Investor Reporting to Freddie Mac. January 2008

Transcription

1 to Freddie Mac January 2008

2 Notice The information in this manual is intended to provide general guidance to Freddie Mac Servicers. The information is offered as an aid in, not a substitute for, complying with requirements set forth in the Single-Family Seller/Servicer Guide (the Guide). Each Freddie Mac approved Servicer must comply with all applicable provisions in the Guide, and all other purchase documents, as that term is defined in the Guide. This manual does not constitute as one of the purchase documents. The requirements and the guidelines in this manual are subject to change at any time by Freddie Mac. Last Updated: January 2008 Publication Number: 460 Copyright 2008 Federal Home Loan Mortgage Corporation All rights reserved. i January 2008

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4 Table of Contents SECTION 1 - NEW SERVICER OVERVIEW Introduction Objectives What is Freddie Mac? Our Mission The Secondary Mortgage Market What is our Role in the Secondary Mortgage Market? Mortgage Flow of Funds Servicing Options Selling a Loan to Freddie Mac Sellers who Choose to Retain Servicing Reporting, Remitting, and Reconciling Retained Portfolio The Investor Accounting Process Daily and Monthly Reports Electronic Default Reporting (EDR) Servicer Performance Profile Review What Did We Learn? SECTION 2 - WHAT HAPPENS WHEN YOU SELL A LOAN TO FREDDIE MAC Introduction Objectives Pre-Sale Actions How to Sell Freddie Mac a Mortgage Terminology Documentation for New Fundings What is the Funding Detail Report? When Will you Receive the Funding Detail Report? How Should you use the Funding Detail Report? The Funding Detail Report What is the Purchase Statement? When do we send you the Purchase Statement? How should you use the Purchase Statement? The Purchase Statement (Form 15) The Purchase Statement (Form 15A/C) Post-Sale Actions Review What Did We Learn? SECTION 3 - YOUR INVESTOR REPORTING RESPONSIBILITIES Introduction Objectives What is the difference between reporting and remitting? The Process Loan-level Discrepancies The Accounting Cycle Finaling the Accounting Cycle January 2008

5 Table of Contents What You Will Report and Remit for Mortgage Activity Accounting Methods Examples of Accounting Methods How to Transmit Your Mortgage Activity Mortgage Activity Exception Codes Remittance Options How to Remit Funds to Freddie Mac When to Remit Funds to Freddie Mac Electronic Default Reporting (EDR) Loans in Default Fees and Penalties Types of Fees Types of Penalties Exercise Exercise Review What Did We Learn? SECTION 4 - COMMON DATA ELEMENTS FOR LOAN LEVEL TRANSACTIONS Introduction Objectives Data Elements Unpaid Principal Balance Principal Due Interest Due Exeption Interest Mortgage Insurance Cancellation Reporting Mortgage Insurance Cancellation Deleting MI Cancellation Data Loan-level Reports for MI Cancellation Review What Did We Learn? SECTION 5 - LOAN LEVEL TRANSACTIONS Introduction Objectives Monthly Processing Interim Processing Paticipation Loans Exercise Newly Funded Mortgage (no exception code) Exercise Principal Balance Correction (exception code 80) Exercise Payoffs (exception codes 60, 61, 65, 66) Type of Payoffs and Their Characteristics Prerequisite Activities for Repurchases and Conversions Negotiated Payoffs Exercise 4a Exercise 4b Exercise 4c Inactivation (exception code 40) January

6 Table of Contents Exercise Reinstatement (exception code 50) Full Reinstatement Exercise Third-Party Foreclosure Sale (exception code 71 for Conventional mortgages, exception code 73 for FHA/VA mortgages) Exercise FHA/VA Foreclosure/Conveyance (exception code 72) REO (exception code 70) Exercise Additional Exercises Review What Did We Learn? SECTION 6 - THE SELLER/SERVICER REMITTANCE ANALYSIS Introduction Objectives What is the Seller/Servicer Remittance Analysis? How to Obtain the Remittance Analysis Sample Seller/Servicer Remittance Analysis Understanding the Header Section Understanding the Date Section Understanding the Amount Received Section Remitting Funds to Freddie Mac Understanding the Amount Due Section Posting Monthly Transaction Amounts Due Curtailments on Super ARC Loans Proceed Amounts Due to Freddie Mac Understanding the Balance and Interest Reimbursement Columns Cumulative Balance Positive and Negative Balances Correcting a Positive or Negative Balance Why Analyze an Overage or Shortage Balance? Understanding the Footer Section Understanding the Footnotes Finding the Adjustment Codes on the Seller/Servicer Remittance Analysis Understanding the Adjustment Codes Review What Did We Learn? SECTION 7 - MIDANET FOR THE PC Introduction Objectives Definition of MIDANET Definition of MIDANET for the PC MIDANET Mediums Investor Accounting Manager and MIDANET Obtaining MIDANET for the PC Sorftware Accessing MIDANET on Your PC Version Number Site Number January 2008

7 Table of Contents Sharing Software User IDs and Passwords How to Log on to MIDANET for the PC Navigating the Logon Screen Log Off of MIDANET for the PC Practice Exercise Navigating in MIDANET for the PC Review What Did We Learn? SECTION 8 - USING MIDANET FOR THE PC TO REPORT OR REVISE A LOAN-LEVEL TRANSACTION Introduction Objectives Loan Level Reporting via MIDANET for the PC Add or Revise a Loan in MIDANET for the PC Cycle Non-Exception Loan-Level Data Update, Browse, and Delete Loan-Level Data Printing Loan-Level Reports Transmitting Loan-Level Data Print Confirmations SECTION 9 - HOW FREDDIE MAC PROCESSES YOUR LOAN LEVEL TRANSACTIONS Introduction Objectives The Accounting Cycle What Happens After the Accounting Cutoff Revisions Overlapping Cycles Loan Edits (Discrepancies) Closing the Accounting Cycle Processing Your Loan Level Transactions Summary Review What Did We Learn? SECTION 10 - THE DAILY EDIT REPORTS Introduction Objectives Definition of Daily Edit Reports When Does Freddie Mac Send the Daily Edit Reports? How do the Daily Edit Reports Fit into the Process? Using the Daily Edit Reports How to Prioritize Your Edits The Loan Level Missing Report About the Loan Level Missing Report Loan-Level Missing Report Content Understanding the Missing Report Header Fields Understanding the Missing Report Body Fields The Edits to be Cleared Report About the Edits to be Cleared Report The Edits to be Cleared Report Content Understanding the Edits to be Cleared Report Header Fields January

8 Table of Contents Understanding the Edits to be Cleared Report Body Fields The Freddie Mac System Cleared Edits Report About the Systems Cleared Edits Report The Systems Cleared Edits Report Content Understanding the Systems Cleared Edits Report Header Fields Understanding the Systems Cleared Edits Report Body Fields Obtaining the Daily Edit Reports Review What Did We Learn? SECTION 11 - MONTHLY RECONCILIATION REPORTS Introduction Objectives Definition of Monthly Reconciliation Report When Does Freddie Mac Send the Monthly Reconciliation Reports? Where do the Monthly Reconciliation Reports Fit into the Process? Using the Monthly Reconciliation Reports The Loan Reconciliation Difference Report About the Loan Reconciliation Difference Report Section 1 of the Loan Reconciliation Difference Report Loan Reconciliation Difference Report Sample Section 2 of the Loan Reconciliation Difference Report Section 3 of the Loan Reconciliation Difference Report Section 4 of the Loan Reconciliation Difference Report Understanding the Loan Reconciliation Difference Report Header Fields Understanding the Loan Reconciliation Difference Report Body Fields Understanding the Line Items on the Reconciliation Difference Report The Monthly Account Statement Report Understanding the Monthly Account Statement Report Header Fields Understanding the Monthly Account Statement Report Body Fields The Detailed Adjustment Report Understanding the Detailed Adjustment Report Header Fields Understanding the Detailed Adjustment Report Body Fields Obtaining the Monthly Reconciliation Reports Review What Did We Learn? SECTION 12 - ADJUSTABLE RATE MORTGAGES (ARMS) Introduction Objectives What is an ARM? Common ARM Terminology ARM Programs Non-Standard ARMs Convertible ARMs Note Rate Changes Most Recently Available Index Rounding Rounding the New ANY Caps Calculating a New ANY ANY Terminology January 2008

9 Table of Contents When Do You Use the New ANY? ANY Calculation for the WAC ARM Guarantor Program ANY Calculation for the ARM Guarantor Program ANY Calculation for the ARM Cash and WAC ARM Cash Programs Relating Rates, Fees and Margins The Rate Change Notification Using the Rate Change Notification Loan Setup Identify and Resolve ARM Interest Discrepancies Convertible ARMs Determining Which Option to Use Servicer Obligation Investor Impacts Buydown Features Eligibility for Conversion Notifying Freddie Mac of a Conversion Summary of the Automated Conversion Process Confirmation of the Conversion for CARMs Accounting/Reporting for the Automated Conversion Process for CARMs Summary of the Repurchase/Resale Process for ACARMs Special Warranties Convertible ARMs sold with Recourse Review What Did We Learn? SECTION 13 - SHORT PAYOFFS Introduction Objectives Short Payoffs Document Your Recommendation and Obtain Approval for Short Payoffs Preparing to Complete a Short Payoff Completing a Short Payoff Review What Did We Learn? ANSWERS TO EXERCISES... A-1 January

10 New Servicer Overview 1 Introduction Objectives This section describes Freddie Mac s role in the secondary mortgage market. It gives you an indication of the activities you are responsible for once you sell a loan to us. After completing this section, you will be able to Define Freddie Mac s role in the secondary mortgage market. Describe the two servicing options available when you sell a loan to us. Describe the steps needed before you sell a loan to us. Describe the investor reporting process and other activities involved if you retain servicing. 1-1 January 2008

11 New Servicer Overview What is Freddie Mac? Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgagerelated securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has opened the doors for one in six homebuyers and more than two million renters across America. Freddie Mac stock is publicly traded on the New York Stock Exchange. We are a Fortune 500 company not a government agency. As a government-sponsored enterprise, we are subject to regulatory oversight. Our Mission Our mission is to improve the quality of life by making the American dream of decent, accessible housing a reality. Since the Great Depression, federal support for housing has been an enduring public policy objective. Even in the late 1960s, interest rates varied widely from city to city across the country. The mortgage market was unpredictable, and loans were sometimes difficult to obtain. Neither government nor private banking interests could address the nation s housing needs alone. Through the years, Freddie Mac accomplishes its mission and more, not by making individual loans, but rather by ensuring that there is a continuous flow of funds to mortgage lenders. The Secondary Mortgage Market If you think of mortgage lenders as retail stores where people go to get mortgages, then the secondary mortgage market is the supplier for the lenders. Freddie Mac, one of the largest suppliers of home mortgages in the United States, is a link between mortgage lenders and investors. Lenders look to us, and other secondary market conduits, for the funds they need to meet consumer demands for home mortgages. We in turn look to our investors for the funds we need to purchase mortgages from lenders. Since we link mortgage lenders with security investors, we keep the supply of money for housing widely available and at a lower cost. January

12 New Servicer Overview What is our Role in the Secondary Mortgage Market? Freddie Mac increases the funds that lenders make available to homebuyers by: Purchasing investment-quality mortgages from lenders such as mortgage bankers, savings institutions, and banks. This supplies mortgage lenders with the money they need to make loans to borrowers. Packaging mortgages with similar characteristics, such as interest rates, terms and types, into securities. Selling the securities to investors, such as insurance companies and pension funds, interested in safe investments. This supplies us with the money we need to purchase mortgages from the primary market, so the cycle can continue. For the most part, our role is invisible to borrowers. But because we exist, millions of homeowners benefit from lower housing costs. Over the years, we have helped finance one in six American homes. 1-3 January 2008

13 New Servicer Overview Mortgage Flow of Funds Freddie Mac facilitates the steady flow of low-cost mortgage funds. Seller/Servicers may receive cash for the mortgages they sell to Freddie Mac, or they may elect to receive securities backed by those mortgages. These securities are known as Participation Certificates (PCs). When a Seller/Servicer receives the cash proceeds from Freddie Mac or sells the PCs, it is able to begin the process again with the next borrower. The sale/purchase process creates a flow or mortgage funds for mortgage lending. The illustration below shows Freddie Mac s role in replenishing the flow of mortgage funds. FLOW OF MORTGAGE FUNDS First Borrower Second Borrower $ Loan Mortgage $ Loan Mortgage Lender Lender $ Mortgages Freddie Mac Freddie Mac Mortgage - Backed Security $ Wall Street January

14 New Servicer Overview Servicing Options You have two options with servicing rights when you sell a loan to Freddie Mac: Retained Servicing and Transfer of Servicing (also referred to as Servicing Released). Retained Servicing You must report, remit, and reconcile the activity once you sell the mortgage to us or acquire the servicing rights for one of our mortgages. This process of reporting, remitting, and reconciling is known as investor accounting. Investor accounting activities include Reporting the principal and interest collections activity that occurred on each mortgage during the month. Remitting the funds due. Resolving reporting and remitting discrepancies. Reconciling your Freddie Mac custodial accounts. If you retain servicing you will receive a servicing fee. This is the portion of the monthly mortgage payment you keep as compensation. The minimum servicing fee is 25 basis points (.25%). Transfer of Servicing A transfer of servicing (TOS) moves the responsibility of servicing a Freddie Mac mortgage to another Servicer. There are three types of TOS that are differentiated by when the transfer takes place: Transfer of Servicing at Time of Sale Concurrent Transfer of Servicing: You transfer the servicing of the mortgage to another Freddie Mac approved Servicer that you select at the time you sell the mortgage to Freddie Mac. Servicing Released: Servicing released occurs when the Seller transfers servicing to a Servicer that Freddie Mac selects. A contract exists between you and the Servicer (Exhibit 28A of the Guide). You must comply with this contract, including providing the Servicer with the required documentation. Freddie Mac must approve you for this option. Transfer of Servicing after One or More Accounting Cycles Subsequent Transfers of Servicing: You transfer the mortgage to a Freddie Macapproved Servicer after Freddie Mac purchases the mortgage. 1-5 January 2008

15 New Servicer Overview A TOS affects all servicing duties and responsibilities (as set forth in the purchase documents) for mortgages and real estate (REO) properties owned in whole or in part by us. Freddie Mac determines whether to approve each TOS for each of the options. The Servicer receiving mortgages must be eligible to receive a TOS. January

16 New Servicer Overview Selling a Loan to Freddie Mac There are some important steps you need to take before selling a loan to Freddie Mac: Sign up for access to the Selling System Freddie Mac s web-based system that automates your front end delivery process. Establish and provide Freddie Mac with wire transfer instructions for receipt of cash settlement proceeds. Complete and sign Form 483, Wire Transfer Authorization. Complete and submit Form 1132, Authorization for the Automatic Transfer of Funds Through the Automated Clearing House (ACH), for payment of Seller fees, Loan Prospector and GoldWorks invoices. Sellers Who Choose to Retain Servicing If you choose to retain servicing, you are also responsible for the following: Action How To Other Activities Order MIDANET for the PC software. Set-up Custodial Accounts and Remittance Process Set-up an Automated Clearinghouse (ACH) account for payment of servicing fees and penalties. Call (800) FREDDIE to order the software for servicing activities. Establish a P&I and escrow custodial account. Call (800) FREDDIE, option 5, to find out if you are eligible to maintain your accounts inhouse. Complete and submit Form 1132, Authorization for Payment of Servicing Invoices through the ACH Use MIDANET for the PC to send mortgage accounting and servicing information to Freddie Mac. Once your accounts are established, you must send the following: Letter Agreements Draft Letter of Authorization, Exhibit #58 of the Seller/Servicer Guide A voided blank check or MICR sheet for the new P&I account Signature cards We send you Servicer Billing Statements approximately the 10 th business day of the month for any fees and penalties you may incur for performing loans, non-performing loans, and repurchase activities, if applicable. We automatically draft the funds from your ACH account the last business day of the month. 1-7 January 2008

17 New Servicer Overview Action How To Other Activities The Investor Accounting Process You are responsible for accounting (or the investor reporting process) for mortgages that are serviced for Freddie Mac every accounting cycle. The investor reporting process consists of reporting, remitting, and reconciling. Freddie Mac s accounting cycle Is a one-month period that begins on the 16 th of each month or, Ends at the close of business on the 15 th of the following month, or Ends the previous business day if the 15 th falls on a weekend or holiday The last day of the accounting cycle is the accounting cutoff. Freddie Mac relies on your accurate investor reporting and remitting. Freddie Mac is responsible for accurate reporting and remitting to our investors on our own retained portfolio. This is illustrated in the following diagram. The Borrower Sends payment The Servicer Reports and remits Freddie Mac Reports and remits The Investor Retains income Freddie Mac Retained Portfolio January

18 New Servicer Overview Reporting, Remitting, and Reconciling Retained Portfolio The chart below lists when and why you must report, remit, and reconcile: Activity When Why Report You must report the mortgage activity for every loan in your Freddie Mac portfolio monthly. Specifically, you are required to report monthly and interim processing: Monthly Processing: Report Monthly principal & interest activity to us within 5 business days of the accounting cutoff. Interim Processing: Report Payoffs, matured or prepaid within 2 business days of the exception date. Repurchases 30 days following the date of Freddie Mac s notification requiring or approving the repurchase, and convertible ARM s within five business days of the exception date. Third Party Foreclosure sales within five business days of receipt of funds. This process tells us what happened with each loan in the portfolio. Remit You are required to remit funds by 9:00 p.m. Eastern time the business day prior to the due date: Monthly principal & interest (monthly processing) funds are due based on the remittance option selected when the loan is sold to Freddie Mac. Liquidations (interim processing) are due based on the exception date. This process tells us how much money you want us to draft from your Freddie Mac custodial account. Reconcile Freddie Mac requires you to reconcile your P&I and escrow custodial account monthly within 45 days of the accounting cutoff. This process tells you if the custodial account is adequately funded. 1-9 January 2008

19 New Servicer Overview The Investor Accounting Process The following process flow summarizes the Investor Accounting Process. Reconcile Cash Statement and resolve variances 11 Servicer Collect and process payment 1 Servicer Deposit payment to custodial account 2 Servicer Report Amount Remit Amount Transmit Process Compare Due Due to monthly No loan - level Is there a remittance to us via Freddie Mac reports after transaction discrepancy? to amount loan - level (from custodial all loans are transactions expected accounts using processed GPI 4 9 Servicer Freddie Mac Yes Freddie Mac Freddie Mac Servicer Generate and send Remittance Cash Statement Analysis to you 10 Freddie Mac Reconcile principal and interest custodial accounts and resolve variances 12 Servicer Generate and distribute Daily Edit Report to you 6 Freddie Mac Identify and resolve reporting problems 7 Servicer Reconcile escrow custodial accounts and resolve variances Servicer Yes Need to submit revised transaction? No 1-10 January 2008

