3, the Borrower is in imminent default. The Servicer must evaluate the Borrower for a short sale and no further analysis is required by the Servicer to determine imminent default. (H) General requirements and information If the Servicer determines that a Borrower is in imminent default, the Servicer must continue evaluating the Borrower using the applicable underwriting requirements outlined in this chapter to determine if the Borrower qualifies for a short sale. (d) Short sale Borrower contributions and relocation assistance (i) Borrower contributions towards the deficiency Page 9208-16 If the Servicer determines that the Borrower’s Cash Reserves exceed $10,000 or the Borrower’s HTI ratio is less than or equal to 40%, the Servicer must request a cash contribution in accordance with the requirements below. The Servicer must verbally confirm the assets reported on Form 710 and reconcile any differences with documentation following the procedure in Section 9202.1(c). A Servicer may negotiate contribution amounts less than the initial contribution requests, which must be determined in accordance with the cash contribution formula in this section. When a Servicer negotiates a contribution that is less than the initial request, the Servicer must document the reason for its decision(s) in the Mortgage file and note the specific financial circumstances that limit the Borrower’s ability to contribute towards the deficiency. Unless Freddie Mac has delegated authority with the MI or communicates otherwise, if the Mortgage is covered by mortgage insurance and the MI requires a contribution from the Borrower that is greater than the contribution limits required by this section in order to approve the short sale, the Servicer must require the Borrower to make the contribution required by the MI as a condition of approval. Borrowers are not required to make a contribution in the following instances: ■ Borrowers who are service members with PCS orders, provided the property securing the Mortgage is or was previously the Borrower’s Primary Residence where the transfer or new employment location is greater than 50 miles one way from the property securing the Mortgage being evaluated ■ Borrowers who qualify for a Streamlined Short Sale (refer to Section 9208.1(c)) ■ Applicable law prohibits requesting or receiving a contribution If the Borrower’s Cash Reserves exceed $10,000 or his or her HTI ratio is less than or equal to 40%, the Servicer must request the greater of 20% of the Cash Reserves or four times principal, interest, taxes and insurance as a cash contribution. The cash contribution must not exceed the total amount of the deficiency. (A) Borrowers who are current or less than 60 days delinquent and meet the criteria described in the Cash Reserves test If the Borrower is current or less than 60 days delinquent and meets the criteria described in in the Cash Reserves test, the Borrower must contribute a minimum of 20% of their Cash Reserves. If the Borrower is unwilling to contribute 20% of their Cash Reserves, the Servicer must submit the case to Freddie Mac for review. (B) Borrowers who are 60 or more days delinquent If a Borrower who is 60 or more days delinquent cannot contribute 20% of his or her Cash Reserves, the Servicer may negotiate a lower level of contribution. If the Servicer negotiates and collects less than 20% of the Cash Reserves, the Servicer Page 9208-17 must document the specific circumstances that limit the Borrower’s ability to make the initially requested financial level of cash contribution (i.e., 20% of the Borrower’s Cash Reserves) in the Mortgage file. Based on the Servicer’s assessment of the Borrower’s written or stated ability to pay in combination with its evaluation of the Borrower’s financial and hardship information, the Servicer is authorized to negotiate a lower contribution amount. Additionally, the Servicer may determine that the Borrower’s individual circumstances warrant a lower starting point to cash contribution negotiations or no contribution. If a Borrower refuses to contribute an amount the Servicer deems acceptable, then the short sale is not delegated and must be submitted to Freddie Mac following the process in Section 9208.1(b). If the Servicer determines the Borrower is unable to contribute at least $500 toward the deficiency, then the Servicer must not collect a cash contribution. If the Borrower’s Cash Reserves are in excess of $50,000, the Servicer must submit the short sale request to Freddie Mac for review. Refer to Section 9208.1(b) regarding the details for submitting a short sale recommendation to Freddie Mac. (ii) Borrower relocation assistance If the Servicer determines that the Borrower is not required to make a financial contribution toward the deficiency, the Borrower is eligible to receive up to $7,500 in relocation assistance provided that the Borrower occupies the Mortgaged Premises as his or her Primary Residence. The Borrower is not eligible to receive relocation assistance in the following circumstances: ■ The Borrower will receive relocation assistance from a source other than Freddie Mac or the Servicer, such as an employer, and the amount is equal to or greater than $7,500. If the Borrower will receive relocation assistance from a source other than Freddie Mac or the Servicer and the amount is less than $7,500, the Servicer must reduce the amount of Freddie Mac’s relocation assistance by the amount received from the other source. ■ The Servicer determines that the Borrower’s Cash Reserves exceed $10,000 or his or her HTI ratio is less than or equal to 40%, regardless of whether the Borrower makes a contribution. If the Servicer believes such a Borrower is experiencing financial circumstances necessitating relocation assistance, the Servicer may submit the file to Freddie Mac. Refer to Section 9208.1(b) regarding the details for submission to ■ The Borrower is subject to PCS orders and receives government assistance with the relocation Page 9208-18 Example: If the Borrower receives $1,000 of relocation assistance from his or her employer, Freddie Mac may provide the Borrower with an additional $6,500 of relocation assistance. The Servicer must instruct the settlement agent to pay the Freddie Mac relocation assistance from sale proceeds and itemize it and any relocation assistance received from other entities separately on the Settlement/Closing Disclosure Statement to the extent that the Servicer is aware of other relocation or transition assistance payments being paid as part of the short sale transaction. In addition to the relocation assistance offered by Freddie Mac, the Servicer may in its discretion offer the Borrower an additional financial incentive to complete the short sale. Any relocation assistance provided by the Servicer will be in addition to the relocation assistance amount provided by Freddie Mac and the Servicer’s assistance amount does not have to be subtracted from the assistance amount Freddie Mac will pay. If the Servicer does offer its own financial assistance, it must not deduct this payment from the proceeds of the short sale and must provide the incentive from its own funds, either by payment made directly to the Borrower, or through the settlement agent closing the short sale transaction. Payments made to the Borrower by the Servicer must be reflected on the Settlement/Closing Disclosure Statement in accordance with applicable law. The relocation assistance payment may not be applied to other debts secured by the 9208.2: Property valuation, communications, processing and transaction management for short sales (10/08/25) ■ Property valuation and minimum net proceeds for short sales ■ Communication timelines for short sales ■ Short sale transaction and processing requirements (a) Property valuation and minimum net proceeds for short sales (i) When to obtain a property valuation If the Servicer has evaluated the Borrower for all other alternatives to foreclosure in accordance with Freddie Mac’s evaluation hierarchy set forth in Section 9201.2 and believes that the Borrower meets the eligibility requirements for a Freddie Mac Standard Page 9208-19 Short Sale (“short sale”), then, unless otherwise instructed by Freddie Mac, the Servicer must obtain an interior property valuation in accordance with the Guide, if the Borrower: 1. Has listed the Mortgaged Premises for sale; or 2. Has expressed interest in a short sale; or 3. Notifies the Servicer of a purchase offer on the Mortgaged Premises The Servicer must obtain a short sale property value from Freddie Mac, as applicable, when one of the above situations occurs. An evaluation for a Borrower contribution should not delay the Servicer’s request for a property valuation. (ii) How to obtain a short sale property value and minimum net proceeds With the exception of Mortgages secured by properties subject to resale restrictions (in accordance with Chapter 4406, 4502 or 4504, as applicable), the Servicer must submit a request to Freddie Mac for the short sale property value and the minimum net proceeds via the “Obtain Valuation” tab in Freddie Mac Real Estate Valuation and Pricing tool when considering a Borrower for a short sale. The Servicer must advise the Borrower that the person evaluating the Mortgaged Premises must be given interior access and that the Borrower must otherwise cooperate with the inspection. An “estimated market value” of the Mortgaged Premises and the “minimum net proceeds” as determined by Freddie Mac will be returned by the Real Estate Valuation and Pricing tool (see Exhibit 88, Servicing Tools) with a “good through date” indicating the expiration date of the property value and minimum net proceeds amount. If the Servicer is unable to render an evaluation decision on a purchase offer prior to the good through date, a new property value and minimum net proceeds must be obtained via the Real Estate Valuation and Pricing tool to evaluate the purchase offer. Refer to Chapter 2404 for terms and requirements for using Freddie Mac’s Servicing Tools. Note: If the Servicer enters a short sale into Resolve® without obtaining a property value or minimum net proceeds or if those values have expired, Resolve will obtain the property value and minimum net proceeds automatically. (iii)Listing price guidance If a short sale property value and minimum net proceeds were obtained, the Servicer should provide listing price guidance to the Borrower or real estate broker based upon the property value obtained from Freddie Mac. However, the Servicer must inform the Borrower or real estate broker of the following when providing such guidance: Page 9208-20 ■ The value provided is only guidance. Such guidance should not be presented as the required listing price to the Borrower or real estate broker. The Borrower and the real estate broker are responsible for determining the list price for the Mortgaged ■ All transactions must meet the minimum net proceeds required by Freddie Mac regardless of the value provided. An offer at or above the value provided by the Servicer may not necessarily result in an acceptable level of net proceeds. In addition to providing listing price guidance, Servicers must communicate a list of acceptable closing expense categories to the Borrower and the real estate broker as described in Section 9208.2(c)(iv). (iv) Mortgages secured by properties subject to resale restrictions Servicers are not required to obtain short sale property values and minimum net proceeds on Mortgages secured by properties subject to with resale restrictions (in accordance with Chapter 4406, 4502 or 4504, as applicable). If the Servicer is considering a Borrower for a short sale on a Mortgage secured by a property subject to resale restrictions, then the Servicer is not delegated to approve the short sale, and the file must be sent to Freddie Mac. Refer to Section 9208.1(b) regarding submission of a short sale to Freddie Mac. For listing price guidance and acceptable closing expense categories that may be specific to Mortgages secured by properties subject to resale restrictions, Servicers must refer to the applicable resale restrictions. (b) Communication timelines for short sales The following chart sets forth the required response times when a short sale is being considered as a solution to the Delinquency for either a Mortgage that is not secured by a Primary Residence or a Mortgage that is secured by a Primary Residence and the Servicer is not evaluating the Borrower for a short sale using the First Complete Borrower Response Package received more than 37 days prior to a scheduled foreclosure sale date. Short sale: Submission of purchase offer and Servicer decision 5 Business Days The Servicer must acknowledge receipt of the purchase offer within five Business Days. If the purchase offer is submitted with insufficient information, the Servicer must notify the Borrower of the information needed to evaluate the offer within five Business Days of receipt of the offer. Page 9208-21 Short sale: Submission of purchase offer and Servicer decision 30 days The Servicer must respond to the Borrower with a purchase decision within 30 days of receipt of the purchase offer. If the purchase offer does not meet Freddie Mac’s minimum net proceeds threshold and/or is denied by Freddie Mac, the Servicer must notify the Borrower and include an acceptable counteroffer in its response. Note: In the event that a Borrower has submitted a complete Borrower Response Package and a purchase offer simultaneously, the response period for evaluating both the complete Borrower Response Package and the purchase offer is the same as outlined in this section (i.e., provide a decision within 30 days following receipt of purchase offer and Borrower Response Package). Short sale: Counteroffers (if purchase offer is less than the minimum net proceeds) 5 Business Days Borrower must respond to the Servicer’s counteroffer within five Business Days of the date the counteroffer is received. 