Revisions to our requirements regarding cancelation of Borrower-paid mortgage insurance October 1, 2018 Mortgage modifications

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1 TO: Freddie Mac Servicers April 11, SUBJECT: SERVICING UPDATES This Guide Bulletin announces: Subsequent Transfers of Servicing Updates related to Subsequent Transfers of Servicing, including the automation of Subsequent Transfer of Servicing requests via the Freddie Mac Service Loans application July 23, 2018 Intra-Servicer Portfolio Moves A new process to facilitate requests by a Servicer that wishes to move the Servicing related to specific Mortgages from one Seller/Servicer number to another ( Intra-Servicer Portfolio Move ) New Mortgage insurance Revisions to our requirements regarding cancelation of Borrower-paid mortgage insurance October 1, 2018 Mortgage modifications Updates to our Escrow repayment requirements July 1, 2018 Removal of Home Affordable Modification Program SM (HAMP ) requirements that no longer apply Additional Guide updates and reminders Further updates as described in the Additional Guide Updates and Reminders section of this Bulletin EFFECTIVE DATE All of the changes announced in this Bulletin are effective immediately unless otherwise noted. SUBSEQUENT TRANSFERS OF SERVICING In our continuing effort to create operational efficiencies, we are streamlining the processing of Subsequent Transfer of Servicing (STOS) requests by automating the STOS request and approval process and introducing an electronic Agreement for Subsequent Transfer of Servicing of Single-Family Mortgages ( STOS Agreement ). All other STOS requirements outlined in Guide Chapter 7101 remain unchanged. On July 23, 2018, Freddie Mac will retire Guide Form 981 and Servicers will be required to initiate STOS requests electronically through the Service Loans application. Freddie Mac will process and approve eligible STOS transactions and the Transferor Servicer, Transferee Servicer and Freddie Mac will electronically sign the STOS Agreement through the Service Loans application. Initiating an STOS request To initiate an STOS request on and after July 23, 2018, the Transferor Servicer must log into the Service Loans application, choose the Manage Portfolio tab and select Create a New STOS Request. New requests must be submitted at least 45 and no more than 60 days prior to the Effective Date of Transfer. When submitting a new STOS request, the Transferor Servicer must: Complete all fields and answer all questions designated to be completed by the Transferor Servicer Input the name of the Transferee Servicer and its contact information; and

2 Upload the proposed list of Mortgages related to the Transfer of Servicing ( Proposed Mortgage List ) Once the Transferor Servicer successfully submits the STOS request, Freddie Mac will notify the Transferee Servicer of the pending STOS request by and provide a unique identifier for the request. The Transferee Servicer must then log into the Service Loans application, choose the Manage Portfolio tab and select the STOS request with the applicable identifier. The Transferee Servicer must then complete all the fields designated to be completed by the Transferee Servicer. Freddie Mac will provide the Transferor Servicer and the Transferee Servicer with certain reports reflecting additional data related to each Mortgage on the Proposed Mortgage List and will populate responses to certain questions from data in Freddie Mac systems. The questions answered by the Transferor Servicer and completed by Freddie Mac are substantially similar to the questions currently set forth in Part A of Form 981. Freddie Mac s responses will be based on data previously reported by the Transferor Servicer or a prior Seller/Servicer. Prior to executing the STOS Agreement electronically, the Transferor Servicer must validate the accuracy and completeness of: All data (regardless of who provided the data) Responses to all questions (regardless of who answered the questions), and The Proposed Mortgage List As part of its due diligence and prior to electronically executing the STOS Agreement, the Transferee Servicer must review: All data Responses to all questions, and The content of the Proposed Mortgage List The Transferor Servicer and Transferee Servicer must also comply with all other STOS requirements set forth in Chapter Review and electronic execution of the STOS Agreement As part of its submission of the new STOS request, the Transferor Servicer and Transferee Servicer must review a draft STOS Agreement that Freddie Mac will make available electronically for their signature. The Transferor Servicer and Transferee Servicer must electronically sign an STOS Agreement at least 45 days prior to the Effective Date of Transfer based on the Proposed Mortgage List in order to commence Freddie Mac s review. Thereafter, the Transferor Servicer will have the capability to add or remove Mortgages from the Proposed Mortgage List up to eight days prior to the Effective Date of Transfer and, if changes are made, the Transferor Servicer must revalidate the responses to various questions to reflect the added/removed Mortgages. As part of its review, Freddie Mac also may require the Transferor Servicer to remove Mortgages from the Proposed Mortgage List. If there are changes to the Proposed Mortgage List, the Transferor Servicer and Transferee Servicer must agree on the final list of Mortgages related to the STOS ( Final Mortgage List ) at least eight days prior to the Effective Date of Transfer and electronically execute a new STOS Agreement. The STOS Agreement replaces Form 981. If there are no changes to the Proposed Mortgage List, such list becomes the Final Mortgage List and there is no need to electronically sign another STOS Agreement. Freddie Mac s approval of the STOS will be provided by letter, and the status of the request in the Service Loans application will be updated to reflect Freddie Mac s approval of the STOS. No later than the first of the month following the Effective Date of Transfer, Freddie Mac will sign the STOS Agreement electronically acknowledging its approval of the STOS. Servicers will be able to download from the Service Loans application a completed and fully executed electronic copy of the STOS Agreement in portable document format (PDF) and the Final Mortgage List in Microsoft Excel format for storage in the Servicer s records. Page 2