20 New Servicer Overview Daily and Monthly Reports Our system compares what you report and remit to what we are expecting. Freddie Mac supplies you with daily and monthly reports communicating what we have processed and any discrepancies. The daily reports are as follows: Loan Level Transactions Missing Edits To Be Cleared System Cleared Edits The monthly reports are as follows: Monthly Account Statement Loan Reconciliation Difference Report (LRDR) Detailed Adjustment Report Seller/Servicer Remittance Analysis Electronic Default Reporting (EDR) You are required to report the delinquent activity for your Freddie Mac portfolio monthly, no later than the third business day of the month. We classify EDR as general servicing, not investor reporting. EDR impacts some loan-level transactions so we recommend you understand what the process is and who performs it. The following timeline summarizes due dates for EDR reporting, remitting and reconciling your custodial accounts. EDR November Accounting Cutoff Report November Loan Level Transactions Reconcile November Custodial Accounts 10/16 11/5 11/15 11/20 11/23 12/4 12/15 12/31 Remit ARC/Gold Remit First Tuesday You must report No activity to report in EDR if you do not have any loans 30 days delinquent as of the end of the month. See our website, for more information on EDR January 2008

21 New Servicer Overview Servicer Performance Profile We send you a Servicer Performance Profile each month. This is a confidential electronic report that provides detailed information on how well you are doing relative to our servicing guidelines, requirements, criteria, and standards for investor reporting and default management. The Servicer Performance Profile is designed to help you monitor servicer performance and reduce the cost of servicing. This report is based on your reporting and remitting for a rolling three month time period and will be available to you early in the second calendar month following the accounting cutoff. For example, your July profile is comprised of May, June, and July data and will be available to you in early September. July Servicer Performance Profile The July Servicer Performance Profile is sent to you by the fifth business day in September. May June July August Sept Oct Nov Dec See our website, for more information on the Servicer Performance Profile. January

22 New Servicer Overview Review Freddie Mac s role is in the secondary mortgage market, not the primary mortgage market. We act is a link between mortgage lenders and investors. There are two options with the servicing rights when you sell a loan to Freddie Mac: Servicing Retained Servicing Released Before selling a loan to Freddie Mac, you must sign up for access to the Selling System, provide us with wire transfer instructions for receipt of cash settlement proceeds and provide us with ACH instruction for payment of Seller fees, GoldWorks invoices and Loan Prospector invoices. There are additional requirements if you choose to retain servicing. These include: Establishing your custodial accounts. Setting up an account for ACH payment of servicing fees and penalties. Completing the Investor Accounting process monthly. Completing Electronic Default Reporting monthly. What Did We Learn? Your Notes: 1-13 January 2008

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24 2 What Happens When You Sell a Loan to Freddie Mac Introduction Objectives This chapter describes the actions that occur when you sell a loan to Freddie Mac. After completing this chapter, you will be able to Describe the actions you should take before you sell a mortgage to Freddie Mac. List the steps you must perform to sell a mortgage. Describe the documentation Freddie Mac provides when you sell mortgage. Explain the steps you must perform after you sell a mortgage to Freddie Mac. 2-1 January 2008

25 What Happens When You Sell a Loan to Freddie Mac Pre-Sale Actions Before you sell a mortgage to Freddie Mac, you need to take the following actions: 1. Determine what product is being sold. Facts about products include The mortgage note dictates the product. Mortgage products are offered in the primary market: Mortgage Products May vary by the term of the note. May vary by the interest rate. Impact investor reporting when changes may occur in the interest rate. Example 15-year, 20-year, or 30-year 5-year or 7-year balloon-reset mortgages Adjustable-Rate mortgages or (ARMs), Convertible ARMs, WAC ARMs. ARMs 2. Decide how to sell the mortgage. Mortgage programs are offered in the secondary market. Facts about these programs include The Cash, Guarantor, or Multilender programs determine how Freddie Mac pays for the mortgages you sell. The investor reporting requirements are the same for all the programs. If you sell a mortgage under the Cash Program Guarantor or Multilender Programs Then Freddie Mac sends you cash (via a wire transfer) for the mortgage balances adjusted for interest and any discounts or premiums. Freddie Mac requires that you have a negotiated master commitment with us. Freddie Mac sends you a participation certificate (PC), a mortgage-backed security, for the total principal amount in whole dollars plus an adjustment on your Seller Billing Statement for interest and/or principal. There are no discounts or premiums on mortgages sold under our Guarantor or Multilender Program. January

26 What Happens When You Sell a Loan to Freddie Mac The only time you may notice that the mortgage program has an impact on your investor reporting is when you resolve certain investor reporting errors. 3. Decide which remittance option you want. The remittance option determines when the funds are sent to Freddie Mac for monthly principal and interest. The remittance option selected is indicated on the Funding Detail Report. 4. Take out a contract. A contract is an agreement to sell a loan or group of loans to Freddie Mac. Contracts are taken out via the Selling System for all execution paths. 5. Deliver the mortgage to Freddie Mac for purchase. Once a contract has been taken out, you must deliver the mortgage so Freddie Mac can process the purchase request. Ensure accurate information is delivered. Investor reporting discrepancies occur when incorrect information is transmitted during the mortgage delivery process. How to Sell Freddie Mac a Mortgage The basic process of a mortgage sale involves the following steps: 1. You decide which program options you want, take out a contract, and deliver a mortgage to Freddie Mac. 2. Freddie Mac funds the mortgage and transmits documentation to you. 3. Set up the loan in your system, designate Freddie Mac as the investor for the mortgage, and begin reporting mortgage activity. 4. Freddie Mac sets up the mortgage on its system and expects you to begin reporting activity. 2-3 January 2008

27 What Happens When You Sell a Loan to Freddie Mac Terminology After you sell a mortgage to Freddie Mac, we refer to it as a new funding or a newly funded mortgage. There are many different terms in the industry that refer to the same thing. The following tables list terminology used. Freddie Mac Terminology When Buying a Mortgage Secondary Market Terminology When You Sell a Mortgage Primary Market Terminology When You Initiate a Mortgage with a Borrower New funding Settling a mortgage Funding a mortgage Newly funded mortgage Buying a mortgage Funding a mortgage Purchasing a mortgage Originating a mortgage Closing a mortgage Settling a mortgage Another term that may need clarification is the date the transaction occurred. It can be referred to as: Settlement date Funding date Purchase date Date the mortgage was sold Date we bought the mortgage When using any terminology, clarify exactly what you mean to avoid miscommunication. January

28 What Happens When You Sell a Loan to Freddie Mac Documentation for New Fundings Once Freddie Mac successfully processes the purchase transaction, the mortgage is funded and you will receive funding documentation and either Cash or a PC. You will receive a Funding Detail report and a Loan Purchase Statement via the Selling System. What is the Funding Detail Report? The Funding Detail report(s) provides loan-level backup for the purchase summaries. For each sale you receive one or more Funding Detail report(s). When Will You Receive the Funding Detail Report? The Funding Detail Report is available to you via the Selling System as follows: Transaction Type Cash Guarantor or Multilender When Available via the Selling System The report is available the morning of the day the funds are wired to the Seller (the settlement date). The report is available the first day after the final delivery date (the first day of the settlement cycle). You can view, print, and export the Funding Detail Report via the Selling System. 2-5 January 2008

29 What Happens When You Sell a Loan to Freddie Mac How Should You Use the Funding Detail Report? Use the Funding Detail report to set-up the loan on your investor reporting system. The Funding Detail report provides all of the information you need to set up the mortgage with us as the investor. For example, the Funding Detail report contains: Accounting net yield Remittance option Freddie Mac loan number Data to calculate the servicing fee The Funding Detail report is the most important document for ensuring your investor reporting system is in sync with Freddie Mac s systems. The Funding Detail Report The mortgage information on the Funding Detail report is the same information that is set-up on Freddie Mac s investor accounting system. The amount expected for principal and interest is based on this data. If information is set up on your system different than shown on the Funding Detail, there will be investor reporting discrepancies. Review the sample Funding Detail report and familiarize yourself with the content. Most investor reporting errors are caused because the information delivered does not match the note, or the information set-up on your investor accounting system does not match the Funding Detail report. January

30 What Happens When You Sell a Loan to Freddie Mac What is the Purchase Statement? The Purchase Statement summarizes the total sale. For each sale you receive one or more Purchase Statement(s). When do We Send You the Purchase Statement? The Cash Purchase Statement is available on the day of settlement. The Guarantor and Multilender Purchase Statement is available the day after the final delivery (the first day of the settlement cycle). How Should You Use the Purchase Statement? Your accounting department should use the Purchase Statement to record the sale on your general ledger. 2-7 January 2008

31 What Happens When You Sell a Loan to Freddie Mac The Purchase Statement (Form 15) Review the sample Form 15 and familiarize yourself with the content. January

32 What Happens When You Sell a Loan to Freddie Mac The Purchase Statement (Form 15A/C) Review the sample Form 15A/C and familiarize yourself with the content. 2-9 January 2008

33 What Happens When You Sell a Loan to Freddie Mac Post-Sale Actions Immediately after you sell a mortgage to Freddie Mac, you need to Set the mortgage up on your investor reporting system. Ensure the information loaded, exported, or entered into MIDANET for the PC matches the information on the Funding Detail report. Begin your investor accounting responsibilities. January

34 What Happens When You Sell a Loan to Freddie Mac Review There are several steps you must take before you sell a mortgage to Freddie Mac. These include the following: Determine what product to sell. Decide which program you want (Cash, Guarantor, or Multiliender). Decide which remittance option you want. Take out a contract. Deliver the mortgage to Freddie Mac. After you sell a mortgage to Freddie Mac, we refer to it as a new funding or newly funded mortgage. The Funding Detail Report and Purchase Statement are available via the Selling System. On the settlement date for Cash transactions The day after the final delivery (the first day of the settlement cycle) for Guarantor and Multilender transactions The Funding Detail Report is critical to accurately setting up the mortgage on your investor reporting system. What Did We Learn? Your Notes: 2-11 January 2008

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36 3 Your Responsibilities Introduction Objectives This section introduces your investor reporting responsibilities including your loan-level transactions and remitting funds due Freddie Mac via Global Payments, Inc (GPI). After completing this chapter, you will be able to Explain the difference between reporting and remitting Describe the difference between monthly processing and interim processing Explain when to report and remit Explain how much to report and remit Describe the activities involved in the investor reporting process 3-1 January 2008

37 Your Responsibilities What is the difference between reporting and remitting? Reporting and remitting, although related, are separate activities. Reporting is the process of transmitting information to Freddie Mac based on the accounting activity (or non-activity) for each mortgage in your Freddie Mac portfolio. Freddie Mac processes one transaction per loan, each accounting cycle. You will report one loan-level transaction for every Freddie Mac loan you service regardless of whether any activity occurred for the loan during the reporting period. If there is more than one activity for a loan, you must summarize all activity for the cycle into one transaction. For example, if a borrower makes a payment on 8/3/XX and then pays off the mortgage on 8/7/XX, you must summarize both of these activities into one loan-level transaction. Remitting is the process of initiating a transfer of funds due Freddie Mac from your Freddie Mac custodial account. You will remit funds via Global Payments, Inc. (GPI). You may access GPI from a touch-tone phone or online via Investor Accounting Manager SM (IAM), an application available through GoldWorks. The Process The investor reporting process is comprised of monthly and interim processing. See boxes 3 and 4 of the investor accounting process flow in Chapter 1. Monthly Processing Monthly processing is cyclical reporting and remitting completed every month at the same time. Freddie Mac s accounting cycle is a one-month period that begins on the 16 th of each month and ends at the close of business on the 15 th of the following month, or the previous business day if the 15 th falls on a non-business day. The accounting cycle determines the timing for monthly reporting. The timing for monthly remittances is determined by the remittance option selected when the mortgage was sold to Freddie Mac. Monthly processing for reporting and remitting is the majority of the investor reporting process. It includes all loan-level transactions except liquidations (payoffs and thirdparty foreclosure sales). As a Servicer, you must: Report monthly transactions no later than five business days after the accounting cutoff. Remit monthly transactions based on the remittance option you select when you sell a loan to Freddie Mac. The different remittance options are covered later in this section. Refer to our Due Date Calendar for Monthly Reporting and Remitting for specific reporting and remitting due dates. January

38 Your Responsibilities Interim Processing Interim processing is event driven reporting and remitting that is completed throughout the month in response to certain mortgage activities, such as payoffs and third-party foreclosure sales. Refer to the following table to determine when to report: Transaction type Payoff (prepaid, matured) Payoff (repurchase) Payoff (adjustable-rate mortgage (ARM) conversion) Third party foreclosure sale When to report Within two business days of the exception date You must repurchase the mortgage within the timeframe specified in the repurchase letter. Report the repurchase within five business days of the selected exception date. Within five business days of the exception date (may be no later than the deadline specified in the contract) Within two business days of the receipt of funds date Remittances for interim processing are due to Freddie Mac within five business days of the exception date or receipt of funds date. Loan-level Discrepancies Your loan-level transactions are compared to data in our database to identify any discrepancies. These discrepancies are referred to as edits. Freddie Mac sends you daily edit reports. We notify you of any edits the business day after we receive any loanlevel transaction. Revisions If you want to change information for a loan already reported, you need to flag the loanlevel transaction as a revision. A revision tells our computer this is the transaction you want to process. A revision overrides any previous transaction. You may transmit revisions for the current cycle approximately two to three business days before the end on the month (depending on the cycle). For the exact date, contact your Freddie Mac Loan Portfolio Specialist. 3-3 January 2008

39 Your Responsibilities The Accounting Cycle Freddie Mac s accounting cycle is a one-month period that begins on the 16 th of each month and ends at the close of business on the 15 th of the following month, or the previous business day if the 15 th falls on a non-business day. The last day of the accounting cycle is the accounting cutoff. This is depicted below: Month A Month B S M T W T F S S M T W T F S One accounting cycle Accounting cutoff Benefits of the Accounting Cycle Freddie Mac designed its accounting cycle to cutoff on the 15th because, although most payments are due on the 1st of the month, many payments are received from the 1st through the 15th. This accounting cycle gives you a two-week period to collect payments before you report and remit. Finaling the Accounting Cycle After Freddie Mac processes a loan-level transaction for every mortgage you service for us, we final the accounting cycle or close our books approximately two to three business days before the end of the month. After we final, we send you monthly reconciliation reports that summarize the activity processed at Freddie Mac for your portfolio. January

40 Your Responsibilities What You Will Report and Remit for Mortgage Activity You must use the interest in arrears accounting method for your Freddie Mac portfolio. Apply a borrower s mortgage payment to interest and principal by: Calculating the interest portion based on the outstanding unpaid principal balance (UPB) as of the last paid installment date Applying the balance of the principal and interest payment as a principal reduction Interest in Arrears Both the interest due from the borrower and interest due Freddie Mac are calculated in arrears. This timeline illustrates the interest and principal you would report and remit for a May accounting cycle. Report principal collected 4/1 4/16 5/1 5/15 6/1 April interest Report April interest at May s cycle Report principal and interest using the interest in arrears accounting method for your Freddie Mac portfolio. 3-5 January 2008

41 Your Responsibilities Due Date of the Last Paid Installment and Last Payment Received Date Freddie Mac requires you to report two dates with every loan level transaction: The Due Date of the Last Paid Installment (DDLPI) is the actual due date according to the terms of note. The DDLPI can be a future date. The Last Payment Received Date (LPRD) is the actual date you received the borrower s payment. The LPRD cannot be a future date. Example You received the borrower s May payment on May 8 th. The note has a 1 st of the month due date. Report a DDLPI of 5/1/xx and a LPRD of 5/8/xx for the May accounting cycle. Accounting Methods The amount of principal and interest you report and remit for your mortgage activity is determined by the contract-specified accounting method selected at the time the mortgage was sold to us. The four types of accounting methods are Net yield Alternate Scheduled/scheduled Guaranteed timely principal and interest Net Yield Accounting Method Most mortgages use the net yield accounting method (scheduled interest, actual principal). The net yield accounting method is used for the majority of investor reporting examples and exercises in this publication. With the net yield accounting method, you will Calculate interest based on the last reported ending unpaid principal balance (UPB) and the accounting net yield (ANY). The ANY equals the note rate less the servicing fee. Report and remit one month s interest regardless of what you receive from the borrower. Report and remit the actual principal collected from the borrower during the accounting cycle (16th 15th) January

42 Your Responsibilities Alternate (Actual/Actual) Accounting Method The alternate method is used for partial reinstatements. With the alternate accounting method, you will Calculate interest based on the last reported ending Unpaid Principal Balance (UPB) and the Accounting Net Yield (ANY). The ANY equals the note rate less the servicing fee. Report and remit the interest only if you receive it from the borrower Report and remit the actual principal collected from the borrower during the accounting cycle (16th 15th). Scheduled/Scheduled Accounting Method and Guaranteed Timely Principal and Interest The scheduled/scheduled accounting method is used for loans sold with the Super ARC (Accelerated Remittance Cycle) remittance option. Remittances are due on the contract specified calendar date each month. Loans that were sold under the Guaranteed Timely Principal and Interest program also use the scheduled/scheduled method of accounting. Remittances are due either on the ARC day specified in the purchase contract, or on the First Tuesday of the month. With the scheduled/scheduled accounting method, and guaranteed timely principal and interest, you will Calculate interest in arrears based on the ending unpaid principal balance (UPB) last reported and the accounting net yield (ANY). The ANY equals the note rate less the servicing fee. Report and remit the scheduled interest and principal regardless of what you receive from the borrower. The only reporting difference between these methods is the scheduled/scheduled loans can be inactivated and Guaranteed Timely Principal and Interest loans cannot. 3-7 January 2008

43 Your Responsibilities Examples of Accounting Methods Prepaid Mortgage You received the borrower s May and June payment on 05/09/xx. The note has a 1 st of the month due date. Both payments consist of $100 principal and $900 interest. You would report a DDLPI of 06/01/xx and a LPRD of 05/09/xx for the May accounting cycle. The following summarizes the principal and interest to be reported with each accounting method for the May accounting cycle: Accounting Method Interest Principal Net yield $900 $200 Alternate $1,800 $200 Scheduled/scheduled $900 $100 Guaranteed timely principal and interest $900 $100 Delinquent Mortgage You received the borrower s April payment on 04/08/xxbut did not receive the May payment. The note has a 1 st of the month due date. The April payment consists of $100 principal and $900 interest. You would report a DDLPI of 04/01/xx and a LPRD of 04/08/xx for the May accounting cycle. The following summarizes the principal and interest to be reported with each accounting procedure for the May accounting cycle: Accounting Method Interest Principal Net yield $900 0 Alternate 0 0 Scheduled/scheduled $900 $100 Guaranteed timely principal and interest $900 $100 January

44 Your Responsibilities How to Transmit Your Mortgage Activity Mortgage Information Direct Access Network (MIDANET ) is our automated reporting network that enables you to send mortgage accounting and servicing information to Freddie Mac. It is the link between your Servicing/ Software and our system. Use MIDANET for the Personal Computer or with other mediums depending on your system capabilities. Contact our Customer Implementation Services (CIS) at 800 Freddie to determine what options are available to you. Mortgage Activity You are responsible for reporting to Freddie Mac monthly, the activity for every mortgage in your portfolio. This is referred to as the mortgage activity. There are two types of mortgage activity: non-exception and exception. Non-exception Activity Non-exception activity is regular monthly activity of principal and interest payments made according to the terms and conditions of the security instrument executed by the borrower. Examples of non-exception activity include Newly funded mortgages Regular principal and interest payments on active mortgages Mortgages inactivated during a previous accounting cycle Exception Activity Exception activity is any exception to the regular monthly principal and interest payments that changes the status of the mortgage. Examples of exception activity include Payoffs Reinstatements Third party foreclosure sales Real Estate Owned (REO) 3-9 January 2008