10 Business Days Servicer must respond to the Borrower within 10 Business Days of receipt of the Borrower’s response to the counteroffer The Servicer must maintain documentation of all communications to and from the Borrower, whether verbal or written, and including status updates, either in the Mortgage file or in the Servicer’s Servicing system. In addition, the Servicer must provide the information to Freddie Mac for review upon request. Refer to Section 9101.3 for foreclosure suspension requirements when the First Complete Borrower Response Package is received more than 37 days prior to a scheduled foreclosure sale. Refer to Sections 9102.5(c) and 9301.7(a) for foreclosure suspension requirements for a Mortgage that has been referred to foreclosure and is either not secured by a Primary Residence or secured by a Primary Residence and the Servicer is not evaluating the Borrower for a short sale using the First Complete Borrower Response Package received more than 37 days prior to a scheduled foreclosure sale date. (c) Short sale transaction and processing requirements Page 9208-22 In order for the short sale to be approved by either the Servicer or Freddie Mac, the short sale transaction must meet the following requirements: (i) Sales proceeds The Servicer must review the executed sales contract and preliminary Settlement/Closing Disclosure Statement to ensure the minimum net proceeds amount provided by Freddie Mac via the Freddie Mac Real Estate Valuation and Pricing tool, if applicable, will result from the sale unless otherwise permitted by Freddie Mac in writing. The Borrower must not receive any proceeds from the sale of the Mortgaged Premises other than relocation assistance paid to the Borrower in accordance with the requirements of Section 9208.1(d) and reflected on the Settlement/Closing Disclosure Statement. (ii) Determining if the transaction meets the minimum net proceeds If applicable, when determining whether the transaction meets or exceeds the minimum net proceeds as provided by the Real Estate Valuation and Pricing tool, the Servicer must deduct from the gross sales price the following allowable transaction costs up to the maximum amount as described below: ■ Allowable Closing Costs reasonable and customary for the jurisdiction where the Mortgage Premises is located, including: ❑ Property taxes and other assessments prorated to the date of closing ❑ Typical and customary local and state transfer taxes and stamps ❑ Title and settlement charges typically paid by the seller ❑ Seller’s attorney fees for settlement services typically provided by a title or escrow company ❑ Wood-destroying pest inspections and treatment, when required by local law or custom ❑ Past-due condominium/homeowners association (HOA) or Cooperative Cooperative Share Loans), Condominium Unit maintenance fees or Cooperative Unit Maintenance Fees and ground rents, as applicable ■ The following transaction costs are subject to more specific parameters, as indicated ❑ Real estate broker commission, including any short sale negotiation fees, if applicable, as described in Sections 9208.2(c)(v) and 9208.2(c)(vi) Page 9208-23 ❑ Borrower incentives (if applicable), as described in Section 9208.1(d) ❑ Payment to subordinate mortgage holders (if applicable), as provided in Section 9208.2(c)(iii) ❑ Any other amounts authorized by Freddie Mac ■ The following transaction costs are prohibited by Freddie Mac: ❑ Real estate sales commissions paid to the Borrower or the purchaser ❑ Buyer’s discount points or mortgage loan origination costs; or ❑ Fees that are not usual or customary to the local market ■ Borrower contributions must not be counted toward the minimum net proceeds Example: If the purchase offer submitted by the Borrower/real estate broker is $100,000, then the Servicer will determine whether the minimum net proceeds are met as follows: $100,000 (Gross sales price) -$9,000 (Allowable Closing Costs including real estate commission) -$6,000 (Payment to subordinate mortgage holders) -$7,500 (Borrower relocation assistance) _________________________________________ $77,500 (Determine whether this amount meets or exceeds the minimum net proceeds provided in the Real Estate Valuation and Pricing tool) The Servicer must not disclose the minimum net proceeds to any party, if applicable, including, but not limited to, the Borrower, the real estate broker and any prospective buyer, except as authorized by Freddie Mac. As applicable, the Servicer must ensure that the transaction meets or exceeds the minimum net proceeds amount prior to approving a short sale transaction. If the minimum net proceeds are not met, the Servicer must provide a counteroffer for an amount that would meet the minimum net proceeds in accordance with the response time frames set forth in Section 9208.2(b). Under no circumstances is the Servicer delegated to approve a transaction if the amount to be remitted to Freddie Mac at closing is less than the minimum net proceeds amount, if applicable. If the transaction does not meet the minimum net proceeds established by Freddie Mac, the Servicer may submit the Mortgage to Freddie Mac for further review. (Refer to Section 9208.1(b) for more information regarding the requirements for submitting a recommendation to Freddie Mac.) (iii)Payments to subordinate mortgage holders Page 9208-24 For each short sale completed in accordance with Sections 9208.1 through 9208.3(a), the Servicer may authorize the settlement agent closing the short sale transaction to pay subordinate mortgage holders an aggregate amount of six thousand dollars ($6,000.00) from sales proceeds at the same time that all other payments, including the payoff to Freddie Mac, are disbursed by the settlement agent. The subordinate mortgage holders may not receive any other payments, in cash, promissory note or otherwise, from the Borrower in connection with approval of the short sale. If there are multiple subordinate mortgage holders, the Servicer has the discretion to divide the subordinate mortgage payment among them so as to maximize the chances that all subordinate mortgage holders will approve the short sale. Payment of any amount to subordinate mortgage holders is contingent upon agreement by all mortgage holders to release their Mortgages and, if they are accepting a payment from Freddie Mac, extinguish the indebtedness secured by the Mortgaged Premises. In addition, subordinate mortgage holders accepting payment from Freddie Mac must agree in writing to waive all rights to seek a deficiency judgment against the Borrower. If a subordinate mortgage holder releases its Mortgage to allow the short sale to close but does not extinguish the indebtedness, the mortgage holder will not receive a payment from Freddie Mac. Regardless of whether payment is made to a subordinate mortgage holder, the Servicer must obtain written commitment from the subordinate mortgage holder(s) to release the Mortgage(s). All payments made to subordinate mortgage holders must be documented on the Settlement/Closing Disclosure Statement in accordance with applicable law. The Servicer must have established written policies governing how subordinate mortgage payments are paid and the Servicer must provide evidence to Borrowers that the subordinate mortgage holder has agreed to accept the payment, extinguish the secured indebtedness and waive all rights to seek a deficiency judgment against the Borrower. Note: Only Mortgages, deeds of trust or security deeds recorded in the land records and constituting a valid lien against the property are eligible for a payment from Freddie Mac. Any and all other types of liens, including, but not limited to, judgments, mechanic’s and materialman’s liens and common interest association liens, are not eligible for the subordinate mortgage payment. (iv) Closing Costs The Servicer is permitted to deduct reasonable Closing Costs customarily paid by a seller in the jurisdiction where the Mortgaged Premises are located. (v) Real estate broker commissions Unless a real estate broker’s sales commission exceeds 6% of the Mortgaged Premises sales price, the Servicer must not, as a condition of the Servicer’s acceptance of an offer, Page 9208-25 renegotiate the real estate broker’s sales commission to an amount that is lower than the amount that was originally agreed upon between the broker and the Borrower. In the event the sales commission exceeds 6%, the Servicer must renegotiate the commission to limit it to 6% of the Mortgaged Premises’ sales price. Neither the Borrower nor the purchaser may receive a commission from the sale of the (vi) Short sale negotiation fees Fees paid to any party to evaluate, negotiate or process a short sale with the Servicer, which are commonly referred to as “short sale negotiation fees,” “short sale processing fees,” “marketing fees,” or “administrative fees,” may be included as part of the real estate broker’s commission at the discretion of the real estate broker. Negotiation fees must not be deducted from sales proceeds or charged to the Borrower. Additionally, neither the Servicer nor its agents may charge Freddie Mac or the Borrower, either directly or indirectly, any fee whatsoever in connection with processing a short sale on any Mortgage. Standard and customary real estate commissions and settlement service fees agreed to by the Borrower and paid to the real estate brokerage and settlement agent are not prohibited. (vii) Waiver of Escrow funds or prepaid items The Borrower must waive reimbursement of any Escrow, buydown funds or prepaid items and assign any insurance proceeds to Freddie Mac, if applicable. (viii) Short sale affidavit The Servicer must obtain a short sale affidavit in which the parties to the transaction attest that the sale is an arm’s length transaction. An arm’s length transaction is a transaction between parties who are unrelated and unaffiliated by family, marriage or commercial enterprise, other than the purchase and sale of the Mortgaged Premises between the Borrower(s) and the purchaser(s) that is the specific subject of the proposed short sale as disclosed to the Servicer. This affidavit must be executed before or at the time of closing of the sale of the Mortgaged Premises by all Borrower(s), purchaser(s), real estate brokers representing any of the parties, the escrow/closing agent and the transaction facilitator (if any). Each signatory must certify under penalty of perjury that to the best of his or her knowledge and belief: ■ The sale of the Mortgaged Premises is an arm’s length transaction between parties who are unrelated and unaffiliated by family, marriage or commercial enterprise ■ There are no agreements, understandings or contracts between the parties that the Borrower will remain in the Mortgaged Premises as a tenant or later obtain title or ownership of the Mortgaged Premises, except if the Borrower is permitted to remain Page 9208-26 as a tenant on the Mortgaged Premises for a short term, but no longer than ninety (90) days, in order to facilitate relocation ■ Neither the Borrower(s) nor the purchaser(s) will receive any funds or commissions from the sale of the Mortgaged Premises. The Borrower may receive a relocation assistance payment if it is offered by the Servicer and reflected on the Settlement/Closing Disclosure Statement. ■ The seller(s)/listing agent has presented all offers for the purchase of the Mortgaged Premises to the Borrower and no offers have been held, concealed or delayed due to action or inaction by a real estate agent ■ There are no agreements, understandings or contracts relating to the current sale or subsequent sale of the Mortgaged Premises that have not been disclosed to the ■ All amounts to be paid to any party, including holders of other liens on the Mortgaged Premises, in connection with the short sale transaction have been disclosed to and approved by the Servicer and will be reflected on the Settlement/Closing Disclosure ■ Each signatory understands, agrees and intends that the Servicer and Freddie Mac are relying upon the statements made in the affidavit as consideration for the reduction of the payoff amount of the Mortgage and agreement to the sale of the Mortgaged ■ A signatory who makes a negligent or intentional misrepresentation agrees to indemnify the Servicer and Freddie Mac for any and all loss resulting from the misrepresentation, including, but not limited to, repayment of the amount of the reduced payoff of the Mortgage ■ The certification will survive the closing of the transaction; and ■ Each signatory understands that a misrepresentation may subject the party making the