3 Moratorium on Subsequent Transfers of Servicing from July 9, 2018 through July 20, 2018 To facilitate the transition to this new process, we will implement a temporary moratorium on Subsequent Transfers of Servicing from July 9, 2018 through July 20, During this period, Servicers will not be able to submit new STOS requests or make modifications to existing requests. All STOS requests submitted prior to July 9, 2018 will be reviewed and, if applicable, approved no later than 2:00 p.m. Eastern time on July 20, Any Freddie Mac approved STOS requests with an Effective Date of Transfer of July 16, 2018 are not impacted by this temporary moratorium. On and after July 23, 2018, subject to obtaining Freddie Mac s prior written approval, Servicers must submit all new STOS requests and make modifications to existing requests electronically through the Manage Portfolio tab in the Service Loans application. No changes to Concurrent Transfers of Servicing Concurrent Transfers of Servicing are not affected by these changes. Servicers must continue to submit Form 960 to Freddie Mac via at TOS@freddiemac.com. Glossary updates In conjunction with the automation of the STOS request and approval process, we are adding the following defined terms to the Glossary: Servicing Contract: The Servicing Contract is the unitary, indivisible master servicing contract comprising all the rights, duties, obligations, representations, warranties, covenants and agreements between a Servicer and Freddie Mac as set forth in the Purchase Documents Servicing Contract Right: The Servicing Contract Right is the indivisible, conditional, non-delegable right and obligation of the Servicer to perform Servicing of the Mortgages for Freddie Mac in accordance with, subject to, and under the Servicing Contract Additionally, we are modifying the definitions of the following Glossary terms: Effective Date of Transfer, Subsequent Transfer of Servicing, Transfer of Servicing, Transferee Servicer and Transferor Servicer. STOS Agreement terms and conditions Effective immediately Based on Servicer feedback, we are updating terms and conditions on Form 981. The current terms could be inadvertently interpreted to require a Transferee Servicer to examine all Transfer Portfolio records. Transfer Portfolio is defined in Form 981. We intended to convey that the Transferee Servicer will have been given the opportunity to examine all such Transfer Portfolio records no later than the Effective Date of Transfer and as of such date, the Transferee Servicer assumes full responsibility and liability for the correctness of such records. The Transferee Servicer must conduct sufficient due diligence on the related Mortgage files and data being transferred to ensure that: The Servicer can service the loans correctly (in accordance with applicable law) The Servicer s systems are accurate with respect to: The related Borrowers (e.g., reflecting the payment history, the terms of the note and any modification or other alternative to foreclosure), and Its related investor reporting and remitting obligations under the Purchase Documents These updated terms and conditions also will be reflected in the electronic STOS Agreement in the Service Loans application on July 23, Page 3

4 Guide and Service Loans User Guide updates Guide Sections through , , through , , and , , Forms 902, 902SA, 981 and 1034T, Directory 3 and Glossaries A-I and R-Z will be updated to reflect these changes related to the STOS process and revised STOS Agreement terms and conditions. Additionally, the Service Loans User Guide will be updated by July 23, 2018 to reflect these changes. INTRA-SERVICER PORTFOLIO MOVES We are introducing a new process to facilitate requests by Servicers that wish to move the Servicing related to specific Mortgages from one of their Seller/Servicer numbers to another of their Seller/Servicer numbers ( Intra- Servicer Portfolio Move ). Servicers must make requests for Intra-Servicer Portfolio Moves via Form 982 until July 23, 2018, when the Service Loans application is updated to automate the process. Requests via Form 982 Prior to July 23, 2018, Servicers must submit an Intra-Servicer Portfolio Move request for Servicing of Single- Family Mortgages and a list of such Mortgages via the Service Loans application, and obtain Freddie Mac s prior approval by undertaking the following steps: At least 30 days, but not more than 60 days, prior to the requested effective date of change, submit a complete and fully executed Form 982 to TOS@freddiemac.com; and Submit the list of Mortgages related to the Intra-Servicer Portfolio Move request to Freddie Mac via the Service Loans application Upon receipt of Form 982 and the list of related Mortgages, Freddie Mac will review the list to ensure that the Servicing of such Mortgages may be reallocated to the proposed Seller/Servicer number. Upon Freddie Mac s approval, the Seller/Servicer number associated with Mortgages will change as of the Servicer s requested effective date of change; however, there will be no change to the rights, liabilities and obligations the Servicer owes towards Freddie Mac under the Purchase Documents. Servicers are reminded that they must ensure that Principal and Interest Payments and Escrow Funds received from Mortgages included on Form 982 are deposited in the Custodial Account associated with the new Seller/Servicer number. In addition, the Servicer must inform its Document Custodian of the new Seller/Servicer number. Form 982 is included as Attachment A to this Bulletin as it is in effect until July 23, Guide impacts: Section and Form 982 Requests via the Service Loans application On and after July 23, 2018, Servicers must submit an Intra-Servicer Portfolio Move request for Servicing of Single-Family Mortgages and a list of such Mortgages via the Service Loans application, and obtain Freddie Mac s prior approval by undertaking the following steps: At least 30 days, but not more than 60 days, prior to the requested effective date of change, log into Service Loans application, go to the Manage Portfolio tab, select Create New Request and then select Intra-Servicer Portfolio Move Request Complete all questions designated to be completed by the Servicer Submit the list of Mortgages related to the change in Seller/Servicer number; and Sign the Intra-Servicer Portfolio Move Request to acknowledge the terms and conditions associated with the change in Seller/Servicer number Guide impacts: Section and Forms 902 and 902SA Page 4