45 Your Responsibilities Exception Codes All of your exception activity has corresponding exception codes. If you report using MIDANET for the PC, the exception code is automatically inserted based on the transaction type. Your investor reporting system should insert the corresponding exception code for any other reporting methods you may use. All investor reporting reports printed from MIDANET for the PC reflect the exception codes. Interpret and match the exception codes to their corresponding transaction when researching discrepancies from your daily edit reports. For a complete list of exception codes, refer to Chapter 5, Loan-level Transactions. Remittance Options For monthly processing, your remittances are due based on the remittance option selected at the time the mortgage was sold to us. The remittance option is listed on the Funding Detail Report sent to you at the time of funding. You may select more than one remittance option in your portfolio. The table below describes the five remittance options available at Freddie Mac. Remittance Option Accelerated Remittance Cycle (ARC) Gold First Tuesday Original Super Accelerated Remittance Cycle (Super ARC) Funds are due to Freddie Mac On a contract specified business day. If the date is not specified, use the third business day following the accounting cutoff. On the third business day following the accounting cutoff. On the first Tuesday of the calendar month following the accounting cutoff. On a contract-specified calendar day between the 1st and 15th calendar day of the month. The funds must be available the preceding business day if the calendar day is a non-business day. Super ARC remittances will use the scheduled/scheduled accounting procedure because you will remit funds before the accounting cutoff. January

46 Your Responsibilities The following timeline illustrates when funds are due to Freddie Mac for the July accounting cycle for the various remittance options: Super ARC due on the 8 th calendar day of the month per the contract Gold/3-day ARC 6/16 7/1 7/8 7/15 7/20 7/31 8/3 July accounting cutoff First Tuesday How to Remit Funds to Freddie Mac Remit funds due us through Global Payments, Inc. (GPI), a third party vendor that collects funds on our behalf. You have two methods to remit, through touch-tone phone (follow the voice prompts), or transmit online via Investor Accounting Manager SM (IAM). When you become a Freddie Mac Servicer, we will provide you with a toll-free remittance number and your identification number. See for more information regarding IAM. When to Remit Funds to Freddie Mac Funds must be available for our use on or before the remittance due date. If the remittance due date falls on a non-business day, the funds are due the preceding business day. To ensure that funds are available to us on or before the remittance due date, complete your remittance no later than 9:00 p.m. Eastern time, the business day prior to the remittance due date. Freddie Mac will debit your account the business day after you complete the remittance process. Example The Gold remittance option amounts for the November xxxx cycle are due November 20, xxxx. Your remittance must be completed by 9:00 p.m. eastern time November 19, xxxx January 2008

47 Your Responsibilities Electronic Default Reporting Servicers with an active Freddie Mac Seller/Servicer number must report all delinquency and default information to us each month for all Freddie Mac single-family mortgages in default via Electronic Default Reporting (EDR). Your EDR information is due by 7:00 p.m. Eastern time on the third business day of the month. Even though EDR is not considered an investor reporting activity, it does impact some loan-level transactions. Each month, you must report all mortgages That are 30 or more days delinquent Where the borrower has filed bankruptcy, whether the mortgage is delinquent or not That were last reported as 90 or more days delinquent and have since fully reinstated Report No Activity if you have no loans to report through EDR for any of your Servicer numbers. For additional information, refer to our Electronic Default Reporting (EDR) Quick Reference Guide and Due Date Calendar for Monthly Reporting and Remitting. EDR and and Remitting Timeline The following timeline illustrates due dates for EDR and monthly investor reporting and remitting for the November accounting cycle. EDR November Accounting Cutoff Report November Loan Level Transactions 10/16 11/3 11/15 11/20 11/23 12/4 12/15 Remit Remit First ARC/Gold Tuesday January

48 Your Responsibilities Loans in Default Freddie Mac s philosophy is to pursue alternatives to foreclosure that will keep the borrowers in their home and avoid the consequences of foreclosure or a deficiency judgment. Most of our delinquencies are cured through reinstatements or alternatives to foreclosures. Examples of alternatives to foreclosure include the following: Loan modifications Short payoffs Make-whole preforeclosure sales Deeds-in-lieu of foreclosure Workout mortgage assumptions Charge-offs Fees and Penalties The pricing of products is based on receiving funds by their due date. When Freddie Mac does not have accurate and timely information or cash, we incur additional costs. Fees and penalties are to help us offset these additional costs. Each month, approximately the 10th business day of the month, we send you a Servicer Billing Statement for fees and penalties you may have incurred for Performing Loans. The funds are automatically drafted from the account you designated for the Automated Clearing House (ACH) draft the last business day of the month. This account is separate from your P&I custodial account. If you do not owe any fees in a particular month you will not receive a Servicer Billing Statement. See the Single-Family Seller/Servicer Guide (the Guide) or contact your Freddie Mac Loan Portfolio Specialist if you have questions about your Servicer Billing Statement January 2008

49 Your Responsibilities Types of Fees Late Reported Payoff Noncompliance Fee Freddie Mac assesses a fee when you fail to report a paid off mortgage by the 5th business day of the month following the month in which you received the payoff funds. The amount of the fee is equal to one month s interest based on the ANY for the loan. The timeliness of your reporting is reflected in your Servicer Performance Profile. Example 1: Payoff date: 04/15/xx Date payoff reported to Freddie Mac: 04/24/xx Result: No fee is assessed. Example 2: Payoff date: 04/15/xx Date payoff reported to Freddie Mac: 05/03/xx Result: No fee is assessed. Example 3: Payoff date: 04/15/xx Date payoff reported to Freddie Mac: 05/10/xx Result: A late reported payoff noncompliance fee is assessed. January

50 Your Responsibilities Late Remittance Interest Reimbursement Fee Freddie Mac assesses a fee when you fail to comply with our required remittance procedures. If remittance funds are not available to us by the remittance due date, we will assess an interest reimbursement fee. We calculate interest reimbursement fees by multiplying the amount of the remittance shortage by the highest quoted prime rate printed on the first business day following the 15th of each month in The Wall Street Journal plus 3 percent and divide by 365 days. Contract Noncompliance and Contract Change Fees Freddie Mac may assess $100 per mortgage, per occurrence when you request us to do one of the following: Perform database changes to correct your error Produce reports to reconstruct your records Process the database changes necessary to complete an approved waiver to the Single-Family Seller/Servicer Guide or contract terms If we process the same contract noncompliance change for 100 or more loans in your portfolio, we will limit your fee for the particular occurrence to $10,000. We exempt mortgages included in a Subsequent Transfer of Servicing from contract noncompliance fee for 90 days following the effective date of the transfer to allow you time to complete your due diligence efforts. Freddie Mac may assess $100 per mortgage or transaction, up to $10,000 maximum if one of the following occurs: You fail to report a disposition code on a balloon/reset mortgage by 4:30 p.m. Eastern time on the 44th day prior to the balloon maturity date. If the 44th day prior to the Balloon Maturity Date is a non-business day, then you must report the disposition code by 4:30 p.m. Eastern time on the next business day. Refer to Section of the Single-Family Seller Servicer Guide for additional information. DCS receives Form 1034B, Custodial Certification Schedule Balloon Loan Modification, (and Form 3293 the unrecorded balloon loan modification, if DCS is the note holder) later than 10 calendar days after the balloon maturity date. If the 10 th calendar day after the balloon maturity date is a non-business day, then DCS must receive Form 1034B (and Form 3293, if applicable) by the last business day prior to the 10 th calendar day. DCS cannot certify Form 1034B, (and Form 3293 if applicable) by the second business day prior to the accounting cycle cutoff in the month following the month of the balloon maturity date January 2008

51 Your Responsibilities Types of Penalties Reporting Non-compliance Penalty Freddie Mac assesses a penalty when you fail to comply with our Servicing accounting reporting requirements. If you have more than one type of reporting offense within an accounting cycle you may be subject to more than one reporting noncompliance penalty. You will be subject to a noncompliance penalty for your failure to take one of the following actions: Submit complete and accurate servicing reports, including the submission of loanlevel data within the required timeframe. Report mandated data elements, such as the last payment received date (LPRD). Provide requested information to Freddie Mac that is not part of the regular monthly reporting requirements, or if you do provide such requested information, it is late or unusable. We will notify you in writing of all instances of noncompliance. We assess noncompliance penalties using the escalating scale shown below based on the number of noncompliance violations you have in any consecutive 12-month period. If the non-compliance violation within a consecutive 12-month period is your Then the non-compliance penalty is First $250 Second $550 Third $1,000 And You may be required to attend a Freddie Mac training workshop. Additional violations after the third violation results in an assessment of a $1,000 noncompliance penalty for each violation during the remainder of the 12 month period starting with the month in which the first violation occurred. Besides the monetary fees, beginning with the second violation, we may require that you attend training. We reserve the right to invoke additional remedies, including suspension or disqualification as a Seller/Servicer or a termination of servicing. Data Error Penalty Freddie Mac may assess a $250 penalty for each accounting cycle where there are unresolved loan-level reporting errors that appear on the Loan Reconciliation Difference Report for 90 days or more. January

52 Your Responsibilities Exercise 1: Your Responsibilities Instructions Use the following calendar to complete the statements below with the appropriate terms, dates, and amounts. There are no holidays in March. You should assume that all mortgage activity occurred in the March accounting cycle unless otherwise noted. When you complete this exercise, check your work in the Answer Sheet for Exercises section. MARCH S M T W T F S Statements to Complete 1. The majority of your loan-level transactions will be processing. 2. Reporting for your monthly processing is due by. 3. Remitting for your monthly processing is due by the loan s. 4. Remitting for a loan with the Gold remittance option must be completed by. 5. A borrower makes three payments for March, April, and May with the March cycle. Each payment consists of $750 for interest and $100 for principal. Using the net yield method, how much interest should you report for the March cycle? How much principal will you report for the March cycle? 3-17 January 2008

53 Your Responsibilities 6. Funds for fees and penalties are automatically drafted from an account, which you set up when you become a Freddie Mac Servicer. 7. What month s interest do you report for the March accounting cycle? 8. What month s interest do you report for the March accounting cycle if no payment was received? 9. A borrower pays off (pre-pays) his loan on March 7, xxxx. When are you required to report the payoff activity to Freddie Mac? When is the remittance for the payoff proceeds due to Freddie Mac? When must you complete your remittance so that Freddie Mac receives it by the remittance due date? 10. You must complete your Electronic Default Reporting by, even if all loans in your portfolio are in a current status. January

54 Your Responsibilities Exercise 2: Your Responsibilities Instructions Match the terms with the appropriate statements. When you complete this exercise, check your work in the Answer Sheet for Exercises section. A. LPRD F. Monthly processing B. Remitting G. DDLPI C. Accounting cycle H. Net yield method D. EDR I. Interim processing E. Prepaid or matured payoffs 1. Reporting for these transactions is due within two business days of the exception date. 2. Reporting and remitting that is event-driven and based on the exception date. 3. This data element reflects the actual date you received the borrower s payment. 4. Accounting method for which you report and remit one month s scheduled interest and the actual principal received during the accounting cycle. 5. Reporting and remitting that occurs every month at the same time. 6. The 16 th of the month through the 15 th of the following month. 7. This is the method you use to inform us of any delinquencies or foreclosures. 8. Sending us funds for the loan-level transactions we have processed. 9. This data element reflects the actual due date according to the terms of the note January 2008

55 Your Responsibilities Review The investor reporting process can be divided into two major parts: monthly processing and interim processing. Reporting is the process of transmitting accounting activity information to us for each mortgage. Remitting is the process of calling in funds due us through Global Payments Inc., (GPI). Funds must be available for our use on or before the remittance due date. You must complete your remittance no later than 9:00 p.m. Eastern time the business day prior to the remittance due date. Non-exception activity is the regular monthly activity of principal and interest payments made according to the terms and conditions of the security instrument executed by the borrower. Exception activity is any exception to regular monthly principal and interest payments. When you report a loan number to us more than once for the same accounting cycle, mark the transaction you want us to process as a revision. The accounting cycle is a one-month period that begins on the 16th of each month and ends at the close of business on the 15th of the following month. We will assess fees for failure to meet our reporting or remitting requirements. There are five remittance options: Accelerated Remittance Cycle (ARC) First Tuesday Original (including Class B Multifamily) Gold Super Accelerated Remittance Cycle (Super ARC) What Did We Learn? Your Notes: January

56 4 Common Data Elements for Loan-level Transactions Introduction Objectives This chapter outlines the common data elements you must report for your loan-level transactions. After completing this chapter, you will be able to Be familiar with the required data elements for loan-level transactions, including, but not limited to Unpaid principal balance Principal due Interest due Understand how report the cancellation of mortgage insurance 4-1 January 2008

57 Common Data Elements for Loan-level Transactions Data Elements There are three primary data elements you must report for non-exception and exception activity: Unpaid principal balance (UPB) Principal due Interest due Monthly interest due Exception interest due Unpaid Principal Balance The unpaid principal balance (UPB) has the following characteristics: Principal Due The previous accounting cycle s ending unpaid principal balance (EUPB) is the beginning unpaid principal balance (BUPB) for the current accounting cycle. For example, the January cycle s EUPB equals the February cycle s BUPB. The EUPB for the current accounting cycle will be the BUPB for the next accounting cycle. For example, the February cycle s EUPB equals the March cycle s BUPB. The principal due to Freddie Mac for all mortgage activity is the difference between the BUPB and the EUPB for the current accounting cycle. Principal due is also referred to as principal reduction (PR). Calculation To calculate principal due, subtract the current cycle s EUPB from the current cycle s BUPB. BUPB EUPB = Principal Due Example BUPB $90,000 - EUPB $89,000 Principal Due $1,000 January

58 Common Data Elements for Loan-level Transactions Additional Examples Principal Due for Newly Funded Mortgages For newly funded mortgages (mortgages sold to Freddie Mac during the current accounting cycle), the BUPB is sometimes referred to as the funded UPB. Therefore, to calculate principal due for a newly funded mortgage, subtract the current cycle s EUPB from the funded UPB. Funded UPB EUPB = Principal Due Funded UPB $120,000 - EUPB $119,975 Principal Due $25 Principal Due for Payoffs and Third Party Foreclosure Sales Principal due for payoffs and third party foreclosure sales will always be equal to the current cycle s BUPB since the current cycle s EUPB must be zero. BUPB $120,000 - EUPB $0 Principal Due $120,000 Inactivations Principal due for inactivations (mortgages in foreclosure that you are moving to an inactive status) will always be zero. BUPB $100,000 - EUPB $100,000 Principal Due $0 4-3 January 2008

59 Common Data Elements for Loan-level Transactions Interest Due There are two types of interest due: Monthly interest due Exception interest due Although our accounting cycle begins on the 16th of the month and ends on the 15th of the following month, monthly interest is based on one full calendar month of interest. Monthly Interest Due You must report monthly interest for all active mortgages, regardless of what has been collected from the borrower. No monthly interest is due for mortgages that were inactive as of the previous accounting cycle. Monthly interest is always due in arrears. This means the interest due you report is for the previous calendar month. For example, in the May accounting cycle, you report April s interest. April s interest Report April s interest 3/16 4/1 4/15 4/30 5/15 5/31 Calculation Monthly interest due is calculated at the accounting net yield rate (ANY) based on a 12 month, 360 day year, or 30-day month. The ANY equals the note rate minus the servicing fee. To calculate monthly interest due, multiply the BUPB for the current accounting cycle by the ANY, and divide by 12. BUPB x ANY 12 = Monthly Interest Due Example: BUPB = $100,000 ANY = 7.50% $100,000 x = $625 Accounting cutoff January

60 Common Data Elements for Loan-level Transactions Monthly Interest Due for Newly Funded Mortgages For newly funded mortgages, monthly interest is due for the first time during the accounting cycle following the calendar month in which the mortgage was sold to Freddie Mac. For example, if we fund a loan in April, you will report April s interest for the May accounting cutoff. The BUPB is the funded balance and will be used to calculate the monthly interest. Regardless of what day of the month we fund a mortgage, you must report and remit interest for the entire month (30 days). Example If we fund a loan on April 10 th, you will report April s interest (30 days) with the May accounting cutoff. We will reimburse you nine days of pro-rated monthly interest at the time of funding. Nine days of interest Report April s interest 4/1 4/10 5/1 5/15 6/1 April s interest 4-5 January 2008

61 Common Data Elements for Loan-level Transactions Exception Interest There are two types of exception interest: Monthly exception interest due Daily exception interest due Monthly Exception Interest Monthly exception interest may be due for more than one month, and may be a credit. You will report monthly exception interest for the following transactions: Payoffs with an exception date that falls on the 16th through the end of the month Reinstatements FHA/VA foreclosures Third-party foreclosure sales REOs Calculation BUPB x ANY 12 x number of months Daily Exception Interest Daily exception interest is calculated from the first of the month, up to, but not including the exception date. It is based on a 365-day year. Daily exception interest will be due when the exception date for the following transactions is not the first of the month: Payoffs FHA/VA foreclosures Third-party foreclosure sales Calculation BUPB x ANY 365 x number of days from the first of the month to the exception date January

62 Common Data Elements for Loan-level Transactions Mortgage Insurance Cancellation Mortgage insurance is federal or private insurance that protects mortgage lenders against default risk. Private carriers provide mortgage insurance to protect lenders against losses in the event of a foreclosure and deficiency. The carrier must be a Freddie Mac-approved mortgage insurer. The borrower pays the mortgage insurance premiums. A down payment of less than 20 percent of the price of the home requires private mortgage insurance (PMI or MI). Borrowers should contact their lender for specific requirements on private mortgage insurance. Under certain circumstances, the borrower may be able to cancel his or her mortgage insurance. For example, a borrower s loan amortization may reach a certain percentage or the property value may increase such that mortgage insurance is no longer required. Reporting Mortgage Insurance Cancellation When to Report MI Cancellation Report MI cancellation data to Freddie Mac using the loan-level reporting function in MIDANET with your non-exception activity only. You must report the MI cancellation data within three accounting after the month of the cancellation date. For example, if the cancellation date is April 5, xxxx, you must report mortgage insurance cancellation data with your monthly loan-level accounting data no later than the July xxxx accounting cycle. How to Report MI Cancellation Perform the following steps to enter loan-level data: 1. Select option 7 Loan-Level Reporting from the Main Menu. 2. Select option 1, Enter Loan-level Reporting Data. 3. Enter the month and year of the cycle date and the Freddie Mac loan number. Press Enter. 4. Respond Y or N at the prompt Is this an FHA/VA loan (Y/N)? 5. Respond Y or N at the prompt Alternate Method (Y/N)? 6. Respond ADD at the prompt ADD/REVISE. 7. Enter all loan-level data and press Enter. 8. Verify the accuracy of the data. 9. Respond Y at the prompt Is the data correct? and press Enter. 4-7 January 2008