misrepresentation to civil and/or criminal liability The affidavit must contain the name of the Servicer, the Servicer loan number for the subject Mortgage, the property address of the Mortgaged Premises and the date the sales contract that is the subject of the short sale was ratified by the parties. The affidavit must contain the printed name and signature of each signatory, and all signatures to the affidavit must be dated. The signature of a real estate agent or settlement agent signing as a representative for the brokerage or settlement service provider is acceptable so long as the representative capacity is clearly identified. The Servicer may modify and integrate its own requirements into the affidavit so long as it contains the minimum requirements contained in this section. The short sale affidavit must be a Page 9208-27 separately identifiable document, distinct from other closing or pre-closing documents, such as the sales contract. (See Exhibit 97, Short Sale Affidavit, for an example of a short sale affidavit.) If the closing agent is prohibited from signing the affidavit by applicable local, State or federal law, the Servicer may waive the closing agent’s signature requirement upon request. The Servicer must condition the waiver upon the closing agent’s agreement that it will not also act as the closing agent on a subsequent transaction involving the Mortgaged Premises within one year of closing the short sale transaction. In all other circumstances, signatures from all parties identified above are required as a condition to Freddie Mac’s agreement to accept a short sale of the Mortgage. If a party reveals an agreement, understanding or contract relating to the current sale or subsequent sale of the Mortgaged Premises that indicates the transaction is not an arm’s length transaction or otherwise indicates bad faith, collusion or fraud on the part of the parties, the Servicer must withdraw agreement to the short sale and immediately notify Freddie Mac using Freddie Mac’s Tip Referral Tool, accessible via Freddie Mac Gateway. (ix) Re-sale deed restriction The Servicer must instruct the settlement agent to ensure that the deed conveying the Mortgaged Premises from the Borrower to the purchaser contains a provision to restrict any re-sale of the Mortgaged Premises for 30 days following the short sale closing and to restrict re-sales of greater than 120% of the short sale’s sales price for the period beginning 31 days after the short sale closing and ending 90 days from the short sale The deed must contain the following provision: Grantee herein is prohibited from conveying captioned property for any sales price for a period of 30 days from [DATE – short sale closing]. After this 30-day period, Grantee is further prohibited from conveying the property for a sales price greater than $ (120% of short sale price) until 90 days from [DATE – short sale closing]. These restrictions shall run with the land and are not personal to the Grantee. The provided language may be amended as necessary to comply with applicable law. Note: If the Servicer believes a re-sale restriction is not appropriate for a particular short sale transaction (such as a short sale transaction under the Homeowners Assistance Program provided by the U.S. Department of Defense), then the Servicer must submit the Mortgage to Freddie Mac for review prior to instructing the settlement agent to insert the above referenced deed provision. The Servicer’s submission must include a thorough explanation of the reason(s) why it is requesting additional review. Page 9208-28 (x) Resolve Services must use Resolve to submit short sale transactions on Freddie Mac-owned Mortgages. Each Servicer must use Resolve in accordance with (A) the requirements in this Chapter, (B) the short sale and other instructions provided in Resolve Online Help and any other Documentation and (C) any other applicable provisions of the Guide, including Sections 2401.1 and 2404.2. If a Servicer is unable to complete a submission via Resolve, the Servicer should contact Customer Service at 800-FREDDIE. (xi) Mortgage insurance The Servicer must approve and process a short sale in compliance with all requirements of applicable mortgage insurance policies so as to preserve and not to impair existing mortgage insurance coverage, if any. When approving and processing a short sale, unless Freddie Mac has delegations of authority with the MI, the Servicer must either obtain the applicable MI’s approval of the terms of each short sale on a case-by-case basis or ensure that the applicable MI has provided a delegation of authority to the Servicer that applies to the requested short sale. If the Servicer is notified that the MI will curtail or deny a claim for any reason, including, but not limited to, failure of the Servicer to comply with mortgage insurance conditions such as payment of a Borrower contribution, the Servicer may not approve the short sale; however, the Servicer must submit the proposed short sale to Freddie Mac. 9208.3: Closing, reporting and compliance for short sales (12/17/25) ■ Closing, reporting, drafting and remittance requirements for short sales and make-whole preforeclosure sales ■ Fraudulent transactions related to short sales (a) Closing, reporting, drafting and remittance requirements for short sales and makewhole preforeclosure sales (i) Servicer review of the Freddie Mac Standard Short Sale (“short sale”) closing Page 9208-29 1. Prior to and outside of the transaction, pay any delinquent property taxes, ground rents and assessments or other charges that are or may become First Liens on the property or that if not paid would result in the subordination of Freddie Mac’s interests. (See Section 9301.6(e) regarding expenses that may become First Liens on the property.) Freddie Mac will reimburse the Servicer for these expenses in accordance with Chapter 9701. 2. Ensure that the Borrower pays all cash contributions in the form of cash or certified funds at settlement 3. Ensure that the title is conveyed directly from the Borrower to the buyer 4. Complete the short sale closing within 60 days of approving the purchase offer 5. Waive its rights to any accrued late fees or property inspection costs 6. Maintain the original short sale affidavit in the Mortgage file in accordance with the requirements of Section 3302.1(c) and provide Freddie Mac with a copy of the short sale affidavit upon request 7. Review the Settlement/Closing Disclosure Statement prior to closing to ensure proper transfer of title directly from the Borrower to the buyer 8. Review the Settlement/Closing Disclosure Statement and deed within five Business Days after closing to validate compliance with this chapter and the Servicer’s approval instructions, including: ■ The name of the buyer on the Settlement/Closing Disclosure Statement is the same as shown on the sales contract ■ The Settlement/Closing Disclosure Statement is consistent with the closing instructions, especially regarding ineligible transfer of title to related parties; and ■ The deed will be recorded in the name of the buyer and contains resale restriction language as required in Section 9208.2(c)(ix) 9. For Cooperative Share Loans, comply with the requirements in Section 8801.3(c) (ii) Reporting the transaction, remitting the proceeds and submitting the settlement To close a short sale or a make-whole preforeclosure sale in Freddie Mac’s systems, complete the following accounting, reporting and remittance steps: 1. Report the Mortgage as a “Short Sale/Charge-off/Make-whole” via the Freddie Mac Loan Level Reporting tool (see Exhibit 88, Servicing Tools) by the second Business Page 9208-30 Day after the Servicer receives the settlement proceeds. When reporting, ensure that ■ Ending UPB is zero ■ Principal collected is the ending balance of the Mortgage (not the proceeds collected from the sale of the property) ■ Payoff date is the date the Servicer received the settlement proceeds Freddie Mac will draft the full UPB plus exception interest. Refer to Section 8303.3(c) for details on payoff requirements and charge-off adjustments. See Sections 8303.3(c) and 8303.3(d) for additional requirements related to short sale reporting and drafting. 2. Complete the “Short Sales Settlement” screen in Resolve® and transmit the data to Freddie Mac. In circumstances where a short sale settlement requires a manual settlement review by Freddie Mac, Freddie Mac may request copies of documentation including, but not limited to, the following: ■ A copy of the Settlement/Closing Disclosure Statement ■ Copies of the sales contract and any addenda to the sales contract (iii)Make-whole preforeclosure sale To notify Freddie Mac that the Servicer has approved a make-whole preforeclosure sale, the Servicer must submit the following to Freddie Mac (see Directory 5): ■ Completed and signed Form 710, Mortgage Assistance Application (or other documentation as permitted in Section 9208.1(c)) ■ Copy of the executed sales contract ■ Copy of the MI’s approval letter (if applicable and if not previously delegated by the MI) ■ A breakdown of the transaction to show how the sale of the Mortgaged Premises plus any other proceeds will result in a total satisfaction of the debt Upon receipt of the required documentation as described above, Freddie Mac will review the file and contact the Servicer with a decision in Resolve based on the Servicer’s input. Once the Servicer receives the decision, it must process the file accordingly and report and close the transaction in accordance with the requirements in this Section 9208.3(a). Page 9208-31 Freddie Mac will draft the full UPB plus exception interest. Refer to Section 8303.3(d) for details on payoff requirements and charge-off adjustments. (iv) Charging off the deficiency The amount that Freddie Mac has determined to be charged off will be reflected on the Draft Report. The Servicer must review the Draft Report and report any discrepancies between its records and the amount on the Draft Report to Freddie Mac via the Freddie Mac Servicing Data Corrections tool (see Exhibit 88) within the same Accounting Cycle in which Freddie Mac posts the amount to the Draft Report. Servicers may access the Draft Report through the Cash Manager tool (see Exhibit 88). variance and upload a copy of the Settlement/Closing Disclosure Statement and of the sales contract and any addenda to the sales contract in the Servicing Data Corrections tool to support the request and explain why the short sale and any related deficiency was not initially settled with data elements matching these documents. Discrepancies submitted after the Accounting Cycle in which the initial adjustment is posted to the Draft Report closes will be processed at Freddie Mac’s discretion and may be subject to a contract noncompliance and contract change compensatory fee (see Section 8303.5(i)). If the postsettlement correction request is denied, the Servicer may be liable for any additional losses. Additionally, Freddie Mac may recover any workout incentives that were paid. (v) Remitting additional proceeds If there are any proceeds that were not included in the proceeds check (e.g., property insurance premium rebate, refunded Escrow advance prepayments), remit the full amount of such proceeds to Freddie Mac by wire transfer or check and send it to Freddie Mac (see Directory 5) within five Business Days of receipt of the proceeds. (vi) Release of deficiency if participants have acted in good faith and in compliance with all applicable law If the Borrower has acted in good faith and in compliance with the Guide and all applicable local, State and federal law, then Freddie Mac will not pursue the Borrower for the entire amount owed under the current Mortgage. Freddie Mac will accept the proceeds of sale and the cash contribution by the Borrower and the Servicer must instruct the closing agent to release the lien on the Mortgaged Premises and mark the previous Note as canceled. For a short sale completed with respect to an eMortgage (as defined in Section 1402.1(b)), the Servicer must also comply with the requirements in Section 1402.5(c). Page 9208-32 However, if the Borrower had knowledge of and/or consented to a transaction that was not in compliance with the Guide and all applicable local, State and federal law, Freddie Mac reserves its rights to pursue any and all participants including, but not limited to, the Borrower, for the full amount owed under the Mortgage, the amount of any other loss or damage Freddie Mac may have suffered and other costs and expenses, including, but not limited to, attorney fees. Failure to fully execute and provide the short sale affidavit required by Section 9208.2(c) is considered bad faith and noncompliance with the Guide. (vii) Requesting reimbursement Request reimbursement for any applicable expenses in accordance with the requirements in Chapter 9701. For claim submissions on Mortgages insured by the FHA or guaranteed by the VA or RHS not subject to recourse or indemnification, expense reimbursement will occur after Freddie Mac receives the claim payment from the applicable entity and determines that all other requirements for reimbursement have been satisfied. (Refer to Section 9603.2(a) on FHA/VA/RHS claim filing and Section 9603.2(d) on receipt of