5 Moratorium on Intra-Servicer Portfolio Moves from July 9, 2018 through July 20, 2018 Similarly to the transition for processing Subsequent Transfers of Servicing via the Service Loans application, to facilitate the transition of Intra-Servicer Portfolio Move requests via the Service Loans application, we will implement a temporary moratorium on Intra-Servicer Portfolio Moves from July 9, 2018 through July 20, During this period, Servicers will not be able to submit new requests or make modifications to existing requests. All Intra-Servicer Portfolio Move requests submitted prior to July 9, 2018 will be reviewed and, if applicable, approved no later than 2:00 p.m. Eastern time on July 20, On and after July 23, 2018, subject to obtaining Freddie Mac s prior written approval, Servicers must submit all new Intra-Servicer Portfolio Move requests and make modifications to existing requests electronically through the Manage Portfolio tab in the Service Loans application. MORTGAGE INSURANCE Effective October 1, 2018; however, Servicers may implement earlier if they are able to do so In response to Servicer feedback, we are revising certain requirements regarding cancelation of Borrower-paid mortgage insurance to provide more specificity and streamline our requirements. To assist Servicers in managing cancelations of Borrower-paid mortgage insurance, changes include, but are not limited to, those described below: Enhancing the list of defined terms specific to our requirements for mortgage insurance by including a new term, Non-HPA Mortgage. HPA Mortgages, Non-HPA Mortgages and Pre-HPA Mortgages are distinguished by their Origination Dates in relation to the HPA Effective Date and the Mortgaged Premises securing such Mortgages. The terms HPA Mortgages, Non-HPA Mortgages, Pre-HPA Mortgages and HPA Effective Date are defined in Section For Borrowers impacted by Eligible Disasters, making permanent the temporary revisions to payment history requirements for Borrower-requested cancelation of Borrower-paid mortgage insurance announced in Bulletin Rearranging the charts in Sections and regarding Borrower-requested cancelation of Borrower-paid mortgage insurance to make them more user-friendly and easier to comprehend. For example, grouping the requirements according to whether the request is based on the original value (as value is defined in Section ) or the current value. Allowing a Servicer to process and/or respond to a Borrower s written or verbal request to cancel Borrowerpaid mortgage insurance, as well as solicit such Borrowers that may be close to, or have reached, their applicable mortgage insurance cancelation points in Sections and Regarding Borrower-requested cancelation of Borrower-paid mortgage insurance based on: The original value: for evidence of value, clarifying that a Servicer is not required to also order and obtain a current value The current value: For requests to cancel mortgage insurance on the basis of substantial improvements to the Mortgaged Premises, we are providing a description and examples of what constitutes substantial improvements for mortgage insurance cancelation purposes For evidence of value, requiring a Servicer to verify the current value by ordering and obtaining a new BPO through BPOdirect, unless applicable law requires that an appraisal be used or it is determined to be in the Borrower s best interest (e.g., at the option of the Borrower). Currently, a Servicer must order and obtain either a BPO or appraisal to verify the current value. Removing the separate automatic cancelation requirements for Pre-HPA Mortgages, allowing for automatic cancelation of Borrower-paid mortgage insurance on such Mortgages based on the date on which the loan-tovalue (LTV) ratio is first scheduled to reach 78% based on the original value and the amortization schedule Page 5

6 Specifying that a modified Mortgage s UPB is the total UPB, including any deferred (non-interest bearing) UPB as a result of a prior modification Removing outdated requirements, including the deletion of Section , as it pertained to Balloon/Reset Mortgages Servicers should review Chapter 8203 in its entirety for the revised requirements. Servicers are reminded that they must comply with all applicable law including, but not limited to, the Homeowners Protection Act of 1998, as amended, when processing and/or responding to requests for Borrowerrequested or automatic cancelation of Borrower-paid mortgage insurance. Guide impacts: Sections through and Section MORTGAGE MODIFICATIONS Escrow repayment Effective July 1, 2018; however, Servicers may implement earlier if they are able to do so We are updating the mortgage modification requirements for the repayment of Escrow shortages and Escrow advances. Escrow shortage repayment We are updating the requirements for the repayment of 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 and insurance premiums when they are due). Previously, if a Borrower was unable to pay an Escrow shortage as a lump sum, the Servicer was required to spread the shortage over 60 months as part of the monthly payment ( Projected Monthly Escrow Shortage Payment ) on the modified Mortgage. As a result of Servicer feedback and to provide greater flexibility, we are updating our requirements to permit the Servicer to spread the Escrow shortage amount equally over a period of at least 12 months, not to exceed 60 months. If a future Escrow analysis identifies a subsequent Escrow shortage, the Servicer must combine the remaining amount due from the initial Escrow shortage with the amount due as a result of the new Escrow analysis. The Servicer must then follow the same steps described in the previous paragraph, using the new combined balance. The resulting term may be extended to a period of up to 60 months. Guide impact: Section Escrow advance repayment for Extend Modification for Disaster Relief With most mortgage modifications, any Escrow advances are capitalized and added to the UPB. However, this is not possible with the Extend Modification for Disaster Relief because it does not allow for the capitalization of arrearages. Therefore, in cases where funds were advanced by the Servicer or are to be advanced and paid to a third party prior to the date the Borrower executes the mortgage modification agreement, the Servicer must recoup from the Borrower all Escrow payments it advanced either via a lump sum payment, or spread them equally over a period of at least 12 months, not to exceed 60 months. Process for Escrow repayment plans Below is the process for spreading an Escrow shortage and/or advance over a period of 60 months as well as over a period of less than 60 months: Page 6