63 Common Data Elements for Loan-level Transactions After you have entered the loan-level data, perform the following steps to enter the MI cancellation data: 1. Respond Y at the prompt Do you need to report MI cancelled on this loan (Y/N)? The default response is N. Press Enter. 2. Enter the date the MI was cancelled and one of the following MI cancellation reason codes: 1M: Mortgage insurance cancellation by homeowner based on original value of property. 1N: Mortgage insurance cancellation by homeowner based on current value of property. 1O: Mortgage insurance cancellation by Servicer based on automatic cancellation provisions. The above MI cancellation codes are alpha-numeric. The first character is a 1 and the second character is a capital letter. 3. Press Enter. The system returns to the ADD/REVISE window. Deleting MI Cancellation Data You cannot execute the delete function for MI cancellation data previously reported via MIDANET for the PC. Contact your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE for assistance. Loan-level Reports for MI Cancellation MI cancellation data is available on reports for All, Non-exception, and MI Cancellation transaction types. To access the MI cancellation reports, perform the following steps: 1. Select option 7, Loan-level Reporting. 2. Select option 4, Loan-level Reports. 3. Select option 1, Loan-level Transaction Data. January

64 Common Data Elements for Loan-level Transactions Review The previous cycle s ending unpaid principal balance (EUPB) is the beginning unpaid principal balance (BUPB) for the current accounting cycle. The principal due is the difference between the BUPB and the EUPB for the current accounting cycle. There are two types of interest: monthly interest and exception interest. Monthly interest is Reported for all active mortgages Based on a 12 month/360 day year and is always due in arrears. There are two types of exception interest: monthly exception interest and daily exception interest. Monthly exception interest may due be due for more than one month and/or may be a credit. Daily exception interest is due for liquidations. Daily exception interest is based on a 365-day year calculated from the first of the month up to but not including the exception date. What Did We Learn? Your Notes: 4-9 January 2008

65 Common Data Elements for Loan-level Transactions This Page Intentionally Left Blank January

66 Loan-level Transactions 5 Introduction Objectives This chapter explains how to report and remit specific non-exception and exception loan-level transactions. Several exercises are also included so that you can practice calculating the various components of loan-level transactions and determining when remittances are due to Freddie Mac. The exercises are date-specific, and sometimes include more than one year. Therefore, please use the following designations as you complete the exercises: Current year = xxxx One year prior to the current year = xxxw After completing this chapter, you will be able to explain how to report and remit funds for the following non-exception and exception transactions: Participation loans Newly funded mortgages Payoffs Inactivations Reinstatements Third-party foreclosure sales FHA/VA Foreclosures/Conveyances REOs 5-1 January 2008

67 Loan-level Transactions Monthly processing The following table identifies the types of transactions that you may report as you complete your monthly processing activities. We will take a closer look at each type of transaction in this chapter. Exception Code Activity Description Report activity within five business days after the Remittances are due N/A Newly funded mortgage Mortgage we funded during the current accounting cycle. Accounting cutoff By the contract specified remittance option due date Active Current or delinquent mortgage that has not been inactivated and is not in foreclosure. 40 Inactivation Mortgage in which you have initiated and notified us of foreclosure and are transferring the loans to an inactive status. N/A Inactive Mortgage you inactivated in a previous accounting cycle; no principal or interest due. 50 Reinstatement Mortgage inactivated in a previous accounting cycle, brought current. Can include mortgages that have a completed workout or loan modification. N/A By the contract specified remittance option due date 72 FHA/VA foreclosure/ conveyance 70 Transfer to REO (real estate owned) 80 Principal Balance Correction A claim has been filed with the FHA/VA on a property that did not sell at foreclosure sale. Mortgage property was acquired by us through foreclosure or deed-in-lieu of foreclosure. Mortgage on which the ending UPB is higher than the beginning UPB. No funds are due; you receive a credit for the interest advanced on the contract specified remittance option due date. By the contract-specified remittance option due date 5-2 January 2008

68 Loan-level Transactions Interim processing The following table highlights the types of transactions that you may report through out the month. We will take a closer look at each of these transactions in this chapter. Exception Code Activity Description Report activity within Remittances are due 60 Payoff - Matured Mortgage was paid in full during the accounting cycle. Two business days after the receipt of funds Within five business days of receipt of funds 61 Payoff Prepaid 65 Payoff Repurchase You are repurchasing (buying back) a mortgage with our approval. 30 days following the date of our notification requiring or approving the repurchase Within five business days of the exception date 66 Payoff ARM converting to a fixed rate Borrower is exercising the conversion option for convertible ARM sold under the repurchase program. Five business days after the exception date (exception date may be no later than the deadline specified in the contract 71 Third-party foreclosure sale - Conventional Property was purchased by a third-party at foreclosure sale. Two business days after the receipt of funds Note: The exception date is the foreclosure sale. Within five business days of receipt of funds 73 Third-party foreclosure sale FHA/VA mortgage 5-3 January 2008

69 Loan-level Transactions Participation Loans A participation loan is a mortgage where two or more investors (participants) own a partial interest. Mortgages that are 100 percent participation are known as whole loans. All examples we use are based on whole loan sales. Characteristics Investors share the income generated from the mortgage. Participation percentage is the portion of the mortgage sold to us, such as 80 or 95 percent. Participation percentages can range from 50 to 95 percent, in five percent increments. Report our share of the principal and interest and 100 percent of the EUPB. Principal Due Calculate the principal due using the following formula: BUPB EUPB = Principal Due Interest Due Calculate the monthly interest due if the loan was active as of the previous accounting cutoff using the following formula: EUPB BUPB x ANY 12 = Monthly Interest Due Report 100 percent of the EUPB for participation loans. When to Report Report within five business days after the accounting cutoff. When to Remit The remittance due date is determined by the remittance option you selected when you sold the loan to Freddie Mac. Reporting and Remitting in Future Cycles There are no special reporting or remitting requirements for future cycles. 5-4 January 2008

70 Loan-level Transactions Exercise 1: Example of a Participation Loan Using the calendars and the information provided, calculate the principal, interest and EUPB due for this participation loan. Note that May 27 th is a holiday. May S M T W T F S June S M T W T F S Activity...Borrower made their June payment for this participation mortgage. Remittance Option...Gold Freddie Mac Loan Number Accounting cycle...06/xxxx DDLPI...06/01/xxxx Participation Percentage...95% BUPB...$105, EUPB...$105, ANY...8.0% 1. How much principal due will you report and remit for the June accounting cycle? 2. How much interest due will you report and remit for the June accounting cycle? 3. What is the EUPB for the June accounting cycle? 4. When will you report the loan-level data to Freddie Mac? 5. On what date is the principal and interest due? 5-5 January 2008

71 Loan-level Transactions Newly Funded Mortgage A newly funded mortgage is a mortgage you sold to us during the current accounting cycle. We send you the Funding Detail Report via the Selling system to confirm your sale of a mortgage to us. You should use the Funding Detail Report to verify the accuracy of mortgage data to avoid errors in loan setup and reporting. Principal Due Calculate the principal due using the following formula: Funded UPB EUPB = Principal Due Interest Due Monthly Interest Due Monthly interest is always due in arrears. This means interest is for the previous calendar month. We are not due monthly interest if we did not own the mortgage during any part of the previous month. Calculate monthly interest due using the following formula: BUPB x ANY 12 = Monthly Interest Due Exception Interest Due No exception interest is due unless the mortgage has been paid in full. Reimbursement for Interest Difference on Newly Funded Mortgages Servicers are required to report and remit interest for the entire month regardless of what day of the month Freddie Mac funds the mortgage. When Freddie Mac purchases a mortgage we reimburse you for the portion of the month we did not own the mortgage. We notify you of the interest reimbursement on the Purchase Summary or Form 15. Example If a mortgage funds on May 25th, you are expected to remit one full month s interest with the June Accounting Cutoff even though we did not own the mortgage for the first 24 days of the month. At the time of funding Freddie Mac sends you the funded UPB plus 24 days of interest. The remaining six days of the monthly interest comes from the borrower. 5-6 January 2008

72 Loan-level Transactions Not owned by us Owned by us (6 days interest) 5/25 5/1 5/25 6/1 6/15 7/1 Funded Accounting Cutoff Report May s Interest EUPB Report 100 percent of the EUPB for all mortgages, even if it is a participation mortgage. When to Report The following table summarizes our reporting and remitting requirements for principal and interest on newly funded mortgages. If the funding date is between the 1 st and the 15 th of the month 16 th and the end of the month and the EUPB at the current accounting cutoff Is different from the funded balance Is not different from the funded balance (i.e., there is no principal received) Is different from the funded balance Is not different from the funded balance Report and remit Principal due and zero interest. Example: If we fund a mortgage on June 5 th for $100,000 and the EUPB is $98,000 at the June cutoff. Report PR of $2,000 and no interest. Nothing. No interest is due until the following cycle (i.e., the calendar month following the funding). If you elect to report in the funding cycle no principal or monthly interest is due. Principal reduction and one month s scheduled interest. One month s scheduled interest, even if you do not receive a payment from the borrower. 5-7 January 2008

73 Loan-level Transactions Example of Newly Funded Mortgage between the 1 st and 15 th of the Month If Freddie Mac funds a mortgage on 06/05/xxxx, you must report June s scheduled interest with the July accounting cutoff. 5/16 6/1 6/5 6/15 7/1 7/15 Mortgage funded Accounting Cutoff June Interest Report June s Interest If you choose to report with the June accounting cutoff, no scheduled interest is due. Example of Newly Funded Mortgage between the 16 th and End of the Month If Freddie Mac funds a mortgage on 06/21/xxxx, you must report June s scheduled interest with the July accounting cutoff. 5/16 6/1 6/15 6/21 7/1 7/15 Mortgage funded Accounting Cutoff June Interest Report June s Interest When to Remit The remittance due date is determined by the remittance option you selected when the mortgage was sold to Freddie Mac. Reporting and Remitting in Future Cycles There are no special reporting or remitting requirements for future cycles. 5-8 January 2008

74 Loan-level Transactions Exercise 2: Example of a Newly Funded Loan Using the calendars and the information provided, calculate the principal, interest and EUPB due for this newly funded loan. Note that May 27 th is a holiday. May S M T W T F S June S M T W T F S Activity... Borrower made their June payment for this newly funded mortgage. Remittance Option... Gold Freddie Mac Loan Number Accounting cycle... 06/xxxx DDLPI... 06/01/xxxx Funding date... 06/14/xxxx Funded balance... $105, EUPB... $105, ANY % 1. How much principal due will you report and remit for the June accounting cycle? 2. How much interest due will you report and remit for the June accounting cycle? 3. What is the EUPB for the June accounting cycle? 4. When will you report the loan-level data to Freddie Mac? 5. On what date is the principal and interest due? 5-9 January 2008

75 Loan-level Transactions Principal Balance Correction (Exception Code 80) A principal balance correction (often referred to as Negative PR) occurs when the EUPB is higher than the BUPB for reasons other than negative amortization or loan modification. Typical causes for a principal balance correction may include the following: Borrower s monthly payment is returned unpaid after you report the payment to Freddie Mac. Payment was misapplied in a previous cycle. If you reduced the principal balance of the mortgage in error in a prior accounting cycle, and the net result of reversing the payment causes the EUPB to increase, you must report the transaction as a principal balance correction. Principal Balance Corrections in Excess of $1,000 If the principal balance correction on one mortgage exceeds $1,000 you must notify your Freddie Mac Loan Portfolio Specialist. You Freddie Mac Loan Portfolio Specialist will Tell you what supporting documentation is required. Typically, the supporting documentation is a copy of the loan history or a copy of the returned payment. Contact you if we deny the transaction. If we are unable to approve the transaction, you may be required to repurchase the loan. We review each transaction individually to determine if we will approve or deny the principal balance correction. Primarily, we consider the impacts to our investor. Principal Due Calculate the principal due using the following formula: BUPB EUPB = Principal Due Example BUPB $100,000 - EUPB $102,000 Negative PR ($2,000) 5-10 January 2008

76 Loan-level Transactions 6/16 7/15 7/18 7/22 $100,000 BUPB $102,000 EUPB Gold Due Date Reporting Due Date Interest Monthly Interest Due You must report monthly interest unless the mortgage was funded in the month being reported. Use the BUPB to calculate the monthly interest due and use the EUPB (the new higher UPB) to calculate monthly interest due for the next accounting cycle. EUPB BUPB x ANY 12 = Monthly Interest Due $100,000 x 7.5% 12 = $625 Exception Interest There is no exception interest due for this transaction. Report 100 percent of the EUPB for all mortgages. When to Report Report within five business days after the accounting cutoff. When to Remit The remittance due date is determined by the remittance option you selected when the mortgage was sold to Freddie Mac. Reporting and Remitting in Future Cycles There are no special reporting or remitting requirements for future cycles January 2008

77 Loan-level Transactions Exercise 3: Example of a Principal Balance Correction Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th and July 4 th are holidays. May S M T W T F S June S M T W T F S July S M T W T F S Activity... You received June s payment from the borrower. Remittance Option... First Tuesday Freddie Mac Loan Number Accounting cycle... 06/xxxx DDLPI... 06/01/xxxx BUPB... $95, ANY % The principal portion of the payment was $ In May, you applied $96.00 in error to principal reduction that should have been applied to escrow. Reverse the $96.00 principal reduction from last month and apply this month s $83.37 principal reduction January 2008

78 Loan-level Transactions 1. How much principal due will you report and remit for the June accounting cycle? 2. How much interest due will you report and remit for the June accounting cycle? 3. What is the EUPB for the June accounting cycle? 4. When will you report the loan-level data to Freddie Mac? 5. On what date is the principal and interest due? 5-13 January 2008

79 Loan-level Transactions Payoffs (Exception Codes 60, 61, 65, and 66) A payoff is the satisfaction of a mortgage due to one of the following: Note maturity (exception code 60) Borrower prepayment (exception code 61) Repurchase (exception code 65) Borrower conversion of a convertible mortgage sold with repurchase option (exception code 66) Types of Payoffs and Their Characteristics Note Maturity Report exception code 60 when the borrower pays the last payment due on the note. The payoff date is the maturity date according to the note. Borrower Prepayment Report exception code 61 when the borrower pays off the mortgage prior to its maturity date. The payoff date you process on your system and the date you actually receive the funds may vary. The exception date must be the receipt of funds date. Example A borrower refinanced his mortgage with another institution on June 1 st but you did not receive the payoff funds until June 4 th. Use June 4 th as the payoff exception date because it is the date you actually received the funds. Prepayment Penalties For prepayment penalty mortgages, you must collect the amount of the prepayment penalty provided for in and under the conditions specified in the mortgage loan instruments and follow the requirements outlined below: For Prepayment Penalty Mortgages sold to Freddie Mac prior to October 14, 2005, you must not collect or assess a prepayment penalty if either of the following occurs: The proceeds received for the payoff are from the sale of the property. The payoff of the mortgage is received from any source, including insurance proceeds, in connection with the workout of a delinquent mortgage or due to a default under the terms of the security instrument January 2008

80 Loan-level Transactions For Prepayment Penalty Mortgages sold to Freddie Mac on or after October 14, 2005, you must not collect or assess a prepayment penalty if either of the following occurs: The proceeds received for the payoff are from the sale of the of the property and the prepayment period is more than three years. The payoff of the mortgage is received from any source, including insurance proceeds, in connection with the workout of a delinquent mortgage or due to a default under the terms of the security instrument. For additional information, see Section of the Guide. Repurchase Repurchase is buying back a mortgage due to your request or Freddie Mac s request. The exception date must be within the timeframe specified in the repurchase letter January 2008

81 Loan-level Transactions Convertible ARM A convertible adjustable rate mortgage (ACARM) is a mortgage that has a conversion option in the note that the borrower may exercise during a specific time period that to convert the terms of the note from ARM loan to a fixed rate product. The loan must have been sold to Freddie Mac under the ACARM product. When the loan is converted the loan is actually paid off and resold (under a different Freddie Mac loan number) as a fixed rate product. Prerequisite Activities for Repurchases and Conversions Before you can report a repurchase or conversion, one of the following must occur: You receive a written request from Freddie Mac to repurchase the loan. You sold the convertible mortgage to Freddie Mac with a repurchase conversion option. You are required to repurchase mortgages due to the following: Guide violations Negative principal reduction (Negative PR) is denied ARM errors ARM conversions outside of the conversion window period Unauthorized loan modification Loan was delivered twice in error ARM loan was sold in error as a fixed rate product You may request to repurchase a mortgage due to the following: You want to take the loan back into your portfolio Your Freddie Mac portfolio is minimal Servicing these loans does not meet your profit need You want to process a loan modification we could not approve You must submit a Form 105, Multipurpose Loan Servicing Transmittal, via fax, mail, or with a voluntary repurchase request January 2008

82 Loan-level Transactions Negotiated Payoffs A common negotiated payoff remittance is an accelerated payoff remittance cycle (PARC) where payoff proceeds are due two, three, or four business days following the exception date. Payoff remittances are due within five business days following the exception date unless you have a negotiated payoff remittance due date allowed in your contract. Principal Due Principal due must equal the previous cycle s EUPB. Use the following formula to calculate the principal due: BUPB EUPB (always zero on a payoff) = Principal Due Principal due is always equal to the BUPB even if you receive a monthly payment and a subsequent payoff from the borrower within the same accounting cycle. Interest Due Monthly Interest Report monthly interest for every payoff unless one of the following conditions occurs: The mortgage was inactive as of the previous accounting cycle. Although monthly interest is not due, you will owe Freddie Mac reinstatement interest if the mortgage is inactive as of the previous accounting cycle. The mortgage funded and paid off between the first and 15th of the current accounting cycle. Calculate monthly interest due using the following formula: BUPB x ANY 12 = Monthly Interest Due You owe Freddie Mac reinstatement interest if the mortgage is inactive as of the previous accounting cycle January 2008

83 Loan-level Transactions Exception Interest Due Exception interest for payoffs is based on the exception date. The following chart summarizes how to calculate the exception interest for a payoff. Payoff Date Example Total Exception Interest 1 st of the month June 1, xxxx No exception interest is due. No exception interest should be reported for June since this mortgage paid off on June 1 and interest is calculated up to, but not including, the payoff date. Remit monthly interest for May based on the mortgage s contract-specified remittance due date. 2 nd - 15 th of the month June 5, xxxx Daily exception interest (BUPB x ANY 365 x # of days) 16th - end of the month May 20, xxxx Calculated from the first of the month up to, but not including, the payoff date (4 days if interest) Exception interest on payoffs occurring between the 2nd and the 15th is always positive. Remit the daily exception interest within five business days of the payoff date with the principal due. Remit monthly interest for May based on the mortgage s contract-specified remittance due date. Total exception interest (daily exception interest less the monthly interest) Daily exception interest is equal to 19 days of interest. Exception interest on payoffs occurring between the 16th and the end of the month is always negative. Remit the total exception interest within five business days of the payoff date with the principal due. Remit the monthly interest for May based on the mortgage s contract-specified remittance due date January 2008

84 Loan-level Transactions When to Report Refer to the following table to determine when to report the payoff to Freddie Mac: Type of Payoff Note maturity (exception code 60) Borrower prepayment (exception code 61) Repurchases (exception code 65) Convertible ARMs (exception code 66) When to Report Within two business days of receipt of funds or the exception date Within five business days of the exception date. For repurchases, the exception date must be within the timeframe specified in the repurchase letter. When to Remit There are two remitting dates for payoffs. 1. Payoff Proceeds are due to us five business days after the exception date unless your contract states otherwise. 2. Monthly interest is due to us according to the mortgage s contract-specified remittance due date. You must complete your remittances via GPI no later than 9:00 p.m. Eastern time the business day prior to the remittance due date. Reporting and Remitting in Future Cycles You will not report or remit on this mortgage for future cycles January 2008