claim payment.) (b) Fraudulent transactions related to short sales Any party to the transaction who engages in fraudulent activity with respect to a short sale transaction may be added to the Freddie Mac Exclusionary List, barred from future involvement in Freddie Mac business and reported to applicable regulatory authorities. See Chapter 3201 for more information on Freddie Mac requirements for fraud prevention, detection and reporting. Page 9209-1 Chapter 9209: Freddie Mac Standard Deed-in9209.1: Deed-in-lieu of foreclosure eligibility requirements and Servicer approval authority A Freddie Mac Standard Deed-in-Lieu of Foreclosure (“deed-in-lieu of foreclosure”) is a Borrower’s voluntary conveyance of clear and marketable title to the property to Freddie Mac in exchange for a discharge of debt. ■ Eligibility requirements for a deed-in-lieu of foreclosure ■ Servicer approval authority ■ Property requirements ■ Submitting a deed-in-lieu of foreclosure recommendation to Freddie Mac Servicers must use the Resolve® user interface (UI) to submit a deed-in-lieu of foreclosure recommendation to Freddie Mac. Servicers that elect to submit deed-in-lieu of foreclosure recommendations via the Resolve UI should refer to Resolve Online Help for details on the If the Borrower’s eligible hardship is permanent or long term and neither a home retention alternative to foreclosure nor a Freddie Mac Standard Short Sale (“short sale”) is a viable solution to the Delinquency or imminent Delinquency, then the Servicer must determine if the Borrower meets the eligibility requirements for a deed-in-lieu of foreclosure. The Servicer must evaluate the Borrower for a deed-in-lieu of foreclosure under this chapter once the Servicer has otherwise complied with the evaluation hierarchy in Section 9201.2. If the Mortgage is subject to a recourse agreement, the Mortgage is ineligible for a deed-in-lieu Additionally, Mortgages for which the Borrower is engaged in litigation related to the Mortgage or Mortgaged Premises, with the exception of a foreclosure action, are ineligible for a deed-inlieu of foreclosure. If the Mortgage is an FHA, VA or Guaranteed Rural Housing Mortgage, the Servicer must comply with the requirements of the applicable agency when approving a deed-in-lieu of foreclosure in a manner that ensures continued coverage of the Mortgage. Page 9209-2 The Servicer must determine the Borrower’s Delinquency status for purposes of establishing eligibility, documentation requirements and Borrower contribution requirements in accordance with Sections 9209.1 through 9209.3. The Servicer must use the Delinquency status of the Mortgage on the date the Servicer begins the evaluation of the Borrower for a deed-in-lieu of foreclosure using the documentation required in Section 9209.2. (a) Eligibility requirements for a deed-in-lieu of foreclosure Every Borrower, regardless of Delinquency status, is eligible to be considered for a deed-inlieu of foreclosure, provided the following requirements are met: ■ Borrowers who do not meet the requirements for a Streamlined Deed-in-Lieu of Foreclosure must be experiencing or have experienced one of the eligible hardships listed in Section 9202.1(b)(i) ■ The Borrower must be able to convey clear and marketable title to the Mortgaged Premises to Freddie Mac ■ The Borrower has not acquired a new Mortgage in the six months preceding the Borrower’s Delinquency or, if the Borrower is current, in the six months preceding the evaluation of the Borrower for a deed-in-lieu of foreclosure. The Borrower is only permitted to have obtained a new Mortgage if the Borrower’s eligible hardship was distant employment transfer. If the debt secured by the Mortgaged Premises has been discharged in a bankruptcy proceeding filed pursuant to Chapter 7 of the U.S. Bankruptcy Code, the Borrower is eligible for a deed-in-lieu of foreclosure regardless of Delinquency, occupancy or property type. The Borrower must provide the Servicer a copy of the order and accompanying documents showing that the debt was discharged. The Servicer must retain those documents in the A Borrower who is current or less than 60 days delinquent must meet the imminent default requirements as described in Section 9209.2(b)(iv). (b) Servicer approval authority Unless otherwise notified by Freddie Mac, all Servicers are delegated to approve a deed-inlieu of foreclosure that meets the eligibility requirements of Section 9209.1(a). When evaluating a Borrower who is a service member with Permanent Change of Station orders and is current or less than 90 days delinquent, the Servicer is encouraged to submit a recommendation to Freddie Mac for review if the Servicer believes a deed-in-lieu of foreclosure is the most appropriate option given the Borrower’s circumstances. Page 9209-3 If a property inspection reveals that the property has been poorly maintained, needs major repairs or has structural or foundation problems, then the Servicer is not delegated to approve a deed-in-lieu of foreclosure. However, if the Servicer believes a deed-in-lieu of foreclosure is still the most appropriate remedy, then the Servicer must submit a recommendation to Freddie Mac for approval. Servicers must refer to the requirements in Sections 8801.3(d) and 9209.1 through 9209.6 for additional circumstances where Servicers are not delegated to approve a deed-in-lieu of (c) Property requirements If the BPO obtained according to the valuation requirements in Section 9209.5(d) or any previous or subsequent Servicer inspection indicates that the Mortgaged Premises has been poorly maintained, needs major repairs or has structural or foundation problems, the Servicer is not delegated to approve a deed-in-lieu of foreclosure. However, if the Servicer believes a deed-in-lieu of foreclosure is still the most appropriate remedy, then the Servicer must submit a recommendation to Freddie Mac for approval in accordance with Section 9209.1(b). In addition, if the Servicer has any indication that the Mortgaged Premises contains environmental contamination or hazardous substances, the Servicer is not delegated to approve a deed-in-lieu of foreclosure. Examples of environmental contamination and hazardous substances include: ■ High sulfur building content, such as drywall ■ Interior mold ■ Exposed asbestos ■ Exposed or chipping lead-based paint ■ Evidence of illegal activity having taken place on the premises, such as growing or manufacturing illegal substances ■ Mortgaged Premises is or is part of a Superfund site ■ Mortgaged Premises exhibits other conditions that could negatively impact the health of occupants (d) Submitting a deed-in-lieu of foreclosure recommendation to Freddie Mac For situations where a Borrower does not meet the eligibility requirements for a deed-in-lieu of foreclosure and the Servicer feels a deed-in-lieu of foreclosure may be the best option for addressing the Delinquency or imminent Delinquency, the Servicer may submit an exception review request through Resolve. For Cooperative Share Loans, the additional documentation listed in Section 8801.3(d) must be included with the Servicer’s recommendation. Page 9209-4 9209.2: Borrower documentation for deeds-in-lieu of foreclosure (10/08/25) ■ Borrower documentation ■ Evaluating the Borrower (a) Borrower documentation (i) Borrower documentation requirements for a deed-in-lieu of foreclosure Borrower documentation requirements for a deed-in-lieu of foreclosure by Delinquency If the Mortgage Delinquency status at of the time of evaluation is… The Servicer must… Current or less than 90 days Evaluate the Borrower based on a complete Borrower Response Package as defined in Section 9102.5. Note: If the Mortgage is current or less than 60 days delinquent, the Servicer must determine that the Borrower's monthly payment is in non-retention imminent default in accordance with Section 9209.2(b)(iv). Between 90 days and 18 months delinquent Evaluate the Borrower based on a complete Borrower Response Package, unless one of the following conditions applies: ■ The Borrower failed a Freddie Mac Flex Modification® Trial Period Plan within the 12 months prior to evaluation for a short sale or deed-in-lieu of foreclosure ■ The Borrower previously received a Freddie Mac Flex Modification and become 60 days or more delinquent within the first 12 months of the effective date of the modification without curing the Delinquency ■ The Borrower previously completed three or more modifications; or ■ The Borrower received a forbearance plan as a result of a hardship due to their Mortgaged Premises or places of employment being located in an Eligible Disaster Area or Page 9209-5 COVID-19 and became 90 days or more delinquent prior to the evaluation for a deed-in-lieu of foreclosure; or ■ The Mortgage is not secured by an Investment Property, as identified at origination, and the Borrower’s FICO® Credit Score is less than or equal to 620 In these cases, the Servicer must evaluate the Borrower for a Streamlined Deed-in-Lieu of Foreclosure (“Streamlined DIL”). Greater than 18 months Evaluate the Borrower for a Streamlined DIL. A Streamlined DIL is a Standard Deed-in-Lieu of Foreclosure where the Servicer is not required to obtain the Borrower Response Package or to verify an eligible hardship. (ii) Credit Score requirements The Borrower’s Credit Score must be no more than 90 days old as of the date the Servicer evaluates the Borrower for a deed-in-lieu of foreclosure. If there is more than one Borrower on the Mortgage, the Servicer must choose one Credit Score that is adequately indicative of the credit reputation of all Borrowers currently on the Mortgage. The Servicer must first select a single Credit Score for each Borrower on the Mortgage. If the Servicer obtains multiple Credit Scores for a single Borrower, the Servicer must use the middle/lower method to select the single Credit Score for that Borrower. If there are multiple Borrowers on the Mortgage, the Servicer must determine the single Credit Score for each Borrower using the method described above. The Servicer must then select either the lowest Credit Score across all Borrowers on the Mortgage or the average Credit Score from all Borrowers’ single scores. Whichever method is used, the Servicer must choose the single Credit Score using the same method and procedure for all Borrowers and for all Mortgages consistent with fair lending laws. If during the current period of Delinquency, the Borrower was determined eligible for a Streamlined Short Sale (refer to Section 9208.1(c)), then the Borrower is also eligible for a Streamlined DIL outlined above, even if the Credit Score that was used previously to determine eligibility for the Streamlined Short Sale is now more than 90 days old at the time of the deed-in-lieu of foreclosure evaluation. However, if the Borrower has since Page 9209-6 brought the Mortgage current, then the Borrower is no longer eligible for a Streamlined Short Sale or Streamlined DIL and is required to submit a complete Borrower Response Package to the Servicer to be evaluated for a deed-in-lieu of foreclosure. (b) Evaluating the Borrower (i) Evaluating the credit report The Servicer must obtain a credit report for each Borrower on the Mortgage (or a joint report for co-Borrowers). The credit report must be no more than 90 days old as of the date the Servicer evaluates the Borrower for a deed-in-lieu of foreclosure. The Servicer must review the credit report to verify that the Borrower meets the relevant requirements for a deed-in-lieu of foreclosure and to evaluate the Borrower’s ability to make a contribution. (ii) Verifying occupancy For Borrowers who are current or less than 60 days delinquent, the Servicer must review the credit report to verify that at least one of the Borrowers is occupying the Mortgaged Premises as a Primary Residence. If the credit report does not indicate that the Mortgaged Premises is the Primary Residence for at least one Borrower, then the Servicer must use good business judgment to reconcile the inconsistency. (iii)New Mortgages Unless the Borrower is eligible for a Streamlined DIL, the Servicer must review the Borrower’s credit report to determine whether the Borrower obtained a new Mortgage(s) in the six months preceding the Borrower’s Delinquency or, if the Borrower is current, in the six months preceding the evaluation of the Borrower for a deed-in-lieu of foreclosure. If the Servicer’s review of the credit report reveals a new Mortgage, the Servicer may approve the deed-in-lieu of foreclosure only if the eligible hardship for a Borrower who was 90 or more days delinquent was due to distant employment transfer, relocation due to new employment or Permanent Change of Station (PCS) orders and the Servicer verifies ■ The Borrower intends to occupy the property securing the new Mortgage as the Borrower’s Primary Residence ■ The new employment location is greater than 50 miles one way from the Mortgaged ■ The new property address is reasonably near the Borrower’s new employment Page 9209-7 If the Borrower has any other hardship, or if the above referenced hardship was for a Borrower who was less than 90 days delinquent, and the Servicer determines a new Mortgage has been obtained, the Servicer is not delegated to approve the deed-in-lieu of foreclosure and must