7 Process for Escrow shortage and/or advance repayment If the Servicer spreads the Escrow shortage and/or advance over a period of. Then the Servicer must 60 months Adhere to existing guidelines and processes as described in the Guide and the Workout Prospector Users Guide Less than 60 months Bypass the existing guidelines and processes in the Guide and the Workout Prospector Users Guide and instead: Calculate the monthly Escrow shortage and/or advance repayment amount separately; and Populate the Ancillary Monthly Fees field on the Modeling Attributes screen in Workout Prospector with the monthly amount owed under the Escrow repayment plan Home Affordable Modification Program We are updating the Guide to remove requirements regarding the eligibility and evaluation of a Borrower and processing of a modification for a Mortgage modification under the Home Affordable Modification Program (HAMP) since all HAMP modifications were required to have a Modification Effective Date on or before December 1, This includes deleting Sections , , through , and We are retaining requirements in the Guide regarding HAMP reporting and incentives as well as any other related requirements that remain relevant for Servicing Mortgages modified under HAMP. Guide impacts: Sections , , , , , , , , , , , through , through , , , , Guide Exhibits 4, 5, 7, 82 and 96, Form 981 and Glossary J-Q ADDITIONAL GUIDE UPDATES AND REMINDERS Borrower hardship, income and other documentation Effective June 1, 2018; however, Servicers may implement earlier if they are able to do so In anticipation of the mandatory effective date for the revised Borrower hardship, income and other documentation requirements associated with Form 710, Mortgage Assistance Application (MAAp), on June 1, 2018, we are updating Section and Exhibit 101, Income Calculation Guidelines for Alternatives to Foreclosure Options. To be consistent with the MAAp, we are removing the requirement in Section that unemployment benefits may not be used when evaluating a Borrower for a Freddie Mac Flex Modification. As a reminder, unemployment is considered a temporary hardship and the Servicer must consider unemployed Borrowers for unemployment forbearance under Sections through We are updating Exhibit 101 to more closely align the examples included in the exhibit with the income documentation requirements included in the MAAp. Guide impacts: Section and Exhibit 101 Unrecoverable expenses In accordance with Section (f), Freddie Mac will reimburse Servicers for certain unrecoverable expenses as set forth in Exhibit 74. We are revising Exhibit 74 to reflect that the following expenses are claimable as unrecoverable expenses in all States: (Connectivity Fee) (Invoicing Fee) Page 7

8 (Technology Fee) Guide impact: Exhibit 74 Recast modification agreements In response to Servicer feedback on our requirements for recasting a Mortgage following partial prepayments (curtailments), we are specifying that, if the number of Mortgages a Servicer modifies in accordance with Section exceeds a total of 10 in a given month, then, in lieu of sending copies of each modification agreement, the Servicer must complete Form 1102, Modified Principal and Interest Payment, including information for all such modifications. The Servicer must send the completed form to Freddie Mac (see Directory 3). Guide impacts: Section and Directory 3 Mortgage file maintenance and Purchase Documents Regarding Mortgage file maintenance, we require: The Seller (if it services the Mortgage for Freddie Mac) and any Transferee Servicer to maintain the Mortgage file for so long as each services the Mortgage for Freddie Mac; and If the Mortgage was sold under the Servicing Released Sales Process, the Seller to comply with the Mortgage file and related data retention requirements set forth in Exhibit 28A Based on Seller/Servicer feedback, we are updating Section to specify that, except with respect to Mortgages sold under the Servicing Released Sales Process that are covered by Exhibit 28A, for the sake of convenience, in connection with any Transfer of Servicing, copies of documents and related data from the Mortgage file may be maintained by the Transferor Servicer. Sellers and/or Transferor Servicers who retain copies of any or all of the Mortgage file may do so until the later of seven years after all associated representation and warranty obligations expire as set forth in Loan Coverage Advisor or after any Transfer of Servicing, as applicable. The Mortgage file and copies of the Mortgage file, or any portion thereof, are, and will remain at all times, the property of Freddie Mac. As a reminder, the Mortgage file must be maintained in accordance with Chapter 3302 and contain all applicable documents listed in Chapters 3301 and In addition, we are updating the Guide to expressly require Transferor Servicers to provide to Transferee Servicers, on or before the Effective Date of Transfer, copies of: All of the Transferor Servicer s Purchase Documents applicable to any of the Mortgages related to a Transfer of Servicing (excluding any Credit Fees in Price and Credit Fees in Yield); and All of the Purchase Documents of any preceding Transferor Servicer that are applicable to any of the Mortgages related to a Transfer of Servicing (excluding any Credit Fees in Price and Credit Fees in Yield) With respect to Transfers of Servicing that have taken place prior to April 11, 2018, we are requiring Transferor Servicers to provide such Purchase Documents to a Transferee Servicer in response to such Servicer s written request. Guide impacts: Sections , , and Contact information for The Bank of New York Mellon Trust Company, N.A. As announced to Sellers in Bulletin , for Seller/Servicers that use The Bank of New York Mellon Trust Company, N.A. (BNYM) as their Designated Custodian, we updated the address provided in Directory 4 to contact BNYM for information related to requests for the physical or constructive possession of a Note and/or other documents to Freddie.Mac.Releases@bnymellon.com. Page 8