85 Loan-level Transactions Exercise 4a: Example of a Prepaid Payoff with an Exception Date Between the 2 nd and 15 th of the Month Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th is a holiday. May S M T W T F S Borrower pays off the mortgage in full. June S M T W T F S Activity...The borrower paid off (pre-paid)the mortgage in the June cycle. Remittance Option...Gold Freddie Mac Loan Number Accounting cycle...06/xxxx DDLPI...05/01/xxxx Payoff date...06/07/xxxx BUPB...$113, ANY % 1. How much principal due will you report and remit for the payoff? 2. How much monthly interest due will you report and remit for the payoff? 3. How much exception interest will you report and remit? 4. What is the total payoff proceeds? 5. When will you report the payoff to Freddie Mac? 6. On what date are the payoff proceeds due? 7. On what date is the monthly interest due? 5-20 January 2008

86 Loan-level Transactions Exercise 4b: Example of a Prepaid Payoff with an Exception Date Between the 16 th and End of the Month Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th is a holiday. May S M T W T F S Borrower pays off the mortgage in full. June S M T W T F S Activity... The borrower paid off (pre-paid) the mortgage in the June cycle. Remittance Option... Gold Freddie Mac Loan Number Accounting cycle... 06/xxxx DDLPI... 05/01/xxxx Payoff date... 05/24/xxxx BUPB... $67, ANY % 1. How much principal due will you report and remit for the payoff? 2. How much monthly interest due will you report and remit for the payoff? 3. How much exception interest will you report and remit? 4. What is the total payoff proceeds? 5. When will you report the payoff to Freddie Mac? 6. On what date are the payoff proceeds due? 7. On what date is the monthly interest due? 5-21 January 2008

87 Loan-level Transactions Exercise 4c: Example of a Prepaid Payoff with an Exception Date Between the 2 nd and 15 th of the Month: Monthly Payment and Prepaid Payoff in the Same Cycle Freddie Mac requires that you use the BUPB to calculate the payoff. Since you summarize the monthly payment and the payoff (all loan activity) into one transaction, you will have an amortization difference. Since you calculated the borrower s payoff based on a UPB slightly lower than what we have on our records, the interest you collect from the borrower at the time of the payoff is slightly lower than the payoff interest we require you to report and remit to us. This is called an amortization difference. You will need to deposit the amortization difference into your custodial account. Refer to our publication, Understanding Custodial Accounts, for more information. When you post a borrower s monthly payment and subsequently payoff the mortgage in the same cycle, calculate the borrower s payoff amount based on the principal balance of the mortgage after you subtract this month s payment. Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th is a holiday. May S M T W T F S June S M T W T F S Borrower pays June payment. Borrower pays off the mortgage in full January 2008

88 Loan-level Transactions Activity...The borrower paid off (pre-paid) the mortgage after making the June payment in the same cycle. Remittance Option...Gold Freddie Mac Loan Number Accounting cycle...06/xxxx DDLPI...06/01/xxxx Payoff date...06/14/xxxx Principal from 06/01/xxxx payment..$ BUPB...$45, ANY % 1. How much principal due will you report and remit for the payoff? 2. How much monthly interest due will you report and remit for the payoff? 3. How much exception interest will you report and remit? 4. What is the total payoff proceeds? 5. When will you report the payoff to Freddie Mac? 6. On what date are the payoff proceeds due? 7. On what date is the monthly interest due? 5-23 January 2008

89 Loan-level Transactions Inactivation (Exception Code 40) The purpose of inactivating a mortgage is to discontinue reporting and remitting interest to us on mortgages in foreclosure. You can inactivate a mortgage if all of the following conditions are met: You have initiated the foreclosure process. You have reported default action (status) code 43, Referred to Foreclosure, via Electronic Default Reporting (EDR) before you report the inactivation via loan-level reporting. Reporting default action (status) code 43 via EDR notifies Freddie Mac that you have initiated foreclosure. For additional information, refer to our Electronic Default Reporting Quick Reference Guide. The mortgage is not a guaranteed timely principal and interest mortgage. Principal Due Principal due for inactivations must be zero, as the borrower did not make a payment. Therefore, the BUPB will equal the EUPB. BUPB EUPB = Principal Due (which will always be zero for an inactivation) Interest Due Monthly Interest Due You must report monthly interest for the accounting cycle you inactivate the mortgage. Interest is due in arrears, therefore monthly interest is due in the same cycle you inactivate the mortgage. EUPB Use the following formula to calculate monthly interest due: BUPB x ANY 12 = Monthly Interest Due Exception Interest There is no exception interest due for this transaction. Report 100 percent of the EUPB for all mortgages. Report the same scheduled balance you reported the previous accounting cycle if you have mortgages under the scheduled/scheduled reporting procedure. When to Report You must report the inactivation within five business days after the accounting cutoff January 2008

90 Loan-level Transactions When to Remit The remittance due date is determined by the remittance option selected when the mortgage was sold to us. The following timeline illustrates a loan that is transferred to an inactive status during the 5/15 cycle with a Gold remittance option, ANY of 7.5% and EUPB of $100,000. May Accounting Cycle Principal Due: $0.00 Monthly Interest Due: $ EUPB: $100, /01 DDLPI 5/01 5/03 5/15 EDR Accounting Code 43 Cutoff 5/18 Remit 5/22 Report Inactivation 6/15 Reporting and Remitting in Future Cycles Once you have inactivated the mortgage, you will report it as a non-exception transaction with zero principal and interest due and 100 percent of the EUPB. Continue to report it this way until the mortgage is paid off, reinstated, sold at foreclosure sale or transferred to REO. June Accounting Cycle Principal Due: $0.00 Monthly Interest Due: $0.00 EUPB: $100, /01 5/01 5/15 5/22 Accounting Report Cutoff Inactivation 6/15 Accounting Cutoff 6/22 Report as nonexception 5-25 January 2008

91 Loan-level Transactions Exercise 5: Inactivation Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th is a holiday. May S M T W T F S June S M T W T F S Activity Remittance Option... Gold Freddie Mac Loan Number Accounting cycle... 06/xxxx DDLPI... 01/01/xxxx BUPB... $87, ANY % Borrower is now delinquent for 120 days. You have initiated foreclosure and we received the MIDANET Foreclosure Notification Transmission via your Electronic Default Reporting (EDR). 1. How much principal due will you report and remit for the June accounting cycle? 2. How much interest due will you report and remit for the June accounting cycle? 3. What is the EUPB for the June accounting cycle? 4. When will you report the loan-level data to Freddie Mac? 5. On what date is the monthly interest due? 5-26 January 2008

92 Loan-level Transactions Reinstatement (Exception Code 50) Reinstatement is the process of restoring an inactive mortgage to an active status. As part of the reinstatement, you must report and remit all interest due whether or not you received it from the borrower. You may fully reinstate a mortgage without prior approval from Freddie Mac. Reinstatement occurs when the borrower Fully reinstates the mortgage Pays off the mortgage Enters into a relief or workout option Files for bankruptcy Initiates a repayment plan (partial reinstatement) Explanation A payment is made to bring the mortgage totally current. The mortgage is paid in full (loan reinstates and payoffs in the same accounting cyclereport as one transaction). Freddie Mac has approved a relief option or workout such as a loan modification (loan must be reinstated on a loan modification). You are notified the borrower has filed bankruptcy after you have initiated the foreclosure process. A payment is made to bring the mortgage partially current and there is an approved repayment plan with Freddie Mac. Full Reinstatement Principal Due Principal due equals the difference between the EUPB at the time the mortgage was inactivated and the current EUPB. Use the following formula to calculate the principal due: BUPB EUPB = Principal Due 5-27 January 2008

93 Loan-level Transactions Interest Due Monthly Interest Due No monthly interest is due because the loan was not active as of the previous accounting cycle. The interest due for the current cycle is included in the exception interest. Monthly Exception Interest Due Monthly exception interest is equal to one month s interest for each month the mortgage was inactive. When you calculate the number of months a mortgage was inactive, remember that the interest is paid in arrears. The UPB you use to calculate exception interest must equal the UPB when you inactivated the mortgage. EUPB Use the following formula to calculate exception interest due: BUPB x ANY x # of Months Inactive 12 = Exception Interest Due Report 100 percent of the EUPB. If you have scheduled/scheduled loans, report the scheduled balance for the current month. When to Report You must report the reinstatement to us within five business days of the accounting cutoff. When to Remit The remittance due date is determined by the remittance option you selected when the mortgage was sold to Freddie Mac. Example The following timeline illustrates the reporting and remitting due dates for a mortgage that was inactivated in the April accounting cycle and reinstated in the August accounting cycle, and has a Gold remittance option. 4/01 4/15 5/1 6/1 7/1 8/01 Inactivation 8/15 Reinstatement 8/20 Remit Reinstate ment 8/22 Report Reinstatement 5-28 January 2008

94 Loan-level Transactions Report and remit exception monthly interest for April, May, June, and July. You do not owe Freddie Mac interest for March, as the interest was reported and remitted with the April cycle. August, as the interest will be reported and remitted with the September cycle. Reporting and Remitting for Future Cycles Report and remit on this mortgage as a non-exception transaction in future cycles unless the reinstatement was part of a liquidation January 2008

95 Loan-level Transactions Exercise 6: Example of a Full Reinstatement Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th is a holiday. May S M T W T F S June S M T W T F S July S M T W T F S Activity... Borrower made seven payments to bring the inactive mortgage totally current (full reinstatement). Remittance Option... First Tuesday Freddie Mac Loan Number Accounting cycle... 06/xxxx DDLPI... 11/01/xxxw (October interest was paid by borrower) Inactivation cycle... 03/xxxx (You remitted February s interest) Total time inactive... 3 months (March, April and May) Principal collected... $ BUPB... $48, Ending UPB... $48, ANY % 5-30 January 2008

96 Loan-level Transactions 1. How much principal due will you report and remit for the June accounting cycle? 2. How much interest due will you report and remit for the June accounting cycle? 3. What is the EUPB for the June accounting cycle? 4. When will you report the loan-level data to Freddie Mac? 5. On what date is the principal and interest due? 5-31 January 2008

97 Loan-level Transactions Third-Party Foreclosure Sale (Exception Code 71 for Conventional Mortgages; Exception Code 73 for FHA/VA Mortgages) A third party is someone other than the mortgagee, mortgagor, or their representative. A third-party foreclosure sale occurs when a third party purchases the property at the foreclosure sale. The exception date you report on your loan-level transaction is the foreclosure sale date. Notify us of a third party foreclosure sale by sending the MIDANET Notification of Foreclosure Sale/DIL transmission. We must receive the notification no later than one business day after the foreclosure sale. Principal Due Use the following formula to calculate the principal due: BUPB EUPB = Principal Due Interest Due Monthly Interest Due (Due on Active Loans Only) Report monthly interest if the mortgage was active as of the previous accounting cutoff. No monthly interest is due if the mortgage was inactive as of the previous accounting cutoff. BUPB x ANY 12 months = Monthly Interest Due Monthly Exception Interest (Due on Inactive Loans Only) Report monthly exception interest if the mortgage was inactive as of the previous accounting cutoff. No monthly exception interest is due if the mortgage was active the previous accounting cutoff. BUPB x ANY x # of months from month inactivated up to, but not including, exception month (foreclosure sale month) 12 months Daily Exception Interest BUPB x ANY x # of days 365 Days = Daily Exception Interest 5-32 January 2008

98 Loan-level Transactions Total Exception Interest for Active Loans Foreclosure Sale Date Total Exception Interest Due 1 st of the month No exception interest is due. 2 nd through the 15 th of the month Total exception interest = Daily exception interest 16 th through the end of the month Total exception interest = Daily exception interest Monthly interest Total Exception Interest for Inactive Loans Foreclosure Sale Date Total Exception Interest Due 1 st of the month No exception interest is due. 2 nd through the 15 th of the month Total exception interest = Daily exception interest + Monthly exception interest 16 th through the end of the month Total exception interest = Daily exception interest + Monthly exception interest Total Proceeds EUPB Calculate the total proceeds due using the following formula: Principal Due + Total Exception Interest = Total Proceeds The EUPB for all third-party foreclosure sales is zero. When to Report Proceeds Received Same Cycle If the receipt of funds occurs in the same cycle as the foreclosure sale, report the third party foreclosure sale within two business days after the receipt of proceeds. Proceeds Received in a Later Cycle Typically, you will not receive the proceeds in the same cycle that the foreclosure sale occurs. If the receipt of funds occurs in a later cycle, take the following actions: Report the loan as a non-exception transaction each cycle until you receive the proceeds. Report the third party foreclosure sale within two business days after you receive the proceeds January 2008

99 Loan-level Transactions If the loan, is active you will receive credit for the interest you advanced for the cycles after the foreclosure sale occurred until the date you received the proceeds. Use the following formula to calculate the credit for interest advanced: BUPB x ANY x # of months from the foreclosure sale date cycle to the cycle during which you received the proceeds 12 months = Credit for Interest Advanced Calculate total exception interest using the following formula: (Credit for Interest Advanced) + Daily Exception Interest = Total Exception Interest Calculate total proceeds using the following formula: When to Remit Principal Due + Total Exception Interest = Total Proceeds The proceeds are due to Freddie Mac within five business days of receipt of funds. Reporting and Remitting for Future Cycles Do not report or remit on this mortgage for future cycles. Example The following timeline illustrates the reporting and remitting requirements for a mortgage inactivated with the May accounting cycle, the third-party foreclosure sale occurred August 11 th, and you received the foreclosure proceeds on October 5 th. 8/12 Notification of Foreclosure Sale Results/DIL 10/12 Proceeds Remittance Due via GPI 1/01 DDLPI 5/01 Cycle Inactive 8/01 8/11 Foreclosure Sale Date 10/05 Receive Foreclosure Proceeds 10/07 Loan Level Transaction (ie., via MIDANET ) Report the foreclosure sale within two business days after October 5 th with an exception date of August 11 th January 2008

100 Loan-level Transactions Exercise 7: Third Party Foreclosure Sale for an Inactive Loan Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th is a holiday. May S M T W T F S June S M T W T F S Activity... Proceeds have been received for a third-party foreclosure sale. Inactivation cycle... 02/xxxx DDLPI... 11/01/xxxw Foreclosure Proceeds Receipt Date... 6/13/xxxx Foreclosure Sale Date..6/06/xxxx Accounting cycle to report activity...06/xxxx ANY % BUPB... $75, Remittance Option... Gold 1. How much principal due will you report and remit for the June accounting cycle? 2. How much monthly interest due will you report and remit for the June accounting cycle? 3. How much exception interest will you report and remit? 4. What is the total proceeds amount due? 5. What is the EUPB? 5-35 January 2008

101 Loan-level Transactions 6. When will you report the third party foreclosure sale to Freddie Mac? 7. When are the total proceeds due to Freddie Mac? 8. When is the monthly exception interest due to Freddie Mac? 5-36 January 2008

102 Loan-level Transactions FHA/VA Foreclosure/Conveyance (Exception Code 72) An FHA/VA foreclosure/conveyance occurs when a property with an FHA or VA mortgage goes into foreclosure and is not sold to a third party at the foreclosure sale. When an FHA/VA foreclosure/conveyance occurs, you must take the following actions: Notify us of the foreclosure sale by sending the MIDANET Notification of Foreclosure Sale/DIL (Deed-in-Lieu) transmission. We must receive the notification no later than one business day after the foreclosure sale. You must also file a claim with the FHA or VA in Freddie Mac s name to convey the property to them. FHA: The claim must be filed within 15 days after the foreclosure sale. VA: The claim must be filed as soon as you clear the marketable title. Principal Due Report and remit zero principal. Interest Due Monthly Interest Report monthly interest if the mortgage was active during the previous accounting cycle. No monthly interest is due if the mortgage was inactive during the previous accounting cycle. Generally, you will not owe monthly interest since most mortgages that go into foreclosure are inactive as of the previous accounting cutoff. Calculate monthly interest due using the following formula: BUPB x ANY 12 months = Monthly Interest Due Exception Interest Exception interest is equal to the total monthly interest you advanced to us during the delinquency period. The delinquency period begins with the due date of the last paid installment (DDLPI) up to the month the mortgage was inactivated or the month the foreclosure sale occurred. The exception interest is a credit to you and reduces your remittance to Freddie Mac. Calculate exception interest using the following formula: BUPB x ANY x Number of months from DDLPI through the end of the month prior to the inactivation month or the month the foreclosure sale occurred 12 months = Exception interest due 5-37 January 2008

103 Loan-level Transactions EUPB Always report 100% of the EUPB. When to Report FHA/VA Foreclosure/Conveyance Report the FHA/VA Foreclosure/Conveyance through the loan-level transaction within five business days after the accounting cutoff in which the foreclosure sale date occurred. When to Remit FHA/VA Foreclosure/Conveyance The remittance due date is determined by the remittance option selected when the mortgage was sold to us. The exception interest reflects funds due you. Therefore, you may reduce your GPI remittance for funds due on the remittance due date. Remitting for Future Cycles FHA/VA Foreclosure/Conveyance Do not report or remit on this mortgage for future cycles. Example The following timeline illustrates the reporting and remitting requirements for a mortgage with a DDLPI of 1/01, inactivated with the May accounting cycle. You advanced interest to us for the months of January, February, March, and April. Therefore, you will be credited 4 months of interest. The foreclosure sale occurred August 11. 8/12 Notification of Foreclosure Sale Results/DIL 8/20 Credit of 4 months interest 1/01 DDLPI 5/01 Cycle Inactive 8/01 8/11 8/15 Foreclosure Accounting Sale Date Cutoff 8/20 8/22 Report FHA/VA Foreclosure/ Conveyance 5-38 January 2008

104 Loan-level Transactions REO (Exception Code 70) A transfer to REO (Real Estate Owned) occurs when a property is not sold at the foreclosure sale and we take title of the property. When we acquire the property we reimburse you for the interest you reported and remitted to us when the mortgage was delinquent. You must notify us of the results of the foreclosure sale within one business day of the foreclosure sale date using the MIDANET Foreclosure Sale/DIL (Deed in Lieu) transmission before you can transfer a conventional mortgage to REO. Principal Due Report and remit zero principal. Interest Due Monthly Interest Report monthly interest if the mortgage was active during the previous accounting cycle. No monthly interest is due if the mortgage was inactive during the previous accounting cycle. Generally, you will not owe monthly interest since most mortgages that go into foreclosure are inactive as of the previous accounting cutoff. Calculate monthly interest due using the following formula: BUPB x ANY 12 months = Monthly Interest Due Exception Interest Exception interest is equal to the total monthly interest you advanced to us during the delinquency period. The delinquency period begins with the due date of the last paid installment (DDLPI) up to the month the mortgage was inactivated or the month the foreclosure sale occurred. The exception interest is a credit to you and reduces your remittance to Freddie Mac. Calculate exception interest using the following formula: BUPB x ANY x Number of months from DDLPI through the end of the month prior to the inactivation month or the month the foreclosure sale occurred 12 months = Exception interest due 5-39 January 2008