submit the request to Freddie Mac for consideration. If the Servicer’s review of the credit report indicates that a mortgage creditor has made an inquiry within the previous four-month period, the Servicer must contact the Borrower to determine the following on the Mortgage sought: ■ The address of the property ■ The purpose of the inquiry (e.g., refinance or purchase Mortgage) and ■ The result of the inquiry (e.g., refinance or purchase Mortgage is pending, closed or canceled) If a purchase Mortgage was obtained, then the Servicer is not delegated to approve the deed-in-lieu of foreclosure, and the file must be sent Freddie Mac. Refer to Section 9209.1 regarding the submission of a deed-in-lieu of foreclosure to Freddie Mac. (iv) Special requirements for Borrowers who are current or less than 60 days delinquent If a Borrower is current or less than 60 days delinquent, he or she must be considered to be in non-retention imminent default following the business rules in the chart below unless the Borrower was discharged from a Chapter 7 bankruptcy. (A) Non-retention imminent default evaluation business rules Resolve® will evaluate the information the Servicer provides against the imminent default business rules. Any Borrower who is current or less than 60 days delinquent at the time the Servicer commences the initial evaluation is in non-retention imminent default if the Borrower meets the requirements of the following business rules: Business rule 1 Page 9209-8 ■ Be current or less than 60 days delinquent (i.e., less than three monthly payments past due) on the Mortgage as of the evaluation date ■ Occupy the property as a Primary Residence (or at least one Borrower on the Mortgage must occupy the property as his or her Primary Residence) ■ Have Cash Reserves (as defined in Section 9209.2(b)(iv)(C)(I)) less than $25,000 ■ Have an eligible hardship as described in Section 9202.1(b) Note: Requirements related to occupancy and nonretirement liquid assets do not apply if the Borrower is a Servicemember (as defined in Section 8503.1) with PCS orders and the property securing the Mortgage is or was the Borrower’s Primary Residence where the transfer or new employment location is greater than 50 miles one way from the property securing the Mortgage. Business rule 2 The Borrower is considered in non-retention imminent default if the Borrower meets the requirements of business rule 1, and: ■ The Borrower’s Credit Score is less than or equal to 620 determined in accordance with Section 9206.1(e)(v); ■ The Mortgage has had two or more 30-day Delinquencies in the most recent 6-month period; OR ■ The Borrower’s housing expense-to-income ratio is greater than 40% as of the evaluation date If the Borrower has one of the Imminent Default Hardships described below in business rule 3, the Borrower may be determined to be in non-retention imminent default even if these business rule 2 requirements are not met. Page 9209-9 The Servicer must submit all information for business rule 1 and business rule 2 in all instances, even if the Borrower does not meet the requirements under business rule 2 and instead is approved based on the Imminent Default Hardship under business rule 3. (B) Income and asset documentation and verification (I) Documentation and verification To be evaluated for imminent default, a Borrower must, at a minimum, provide a complete Borrower Response Package as defined in Section 9102.5(c). In addition to the income documentation required under Section 9202.1(c), the Servicer must obtain the Borrower’s Credit Score in accordance with Section 9206.1(e)(v). Business rule 3 The Borrower is considered in non-retention imminent default if the Borrower meets the requirements of business rule 1 and the Borrower provided the documentation required in Section 9202.1(b) supporting one of the Imminent Default Hardships listed below: ■ Death of a Borrower or death of either the primary or secondary wage earner in the household ■ Long-term or permanent disability or serious illness of a ■ Divorce or legal separation or separation of Borrower unrelated by marriage, civil union or similar domestic partnership under applicable law; or ■ Distant employment transfer or relocation due to new employment or PCS orders where the property securing the Mortgage being evaluated is the Borrower’s Primary Residence. The new employment location must be more than 50 miles one way from the property securing the Mortgage being evaluated. The Imminent Default Hardship must currently cause and be expected to continue to cause a long-term or permanent decrease in income or increase in expenses. Page 9209-10 (II) Verification of income and assets; resolution of material inconsistencies Servicers must review all documentation submitted by the Borrower to identify any material inconsistencies, including material inconsistencies with a tax return or tax transcript if one was obtained under Section 9202.1(c). If, based on the Servicer’s good business judgment, there are material inconsistencies with respect to the income or asset information disclosed by the Borrower or with other documentation relevant to the imminent default decision, the Servicer must obtain other documentation to reasonably reconcile such material inconsistencies. Servicers must also document such material differences in their Servicing system. If the Servicer cannot reconcile such material differences, the Borrower cannot be (C) Cash Reserves test imminent default. If the Borrower either discloses or provides documentation indicating the Borrower has Cash Reserves equal to or greater than $25,000, then the Borrower is not in imminent default. (I) Definition of Cash Reserves For purposes of determining imminent default, Cash Reserves are defined as withdrawal from any financial institution or brokerage, including funds on deposit in the Borrower’s checking, savings, money market or certificate of deposit account or other depository account, stocks, bonds, mutual funds, U.S. government securities and other securities that are traded on an exchange or marketplace generally available to the public (e.g., New York Stock Exchange, National Association of Securities Dealers Automated Quotations, Midwest SE, Chicago Board of Trade or Over the Counter) for which the price can be readily verified through financial publications. Assets are only considered retirement assets if they are held in a qualified retirement account such as a 401k, 403b, 457, Individual Retirement Account or pension fund. If the assets are not held in a retirement account, the assets must be considered Cash Reserves. (II) Calculating Cash Reserves Page 9209-11 ■ The Servicer must determine that, for every Borrower on the Mortgage, all the Borrower’s Cash Reserves have been accounted for on Form 710, Mortgage Assistance Application ■ In making the determination that all Cash Reserves have been accounted for, the Servicer must review all information provided by the Borrower to determine if the asset information stated on Form 710 is reasonably consistent with information available from all other information provided by the Borrower, including verbal information shared by the Borrower ■ If there are inconsistencies between the Borrower’s disclosure of assets and the information provided by the Borrower, then the Servicer must obtain the Borrower’s tax return or tax transcript to reconcile the inconsistencies. The ❑ If, upon reviewing the Borrower’s tax return or tax transcript, if applicable, the Servicer observes interest, dividend income or gains/losses that, in total, that could not be reasonably produced by the Borrower’s disclosed Cash Reserves, and such income indicates deposits, securities holdings or other assets that could be in excess of the amounts disclosed by the Borrower on Form 710, the Servicer must reconcile the inconsistency with the Borrower ❑ The Servicer must require the Borrower to produce a signed federal tax return and all relevant schedules, in the event the Servicer used a tax transcript in lieu of a tax return, along with any other relevant documentation that verifies the disposition and/or current status of those assets, which produced the income or gains/losses to resolve the inconsistency ❑ The Servicer must ensure that the Borrower’s disclosure of assets is reasonably accurate despite the inconsistency between the disclosed assets and the income or gain/loss from assets reported on the tax return or tax transcript ❑ In determining what documentation is needed to reconcile an inconsistency, the Servicer must review the detailed tax return schedules and forms and request from the Borrower copies of recent and past statements from those asset holdings or transactions indicated on the schedules and forms that produced the income or gain/loss (e.g., checking, savings, brokerage account statements, asset sale statements or records) ■ If there are inconsistencies between the Borrower’s disclosure of assets and the tax return information that cannot be reconciled, the Borrower cannot be Page 9209-12 If the Servicer determines that the Borrower has Cash Reserves of less than $25,000 and meets all other requirements of Section 9206.1(e)(ii), then the Borrower is considered to be in imminent default. (D) Imminent default Credit Score Servicers must choose one Credit Score that is adequately indicative of the credit reputation of all Borrowers currently on the Mortgage. Servicers must use a Credit Score based on the credit-scoring model. This score must be obtained and determined in accordance with the requirements below. (I) Obtaining Credit Scores for each Borrower The Servicer must request a Credit Score for each Borrower on the Mortgage from any one of the following three credit repositories: ■ Equifax Credit Information Services ■ Experian Information Systems and Services ■ TransUnion Credit Information Company The Borrower’s Credit Score must be less than 90 days old on the date the Servicer performs the imminent default evaluation. (II) Borrowers with no available Credit Score It is unusual for any Borrower who has obtained a Mortgage not to have a Credit Score. If no single Credit Score can be identified for a Borrower, the Servicer must recheck the information provided when ordering the Credit Scores and resubmit a request. If the Servicer is still unable to obtain a Credit Score for that Borrower, it may rely on the Credit Scores of all other Borrowers as determined in accordance with this section. Absent a Credit Score for any Borrower on the Mortgage, the Borrower may not be determined to be in imminent default under the requirements of business rule 2, and the Servicer must proceed to evaluate the Borrower under the requirements of business rule 3 in Section 9206.1(e)(ii). When a Credit Score is not available for any Borrower on the Mortgage, the Servicer must: ■ Maintain documentation in the Mortgage file that demonstrates the Servicer’s attempts to obtain Credit Scores from all three credit repositories on all ■ Enter the result that a FICO score is not available for any Borrower on the Page 9209-13 ■ Proceed to the Imminent Default Hardship test in business rule 3 to determine if an Imminent Default Hardship exists (III) Determining the Imminent Default Credit Score The Servicer must identify the Imminent Default Credit Score in accordance with ■ The Servicer must first select a single Credit Score for each Borrower on the Mortgage. If the Servicer obtains multiple Credit Scores for a single Borrower, the Servicer must use the middle/lower method to select the single Credit Score for that Borrower. This method is the most predictive when determining a single Borrower's overall credit reputation. If three Credit Scores are obtained for a Borrower, the single score for that Borrower is the one with the middle value. For example, if the Credit Scores were 660, 656 and 640, the single Credit Score selected by the Servicer should be 656. When there is a duplicate score, the Seller must select that score to be the single score. If the Credit Scores for a Borrower were 660, 660 and 640, the Servicer should select 660. If two Credit Scores were obtained for a Borrower, the Servicer must select the lower of the two Credit Scores to be the single Credit Score for that Borrower. ■ If there is only one Borrower on the Mortgage, the single Credit Score, determined in accordance with the above requirements, is considered the Imminent Default Credit Score ■ If there are multiple Borrowers on the Mortgage, the Servicer must determine the single Credit Score for each Borrower using the method described above. The Servicer must then select either the lowest Credit Score across all Borrowers on the Mortgage or the average Credit Score from all Borrowers' single scores. (Note: Whichever method is used, the Servicer should choose the single Credit Score using the same method and procedure for all Borrowers and for all Mortgages consistent with fair lending laws.) (E) Calculating housing expense-to-income ratio The Servicer must input verified income data into Resolve. Based on the Servicer’s input, Resolve will determine if the Borrower’s housing expense-to-income ratio is greater than 40%. For purposes of this determination, the Borrower’s current monthly housing expense is divided by the Borrower’s monthly gross