9 Rent loss insurance In response to Seller/Servicer feedback, we are deleting Section as it only contained general information on rent loss insurance. Guide impacts: Sections and GUIDE UPDATES SPREADSHEET For a detailed list of the Guide updates associated with this Bulletin and the topics with which they correspond, refer to the Bulletin (Servicing) Guide Updates Spreadsheet available at CONCLUSION If you have any questions about the changes announced in this Bulletin, please contact your Freddie Mac representative or call the Customer Support Contact Center at 800-FREDDIE. Sincerely, Yvette W. Gilmore Vice President Servicer Performance Management Page 9

10 Form 982 Intra-Servicer Portfolio Move Request for Servicing of Single-Family Mortgages Servicer Name ( Servicer ): Contact Current Seller/Servicer number Telephone number ( ) ext. Requested Effective Date of Change in S/S# / 16 / New Seller/Servicer number Does this Request include all Mortgages serviced by Servicer for Freddie Mac under the Current Seller/Servicer number? Yes No Terms and Conditions Chapters and sections referenced in this Intra-Servicer Portfolio Move Request ( Request ) are those set forth in the Freddie Mac Single-Family Seller/Servicer Guide ( Guide ). Capitalized terms used but not defined herein are defined in the Guide, except that emortgage is defined in the Freddie Mac emortgage Guide at FreddieMac.com. For purposes of this Request, Mortgage means any Mortgage, emortgage and/or REO that is the subject of this Request. This Request, duly executed by Servicer, must be received by Freddie Mac not less than 30 days but not more than 60 days prior to the Requested Effective Date of Change in S/S# set forth above. The Requested Effective Date of Change in S/S# must be the 16 th day of the month in which Servicer is requesting a change of the Seller/Servicer number attributable to the Servicing of Mortgages set forth on a list that Servicer has separately submitted via the Freddie Mac Service Loans application (the List ). Servicer understands and agrees that any rights, duties, obligations, representations, warranties, covenants and agreements that Servicer has with or otherwise owes to Freddie Mac will not, in any manner, change as a result of the change in Seller/Servicer numbers attributable to the Servicing of Mortgages set forth on the List. In accordance with Chapter 7101, Servicer agrees that it will not change the Seller/Servicer number attributable to the Servicing of any individual Mortgage set forth on the List unless and until it receives Freddie Mac s express written approval in accordance with Section (e). Servicer further represents and warrants to, and covenants with Freddie Mac, if the Request is approved by Freddie Mac, that Servicer will: A. Change the Seller/Servicer number in its systems to ensure accurate reporting and remitting to Freddie Mac; B. Notify its Document Custodian of the change in Seller/Servicer number for each Mortgage related to the approved Request; C. Transfer all principal and interest, Escrow funds and prepaid installments to the appropriate Custodial Account attributable to the new Seller/Servicer number; D. Notify any affected Borrower to the extent the Borrower may need to send the monthly Mortgage payment to a new payment address that references the new Custodial Account and, as necessary, provide the Borrower with new payment coupons, monthly statements and/or any other material necessary to ensure uninterrupted payment; and E. No creditor maintains a security interest in the Servicer s Servicing contract rights that are the subject of this Request. Additional Terms and Conditions Neither Freddie Mac s approval, acknowledgment or acceptance of this Request nor its consent to the proposed Request will operate to waive, modify or limit Freddie Mac s rights and remedies under the Guide, the other Purchase Documents, at law or in equity, with respect to any legal, regulatory or supervisory action, proceeding or investigation or otherwise; all such rights and remedies are hereby expressly reserved by Freddie Mac. By signing this Request, Servicer: (i) certifies that all of the information that it has provided to Freddie Mac in connection with this Request, including all of the information set forth in this Request or in Service Loans application, is true and correct; (ii) acknowledges that it has reviewed, understands and is in compliance with, and agrees that it shall be bound by the provisions of Section ; and (iii) agrees that the terms of Section are hereby incorporated herein by this reference and made a part hereof. Each of Freddie Mac and Servicer agree that delivery of an Electronic Record copy of this Request with Servicer s duly authorized employee s Electronic Signature attached to or logically associated with this Request, shall be as binding, effective, valid and enforceable as delivery of an original paper Request executed in writing by each party s duly authorized employee. Servicer shall adopt and be bound by their respective duly authorized employee s Electronic Signature used to authenticate this Request as governed by the applicable provisions of Chapter 1401, including, without limitation, Sections and Freddie Mac Single-Family Seller/Servicer Guide Attachment A to Bulletin /11/18 Page F982 1

11 Execution: Signatures IN WITNESS WHEREOF, each of Freddie Mac and Servicer have caused this Request to be executed in their names and on their behalf by their respective duly authorized employees. Agreement and request for approval of Servicer s Request: By (Signature of duly authorized employee) Date: Type/Print Name: Type/Print Title: Acknowledgment and approval of Request by Freddie Mac: Approved Effective Date of Change in S/S# (always effective with the 16 th day of the month of the change): / 16 / Date of acknowledgment and approval / / By (Signature of duly authorized employee) Date: Type/Print Name: Type/Print Title: Freddie Mac Single-Family Seller/Servicer Guide 04/11/18 Attachment A to Bulletin Page F982 2

