Freddie Mac Single-Family Seller/Servicer Guide 8402.1 — Property seizure and disclosure of pre-seizure information

This section contains information related to: ■ Property seizure ■ Unsolicited disclosure of pre-seizure information and property requirements ■ Requested disclosure of pre-seizure reporting and property requirements ■ Reimbursement of expenses related to property seizures

(a) Property seizure Under various federal, State and local laws, a law enforcement agency may, in some circumstances, seize and cause the forfeiture of real property that is obtained with the proceeds of activities, or which is used to facilitate activities, committed in violation of federal, State or local laws. Such laws include those relating to controlled substances, gambling and prostitution. Actions that result in the loss of possession of real property by a legal action or process are called property seizures. These different laws commonly provide some avenue of relief from forfeiture for a mortgagee that can prove it is an “innocent owner” (or “innocent lienholder”). An important course of action in protecting the mortgagee’s innocent owner status is prompt and cooperative communication with law enforcement agencies. (i) The Servicer’s designee for contacts with law enforcement agencies To properly handle the sensitive area of mortgagee-law enforcement agency cooperation and maximize mutual benefits from such cooperation, the Servicer must limit contacts with or from law enforcement agencies to a designated management-level employee that the Servicer selects. The Servicer must alert its employees to direct all information regarding a property seizure to the appropriate designee, including, but not limited to, the following: ■ Unsolicited information ■ Government notices ■ Government or other third-party inquiries ■ Telephone calls or written correspondence (ii) Documentation The management-level employee selected as the Servicer’s designee to handle a property seizure must: ■ Maintain complete, detailed and accurate records of: ❑ All information received, relayed or reported, including (where applicable) the names of all contacting and contacted parties ❑ All actions taken by the Servicer ❑ The dates of all contacts and actions ■ Confirm in writing communications with Freddie Mac and appropriate law enforcement agencies ■ Deliver the original Mortgage file to Freddie Mac (see Directory 5) when and if Freddie Mac requests the Servicer to do so (iii) Restriction on foreclosure action The Servicer must contact Freddie Mac to request approval to initiate foreclosure (see Directory 5). (iv) Applicability of requirements The requirements in Sections 8402.1(a) and 8402.1(d) address forfeitures arising from violations of federal, State or local laws specified in Section 8402.1(a)(i) above. However, all of these requirements also extend to government seizure and forfeiture of the property for the Borrower’s violation of any other laws. Note: Refer to Section 9401.1(b) for Freddie Mac rights when the requirements of this section and Sections 8402.1(b) through 8402.2(b) regarding government seizure and forfeiture of the property are not met.

(b) Unsolicited disclosure of pre-seizure information and property requirements The Servicer must relay the following information to the asset forfeiture team in the Drug Enforcement Administration (DEA) office nearest to the location of the property: ■ Unsolicited information that the Servicer receives from any party (other than a law enforcement official) regarding a possible connection between alleged or suspected drug transactions and the Mortgage or the property. The Servicer must relay the information without verifying or passing judgment on its source or veracity. ■ Visual observations of suspected drug transactions by any party on the property as reported by a Servicer’s employee or a contractor while on a routine inspection of the property The Servicer must cooperate with all law enforcement agencies to the extent that applicable law allows. If the DEA or another law enforcement agency requests information about the Borrower, Mortgage or property or requests that the Servicer take certain actions, whether or not in response to a voluntary disclosure of information, the Servicer must determine if: ■ The request complies with the provisions of applicable law, including, but not limited to, the Right to Financial Privacy Act (RFPA) ■ The Servicer’s compliance with the request is allowed under applicable law ■ The Servicer’s compliance with the request would expose the Servicer or the Servicer’s staff to potential harm and/or liability (i) Reporting requirements Within three Business Days of receiving the DEA’s or other law enforcement agency’s request, the Servicer must report the information in writing to the DEA or other law enforcement agency. The Servicer must send a copy of that report to Freddie Mac (see Directory 5) within three Business Days of reporting the information to the DEA or other law enforcement agency. When submitting information to the DEA, the Servicer must: ■ Advise the DEA that the Servicer is Servicing the Mortgage for Freddie Mac ■ Disclose to the DEA the name, telephone number and mailing address of the Servicer’s contact at Freddie Mac ■ Forward the information to any other applicable federal or local law enforcement agency as the DEA may request All reporting to the DEA and/or to Freddie Mac must be in writing unless an emergency warrants reporting by telephone, in which case the Servicer must confirm such report in writing to Freddie Mac in accordance with Section 8402.1(a)(ii). The Servicer must also report all developments after the initial contact to Freddie Mac (see Directory 5) within three Business Days of any such development. (ii) Property inspection The Servicer must order a property inspection within three Business Days of receiving unsolicited information regarding a possible connection or observation of alleged or suspected drug transactions in connection with the property. Freddie Mac will permit a curbside inspection as specified in Section 9202.3(c). The Servicer must submit a copy of the inspection report along with the Freddie Mac loan number and the name and phone number of the Servicer’s point of contact to Freddie Mac (see Directory 5) within three Business Days of the Servicer’s receipt of the report.