income (or the Borrowers’ combined monthly gross income in the case of co-Borrowers) plus any allowable non-obligor household income. The Borrower’s current monthly housing expense consists of the following, as Page 9209-14 ■ Any Escrow shortage currently included as part of the monthly contractual contractual rate of interest in effect on the Note prior to the granting of the SCRA relief rather than the temporarily SCRA-reduced interest rate and related SCRA monthly payment when calculating the Borrower’s current monthly housing expenseto-income ratio. If a Borrower has indicated that there are condominium/HOA or Cooperative Maintenance Fees or ground rents but has not been able to provide written documentation to verify these amounts, the Servicer must rely on the information provided by the Borrower if the Servicer has made reasonable efforts to obtain the amounts in writing. payments or payments due to holders of subordinate liens. Based on the information provided by the Servicer, Resolve will calculate the Borrower’s housing-to-expense income ratio and determine if it meets the imminent default requirements under business rule 2. (F) Payment history Based on the information provided by the Servicer, Resolve will review the Borrower’s payment history and determine if it meets the imminent default requirements under business rule 2. (G) Imminent default evaluation results If the Borrower meets the requirements of business rule 1 and meets the requirements of either business rule 2 or business rule 3, the Borrower is in imminent default. The Servicer must evaluate the Borrower for a deed-in-lieu of foreclosure, and no further analysis is required by the Servicer to determine imminent default. Page 9209-15 (H) General requirements and information If the Servicer determines that a Borrower is in imminent default, the Servicer must continue evaluating the Borrower using the applicable requirements outlined in this chapter to determine if the Borrower qualifies for a deed-in-lieu of foreclosure. 9209.3: Deeds-in-lieu of foreclosure Borrower contributions and relocation assistance (09/10/25) ■ Borrower contributions towards the deficiency ■ Borrower relocation assistance (a) Borrower contributions towards the deficiency If the Servicer determines that the Borrower’s Cash Reserves (as defined in Section 9209.2(b)(iv)(C)(I)) exceed $10,000 or the Borrower’s housing expense-to-income (HTI) ratio is less than or equal to 40%, the Servicer must request a cash contribution in accordance with the requirements below. The Servicer must verbally confirm the assets reported on Form 710, Mortgage Assistance Application, and reconcile any differences with documentation following the procedure in Section 9202.1(c). A Servicer may negotiate contribution amounts less than the initial contribution requests, which must be determined in accordance with the contribution formula in this section. When a Servicer negotiates a cash contribution that is less than the initial request, the Servicer must document the reason for its decision in the Mortgage file and note the specific financial circumstances that limit the Borrower’s ability to contribute towards the deficiency. Unless Freddie Mac has delegated authority with the MI or communicates otherwise, if the Mortgage is covered by mortgage insurance and the MI requires a contribution from the Borrower that is greater than the contribution limits required by this section in order to approve the Freddie Mac Standard Deed-in-Lieu of Foreclosure (“deed-in-lieu of foreclosure”), the Servicer must require the Borrower to make the contribution required by the MI as a condition of approval. Borrowers are not required to make a contribution in the following instances: ■ Borrowers who are Servicemembers (see Section 8503.1) with Permanent Change of Station (PCS) orders who are 90 or more days delinquent. The property securing the Mortgage is or was previously the Borrower’s Primary Residence where the transfer or new employment location is greater than 50 miles one-way from the property securing the Mortgage being evaluated. Page 9209-16 ■ Borrowers who qualify for a Streamlined Deed-in-Lieu of Foreclosure (refer to Section 9209.2) ■ Applicable law prohibits requesting or receiving a contribution If the Borrower’s Cash Reserves exceed $10,000 or his or her HTI ratio is less than or equal to 40%, the Servicer must request the greater of 20% of the Cash Reserves or four times the Borrower’s principal, interest, taxes and insurance, rounded to the nearest $100 as a cash contribution. The cash contribution cannot exceed the total amount of the deficiency. If a Borrower is 60 or more days delinquent and cannot contribute 20% of his or her Cash Reserves, the Servicer may negotiate a lower level of contribution. If the Servicer negotiates and collects less than 20% of the Borrower’s Cash Reserves, then the Servicer must document in the Mortgage file the specific financial circumstances that limit the Borrower’s ability to make the initially requested level of cash contribution (i.e., 20% of the Borrower’s Cash Reserves). Based on the Servicer’s assessment of the Borrower’s written or stated ability to pay in combination with its evaluation of the Borrower’s financial and hardship information, the Servicer is authorized to negotiate a lower contribution or agree that the Borrower’s individual situation and circumstances warrant a lower starting point to cash contribution negotiations or no contribution. If a Borrower is unwilling to contribute an amount the Servicer deems acceptable, then the deed-in-lieu of foreclosure is not delegated and must be submitted to Freddie Mac in the manner outlined in Section 9209.1. If the Servicer determines the Borrower is unable to contribute at least $500 toward the deficiency, then the Servicer must not collect a cash contribution. If the Borrower’s Cash Reserves are in excess of $50,000, the Servicer must submit the deed-in-lieu of foreclosure request to Freddie Mac for review. Note: Refer to Section 9209.1 regarding the details for submitting a deed-in-lieu of foreclosure recommendation to Freddie Mac. (b) Borrower relocation assistance If the Servicer determines that the Borrower is not required to make a financial contribution toward the deficiency, the Borrower is eligible to receive up to $7,500 in relocation assistance provided that the Borrower occupies the Mortgaged Premises as his or her primary residence. The Borrower is not eligible to receive relocation assistance in the following circumstances: ■ The Borrower will receive relocation assistance from a source other than Freddie Mac or the Servicer, such as an employer, and the amount is equal to or greater than $7,500. If the Borrower will receive relocation assistance from a source other than Freddie Mac or Page 9209-17 the Servicer and the amount is less than $7,500, the Servicer must reduce the amount of Freddie Mac’s relocation assistance by the amount received from the other source. ■ The Servicer determines that the Borrower’s Cash Reserves exceed the greater of $10,000 or four times the Borrower’s total monthly Mortgage payment, regardless of whether the Borrower makes a contribution. If the Servicer believes such a Borrower is experiencing financial circumstances necessitating relocation assistance, the Servicer may submit the file to Freddie Mac. Refer to Section 9209.1 regarding the details for submission to Freddie Mac. ■ The Borrower is subject to PCS orders and receives government assistance with the relocation Once the final amount of relocation assistance has been determined and the deed has been executed, the Servicer must disburse to the Borrower the relocation assistance payment. Unless otherwise instructed by Freddie Mac, the Servicers must distribute the relocation assistance funds no more than 30 days after execution of the deed. Servicers may request reimbursement for the relocation assistance from Freddie Mac via PAID (Payments In addition to the relocation assistance offered by Freddie Mac, the Servicer may in its discretion offer the Borrower an additional financial incentive to complete the deed-in-lieu of foreclosure. Any relocation assistance provided by the Servicer will be in addition to the relocation assistance amount provided by Freddie Mac, and the Servicer’s assistance amount does not have to be subtracted from the assistance amount Freddie Mac will pay. If the Servicer does offer its own relocation assistance, it must provide the assistance from its own funds as a payment made directly to the Borrower. The relocation assistance payment may not be applied to other debts secured by the 9209.4: Borrower communication and execution timelines for deeds-in-lieu of foreclosure (09/10/25) In addition to the response requirements related to Borrower Response Packages addressed in Section 9102.5, the following chart sets forth the required response times when a Freddie Mac Standard Deed-in-Lieu of Foreclosure (“deed-in-lieu of foreclosure”) is being considered as a solution to the Delinquency for either a Mortgage that is not secured by a Primary Residence or a Mortgage that is secured by Primary Residence and the Servicer is not evaluating the Borrower for a deed-in-lieu of foreclosure using the First Complete Borrower Response Package received more than 37 days prior to a scheduled foreclosure sale date. Page 9209-18 Deed-in-lieu of foreclosure: submission of Borrower Response Package or streamlined documentation 30 days Within five days of an evaluation decision, but in no event later than 30 days following the receipt of a complete Borrower Response Package or streamlined documentation, the Servicer must send an Evaluation Notice to the Borrower. The Evaluation Notice must include approved model language for a deed-in-lieu of foreclosure, or similar language drafted by the Servicer. 14 days The Servicer must allow the Borrower 14 days from the date the Evaluation Notice is sent to accept the offer to pursue a deed-in-lieu of foreclosure. 60 days (no later than 90 days) The Servicer must receive all necessary approvals (e.g., title, secondary lien(s), MI) and execute the deed-in-lieu of foreclosure within 60 days of the date the Borrower’s communication to accept the offer was received. If the Servicer is unable to execute the deed-in-lieu of foreclosure within 60 days due to delays encountered as a result of issues with title, secondary lien(s) or MI approval, the Servicer must continue working with the Borrower to resolve these issues. In these instances, the Servicer will be allotted an additional 30 days to execute the deed-in-lieu of foreclosure, and, during this time, the Servicer must provide weekly status updates to the Borrower (90 days maximum from the date the Borrower’s communication to accept the offer was received to the date the deed-in-lieu of foreclosure is executed). The Servicer must maintain documentation of all communications to and from the Borrower, whether verbal or written, and including status updates, either in the Mortgage file or in the Servicer’s Servicing system. In addition, the Servicer must provide the information to Freddie Mac for review upon request. Refer to Section 9101.3 for foreclosure suspension requirements for deeds-in-lieu of foreclosure when the First Complete Borrower Response Package is more than 37 days prior to a scheduled foreclosure sale and results in an offer to proceed with a deed-in-lieu of foreclosure. Refer to Sections 9102.5(c) and 9301.7(a) for foreclosure suspension requirements when the Mortgage has been referred to foreclosure for either a Mortgage that is not secured by a Primary Residence or a Mortgage that is secured by a Primary Residence and the Servicer is not evaluating the Page 9209-19 Borrower for a deed-in-lieu of foreclosure based on the First Complete Borrower Response Package received more than 37 days prior to a scheduled foreclosure sale date. 9209.5: Deed-in-lieu of foreclosure transaction and processing requirements (11/01/25) ■ Prior to approval ■ Post-approval activities ■ Resolve® ■ Waiver of buydown funds ■ Property valuation requirements for deeds-in-lieu of foreclosure In order for the Freddie Mac Standard Deed-in-Lieu of Foreclosure (“deed-in-lieu of foreclosure”) to be completed by the Servicer, the Servicer must work with and assist the Borrower to ensure that the deed-in-lieu of foreclosure transaction meets the following (a) Prior to approval ■ Ensure the Borrower meets all eligibility requirements and negotiates a Borrower contribution, if applicable ■ Obtain mortgage releases from all applicable subordinate mortgage holders as follows: ❑ The Servicer may authorize payment to subordinate mortgage holders in an aggregate amount of six thousand dollars ($6,000.00). The subordinate mortgage holders must not receive any other payments from the Borrower, in cash, promissory note or otherwise, in connection with approval of the deed-in-lieu of foreclosure. ❑ If there are multiple subordinate mortgage holders, the Servicer has the discretion to divide the payment among those mortgage holders so as to maximize the chances that all subordinate mortgage holders will approve the deed-in-lieu of foreclosure. Payment of any amount to subordinate mortgage holders is contingent upon agreement by all