12 TO: Freddie Mac Sellers April 25, SUBJECT: SELLING UPDATES This Guide Bulletin announces: HomeOne SM Mortgage and revised Home Possible Mortgage income limits July 29, 2018 Freddie Mac HomeOne Mortgage New Updates to the income limits for Freddie Mac Home Possible and Freddie Mac Home Possible Advantage Mortgages, including applying 100% area median income (AMI) limits to all Mortgages except those secured by properties in low-income census tracts Enhancements to Loan Product Advisor to assess the appropriate annual income limits Integrated Construction Conversion Documentation for Manufactured Homes Sellers are permitted to use Integrated Construction Conversion Documentation for a Construction Conversion Mortgage secured by a Manufactured Home Automation of Warehouse Lender release and transfer New functionality to automate Warehouse Lenders release and transfer of their interests in Pledged Mortgages August 13, 2018 Additional Guide updates and reminders Further updates as described in the Additional Guide Updates and Reminders section of this Bulletin EFFECTIVE DATE All of the changes announced in this Bulletin are effective immediately unless otherwise noted. HOMEONE MORTGAGE AND REVISED HOME POSSIBLE MORTGAGE INCOME LIMITS Effective July 29, 2018 In support of our continuing efforts to provide access to Mortgage credit, we are introducing the HomeOne Mortgage, our newest low down payment option that will serve the needs of more First-Time Homebuyers. HomeOne Mortgages have loan-to-value (LTV), total LTV (TLTV) and/or Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios above 95%. This offering complements our Home Possible offering by providing a low down payment financing option for Borrowers without specific income or geographic restrictions. Freddie Mac remains committed to our mission of providing sustainable homeownership. In order to better focus Home Possible Mortgages on serving low- and moderate-income Borrowers, we are also revising the income limit requirements for Home Possible and Home Possible Advantage Mortgages. HomeOne Mortgage The requirements for the HomeOne Mortgage are in new Guide Chapter 4605 and include, but are not limited to, the following: At least one Borrower must be a First-Time Homebuyer when the Mortgage is a purchase transaction Mortgage

13 When all Borrowers are First-Time Homebuyers, at least one Borrower must participate in homeownership education. This requirement may be fulfilled with our free, online CreditSmart program or another acceptable homeownership education program. The maximum LTV/TLTV/HTLTV ratios are: Maximum LTV ratio: 97% Maximum TLTV ratio for Mortgages with secondary financing that are not Affordable Seconds : 97% Maximum TLTV ratio for Mortgages with Affordable Seconds: 105% Maximum HTLTV ratio: 97% The Mortgage must be: A Loan Product Advisor Mortgage with a Risk Class of Accept (Manually Underwritten Mortgages are not permitted) A purchase transaction or no cash-out refinance Mortgage. For a no cash-out refinance Mortgage, the Mortgage being refinanced must be owned or securitized by Freddie Mac unless it has secondary financing that is an Affordable Second. To identify if Freddie Mac owns the Mortgage, the Borrower can look up the loan in Freddie Mac s Loan Look-Up Tool or authorize the Seller to obtain this information on the Borrower s behalf. Secured by a 1-unit Primary Residence. Eligible property types include Condominium Units and units in Planned Unit Developments. Manufactured Homes are not permitted. A fixed-rate Mortgage If the Mortgage has an LTV ratio greater than 95%, it must have standard mortgage insurance coverage of 35%. Custom mortgage insurance is allowed. Guide Section (b)(ii) is being updated to include special delivery requirements for HomeOne Mortgages that are no cash-out refinance Mortgages. Sellers must enter the valid value of FRE for ULDD Data Point Related Loan Investor Type (Sort ID 222). If available, Sellers should also provide the associated Freddie Mac loan number of the Mortgage being refinanced for ULDD Data Point Related Investor Loan Identifier (Sort ID 221). Review Guide Exhibit 19 to determine Credit Fees in Price applicable to the HomeOne Mortgage, including Mortgages with secondary financing. Loan Product Advisor, Loan Quality Advisor and Loan Selling Advisor SM will be updated on July 29, 2018 to support the HomeOne Mortgage. There will be new Loan Product Advisor feedback messages which will be communicated at a future date. Guide impacts: Chapter 4605 and Sections , , , , , , , , , , and and Exhibits 19 and 25 Revisions to Home Possible Mortgage income limit requirements We are updating the income limits for Home Possible Mortgages, including Home Possible Advantage Mortgages, to better focus these offerings on serving low- and moderate-income Borrowers. For all Home Possible Mortgages, with the exception of those secured by Mortgaged Premises located in a low-income census tract, the Borrower s income, converted to an annual basis, must not exceed 100% of the AMI. There will continue to be no income limit for Mortgaged Premises located in low-income census tracts where the median income is at or below 80% AMI. With these revisions to the Guide, the Glossary term Underserved Area is no longer used in the Guide and will be deleted. Freddie Mac will continue to purchase Mortgages secured by properties located in designated high-cost areas, census tracts designated as disaster areas and minority census tracts; however, these Mortgages will now be subject to the maximum 100% AMI requirement. Guide impacts: Section and Glossary R-Z Page 2