105 Loan-level Transactions EUPB Always report 100% of the EUPB. When to Report REO Report the REO through the loan-level transaction within five business days after the accounting cutoff in which the foreclosure sale date occurred. When to Remit REO The remittance due date is determined by the remittance option selected when the mortgage was sold to us. The exception interest reflects funds due you. Therefore, you may reduce your GPI remittance for funds due on the remittance due date. Remitting for Future Cycles REO Do not report or remit on this mortgage for future cycles. Example The following timeline illustrates the reporting and remitting requirements for a mortgage with a DDLPI of 1/01, inactivated with the May accounting cycle. You advanced interest to us for the months of January, February, March, and April. Therefore, you will be credited 4 months of interest. The foreclosure sale occurred August 11. 8/12 Notification of Foreclosure Sale Results/DIL 8/20 Credit of 4 months interest 1/01 DDLPI 5/01 Cycle Inactive 8/01 8/11 8/15 Foreclosure Sale Accounting Date Cutoff 8/20 8/22 Report REO 5-40 January 2008

106 Loan-level Transactions Exercise 8: REO Using the calendars and the information provided, calculate the principal, interest and EUPB due for this loan. Note that May 27 th is a holiday. May S M T W T F S June S M T W T F S Activity Remittance Option...Gold Freddie Mac Loan Number Accounting cycle... 06/xxxx The foreclosure sale is complete; we have acquired the property and it will be transferred to REO in the current accounting cycle. DDLPI... 08/01/xxxw (July interest was paid by borrower) Number of months delinquent prior to inactivation...6 months (August, September, October, November, December and January) Inactivation cycle date...02/xxxx (January interest was sent to us) Foreclosure sale date...05/24/xxxx UPB...$79, ANY % 1. How much principal due will you report and remit for the June accounting cycle? 2. How much monthly interest due will you report and remit for the June accounting cycle? 3. How much exception interest will you report and remit? 4. When will you report the REO to Freddie Mac? 5. When will the credit for interest advanced be posted to your account? 5-41 January 2008

107 Loan-level Transactions Review Exercise 1: Use the following calendars to complete the exercises on the following pages. When you are finished, refer to the Appendix A, Answers to Exercises, in this manual to check your work. Note that May 27 th and July 4 th are holidays. May S M T W T F S June S M T W T F S July S M T W T F S January 2008

108 Loan-level Transactions Example 1: Freddie Mac funds a new mortgage with the Gold remittance option on 05/13/xxxx. The first payment from the borrower is due on 07/01/xxxx. Example 2: 1. What is the first cycle you will be required to report this mortgage to Freddie Mac? 2. On what day is the remittance for May s interest due to Freddie Mac? A borrower made a payment that was misapplied to the UPB during the May accounting cycle. You correct the mistake in the June accounting cycle by reporting a principal balance correction. The mortgage was sold to us with the First Tuesday remittance option. Example 3: 1. On what day is the remittance due for the principal balance correction? A borrower paid off (pre-paid) his mortgage on 05/30/xxxx. The DDLPI of the mortgage prior to the payoff was 05/01/xxxx. The mortgage was sold to us with the Gold remittance option. 1. On what date will the remittances for the following be due to Freddie Mac? Payoff proceeds: Monthly interest: 2. By what date must you report the payoff to Freddie Mac? 5-43 January 2008

109 Loan-level Transactions Example 4: A borrower paid off (pre-paid) her mortgage on 07/12/xxxx. The DDLPI of the mortgage prior to the payoff was 07/01/xxxx. The mortgage was sold to us with the Gold remittance option. Example 5: 1. On what date will the remittances for the following be due to Freddie Mac? Payoff proceeds: Monthly interest: 2. By what date must you report the payoff to Freddie Mac? A delinquent borrower paid off (pre-paid) his mortgage on 05/20/xxxx. The last payment the borrower made before the payoff was on 01/02/xxxx and the loan was inactivated with the April cycle. The mortgage was sold to us with the First Tuesday remittance option. Example 6: 1. On what date will the remittances for the following be due to Freddie Mac? Payoff proceeds: Reinstatement Exception Interest: Monthly interest: 2. By what date must you report the payoff to Freddie Mac? The last payment a borrower made was on 03/01/xxxx. You have begun foreclosure proceedings on the mortgage and want to inactivate the mortgage during the June accounting cycle. The mortgage was sold to us with the First Tuesday remittance option. 1. By what date must you report the inactivation to Freddie Mac? 2. Is monthly interest due to Freddie Mac for the June accounting cycle? If so, on what date is the interest due? If not, why? 5-44 January 2008

110 Loan-level Transactions Example 7: A borrower whose mortgage has been delinquent since 01/01/xxxx comes into your office on 06/01/xxxx and brings the mortgage current. You inactivated the mortgage during the May xxxx accounting cycle. The mortgage was sold to us with the Gold remittance option. Example 8: 1. By what date must you report the reinstatement to Freddie Mac? 2. On what date is the remittance for the delinquent principal due to Freddie Mac? 3. On what date is the remittance for the reinstatement interest due to Freddie Mac? A mortgage has been delinquent since 11/01/xxxx (the previous year). You initiated foreclosure in February and inactivated the mortgage during the 03/xxxy accounting cycle. The property did not sell at foreclosure sale on 05/24/xxxy. The mortgage was originally sold to us with the First Tuesday remittance option. 1. By what date must you report the REO to Freddie Mac? 2. When will you receive the credit for interest advanced on your Seller/Servicer Remittance Analysis? 5-45 January 2008

111 Loan-level Transactions Review Exercise 2: Use the information provided, complete the exercises on the following pages. When you are finished, refer to the Appendix A, Answers to Exercises, in this manual to check your work. Example 1: A borrower makes their monthly payment. The following information has been posted to the mortgage history. Payment received 06/03/xxxx: $1, Principal paid: $ Total interest paid at the note rate: $ Principal balance remaining: $143, The borrower is paying a note rate of 7.50%. The ANY for the mortgage is 7.25%. How much principal and interest is due to Freddie Mac? Principal reduction Monthly interest Example 2: A borrower paid off (pre-paid) the outstanding balance of her mortgage on 06/12/xxxx. The balance on 06/12/xxxx is $131, The note rate is 10.00% and the ANY is 9.625%. How much principal and interest is due to Freddie Mac? What is the ending UPB? Principal reduction Monthly interest Exception interest Ending UPB 5-46 January 2008

112 Loan-level Transactions Example 3: A borrower does not make his monthly payment during June. The outstanding balance of the mortgage as of 06/01/xxxx is $90, with a note rate of 6.25%. Your servicing fee is.25%. How much principal and interest is due to Freddie Mac? Principal reduction Monthly interest Example 4: On 06/03/xxxx a borrower brings their mortgage current. The DDLPI of the mortgage was 11/01/xxxw (the previous year). You inactivated the mortgage during the 02/xxxw accounting cycle at a UPB of $203, The ANY is 8.35%. How much interest is due to Freddie Mac? Exception interest Example 5: An inactive mortgage was sold through a third-party foreclosure sale on 06/13/xxxx. The mortgage has been inactive since the 01/15/xxxx accounting cutoff at a balance of $71, The ANY is 8.90%. How much principal and interest is due to Freddie Mac? What is the ending UPB? Principal reduction Exception interest Ending UPB Example 6: An FHA/VA mortgage is not sold to a third party at the foreclosure sale on 06/03/xxxx. The DDLPI is 11/01/xxxw (previous year). The mortgage was inactivated in the 03/xxxw cycle at a UPB of $68, The ANY is 7.75%. How much interest is due to Freddie Mac? Exception interest 5-47 January 2008

113 Loan-level Transactions Example 7: The DDLPI on the mortgage is 12/01/xxxw (the previous year). The mortgage was inactivated in the 04/xxxx accounting cycle at a UPB of $33, The ANY for the mortgage is 8.00%. You report the mortgage to us for the 06/xxxx cycle as a transfer to REO. How much interest is due to Freddie Mac? Exception interest Example 8: A borrower makes their monthly payment on 05/01/xxxx for $ ($65.78 principal, $ interest) reducing the UPB to $98, The note rate is 9.25% and the servicing fee is.35%. During the next cycle s reporting, you notice that the borrower s $65.78 principal payment was incorrectly posted to the mortgage as a $ principal payment, incorrectly reducing the UPB to $97, The borrower does not make a payment for the 06/xxxx accounting cycle. How much principal and interest is due to Freddie Mac? What is the ending UPB? Principal reduction Monthly interest Ending UPB 5-48 January 2008

114 Loan-level Transactions Review There are various reporting and remitting due dates depending on the type of loan level transaction. A Participation loan is a mortgage where two or more investors own a partial interest. A newly funded mortgage is a mortgage you sold to us during the current accounting cycle. Although you are required to report one month of interest to Freddie Mac for the month we funded the loan, we reimburse you for the portion of the month we did not own the mortgage. Principal Balance Correction (exception code 80) occurs when the EUPB is higher than the BUPB for reasons other than negative amortization or loan modification. You must notify your Freddie Mac Loan Portfolio Specialist if a principal balance correction exceeds $1,000. A payoff is the satisfaction of a mortgage due to: Note maturity (exception code 60) Borrower prepayment (exception code 61) Repurchase (exception code 65) Borrower conversion of a convertible mortgage sold with a repurchase option (exception code 66) Exception interest for payoffs is based on the exception date. You must report prepaid or matured payoffs within 2 business days of the exception date. You must report other payoffs within 5 business days of the exception date. The purpose of an inactivation (exception code 40) is to discontinue reporting and remitting interest to us on a mortgage in foreclosure. Reinstatement (exception code 50) is the process of restoring an inactive mortgage to an active status. A third-party foreclosure sale (exception code 71, 73) occurs when someone other than the mortgagee, mortgagor or his or her representative purchases the property at the foreclosure sale. An FHA/VA foreclosure/conveyance (exception code 72) occurs when a property with an FHA or VA mortgage goes into foreclosure and is not sold to a third party at the foreclosure sale. We reimburse you for the interest you reported and remitted to us when the mortgage was delinquent January 2008

115 Loan-level Transactions A transfer to REO (exception code 70) occurs when a property is not sold at the foreclosure sale and we take title of the property. We reimburse you for the interest you reported and remitted to us when the mortgage was delinquent. What Did We Learn? Your Notes: 5-50 January 2008

116 6 The Seller/Servicer Remittance Analysis Introduction This chapter introduces and provides detailed information on the Seller/Servicer Remittance Analysis. Objectives After completing this chapter, you will be able to understand the information reflected on the Seller/Servicer Remittance Analysis. 6-1 January 2008

117 The Seller/Servicer Remittance Analysis What is the Seller/Servicer Remittance Analysis? The Seller/Servicer Remittance Analysis (also called the Cash Statement ) is a summary report Freddie Mac sends you that can help you manage and monitor your remittance process. The report summarizes the following: Daily remittances via Global Payments, Inc. (GPI) and the dates your remittances are available to us Total amounts due based on what we process for your loan level transactions and any adjustments Beginning and ending cumulative balances, and your cumulative overage/shortage balance How to Obtain the Remittance Analysis You may view, print, or download the following reports via Investor Accounting Manager SM (IAM): Preliminary report Final report Revised report If you do not have access to IAM, contact your Loan Portfolio Specialist. Preliminary Report A preliminary Remittance Analysis is available at any time until the final statement for the cycle is produced. For example, if you generate the November xxxx Remittance Analysis on November 6, xxxx, you will see the remittances we received and the transactions we processed as of November 5, xxxx. Freddie Mac updates the preliminary report on a daily basis to reflect the remittances we receive and transactions we process as of the business day before you order the report. The Preliminary Remittance Analysis report should not be read as a final report and it cannot solely determine your remittances due Freddie Mac. Final Report A final Seller/Servicer Remittance Analysis is available the first week in the calendar month following the accounting cutoff. For example, you will receive the November Seller/Servicer Remittance Analysis the first week in December. January

118 The Seller/Servicer Remittance Analysis Revised Report The revised Remittance Analysis is available when changes are made after the final Remittance Analysis has been generated and the cash cycle has closed. The revised Remittance Analysis reflects the most current information and overrides the Final report. 6-3 January 2008

119 The Seller/Servicer Remittance Analysis Sample Seller/Servicer Remittance Analysis Review the sample Seller/Servicer Remittance Analysis (or Cash Statement ) below and familiarize yourself with the content (headers, fields). The Amount Received and Amount Due sections are split into multiple descriptive categories. A field at the top of the form indicates whether the information is preliminary, final, or revised. Servicer Number: Servicer Name: Servicer Contact Name: Freddie Mac Seller/Servicer Remittance Analysis 10/16/XXXX through 11/15/XXXX Last Updated: 11/30/XXXX 12:00:00 AM Final Date P&I, Adj, Int. Advanced Amount Received P/O, TP FCL. Corrections P&I, Int. Advanced Amount Due P/O, TP FCL Adj. Adj. Code Balance Int. Reimbursement 100, Oct , Oct , Oct 18 15, , Oct Oct Oct Oct Oct Oct Oct Oct , (120,000.00) Oct (120,000.00) Oct (120,000.00) Oct , Oct Oct Nov Nov Nov Nov Nov Nov , (300,000.00) Nov 7 300, Nov Nov Nov Nov Nov Nov Nov Nov Totals 315, , , , Total Interest Reimbursement Due to Freddie Mac calculated at (Prime Rate 8.5% plus 3%) / January

120 The Seller/Servicer Remittance Analysis Understanding the Header Section The table below describes the content in the header row on the Seller/Servicer Remittance Analysis. Header Section Servicer Number: Servicer Name: Servicer Contact Name: Freddie Mac Seller/Servicer Remittance Analysis 10/16/XXXX through 11/15/XXXX Last Updated: 11/30/XXXX 12:00:00 AM Final Field Name Servicer Number: Servicer Name: Description Your Servicer Number Your Servicer Name Servicer Contact Name: Freddie Mac Seller/Servicer Remittance Analysis Last Updated: (date) Final* *Preliminary *Revised The Contact Name you want on our database Name of Report The latest date that the Remittance Analysis was updated for any transactions or revisions. The Remittance Analysis is produced upon the cash cycle closing at the end of the accounting month. A Preliminary Remittance Analysis is available at any time until the final statement for the cycle is produced. The revised Remittance Analysis is produced when changes are made after the final Remittance Analysis has been generated and the cash cycle has closed. You may view, print, or download the Final, Preliminary, or Revised Remittance Analysis using Investor Account Manager SM. 6-5 January 2008

121 The Seller/Servicer Remittance Analysis Understanding the Date Section The table below describes the content of the fields in the Date column on the Seller/Servicer Remittance Analysis. Date Section Date Oct 16 Oct 17 Oct 18 Oct 19 Oct 20 Oct 21 The fields in the Date column refer to the dates covered on the Remittance Analysis. Field Name Date Description Lists the month and day of your transaction activity. The time period covered is from the 16 th of one month through the 15 th of the next month. January

122 The Seller/Servicer Remittance Analysis Understanding the Amount Received Section The table below describes the content of the fields in the Amount Received columns on the Seller/Servicer Remittance Analysis. Amount Received Section P&I, Adj, Int. Advanced Amount Received P/O, TP FCL. Corrections , The Amount Received fields show the cash you remitted and, if applicable, any cash adjustments we have made (corrections column). Field Name Full Field Name Description P&I, Adj, Int. Advanced Principal and Interest, Adjustments, Interest Advanced This column contains your monthly remittances (GPI will prompt you to enter a non-payoff amount) for the following: Monthly Interest Principal (Including Curtailments And Negative Principal Reduction) Reductions In Negative Amortization Reinstatement Interest Interest Advanced (REO) Adjustments P/O, TP FCL Payoff Proceeds, Third-Party Foreclosure Sale Proceeds This column contains remittances (GPI will prompt you to enter a payoff amount) for the following: Payoff proceeds Third-party foreclosure sale proceeds Corrections Corrections This column contains adjustments that we make to remittances 6-7 January 2008

123 The Seller/Servicer Remittance Analysis Remitting Funds to Freddie Mac You may remit funds to Freddie Mac by either of the following: Timing Touch-tone phone following the voice prompts Online via Investor Accounting Manager SM (IAM) Funds must be available to Freddie Mac on or before the remittance due date. Funds are due to Freddie Mac the preceding business day if the remittance due date falls on a non-business day. You must complete your remittance no later than 9:00 p.m. Eastern time, the business day prior to the remittance due date. Freddie Mac will debit your account the business day after you complete the remittance process. January

124 The Seller/Servicer Remittance Analysis Understanding the Amount Due Section The Amount Due can change throughout the cycle based on additional transactions processed and adjustments made to your account. If we have not processed a transaction due to an outstanding edit, the amount due will not reflect this transaction until the edit is cleared. The table below describes the content of the fields in the Amount Due column on the Seller/Servicer Remittance Analysis. Amount Due Section P&I, Int. Advanced Amount Due P/O, TP FCL Adj. Adj. Code , , The Amount Due fields show the amounts that we expect you to remit. (We post amounts due based on what we process via your loan level transactions reported). Field Name Full Field Name Description P&I, Int. Advanced P/O, TP FCL Principal and Interest, Interest Advanced Payoff Proceeds, Third-Party Foreclosure Sale Proceeds This column contains amounts due based on the contracted monthly remittance due date you select when you sell a loan to Freddie Mac: Monthly Interest Principal due (Including Curtailments And Negative Principal Reduction) Reductions In Negative Amortization Reinstatement interest Interest advanced (REO) This column contains amounts due for liquidations: Payoff proceeds Third-party foreclosure sale proceeds Adj. Adjustments This column contains adjustments we have made. These will be posted to the remittance due date of the adjustment. For example: Charge-off adjustments RTC minority principal and interest billings Transfer of servicing reallocations 6-9 January 2008

125 The Seller/Servicer Remittance Analysis Field Name Full Field Name Description Adj. Code Adjustment Code This column contains the adjustment code that corresponds to an adjustment amount. January

126 The Seller/Servicer Remittance Analysis Posting Monthly Transaction Amounts Due Monthly transaction amounts are due based on the remittance option selected when you sell a loan to Freddie Mac. The remittance option will be reflected on the Funding Detail report we send you at the time of funding. The following are the primary remittance options available, their corresponding due dates and examples: Remittance Option Gold Due Date Three business days following the accounting cutoff unless the contract specifies otherwise. Example If the accounting cutoff date is August 15 th, complete remittance by 9:00 p.m. Eastern time the business day prior to the following due date August 18 th (remit on August 17 th ) Accelerated Remittance Cycle (ARC) Three business days following the accounting cutoff unless the contract specifies otherwise. August 18 th (remit on August 17 th ) First Tuesday First Tuesday of the calendar month following the accounting cutoff. September 5 th (remit on September 4 th ) 6-11 January 2008