mortgage holders to release their Mortgage and, if they are accepting a payment from Freddie Mac, extinguish the indebtedness secured by the Mortgaged Page 9209-20 In addition, subordinate mortgage holders accepting payment from Freddie Mac must agree in writing to waive all rights to seek a deficiency judgment against the Borrower. If a subordinate mortgage holder releases its Mortgage to allow the deed-in-lieu of foreclosure to close but does not extinguish the indebtedness, the mortgage holder will not receive a payment from Freddie Mac. Regardless of whether payment is made to a subordinate mortgage holder, the Servicer must obtain written commitment from the subordinate mortgage holder(s) to release the Mortgage(s). All payments made to subordinate mortgage holders must be documented, and the documentation must be provided to Freddie Mac upon request. The Servicer must have established written policies governing how subordinate mortgage payments are paid and evidence of their agreement is provided to the Borrower. For deeds-in-lieu of foreclosure completed in accordance with this chapter, the Servicer must advance the amount to the subordinate mortgage holder or holders and request reimbursement for such advancement from Freddie Mac via PAID (Payments Automated Note: Only Mortgages or deeds of trust recorded in the land records and constituting a valid lien against the property are eligible for a payment from Freddie Mac. Any and all other types of liens, including, but not limited to, judgments, mechanic’s and materialman’s liens and common interest association liens, are not eligible for the subordinate mortgage payment. ■ Approve and process a deed-in-lieu of foreclosure in compliance with all requirements of applicable mortgage insurance policies and any delegated authority granted to the Servicer by the MI so as to preserve and not to impair existing mortgage insurance coverage, if any. If the MI indicates that it will curtail or deny a claim for any reason, including, but not limited to, failure of the Servicer to comply with mortgage insurance conditions such as payment of a Borrower contribution, the Servicer may not approve the deed-in-lieu of foreclosure; however, the Servicer must submit the proposed deed-in-lieu of foreclosure (b) Post-approval activities ■ The Servicer must obtain clear and marketable title to the property ■ The Borrower must: ❑ Contribute to any loss, according to the requirements in Section 9209.3(a) ❑ Vacate the property and leave it in undamaged, broom-swept condition and provide the Servicer with the keys to the property at the time of conveyance, unless the Page 9209-21 property is a 2- to 4-unit property and Freddie Mac allows one tenant to remain in the ❑ For leasehold Mortgages, obtain the consent of the fee simple landowner/lessor, if required under the lease, and provide evidence of consent to the Servicer ❑ Execute a personal property release for any personal property the Borrower has left at or in the Mortgaged Premises. The Servicer may use Exhibit 100, Personal Property Release, as a template and revise it as necessary to comply with applicable law or to incorporate it into the Servicer’s own forms. ■ The Servicer must obtain the executed deed-in-lieu of foreclosure and all other required deed-in-lieu of foreclosure documents (including the personal property release). For leasehold Mortgages, the Servicer must obtain either an assignment of the lease or a new lease of the same priority. (c) Resolve Servicers must use Resolve to submit deed-in-lieu of foreclosure transactions on Freddie Mac-owned Mortgages. Each Servicer must use Resolve in accordance with (A) the requirements in this section, (B) the deed-in-lieu of foreclosure and other instructions provided in Resolve Online Help and any other documentation and (C) any other applicable provisions of the Guide, including Sections 2401.1 and 2404.2. If a Servicer is unable to complete a submission via Resolve, the Servicer should call Customer Service at 800-FREDDIE. (d) Waiver of buydown funds The Borrower must waive reimbursement of any buydown funds, if applicable. (e) Property valuation requirements for deeds-in-lieu of foreclosure Based on the information provided by the Servicer, Resolve will determine if there is an existing valid valuation in Freddie Mac systems. If one is not available, Resolve will use the information provided by the Servicer to order a BPO. 9209.6: Closing, reporting and remittance requirements for deeds-in-lieu of foreclosure Page 9209-22 ■ Reporting requirements and settlement data submissions ■ Remittance requirements ■ Other requirements (a) Reporting requirements and settlement data submissions 1. Report the deed execution in Resolve® within one Business Day of receiving the executed deed or lease 2. Forward to Freddie Mac within five Business Days of receiving the executed deed or lease: ■ The Borrower’s contribution, if applicable (see Directory 5) ■ For a leasehold Mortgage, a copy of the lease via e-mail (see Directory 6) ■ A copy of the signed personal property release via e-mail (see Directory 6) 3. Report the Mortgage to Freddie Mac via the Freddie Mac Loan Level Reporting tool (see Exhibit 88, Servicing Tools) as a Transfer to REO by the end of the Accounting Cycle in which the Servicer receives the executed deed or lease and ensure that the: ■ Ending gross UPB is the ending balance of the Mortgage ■ Principal due field is zero ■ REO acquisition date is the date the deed or lease was executed If any of these data elements are incorrect, the Servicer should contact its investor reporting specialist or Customer Service at 800-FREDDIE. 4. Once the Servicer reports the Mortgage as a Transfer to REO through the Loan Level Reporting tool, Resolve will automatically settle the deed-in-lieu transaction. (b) Remittance requirements Remit any funds, including funds contributed by the Borrower, via wire transfer or check to Freddie Mac (see Directory 5) following completion of the reporting requirements in Section 9209.6(a)(3) but no later than six Business Days of receipt of the executed deed or lease. (c) Other requirements Page 9209-23 1. Ensure that: ■ Clear and marketable title, or for a leasehold Mortgage, a marketable real estate leasehold interest is conveyed to Freddie Mac; issuance or purchase of a letter of indemnity, title insurance or similar form of indemnification does not constitute, and may not be used in lieu of, provision of clear and marketable title to the Mortgaged ■ The deed or lease is submitted for recordation within five Business Days of the Servicer’s receipt of the executed deed or lease ■ The recorded deed or lease is e-mailed to Freddie Mac (see Directory 6) within one Business Day after the Servicer receives it from the recorder’s office ■ The recorded deed or lease and all other required deed-in-lieu of foreclosure documents (including the personal property release) are maintained in the Mortgage file and available to Freddie Mac upon request 2. Request reimbursement for any applicable expenses, in accordance with Chapter 9701. For expenses incurred on Mortgages insured by the FHA or guaranteed by the VA or RHS not subject to recourse or indemnification, expense reimbursement will occur after Freddie Mac receives the claim payment from the applicable entity and determines that all other requirements for reimbursement have been satisfied. (Refer to Section 9603.2(a) on FHA/VA/RHS claim filing and Section 9603.2(d) on receipt of claim payment.) 3. Release the First Lien within the time frame required by the applicable State or local law after the delivery of the deed or lease of the Mortgaged Premises. If local or State law does not require release within a specified time frame, the Servicer must submit the lien release for recordation within 30 Business Days of the receipt of the deed or lease and 4. Report the acquisition of the property to the Internal Revenue Service (IRS) in accordance with the requirements in Section 8106.2(b) on IRS Form 1099-A, Acquisition or Abandonment of Secured Property 5. Release of deficiency if participants have acted in good faith and in compliance with all If the Borrower has acted in good faith and in compliance with the Guide and all applicable local, State and federal laws, then Freddie Mac will not pursue the Borrower for the entire amount owed under the current Mortgage. Freddie Mac will accept the deed or lease and the cash contribution by the Borrower, and the Servicer must release the lien on the Mortgaged Premises and mark the previous Note as canceled. For a deed-in-lieu of foreclosure completed with respect to an eMortgage (as defined in Section 1402.1(b)), the Servicer must also comply with the requirements in Section 1402.5(c)(iii). Page 9209-24 However, if the Borrower had knowledge of and/or consented to a transaction that was not in compliance with the Guide and all applicable local, State and federal laws, Freddie Mac reserves its rights to pursue any and all participants, including, but not limited to the Borrower, for the full amount owed under the Mortgage, the amount of any other loss or damage Freddie Mac may have suffered and other costs and expenses, including, but not limited to, attorneys’ fees. 6. If the Mortgage is covered by mortgage insurance and the MI has not provided a delegation of authority to the Servicer or Freddie Mac, fax a copy of the approval from the MI to Freddie Mac (see Directory 5) within two Business Days of the Servicer’s receipt of the MI’s approval 7. For Cooperative Share Loans, comply with the requirements in Section 8801.3(d) Page 9210-1 Chapter 9210: Charge-off 9210.1: Charge-off overview and recommendation process (10/08/25) ■ What is a charge-off? ■ When a Servicer must recommend a charge-off ■ Submitting a recommendation for a charge-off to Freddie Mac ■ Freddie Mac’s decision about a Servicer’s charge-off recommendation (a) What is a charge-off? A charge-off ceases collection efforts on a Mortgage when all appropriate measures have been exhausted to collect on the delinquent Mortgage and the Servicer has deemed the debt to be uncollectible or that a foreclosure should not be completed. In most cases, a charge-off will be accompanied by a lien release and cancelation of the Note. A charge-off may be appropriate in varying situations, including: 1. A charge-off of a balance remaining after a short payoff. A short payoff may result from, among other things: ■ A negotiated settlement with the Borrower, a legal settlement or an agreement to resolve a legal dispute ■ A settlement related to: ❑ A Condominium Project or Cooperative Project (see Chapter 8801 for special Servicing requirements for Cooperative Share Loans) termination; or ❑ A unit of a Condominium Project or Cooperative Project that is damaged and its repair is not feasible ■ A court order ■ A bankruptcy cramdown (see Section 9401.2(e) regarding completing and transmitting the final terms of a confirmed bankruptcy cramdown to Freddie Mac via the “Custom Modification” functionality in Resolve®); or Page 9210-2 ■ A receivership 2. A full charge-off of: ■ A Mortgage that is secured by a Mortgaged Premises that is subject to property seizure ■ A Mortgage that is not subject to a recourse or repurchase obligation under the Purchase Documents, and it is not practical or possible to complete foreclosure or other enforcement of Freddie Mac’s rights under the Note or Mortgage and/or to obtain clear title to the Mortgaged Premises ■ A low balance Mortgage that is delinquent and Freddie Mac has determined to not complete a foreclosure of the Mortgage. (See Section 9210.1(b) for more details.) ■ A Mortgage or Cooperative Share Loan that is secured by a unit of a Condominium Project or Cooperative Project, respectively, and: ❑ The project is not presently economically viable; ❑ The project has been terminated; or ❑ The unit is damaged and its repair is not feasible ■ A Mortgage that is secured by a Mortgaged Premises for which has been impacted by a natural or manmade disaster, or other like circumstance, and rebuilding on the land is determined by the Servicer to be impracticable or impossible ■ A Mortgage that is secured by undeveloped land or any above-grade primary structure has been demolished and removed by the Borrower, jurisdiction or other party; and the vacant land (and any remaining outbuilding, if applicable) has been protected from waste, damage and vandalism ■ A Mortgage that is secured by a Mortgaged Premises that a third party is willing to accept any risk of liability if it becomes the owner of the property. (Note: This may also include a charge-off of a balance left over after a short payoff as the result of a negotiated settlement with the third party.) ■ A Mortgage that is secured by a Mortgaged Premises that has been identified as posing a Risk of Property Ownership. (See Section 9202.2(b) for more details) (b) When a Servicer must recommend a charge-off The Servicer must recommend a charge-off to Freddie Mac instead of proceeding with foreclosure when the debt that is secured by the Mortgaged Premises is deemed uncollectible and/or any of the following situations in numbered paragraphs 1 through 9 below exist: Page 9210-3 1. A short payoff has been approved by Freddie Mac and a balance is left over (see