14 Loan Product Advisor enhancements for income changes We are enhancing Loan Product Advisor, on July 29, 2018, to assess eligible Home Possible Mortgages against the previous and/or current year income limits, applying the better of the two years limits. Sellers will no longer need to retain the original Feedback Certificate when the Mortgage receives an Accept-Ineligible based on the Home Possible income limits. We will update the 2018 AMI limits concurrently with the updated income limits announced in this Bulletin. As provided for in the table below, the better of the income limits will be based on: 2017 refers to the income limits in effect prior to July 29, 2018: Home Possible and Home Possible Advantage income eligibility requirements which provide for higher income limits in designated high-cost areas, properties located in census tracts designated as disaster areas and high minority census tracts The 2017 AMI limits 2018 refers to the revised Home Possible and Home Possible Advantage income eligibility requirements announced with this Bulletin in effect on and after July 29, 2018, which include 2018 AMI limits and 100% AMI limits except for properties located in low-income census tracts Loan Product Advisor Determination of Income Limits When the Mortgage is submitted as a Home Possible Mortgage on and after July 29, 2018, and The last submission before July 29, 2018 was also a Home Possible Mortgage, and income limits were met The Mortgage is submitted for the first time The Key Number cannot be identified, or The last submission before July 29, 2018 was not submitted as Home Possible and/or did not meet the income eligibility limits Then the following income limits are applied The better of income limits for 2017 or The revised Home Possible Mortgage income limits and 2018 AMI limits will also be implemented in the Home Possible Income & Property Eligibility tool on July 29, For Manually Underwritten Home Possible Mortgages, Sellers must apply the new income limits for Mortgages with Application Received Dates on or after July 29, Additional resources Sellers are encouraged to register for our Realize the Possibilities with HomeOne Mortgages webinar. A new HomeOne Mortgage fact sheet is also available. INTEGRATED CONSTRUCTION CONVERSION DOCUMENTATION FOR MANUFACTURED HOMES Freddie Mac's Duty to Serve plan describes our focus on supporting underserved markets by financing more rural and manufactured housing and preserving affordable housing for homebuyers nationwide. Freddie Mac is working with the mortgage industry, community nonprofits, all levels of government and other dedicated organizations to make a positive difference for very low-, low- and moderate-income households in these three Page 3

15 historically underserved markets. As part of our Duty to Serve plan, we are making changes to our Manufactured Homes requirements. Currently, for a Construction Conversion Mortgage secured by a Manufactured Home, Sellers must conduct two loan closings, one for the construction financing and one for the Permanent Financing, and must use separate documentation for each type of financing. To streamline the loan processing, underwriting and settlement processes for Sellers, we are expanding our Construction Conversion Mortgage offering for Manufactured Homes to include Mortgages that use Integrated Documentation and a single-close process where permitted under applicable law. Sellers will still be able to originate Construction Conversion Mortgages secured by Manufactured Homes using two loan closings and separate documentation if they so choose. Sellers will need to evaluate the most efficient process for their business and consider their respective State or county titling requirements. We are updating the special delivery requirements to include Manufactured Homes. Guide impacts: Sections and AUTOMATION OF WAREHOUSE LENDER RELEASE AND TRANSFER Effective August 13, 2018 Many Sellers enter into Warehouse Agreements with Warehouse Lenders to finance Mortgages prior to their sale into the secondary mortgage market. Warehouse Lenders must release their security interests, or transfer their ownership interests, in these Pledged Mortgages by delivering Guide Form 996E to Freddie Mac for each Purchase Contract containing Pledged Mortgages prior to their Funding Date. We are enhancing Loan Selling Advisor, and we are updating the Guide, to reflect new functionality to automate Warehouse Lenders release and transfer of their interests in Pledged Mortgages. These enhancements will create efficiencies by: Granting Warehouse Lenders access to Loan Selling Advisor to directly release their interests in Pledged Mortgages Giving Warehouse Lenders the option to import the recording of their release of their interests in Pledged Mortgages Eliminating manual processing of Form 996E by Sellers and Warehouse Lenders as this form will now be electronically submitted through Loan Selling Advisor Providing the capability to both Sellers and their Warehouse Lenders to allow export of certain Warehouse Lender data We are also updating Form 996E to include Note Amount and Total Note Amount data on Appendix 1: Schedule of Pledged Mortgages. New Section (c) details the procedure to obtain access for Warehouse Lenders to become authorized users of Loan Selling Advisor and to designate their roles by completing and submitting new Form 900WHL, Loan Selling Advisor SM Warehouse Lender Authorized User Identification Form. In addition, we have made certain changes to clarify other sections of the Guide that relate to Pledged Mortgages and/or Warehouse Lenders. Warehouse Lender authorization to use Loan Selling Advisor All Warehouse Lenders must use this new process to release Pledged Mortgages through Loan Selling Advisor for Forms 996E created on or after August 13, 2018; those created prior to that date may be submitted according to the requirements in effect prior to August 13, For a Warehouse Lender to become authorized to use Loan Selling Advisor by August 13, 2018, the Warehouse Lender must complete, sign in ink and deliver to Freddie Mac by July 13, 2018: New Form 475, Warehouse Lender Agreement to Access Loan Selling Advisor SM, and Page 4