127 The Seller/Servicer Remittance Analysis Remittance Option Super Accelerated (Super ARC) Due Date Contract specified calendar day between the 1st and 15th of the month. Example If the accounting cutoff date is August 15 th, complete remittance by 9:00 p.m. Eastern time the business day prior to the following due date The contract specified the 5 th, which is a Saturday and a non-business day. Therefore the funds are due on the previous business day, August 4 th. Remit funds on August 3 rd. Curtailments on Super ARC Loans If a borrower makes a curtailment on a Super ARC loan, remit the scheduled/scheduled payment only. A curtailment is due on the contract-specified calendar day the following cycle, however you must: Example Report the curtailment principal along with your scheduled/scheduled payment. Complete and submit to your Freddie Mac Loan Portfolio Specialist Form 1100 Supplemental Report of Curtailments for Super ARC, for the curtailment amounts. Your Freddie Mac Loan Portfolio Specialist will post the curtailment amount due the following cycle using the Form A curtailment of $1000 was received during the August cycle for a Super ARC with the contract-specified 5th calendar day. The scheduled/scheduled payment is $900. You are responsible for the following: Report the $1000 curtailment along the with the scheduled/scheduled payment of $900 with the August cycle. Remit the $900 only, by August 4th, xxxx before 9:00 pm Eastern time (the 5th is a Saturday therefore, the funds are due Friday, the 4th). January

128 The Seller/Servicer Remittance Analysis Complete the Form 1100 reporting the $1000 curtailment and fax to your Freddie Mac Loan Portfolio Specialist. The $1000 will be posted as due the following cycle. Remit the $1000 August curtailment along with your September scheduled/scheduled payment, by September 1st, xxxx before 9:00 pm Eastern time (September 2 nd and 3 rd are Saturday and Sunday, and the 4 th is a holiday, all are non-business days). The funds are due Freddie Mac by September 5th, xxxx. You may have more than one remittance option in your portfolio. The following timeline summarizes all of the remittance options for the August xxxx cycle. 8/15 Accounting Cutoff 7/16 8/1 8/5 8/18 9/1 9/7 Super ARC August Cycle ARC/Gold August Cycle Remit First Tuesday for the August Cycle 6-13 January 2008

129 The Seller/Servicer Remittance Analysis Proceeds Amounts Due to Freddie Mac Transaction Payoffs When Proceeds are Due Within five business days of the exception date, unless it is a negotiated payoff. Example: A payoff with an exception date of 10/24/xxxx is due to Freddie Mac 10/31/xxxx. Your remittance must be completed by 9:00 p.m. Eastern time 10/30/xxxx. Third-party Foreclosure Sales Within five business days of the receipt of funds. When you report the sale to Freddie Mac, use the date of the sale of the exception date. Example: A third-party foreclosure sale with an exception date of 08/23/xxxx and funds received on 10/29/xxxx are due Freddie Mac 11/05/xxxx. Your remittance must be completed by 9:00 p.m. Eastern time 11/02/xxxx (November 3 and 4 are Saturday and Sunday, nonbusiness days). Third-party foreclosure sale and payoffs differ in that the exception date for the foreclosure sale is different than the receipt of funds. Because you do not report the date of receipt of funds, we post third-party foreclosure sales five business days after the accounting cutoff. You must remit the funds within five business days of the receipt of funds. January

130 The Seller/Servicer Remittance Analysis Understanding the Balance and Interest Reimbursement Columns The table below describes the content of the fields in the Balance and Int. Reimb. columns on the Seller/Servicer Remittance Analysis. Balance Column Balance Int. Reimburs ement 100, , (120,000.00) (120,000.00) (120,000.00) Int. Reimbursement. Column These are the two columns on the right side of the Remittance Analysis. Field Name Full Field Name Description Balance Balance The first amount in this column represents your beginning cumulative balance. The subsequent amounts represent your total cumulative daily balance during the accounting cycle. Interest Reimbursement Interest Reimbursement The daily balance is computed by taking the previous day s daily balance, adding the total remittances for the day, and subtracting the amounts due for day. This column contains the amount of interest that you need to reimburse us because of a shortage in your daily cash balance. Interest reimbursement is only calculated when a cash balance is negative and will be reflected on your Servicer Billing Statement. The formula used to calculate interest reimbursement is: Daily Balance (Prime plus 3%) Interest Rate / January 2008

131 The Seller/Servicer Remittance Analysis Cumulative Balance The cumulative balance tells you the cumulative difference between what you have remitted to Freddie Mac and what we are posting due. Positive and Negative Balances The cumulative balance tells you how well you are managing your remittance process. Your goal is to maintain a zero balance by remitting amounts due in a timely manner and maximizing your float. To fully understand your daily and total balance, you may want to reconcile your Servicer Remittance Analysis to your Monthly Account Statement. You can also analyze your remittances against Amounts Due and Amounts Received and identify any differences. Positive Balances A positive balance on any date on your Servicer Remittance Analysis indicates that your total remittances to date are more than your total Amounts Due to date. Positive balances occur when you over remit or remit funds early. Negative Balances A negative balance on any date on your Servicer Remittance Analysis indicates that your total remittances to date are less than your total Amounts Due to date. It does not always mean that you were short on that particular day s remittance. The shortage may have been offset by a prior remittance. Negative balances occur when you under remit or remit funds late. Always track your remittance. For each remittance, record the following: Amount Date and time Reason (monthly P&I, payoff, third-party foreclosure sale, etc.) Loan number GPI verification code January

132 The Seller/Servicer Remittance Analysis Correcting a Positive or Negative Balance To correct a positive balance, you may deduct the amount of overage from your next remittance to us. You will need to verify that the overage is in fact a true overage as opposed to a timing difference. Example A payoff remitted several days before the actual due date will reflect as an overage on your remittance analysis. Once we post the payoff as due, the overage will no longer be there. This would be an overage due to timing. To correct a negative balance, you will need to remit the additional funds immediately. Why Analyze an Overage or Shortage Balance? Identifying what comprises a daily cash overage or shortage is sound cash management practice. Analyzing your Servicer Remittance Analysis enables you to do the following: Determine if errors have occurred. Take precise corrective action to avoid paying additional fees. Positively impact your Performance Profile. Identify any system problems that may be reoccurring January 2008

133 The Seller/Servicer Remittance Analysis Understanding the Footer Section The table below describes the content of footer section on the Seller/Servicer Remittance Analysis. Footer The footer section is located on the bottom of the Remittance.Analysis. Adj. Code Column (Total) Balance Column (Total) Int. Reimbursement Column (Total) Totals 315, , , , Total Interest Reimbursement Due to Freddie Mac calculated at (Prime Rate 8.5% plus 3%) / Amount Received Columns (Totals) Amount Due Columns (Totals) Total Interest Reimbursement Due to Freddie Mac calculated at Prime Rate plus 3.00% Footer Field Description Amount Received Column Totals Amount Due Column Totals Adj. Total Balance Column Total Int. Reimb. Column Total Total Interest Reimbursement Due to Freddie Mac calculated at Prime Rate plus 3.00% Sum of the amount received column Sum of the amount due column Sum of the adjustment column The total field in the Balance column reflects the ending daily cash balance as of the accounting cutoff. The Total Interest Reimbursement represents the sum of the daily interest reimbursement amounts in the column. The Total Interest Reimbursement Due to Freddie Mac calculated at Prime Rate plus 3.00% amount is the interest reimbursement amount due Freddie Mac as a result of shortages in your daily cash position. This amount will be reflected on your Servicer Billing Statement. January

134 The Seller/Servicer Remittance Analysis Understanding the Footnotes The table below describes footnotes that may appear on the Seller/Servicer Remittance Analysis on the bottom of the page. Footnote Remittances that appear in the Amount Received column are based on codes you used while making your remittance. Freddie Mac will not make corrections to any remittances incorrectly coded since it does not affect your overall daily balance. Total Interest Reimbursement amount will appear on your Servicer Billing Statement for fees. Description This is a standard footnote that will appear on every Remittance Analysis. This footnote appears when you have a total interest reimbursement amount greater than $ The Total Interest Reimbursement amounts do not appear on Preliminary Cash Statements because the information may not be available. Our records indicate that you are required to remit all P&I, including payoffs to Freddie Mac on a daily basis, upon receipt of such funds from the mortgagor. This footnote appears for Servicers on Freddie Mac Reinvestment Program or Institutional Eligibility Daily Sweep Program January 2008

135 The Seller/Servicer Remittance Analysis Finding the Adjustment Codes on the Seller/Servicer Remittance Analysis The adjustment codes are located on your The Seller/Servicer Remittance Analysis in the eighth column. Sample Cash Servicer Number: Servicer Name: Servicer Contact Name: Freddie Mac Seller/Servicer Remittance Analysis 10/16/XXXX through 11/15/XXXX Adjustment Code column Last Updated: 11/30/XXXX 12:00:00 AM Final Amount Received Amount Due Date P&I, Adj, Int. Advanced P/O, TP FCL. Corrections P&I, Int. P/O, TP FCL Adj. Adj. Code Balance Int. Reimbursement 100, Oct , Oct , Oct 18 15, , Oct Oct Oct Oct Oct Oct Oct (120,000.00) Oct , (120,000.00) Oct (120,000.00) Oct Oct , Oct Oct Nov Nov Nov Nov Nov , Nov , Nov 7 300, Nov Nov Nov Nov Nov Nov Nov Nov Totals 315, , , , Total Interest Reimbursement Due to Freddie Mac calculated at (Prime Rate 8.5% plus 3%) / January

136 The Seller/Servicer Remittance Analysis Understanding the Adjustment Codes The following table lists and describes the adjustment codes that may be listed on your Seller/Servicer Remittance Analysis. The adjustment amount and code will also appear on the Detailed Adjustment report. Code ADM Full Code Name (Allocation Adjustment) Amount Due Mover within same Servicer Description This adjustment is used to correct the posting of amount due within the same Servicer. BALI Balloon Interest Adjustment Interest calculated on a balloon loan that resets on a later date than the original reset date. BBA Beginning Balance Adjustment This is an adjustment to the beginning balance for corrections made to amounts due or remittances in previous cycles. CADJ Cash Adjustments This adjustment is used to reallocate funds between Servicers. CAP CCI Cramdown Adjustment on Principal Cramdown Capitalized Interest This is an adjustment to the principal balance or capitalized expenses into principal for court ordered bankruptcy. This adjustment is used to capitalize delinquent interest on a loan for court ordered bankruptcy. CMI Cramdown Monthly Interest This adjustment is applied to adjust the monthly interest on a loan for a court ordered bankruptcy. CO Charge off This adjustment is used for the difference between the unpaid principal balance and the market value of a loan. CRM Cash Received Mover within the same Servicer This adjustment is used to correct posting errors of cash received within the same Servicer January 2008

137 The Seller/Servicer Remittance Analysis Code DPCA DPPA Full Code Name (Allocation Adjustment) Discount or Premium on Convertible ARMs Discount or Premium on New Purchases Description A premium adjustment is used when there is a buy down to a lower interest rate for the life of a loan, when current market rates are lower than the lock-in rate. A discount adjustment is used when an adjustable-rate mortgage was obtained for less than market value. This adjustment is used for newly purchased loans obtained at a price above or below market value. FORI Forgiven Interest This adjustment is used when there is a write off to amortized interest because a borrower is not required to pay. IADJ Interest Adjustment This adjustment is used for interest corrections. LMCI LMDI Loan Modification Capitalized Interest Loan Modification Interest Adjustment This adjustment is used for accumulated unpaid interest that has been added to the principal balance of a loan. This adjustment is used when interest calculated on loan modifications impacts prior accounting cycles interest due. MISI Miscellaneous Interest This adjustment is used for other unique interest items not already defined. MISP Miscellaneous Principal This adjustment is used for other unique principal items not already defined. MOI Mobile Homes Interest This adjustment is used for interest due on mobile home loans. MOP Mobile Homes Principal This adjustment is used for principal due on mobile home loans. MOPO Mobile Homes Pay-offs This adjustment is used for payoff proceeds due on mobile home loans. January

138 The Seller/Servicer Remittance Analysis Code Full Code Name (Allocation Adjustment) Description MOR Mobile Home Residual This adjustment is used for excess servicing fee and payoff differential on mobile home loans. MPPI MPPP Minority Participation Percentage Interest Minority Participation Percentage Principal This adjustment is used for additional interest due or owed on loans purchased from the RTC. This adjustment is used for additional principal due on loans purchased from the RTC. MULT Multiple NDPA Interim Servicing T- Accounts This adjustment is used when multiple adjustments for a Servicer occur on the same date. This adjustment is used to move a change in prepaid and delinquent interest out of the principal and interest processed so it posts to the three-day accelerated remittance cycle (ARC) date. REI Reinstatement Interest Adjustment This adjustment is used to incorporate delinquent interest due on a loan that was delinquent but has been brought current. RERI REO Rollback This adjustment is used to debit the servicer for a reversal of REO interest advanced. SARC SS Super Accelerated Remittance Cycle (Super ARC) Servicemembers Civil Relief Act This adjustment is used for Servicers who submit Form 1100 (Supplemental Report of Curtailments for Super ARC) to us on a monthly basis to move curtailment funds out of a current Super ARC day to post to the next cycle s Super ARC day. This adjustment is used to credit interest on a quarterly basis for active military personnel under the Servicemembers Civil Relief Act January 2008

139 The Seller/Servicer Remittance Analysis Code Full Code Name (Allocation Adjustment) Description TACC T Account This adjustment is used for T-accounts to move a principal and interest amount due from the first Tuesday to the three-day ARC date. TOS Transfer of Servicing This adjustment is used to reallocate principal and interest amounts for Servicers involved in a transfer of servicing. W/O Write-off This adjustment is used to write off a variety of miscellaneous items. You will also receive a Detailed Adjustment report reflecting any adjustments, codes and amounts made to your Servicer Remittance Analysis. January

140 The Seller/Servicer Remittance Analysis Review The Seller/Servicer Remittance Analysis is a summary we send you that reflects the remittances we have received, the amounts posted as due, and the daily cumulative balances throughout the cycle. You may retrieve the Seller/Servicer Remittance Analysis via IAM or we send it to you via US mail. You remit funds to us via GPI using a touch-tone phone or online via IAM. You must complete your remittance no later than 9:00 pm Eastern time, the business day prior to the remittance due date. We debit you account the next business day. We post amounts due based on the loan level transactions processed and their corresponding remittance due date for monthly processing and the exception date for interim processing. Gold and ARC amounts are due three business days following the accounting cutoff. First Tuesday amounts are due the first Tuesday following the calendar month following the accounting cutoff. Super ARC amounts are due based on the contract specified calendar day between the 1st and the 15th of the month. Payoff amounts are due within five business days of the exception date, unless it is a negotiated payoff remittance date. The balance column reflects the cumulative difference between the amount received and the amount due column. The interest reimbursement column reflects the interest you need to reimburse us because of a shortage in your balance column. To correct a shortage, you will need to remit the additional funds immediately. To correct an overage, you may deduct the amount of overage from your next remittance to us. What Did We Learn? Your Notes: 6-25 January 2008

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142 MIDANET for the PC 7 Introduction Objectives This chapter introduces MIDANET and explains how to access and use MIDANET for the PC for loan-level transactions. After completing this chapter, you will be able to Define MIDANET and MIDANET for the PC Identify the different MIDANET mediums Access MIDANET for the PC and identify your version and site number Log on and off of MIDANET for the PC Navigate through the MIDANET for the PC screens 7-1 January 2008

143 MIDANET for the PC Definition of MIDANET Mortgage Information Direct Access Network (MIDANET ) is our automated reporting network that enables you to send mortgage accounting and servicing information to Freddie Mac. It is the link between your Servicing/ Software and our system. MIDANET is the current system we use for all loan-level reporting. Definition of MIDANET for the PC MIDANET for the PC is a DOS based menu driven software package that enables your IBM compatible personal computer to exchange information with us. The software is provided free of charge by Freddie Mac. Obtain a separate copy of the software for each PC you ve selected for installation. Problems will occur if you have the same site number installed on multiple computers. MIDANET Mediums Electronic Data Interchange (EDI) is a data-formatting standard used when exchanging data between computers. This standard is required for all loan level transmissions received by Freddie Mac. A translator is needed to put you data files into the EDI format. Use MIDANET through your Personal computer (MIDANET for the PC) or other mediums for your loan level transmissions depending on your system capabilities. MIDANET for the PC includes a translator and automatically puts your data files into the EDI format when you transmit information to us. If you use another medium you will need EDI version Determine what options are available to you by contacting our Customer Implementation Services at (800) Freddie. You can use both MIDANET for the PC and another medium to report to Freddie Mac. For example, you can use an alternative medium the majority of your loan-level transactions, and MIDANET for the PC to transmit payoffs and revisions. Investor Accounting Manager SM (IAM) and MIDANET Investor Accounting Manager SM (IAM) is not a substitute for MIDANET. You can use IAM to receive the daily edit reports and monthly reconciliation reports, but you cannot use IAM for loan-level reporting January

144 MIDANET for the PC Obtaining MIDANET for the PC Software To request the MIDANET for the PC software, or get help with software set-up, or to obtain a copy of the MIDANET for the PC Personal Computer Users Guide, contact our customer staff at (800) FREDDIE. Accessing MIDANET on Your PC Perform the following steps to access MIDANET for the PC: 1. Restart your computer in DOS mode or open your DOS window. The following system prompt displays: C:\> 2. Type cd\midanet at the prompt to change the directory to MIDANET. C:>\cd\midanet 3. Press Enter. The following prompt displays: C:\midanet> 4. Type midanet at the prompt as follows: C:\midanet>midanet The copyright screen displays. 7-3 January 2008

145 MIDANET for the PC Version Number The version number appears on the MIDANET screen as follows. Version Numbers Digit Release Numbers Description Download Numbers 1 st and 2 nd Version number Year of the most recent new release. 3 rd and 4 th Release number Begins with 01 and indicates the most recent major software update. When we develop a new release, or you order a new copy of the software, we send you a CD to load. The first four digits represent the release number. 5 th and 6 th Download number Begins with 01 and indicates the most recent software enhancements for the current update and release number. When we make minor enhancements to the software, we update your software automatically when you connect to Freddie Mac through the communications to transmit or to receive information. The next time you log on you will notice that the 5 th and 6 th digits have changed. January

146 MIDANET for the PC You must use the current version of MIDANET to communicate with our system. Your system automatically updates to the current version number when you communicate with Freddie Mac. Contact (800) FREDDIE to confirm you have the latest version of the MIDANET software. Site Number A site is defined as a PC on which a set of MIDANET for the PC software is installed. The site number appears on the MIDANET screen as follows. Seller/Servicer Numbers MIDANET Numbers Freddie Mac designates a unique identifier (or site number) on each Red Labeled support disk. It serves as an address for transmitting and receiving data. Digit First four digits Last three digits Description The first four digits of your Seller/Servicer number Unique to your set of MIDANET for the PC software. For example, if your institution has 17 sets of the software, these digits will range from 001 through January 2008

147 MIDANET for the PC The site number on the above illustration is This means that the first four digits of your Seller/Servicer number are 9999 and this is the 585 th set of software ordered by your institution. Sharing Software You should not install the same set of software on more than one computer. Using the same site number on multiple PC s creates transmission problems. Order a copy of the MIDANET for the PC software for each person who needs it installed on his or her computer. The copies are free. Call (800) FREDDIE to order the MIDANET for the PC software. User IDs and Passwords When the software is shipped, both the user id and password is MASTER. You can add, delete, and change the user id and passwords and assign security levels. User ID s and passwords must be eight or less alphanumeric characters. For instructions on how to do this please refer to the User Administration chapter of the MIDANET for the PC users guide. How to Log On to MIDANET for the PC Perform the following steps to log on to MIDANET for the PC: 1. From the Copyright screen, press Enter. The following screen displays: January