Section 9210.1(a)) 2. The Mortgaged Premises is subject to property seizure (see Section 9210.1(a)) 3. For any Mortgage not subject to recourse or repurchase obligations under the Purchase Documents, the Servicer determines that it is not practical or possible to complete foreclosure or other enforcement of Freddie Mac’s rights and/or to obtain clear title to the Mortgaged Premises (see Section 9210.1(a)) 4. The Servicer identifies a low balance Mortgage with a UPB that is $5,000 or less, regardless of the equity in the property, and the criteria of both (a) and (b) below are met: (a) Prior to the Mortgage becoming 120 days delinquent or the Mortgage maturing prior to becoming 120 days delinquent, the Servicer must: ■ Solicit a payoff or other form of workout from the Borrower and respond to all Borrower inquiries and requests about the Mortgage; and ■ Ensure that payments have been correctly applied to the Mortgage. (In certain circumstances, Freddie Mac may request that the Servicer provide documentation to substantiate that payments have been applied correctly to the Mortgage. If Freddie Mac determines that the payments were not applied correctly, the Servicer may be required to satisfy the affected debt.) (b) The following eligibility requirements must be met: ■ The property is owner-occupied ■ Property inspections continue to show the property maintenance to be both up to neighborhood standards and compliant with municipal requirements ■ The Mortgage is at least 120 days delinquent or has matured prior to becoming 120 days delinquent; and ■ The Borrower is not currently performing under a relief or workout arrangement or a bankruptcy plan Note: In the event the Servicer identifies a Mortgage with a UPB that is greater than $5,000, but all other criteria in both (a) and (b) are met, the Servicer may make a recommendation for a charge-off to Freddie Mac. 5. The Mortgage or Cooperative Share Loan (see Chapter 8801 for special Servicing requirements for Cooperative Share Loans) is secured by a unit of a Condominium Project or Cooperative Project, respectively, and: Page 9210-4 ■ The project is not presently economically viable ■ The project has been terminated; or ■ The unit is damaged and its repair is not feasible (see Section 9210.1(a)) 6. The Mortgaged Premises has been impacted by a natural or man-made disaster, or other like circumstance, and rebuilding on the land is determined by the Servicer to be impracticable or impossible (see Section 9210.1(a)) 7. The Mortgage is secured by undeveloped land or any above-grade primary structure has been demolished and removed by the Borrower, jurisdiction or other party and the vacant land (and any remaining outbuilding, if applicable) has been protected from waste, damage and vandalism (see Section 9210.1(a)) 8. A third party is willing to accept any risk of liability if it becomes the owner of the property (see Section 9210.1(a)) 9. The Mortgaged Premises poses a Risk of Property Ownership to Freddie Mac (see Section 9202.2(b)) In addition to the above requirements, if the Mortgage is a matured Mortgage, the Servicer must comply with the requirements of Section 8303.1(c) with respect to the payoff of such matured Mortgage and only submit a charge-off request if the Mortgage is delinquent at time of maturity, or becomes delinquent following maturity and meets any of the above criteria. (c) Submitting a recommendation for a charge-off to Freddie Mac Servicers must use the Resolve user interface (UI) to submit a charge-off recommendation to Freddie Mac. Servicers that elect to submit charge-off recommendations via the Resolve UI must use Resolve in accordance with (A) the requirements in this section, (B) the charge-off and other instructions provided in Resolve Online Help and any other documentation and (C) any other applicable provisions of the Guide, including Sections 2401.1 and 2404.2. The Servicer must take the steps listed below in this section when it recommends a chargeoff of a Mortgage to Freddie Mac. Before making the recommendation, the Servicer must have filed and settled any property insurance claim(s) with the applicable property insurer. To submit a charge-off recommendation, the Servicer must complete the charge-off template and upload the following via Resolve: 1. A detailed explanation of the Servicer’s recommendation 2. Documentation describing the condition of the property, including copies of the most recent six consecutive months of property inspection reports with photographs. For charge-off recommendations on low balance Mortgages (see Section 9210.1(b)), the Page 9210-5 Servicer may submit less than six consecutive months of property inspection reports depending on the level of Delinquency. Note: If the Servicer has previously provided this information in accordance with Sections 8403.1(a) and (b), the Servicer does not need to submit this information again as part of the charge-off recommendation. 3. A Hazard Distressed BPO obtained through BPOdirect®, if applicable, if the recommendation to charge off a Mortgage is due to condemnation, disaster or other Risk of Property Ownership (see Section 9202.2(b)). The Hazard Distressed BPO must be less than 90 days old on the date the Servicer makes the recommendation to charge off the Mortgage, unless expressly approved by Freddie Mac. 4. A payoff statement, when applicable 5. A copy of any property insurance claims filed, including a copy of either: ■ An explanation of benefits and proof of payment received by the Servicer on any paid claim(s); or ■ Any notification documenting reason(s) for non-payment of a claim and if an appeal was filed by the Servicer that was also denied for payment of a claim 6. A copy of any estimates that may have been obtained by the Servicer for necessary repairs 7. If the Mortgage is secured by a Manufactured Home, the documentation specified in Section 9301.2(f)(iii) or 9301.2(f)(iv) to evidence that the Manufactured Home and the land are real property under the laws of the State where the property is located. If the Manufactured Home is located in a certificate of title State (see Section 5703.4(f)(iii)), then the Servicer must provide the documentation specified in Section 9301.2(f)(v). Freddie Mac will contact the Servicer should it require additional documentation following the submission of a recommendation to charge off a Mortgage. (d) Freddie Mac’s decision about a Servicer’s charge-off recommendation Freddie Mac will review the documentation the Servicer submits and make a decision to approve or deny the charge-off request. (i) Approval of request Freddie Mac will notify the Servicer if the charge-off recommendation is approved and whether the lien has been released through Resolve. Upon approval of the request, the Servicer must not incur any new expenses for taxes, insurance, property preservation, Page 9210-6 legal fees or any other fees or costs if Escrow is insufficient to pay charges when due without Freddie Mac’s prior approval (see Directory 5). In most cases, when Freddie Mac approves a charge-off request, Freddie Mac will instruct the Servicer to release its lien on the property and cancel the Note as part of the closing of an approved charge-off request (see Section 9210.2). However, in situations in which future funds are anticipated (e.g., when Freddie Mac or the Servicer is negotiating a settlement with the Borrower or a third party), Freddie Mac will retain its lien on the property and will instruct the Servicer not to release the lien or cancel the Note on the Request Details Screen in Resolve until such time that funds are received by Freddie (ii) Denial of request If Freddie Mac denies the charge-off request, Freddie Mac will provide the Servicer the response in Resolve, stating the reason Freddie Mac denied the request together with the course of action the Servicer must take to resolve the Delinquency, including the resumption of normal default Servicing activity, including all Escrow advances, property preservation and legal activities, if applicable. 9210.2: Closing, reporting and remittance requirements for charge-offs (09/10/25) ■ Lien release requirements ■ Reporting requirements ■ Settlement data submissions ■ Charging-off the Delinquency ■ Remittance requirements ■ Closing requirements ■ Requesting reimbursement (a) Lien release requirements If Freddie Mac instructs the Servicer not to complete a lien release as part of the approved charge-off request, upon receiving a request from a Freddie Mac-approved vendor (see Page 9210-7 Section 9601.1(a) for details on this process), the Servicer must prepare and submit all of the following documentation to the Freddie Mac-approved vendor: ■ Original Note ■ Original Security Instrument ■ A copy of the assignment of the Security Instrument to “Federal Home Loan Mortgage Corporation” sent to the local recorder’s office; and ■ A copy of the original loan application The Servicer must forward the recorded assignment to Freddie Mac (see Directory 5) when the Servicer has received it from the recorder’s office. When sending the documentation to a Freddie Mac-approved vendor, the Servicer must only send the items listed above, not entire Servicing file. In the event Freddie Mac approves a charge-off request and instructs the Servicer to release the lien on the property and cancel the Note, the Servicer must prepare and execute a satisfaction of Note and/or release of lien. For Cooperative Share Loans, the Servicer must also comply with the requirements in Section 8801.3(e). (b) Reporting requirements Within two Business Days of the workout approval reflected in Resolve®, following receipt of funds when a short payoff has been approved by Freddie Mac, the Servicer must: 1. Reinstate the Mortgage if it was inactivated; and 2. Report the Mortgage as a “Short Sale/Charge-off/Make-whole” in the Loan Level Reporting tool (see Exhibit 88, Servicing Tools) and ensure that the: ■ Ending gross UPB is zero ■ Principal due field is completed with the gross unpaid ending balance of the Mortgage ■ Payoff date is the workout approval date reflected in Resolve; and If any of these data elements are incorrect, the Servicer should contact its investor reporting specialist or call Customer Service at 800-FREDDIE. (c) Settlement data submissions Page 9210-8 Following completion of the reporting and remittance requirements, Resolve will automatically settle the charge-off transaction. (d) Charging-off the Delinquency The amount that Freddie Mac has determined to be charged off will be reflected on the Draft Report. The Servicer must review the Draft Report and report any discrepancies between its records and the amount on the Draft Report to Freddie Mac via the Freddie Mac Servicing Data Corrections tool (see Exhibit 88) within the same Accounting Cycle in which Freddie Mac posts the amount to the Draft Report. Servicers may access the Draft Report through the Cash Manager tool (see Exhibit 88). Discrepancies submitted after the Accounting Cycle in which the initial adjustment is posted to the Draft Report closes will be processed at Freddie Mac’s discretion and may be subject to a contract noncompliance and contract change compensatory fee (see Section 8303.5(i)). If the postsettlement correction request is denied, the Servicer may be liable for any additional losses. (e) Remittance requirements Following completion of the reporting requirements in Section 9210.2(c) but no later than three Business Days after workout approval reflected in Resolve or following receipt of funds when a short-payoff has been approved by Freddie Mac, the Servicer must submit any proceeds received on a Mortgage that has an approved charge-off request via wire transfer or check to Freddie Mac (see Directory 5), regardless of whether the lien is released or not. (f) Closing requirements Within seven Business Days of the workout approval date reflected in Resolve, the Servicer 1. Notify the Borrower in writing that the Servicer will no longer service the Mortgage. The written notice must include: ■ Freddie Mac's nine-digit loan number and the Servicer's loan number ■ Information that either: ❑ The lien on the property is being released and the Note is being canceled; or Page 9210-9 ❑ The lien is not being released, the Note is not being canceled, the Mortgage is being assigned to Freddie Mac and the Borrower remains financially obligated to the Note and Security Instrument ■ Instructions that the Borrower remains responsible for paying property taxes and property insurance premiums and that such payments should be made directly to the taxing authority or insurer, even if the Mortgage had an Escrow account prior to the 2. If the Mortgage had an Escrow account prior to the charge-off, the Servicer must notify the local taxing authority in writing to send all tax bills directly to the Borrower (g) Requesting reimbursement In order for the Servicer to be reimbursed for charge-off related expenses, the charge-off must first be accepted and settled in Resolve. The Servicer must request reimbursement for any applicable expenses, in accordance with the requirements in Chapter 9701. Page 9212-1 Chapter 9211: Third Party Mortgage Assistance

Source: Freddie Mac Single-Family Seller/Servicer Guide Section 9203.1(d) · source URL · snapshot 5869ee9e606cd4ae