16 New Form 900WHL for Warehouse Lender employees who require access to Loan Selling Advisor. Persons authorized as Approvers must also be Authorized Employees on the Warehouse Lender s Form 990SF that has been accepted by Freddie Mac. Resources and Guide impacts Prior to August 13, 2018, training and a dedicated test environment will be made available. We will announce when Sellers and Warehouse Lenders may begin using the training and test environment at a future date. For additional information, visit our Requirements for Warehouse Financing Arrangements web page. Guide impacts: Sections , , , , , , , , , , through , through and and Forms 475, 900WHL and 996E and Glossaries A-I, J-Q and R-Z ADDITIONAL GUIDE UPDATES AND REMINDERS Exhibit 28A We are updating Exhibit 28A to better align with the practices of the servicing-released mortgage market. Sellers will now be required to refund Servicers that service loans sold to Freddie Mac through the Servicing Released Sales Process 100% of the servicing-released premium if a Borrower fails to make the first four monthly payments following the Funding Date. In addition, we are eliminating the requirement that a Servicer must notify a Seller of the payoff of Mortgages sold through the Servicing Released Sales Process. The Seller can access that information on its own in Loan Coverage Advisor. Guide impact: Exhibit 28A Authorized user identification forms We will no longer require users to assign the birthdate of the individual Authorized User as that user s personal identification number (PIN) when requesting access to Freddie Mac tools and systems, including Loan Selling Advisor and Loan Coverage Advisor. A PIN will now be automatically generated for each Authorized User. As a result, we are removing the fields for a PIN from applicable forms. Guide impacts: Forms 900, 900SA, 901 and 906 Credit assessment with Loan Product Advisor Effective for Mortgages submitted or re-submitted through Loan Product Advisor on and after May 19, 2018 Loan Product Advisor is being updated to apply the revised requirements for Accept and A-minus Mortgages when not all Borrowers have a usable Credit Score as announced in Bulletin to pertain to any Mortgage submitted or re-submitted through Loan Product Advisor regardless of original submission date. Guide impact: Section Forms 16SF and 1107SF In Bulletin we announced changes effective on November 10, 2017 to the electronic versions of Forms 16SF and 1107SF; at that time, the sample Form 16SF and paper Form 1107SF were not updated. We are now updating the sample Form 16SF and the paper Form 1107SF to reflect the changes made to the electronic versions of these forms. Guide impacts: Forms 16SF and 1107SF Page 5

17 Mortgage file maintenance and Purchase Documents As announced in Bulletin , based on Seller/Servicer feedback, Section has been updated to specify that, except with respect to Mortgages sold under the Servicing Released Sales Process that are covered by Exhibit 28A, for the sake of convenience, in connection with any Transfer of Servicing, copies of documents and related data from the Mortgage file may be maintained by the Transferor Servicer. In addition, we updated the Guide to expressly require Transferor Servicers to provide to Transferee Servicers, on or before the Effective Date of Transfer, copies of: All of the Transferor Servicer s Purchase Documents applicable to any of the Mortgages related to a Transfer of Servicing (excluding any Credit Fees in Price and Credit Fees in Yield); and All of the Purchase Documents of any preceding Transferor Servicer that are applicable to any of the Mortgages related to a Transfer of Servicing (excluding any Credit Fees in Price and Credit Fees in Yield) With respect to Transfers of Servicing that have taken place prior to April 11, 2018, we now require Transferor Servicers to provide such Purchase Documents to a Transferee Servicer in response to such Servicer s written request. Rent loss insurance As announced in Bulletin , in response to Seller/Servicer feedback, we deleted Section as it only contained general information on rent loss insurance. GUIDE UPDATES SPREADSHEET For a detailed list of the Guide updates associated with this Bulletin and the topics with which they correspond, refer to the Bulletin (Selling) Guide Updates Spreadsheet available at CONCLUSION If you have any questions about the changes announced in this Bulletin, please contact your Freddie Mac representative or call the Customer Support Contact Center at 800-FREDDIE. Sincerely, Christina K. Boyle Senior Vice President Single-Family Sales and Relationship Management Page 6

18 TO: Freddie Mac Sellers May 22, SUBJECT: SELLING UPDATES This Guide Bulletin announces: Freddie Mac Enhanced Relief Refinance Updates to our Enhanced Relief Refinance Mortgage requirements, including: A Credit Fee in Price cap structure January 1, 2019 (New) An increase to the minimum loan-to-value (LTV) ratio for Mortgages secured by 1-unit Primary Residences November 1, 2018 Uniform Loan Delivery Dataset Updates to our delivery requirements for Freddie Mac HomeOne SM Mortgages July 29, 2018 Origination and underwriting Clarifications regarding income stability and credit inquiries Concurrent Transfers of Servicing Revisions to Guide Form 960 to account for Concurrent Transfers of Servicing involving emortgages October 1, 2018 Freddie Mac Access Manager Updates to the access management provisions of the Master Systems License provided in Guide Section in preparation for the future availability of Freddie Mac Access Manager Investor Reporting Change Initiative Removal of the Seller s option to elect the super Accelerated Remittance Cycle Additional Guide updates and reminders Further updates as described in the Additional Guide Updates and Reminders section of this Bulletin EFFECTIVE DATE All of the changes announced in this Bulletin are effective immediately unless otherwise noted. FREDDIE MAC ENHANCED RELIEF REFINANCE As announced in Bulletin , the Enhanced Relief Refinance offering provides refinance opportunities to Borrowers with existing Freddie Mac Mortgages who are making their Mortgage payments on time but cannot take advantage of the Freddie Mac no cash-out refinance offering because the LTV ratio of the new Mortgage exceeds the maximum limits. The Enhanced Relief Refinance offering is effective for Mortgages with Application Received Dates on and after November 1, Under the direction of the FHFA and in alignment with Fannie Mae, we are revising our Enhanced Relief Refinance Mortgage requirements by introducing a Credit Fee in Price cap structure. In addition, we are increasing the minimum LTV ratio for Mortgages secured by 1-unit Primary Residences and clarifying our requirements for the use of HVE values in Section by removing the separate reference to the use of