148 MIDANET for the PC 2. Enter your user ID. If your user ID is eight characters, the cursor will automatically move to the password field. If your user ID is less than eight characters, you must hit the tab key to move to the password field. 3. Enter your password. The cursor will automatically move to the Seller Number field if your password is eight characters. If your password is less than eight characters, you must hit the tab key to move to the password field. 4. Enter your six-digit Seller/Servicer number. 5. Press Enter. The MIDANET Main Menu screen displays. You have successfully logged on to the system. 7-7 January 2008

149 MIDANET for the PC Navigating the Logon Screen Refer to the following table when navigating the Logon screen: To Move to the next field Move to a previous field Move left or right one space at a time Clear fields Do the following Press the TAB key. Press the SHIFT +TAB keys simultaneously. Use the arrow keys. Press the F1 function key Do not press the ENTER key until you are finished. Your access to MIDANET for the PC will be suspended if you are not successful in logging on by the third attempt. To reestablish your access to MIDANET for the PC, contact your system administrator or (800) FREDDIE. Log Off of MIDANET for the PC Perform the following steps to log off of MIDANET for the PC: 1. Press the F10 key to return to the Main Menu. 2. Type X to exit MIDANET for the PC and return to DOS. 3. Refer to the following table to determine your next step: If you are in The DOS window DOS Then Close it. 1. Type exit. 2. Press Enter. January

150 MIDANET for the PC Practice Exercise: Log onto and Off of MIDANET for the PC Starting at the screen shown below, practice logging onto MIDANET for the PC with the following information. After you have successfully logged in, log off. User ID: Master Password: Master Seller/Servicer Number: January 2008

151 MIDANET for the PC Navigating in MIDANET for PC After you load the software, you have the option to determine which of the available seven modules are installed. Select one of the seven available modules on the Main Menu to begin navigation. Module Name and Content The following table identities the various modules available and their descriptions. Module Module Name Description 1 Single Family Mortgage Use the single family mortgage module to deliver mortgages for sale to Freddie Mac. 2 Service Mortgages Use the service mortgages module for delinquency reporting and EDR. 3 Not Active Not Active January

152 MIDANET for the PC Module Module Name Description 4 Communications Use the communications module to transmit data to Freddie Mac and to receive information from us. 5 Administration Use the administration module to complete system administration, view and print your transaction log, maintain your Seller/Servicer information, process Freddie Mac mail (i.e. edit reports) and maintain password security. 6 Not Active Not Active 7 Loan-Level Reporting Use the Loan-Level reporting module to report loan level transactions, make revisions, print reports, import data January 2008

153 MIDANET for the PC The Screen Tracking Number The screen tracking number identifies the menu selections you made to arrive at your current screen. The screen tracking number is located in the upper right corner of the screen. Use the screen tracking number to remember how to get to a function. The screen tracking number starts with an M and is followed by seven numbers. Screen Tracking Number On the screen shown above, the screen tracking number is M Your Selections M When you make a selection from the menu, the number fills in, from left to right, with your selection. The first number after the M was the selection from the main menu; the second number after the M was your next selection and so forth. Example The screen tracking number on the screen above is M This means you M = Started from the Main Menu 7 = Selected option 7, Loan-level Reporting 1 = Selected option 1, Enter/Cycle/Load Loan-level Detail 1 = Selected option 1, Enter Loan-level Data January

154 MIDANET for the PC Function Keys Use the function keys to move around and edit data. MIDANET does not have an undo key. You must clear the data using a function key. These function keys can be used as described below, unless otherwise noted on the screen. Key F1 F2 F3 F4 F5 F6 F7 Function Clears the entry field in which the cursor is located Clears all the entry fields on the current screen Displays the help panel(s) on the current screen Allows access to override the Flag Severity Panel (M1CDIFS1) from the Enter Mortgage Detail screen (M ) Clears data from the location of the cursor to the end of the field Clears data from the location of the cursor to the end of the screen Allows you to bypass HMDA/GSE edit. List the WHL codes when on the WHL screen. F9 F10 Page up Returns to the previous menu or screen Returns to the main menu Pages backward (for multiple pages) Page Down Pages forward (for multiple pages) Home End Tab Moves the cursor to the first variable position or page (if multiple pages) Moves the cursor to the last variable position or page (if multiple pages) Moves the cursor to the next field Shift + Tab Moves the cursor to the previous field Insert Delete Esc Toggles insert character mode (on/off) Deletes character at cursor position Returns to the previous screen, or to the primary screen from the help panel -> Or <- Moves the cursor to the next position in the direction of the arrows 7-13 January 2008

155 MIDANET for the PC Commonly Used Function Keys F3: F9: F10: Displays the Help panel(s) for the current screen. Returns to the previous menu or screen Returns to the Main menu Speed Keys Speed keys allow quick access to common functions. The following speed keys are applicable for loan-level reporting. Key ALT + G ALT + N ALT + C Function Allows immediate access to the Process Freddie Mac Text Files screen from most menus. You can view or print many types of Freddie Mac correspondences. Allows immediate access to the Change Seller Number window from within most menus. This is useful if you service mortgages under more than one Servicer Number. Allows immediate access to a calculator window used to calculate rate changes for ARMs. Help Help information is readily available by pressing the F3 key. When you press the F3 key, the help text for the associated screen will be displayed. The page down and page up keys, or the up and down arrows will navigate you through the pages. Press the Escape key to return to the screen. January

156 MIDANET for the PC Review MIDANET is our automated reporting network that enables you to send mortgage accounting and servicing information to Freddie Mac. MIDANET for the PC is a DOS based menu driven software package that enables your IBM l compatible personal computer to exchange information with Freddie Mac. MIDANET software is free and can be obtained by calling (800) FREDDIE. Obtain a separate copy for each PC you ve selected for installation. Each time you communicate with MIDANET, your system will automatically update to the current version number. MIDANET provides you with function keys to move around and edit data. What Did We Learn? Your Notes: 7-15 January 2008

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158 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 8 Introduction Objectives This chapter explains how to report and revise a loan-level transaction via MIDANET for the PC. After completing this chapter, you will be able to do the following: Add or revise a loan-level transaction Update, browse, or delete a transaction Transmit loan-level data to Freddie Mac Print confirmations and reports 8-1 January 2008

159 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Loan-level Reporting via MIDANET for the PC Perform the following high-level steps to report loan-level transactions via MIDANET for the PC: 1. Enter the loan-level information manually, one loan at a time. (Use the cycle function to manually update MIDANET for the PC during the accounting cutoff only.) OR Import the data. Use the import function whenever possible. 2. Review and correct your data. Print a report to confirm that the information you entered is correct. Update any information you want changed prior to transmitting. 3. Transmit loan-level data to Freddie Mac. 4. Receive confirmation from Freddie Mac. Add or Revise a Loan in MIDANET for the PC Perform the following steps to manually add loan-level data, one loan at a time, to MIDANET for the PC: 1. Access the MIDANET Main menu. January

160 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 2. From the Main Menu, select option 7, Loan-level Reporting. The Loan-level Reporting menu displays: 3. From the Loan- level Reporting menu, select option 1, Enter/Cycle/Load Loanlevel Reporting Detail. The Loan-level Reporting Detail menu displays: 8-3 January 2008

161 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 4. From the Loan-level Reporting Detail menu, select option 1, Enter Loan-level Reporting Data. The Loan-level Reporting Detail screen displays. 5. Enter the following information on the Enter Loan-level Reporting Detail screen: Month and year of the accounting cycle Freddie Mac loan number 6. Press Enter. The Enter Loan-level Reporting Detail screen re-displays: Leave the response as N, unless you are reporting on a loan that is being accounted for as a partial reinstatement. In our example, leave the response as N. January

162 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Press Enter. The system displays the Add and Revise options. 8-5 January 2008

163 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Select the Function, Enter UPB, Principal Collected and Transaction Type 1. Select the function you want to perform: Use the arrow keys to highlight the Add or Revise function. You must use the revision function if you change any information for a loan that was reported or will be reported outside of MIDANET for the PC. If the original transaction you are changing was transmitted through MIDANET for the PC, correct it by using the Update, Browse, delete function. Press Enter. The following screen displays: 2. Enter the Ending UPB (100%) and Principal Collected (100%): Enter the UPB. Press Enter. Enter the principal collected. January

164 Using MIDANET for the PC to Report or Revise a Loan-level Transaction In our example, we will enter for the UPB and 0 for principal collected. Do not use commas. You must enter the decimal point to indicate cents. The following screen displays. Press Enter again. The following screen displays: 8-7 January 2008

165 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 3. Select the appropriate transaction type. In our example, we will enter a nonexception transaction. Use the arrow keys to highlight the appropriate transaction. Press Enter. The following screen displays: 4. Press Enter again to highlight the required fields for the transaction type you selected. January

166 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Enter Data on the Transaction Screen and Mark for Transmit After you have accessed the Process a Loan-level Transaction screen, perform the following steps: 1. Enter the following data. Data Field Required Action Example Net Yield Rate S/S Loan Number Mortgage Note Rate Mortgage P&I Monthly Interest Due Enter the net yield rate in decimal format. Press the tab key. This field is optional. Freddie Mac recommends you use this field to enter your loan number so your loan number is displayed on reports you receive from us. Enter the note rate in decimal format. Press the tab key. Enter the principal and interest portion of the scheduled payment. The Mortgage P&I field is the current P&I constant on the loan, do not enter the PITI (principal, Interest, Taxes and Insurance). Enter a number between one and nine. MIDANET for the PC will calculate interest for you when you complete the screen. Enter.0715 and press the tab key. Enter Seller/Servicer Number or tab to next field. Enter.074 and press the tab key. Enter and press the tab key. Enter 1 and press the tab key. 8-9 January 2008

167 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Data Field Required Action Example Due Date of the Last Paid Installment Last Payment Received Date Freddie Mac Participation Percentage Enter the current Due Date of Last Paid Installment (DDLPI) for the mortgage. The cursor automatically moves over after you enter two numbers in each field. If the number only has one digit, you must use a leading zero. Enter the current Last Payment Received Date (LPRD) for the mortgage. The cursor automatically moves over after you enter two numbers in each field. If the number only has one digit, you must use a leading zero. Enter the Freddie Mac participation percentage. Do not use a decimal. Enter 100 for whole loans. Enter Freddie Mac s share of ownership for participations. For example, enter 095 if Freddie Mac owns 95 percent. The cursor automatically advances to the next field after you enter three numbers. Enter You do not have to press the tab key. Enter You do not have to press the tab key. Enter 100. You do not have to press the tab key. January

168 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Data Field Required Action Example Funding Date Remittance Option Use the funding date field only if you have loaded loans onto MIDANET for the PC that were purchased between the 1st and 15th of the current month. MIDANET will know not to calculate interest. Example: If you purchased a loan on 2/10, the 02/10 in the funding date field will keep MIDANET from calculating interest due for the 2/15 cycle. This field is optional. Freddie Mac recommends using the field so the MIDANET reports give you totals by remittance due dates. A= ARC F =First Tuesday G = Gold Practice by entering a G, MIDANET automatically tab to the ARC Days field. The ARC days field is required for ARC and GOLD loans. If it is a single digit a zero must precede it. The cursor automatically advances to the next field. Press the tab key to move to the Remittance Option field. Enter G. You do not have to press the tab key. Enter 03. You do not have to press the tab key January 2008

169 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Data Field Required Action Example Mark for Transmit Enter a Y in the Mark for Transmit field to report this loan when you go into the communications option and transmit your loan level transactions to us. 2. Press Enter after you have completed your data entry for the transaction. The following screen displays. January

170 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 3. Press Enter. The Process a Loan-level Transaction screen re-displays with the following prompt: Note that monthly interest due of is calculated. 4. Review the data you entered to ensure accuracy. 5. Respond to the prompt Is the data correct? as outlined in the following table: If the data is Then take the following actions And the system will Correct Enter Y and press Enter. Display the MI Cancellation screen (only for nonexception transactions) Incorrect Enter N and press Enter. Move the cursor to the top of the Process a Loan-level Transaction screen so that you can make the appropriate changes January 2008

171 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Cycle Non-exception Loan-level Data Perform the following steps to cycle non-exception loan-level data in MIDANET for the PC: 1. From the Main Menu, select Option 7, Loan-level Reporting. The Loan-level Reporting menu displays. 2. From the Loan- level Reporting menu, select Option 1,Enter/Cycle/Loan Loanlevel Reporting Detail. The Loan-level Reporting Detail menu displays. January

172 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 3. From the Loan-level Reporting Detail menu, select Option 2, Cycle Loan-level Reporting Data. The Cycle Loan-level Reporting Data screen displays. 4. Complete the Cycle Loan-level Reporting Data screen: Enter the month and year for the current accounting cycle. The system will display the following message if there is no loan-level data to cycle from the previous cycle: Cycle Aborted No previous month. Press Enter. The following displays: 8-15 January 2008

173 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Enter the current UPB (the UPB after the application of the current cycle s principal reduction). Press Enter. The Cycle a Loan-level Transaction screen displays. 5. Enter the current cycle s data in the required fields. Use the tab key to navigate the screen. 6. Press Enter. 7. Review the data you entered. Respond to the prompt Is the data correct (Y/N)? If the data is Then Correct Enter Y. Press Enter. If There are additional loan-level records to cycle There are no additional loanlevel records to cycle Then The Cycle Loan-level Reporting Data displays with the next loan number. The Loan-level Reporting Detail screen displays the following message: Cycle Finished All loan-level records are finished. January

174 Using MIDANET for the PC to Report or Revise a Loan-level Transaction If the data is Then Incorrect Enter N. Press Enter. The Cycle Loan-level Transaction screen displays. Correct the data and press Enter January 2008

175 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Update, Browse, and Delete Loan-level Data Perform the following steps to update, browse, or delete loan-level data in MIDANET for the PC: 1. From the Main Menu, select Option 7, Loan-level Reporting. The Loan-level Reporting menu displays. 2. From the Loan- level Reporting menu, select Option 1, Enter/Cycle/Loan Loanlevel Reporting Detail. The following screen displays: January

176 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 3. From the Loan-level Reporting Detail menu, select Option 1, Enter Loan-level Reporting Data. The following screen displays: 4. Enter the following Month and year of the accounting cycle Freddie Mac loan number. Press Enter January 2008

177 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 5. Respond to the following prompts if they display: Is this a FHA/VA loan (Y/N)? Alternate Method (Y/N)? The following screen displays: 6. Select the function you want to perform: Use the arrow keys to select Update, Browse, or Delete. Press Enter. Note that if you have transmitted the transaction from a medium other than MIDANET for the PC (for example, you use a service bureau), the Revise function will display instead of the Update function. If you select Update or Revise Browse or Delete Then The Enter Loan-level Reporting Detail screen displays. Make any necessary updates. The Process a Loan-level Transaction screen displays. Go to step 7. January

178 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 7. Refer to the following table to determine your next step: If you selected Browse Then View the loan-level record. Use the PgUp and PgDn keys to view the next record(s). Press Enter or the F9 key to return to the Enter Loan-level Reporting Detail screen. Delete Respond to the system prompt: Do you want to delete this record? : Enter Y to delete the record. Press Enter. The Enter Loan-level Reporting Detail screen displays with the following message: Record(s) deleted. Enter N if you do not want to delete the record. Press Enter. The Enter Loan-level Reporting Detail screen displays with the following message: Abort Record not deleted January 2008

179 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Printing Loan-level Reports Perform the following steps to print loan-level reports: 1. From the Main Menu, select Option 1, Loan-level Reporting. 2. From the Loan-level Reporting menu, select Option 4, Loan-level Reports. The following screen displays: 3. From the Loan-level Reports menu, select Option1, Loan-level Transaction Data. The following screen displays: January

180 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 4. Select the appropriate parameters for the report you want to print: Transaction type ( A, E, F, D, I, N, P, R, or M ) Transmission status ( OPEN, PKGD, XMTD or All ) Cutoff date (the cycle date) Report type ( D, S, or T ) 5. Press Enter. 6. Print the report and ensure the following: Your PC is connected to a printer. Your PC may lock up if there are no printer connections and you attempt to print a report. Turn off your PC and log on to MIDANET again. The printer is set according to the print message. Press Enter to print the report. 7. Compare the data on the MIDANET PC Loan Level Reporting - Detail report and your internal investor reporting system reports to identify any data entry errors. 8. Correct any data errors January 2008

181 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Transmitting Loan-level Data You must package the loan-level data before transmitting loan-level transactions to Freddie Mac. Packaging is enclosing all the loan-level data that is cycled or added together in a bundle that can be transmitted via MIDANET to Freddie Mac. MIDANET automatically packages the data for transmission when you enter a Y in the Mark for Transmit field. Once you package the data, you are ready to transmit your loan-level transactions to Freddie Mac. The steps below will transmit all data marked for transmission. 1. From the Main Menu, select Option 4, Communications. The following screen displays: January

182 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 2. From the Communications menu, select option 2, Transmit Data to Freddie Mac. The Transmit Freddie Mac Data screen displays and lists all records that can be marked for transmission. 3. Select the records you want to transmit: Enter an X next to Loan-level Reporting Data. Press Enter. The following screen displays: 8-25 January 2008

183 Using MIDANET for the PC to Report or Revise a Loan-level Transaction 4. Enter the following loan-level reporting transmission information: Contact phone number Bureau client number 5. Press Enter. The following screen displays: 6. Respond to the following prompt: Do you wish to delay transmission (Y/N)? (F9/F10 to Abort) If you want to Transmit immediately Delay transmission (Ensure that your PC s internal date and time are correct before you delay transmission.) Take the following actions: Enter N. Press Enter. The system will dial Freddie Mac s network and transmit your data. Enter Y. Press Enter. A window displays that prompts you to enter the desired transmission time. You can delay transmission for up to 24 hours. Enter the time you want to transmit. Press Enter. At the designated time, the system will dial Freddie Mac s network and transmit your data. Note that once you set up a delayed transmission, you cannot use or turn off your PC until transmission is complete. January

184 Using MIDANET for the PC to Report or Revise a Loan-level Transaction If you want to Stop a transmission already in progress Abort a delayed transmission Cancel a delayed transmission Take the following actions: Press the Esc key twice. The Main Menu will display. Press the F9 key. The Communications menu will display. Press the F10 key. The Main Menu will display January 2008

185 Using MIDANET for the PC to Report or Revise a Loan-level Transaction Print Confirmations Perform the following steps to receive and view confirmation messages: 1. From the Main Menu, select Option 4, Communications. The Communications menu displays. 2. From the Communications menu, select Option 1, Receive Other Data. If There are messages Then The Receive screen displays to confirm receipt of confirmation messages. Go to step 3. There are no messages The Communications menu displays and indicates No data to receive. 3. View the list of confirmation messages: Press the Esc or F9 key to return to the Communications menu. Select Option 3, Process Transmission Confirmations. The List Confirmation Messages screen displays. Freddie Mac M M I D A N E T - List Confirmation Messages - F3 = HELP Message Seller/Servicer Data Sent Date Time ID Number Freddie Mac Received Received A /18/96 10:01 E R. E. O. 06/18/96 10:01 E Payoff 06/18/96 10:02 E Payoff 06/18/96 10:03 January