(c) Requested disclosure of pre-seizure information and property requirements The Servicer must cooperate with all law enforcement agencies to the extent that applicable law allows. If the DEA or another law enforcement agency requests information about the Borrower, the Mortgage or the property or requests that the Servicer take certain actions (whether or not in response to a voluntary unsolicited disclosure of information by the Servicer as provided in Section 8402.1(a)), the Servicer must determine if: ■ The request complies with the provisions of applicable law, including, but not limited to, the RFPA ■ The Servicer’s compliance with the request is allowed under applicable law ■ The Servicer’s compliance with the request would expose the Servicer or the Servicer’s staff to potential harm and/or liability (i) Reporting requirements Within three Business Days of receiving the DEA’s or other law enforcement agency’s request, the Servicer must report the request to Freddie Mac (see Directory 5) with a copy of the Servicer’s response to the agency and any other information the Servicer submitted. The Servicer must also report to Freddie Mac (see Directory 5) all developments after the initial contact within five Business Days of any such development. When submitting information to the DEA or another law enforcement agency, the Servicer must: ■ Advise the agency that the Servicer is Servicing the Mortgage for Freddie Mac ■ Disclose to the agency the name, telephone number and mailing address of the Servicer’s contact at Freddie Mac ■ Forward the information to any other applicable federal or local law enforcement agency as may be requested by the law enforcement agency making the request All reporting to the DEA and/or to Freddie Mac must be in writing unless an emergency warrants reporting by telephone, in which case the Servicer must confirm such report in writing to Freddie Mac in accordance with Section 8402.1(a). The Servicer must also report all developments after the initial contact to Freddie Mac (see Directory 5) within three Business Days of any such development. (ii) Property inspection The Servicer must order a property inspection within three Business Days of receiving a request from a law enforcement agency. Freddie Mac will permit a curbside inspection as specified in Section 9202.3(c). The Servicer must submit a copy of the inspection report along with the Freddie Mac loan number and the name and phone number of the Servicer’s point of contact to Freddie Mac (see Directory 5) within three Business Days of the Servicer’s receipt of the report.

(d) Reimbursement of expenses related to property seizures Freddie Mac will reimburse the Servicer for allowable expenses listed in Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses, that the Servicer incurs to comply with Freddie Mac’s requirements regarding property seizure only if the expenses are not legally collectible from the Borrower. The Servicer must obtain Freddie Mac’s written pre-approval prior to incurring expenses that are not listed, or that exceed Freddie Mac’s expense limits in Exhibit 57A by submitting a request for pre-approval via PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools). If unusual or emergency circumstances do not allow the Servicer to request Freddie Mac’s prior written approval, then the Servicer must notify Freddie Mac via PAID by the next Business Day after the Servicer incurred the expense. If the Servicer’s determination to incur the expense was reasonable, Freddie Mac will reimburse the Servicer for the expense.