Freddie Mac Single-Family Seller/Servicer Guide 9301.3 — Foreclosure process and legal considerations

This section contains requirements related to: ■ Choosing a judicial or nonjudicial foreclosure process ■ Obtaining the original Note ■ Foreclosing in the Servicer’s name ■ Solicitation during the foreclosure process ■ Servicer’s responsibility to work with foreclosure counsel

(a) Choosing a judicial or nonjudicial foreclosure process In States where the Servicer has the option of pursuing a judicial or nonjudicial foreclosure process, the Servicer must choose the nonjudicial process. However, if the Servicer determines its filing of a judicial foreclosure will preserve the right to pursue a deficiency judgment, and/or is in Freddie Mac’s best interests, the Servicer should refer to Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses, to determine if Freddie Mac has approved judicial foreclosure attorney fees in the State. If Freddie Mac has approved judicial foreclosure attorney fees in the State, the Servicer may pursue a judicial foreclosure process without Freddie Mac’s approval. If Freddie Mac does not have approved judicial foreclosure attorney fees in the State, or the filing of a judicial foreclosure will incur additional attorney fees exceeding the expense limits in Exhibit 57A, the Servicer must obtain Freddie Mac’s approval prior to referral to judicial foreclosure by submitting a request for pre-approval via PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools). Note: Refer to Section 9301.6(b) regarding when to request Freddie Mac’s approval to preserve deficiency rights.

(b) Obtaining the original Note If physical or constructive possession of the original Note is needed to perform the foreclosure, the Servicer must request the Note from the Document Custodian maintaining the Note by submitting to the Document Custodian a completed Form 1036, Request for Physical or Constructive Possession of Documents, or an electronic or system-generated version of the form (or, in the case of The Bank of New York Mellon Trust Company, N.A. as the Designated Custodian, a copy of the electronically generated 1036 Release Receipt Report) in accordance with the requirements of Section 8107.1(b). If there is a full or partial reinstatement of the Mortgage, the Servicer must return the Note to the Document Custodian with either the original Form 1036 or a copy.

(c) Foreclosing in the Servicer’s name (i) Conducting the foreclosure The Servicer must instruct the foreclosure counsel to process the foreclosure in the Servicer’s name and in a manner that would avoid any obligation to pay a transfer tax. However, the Servicer may instruct foreclosure counsel to conduct the foreclosure in Freddie Mac’s name if applicable law: ■ Precludes the Servicer from conducting the foreclosure in its name because it owns or services a subordinate Mortgage on the Mortgaged Premises, or ■ Requires the foreclosure to be processed in Freddie Mac’s name to avoid any obligation to pay a transfer tax and foreclosure counsel could not otherwise process the foreclosure in a manner that would successfully avoid imposition of the transfer tax obligation For these special circumstances, the Servicer does not need to obtain written approval but must notify Freddie Mac within two Business Days of the Servicer’s determination to foreclose in Freddie Mac’s name and record the basis of the decision in the Mortgage file. All notifications must be sent via e-mail (see Directory 5). For all other circumstances in which the Servicer may need to instruct foreclosure counsel to conduct the foreclosure in Freddie Mac’s name, the Servicer must obtain written approval from Freddie Mac (refer to Section 9402.1(b) regarding initiating legal actions on Freddie Mac’s behalf). When processing the foreclosure in Freddie Mac’s name, all pleadings and related documents must comply with Section 9402.1(b)(iii). The Servicer remains obligated to notify Freddie Mac pursuant to Section 9501.5(d) in the event that any foreclosure conducted in Freddie Mac’s name evolves into a non-routine litigation matter (see Section 9402.1(b)). When a Servicer conducts the foreclosure in Freddie Mac’s name, the Servicer is not permitted to have the same foreclosure counsel represent the Servicer or another lienholder in the same proceeding. Freddie Mac does not consent to dual representation of Freddie Mac and another lienholder on the same property. (ii) Executing documents If Freddie Mac needs to execute a document that is not authorized for the Servicer to execute under the Limited Power of Attorney (see Exhibit 53, Limited Power of Attorney) for the Servicer to: ■ Process the foreclosure, or ■ Execute a document related to a foreclosure sale The Servicer must submit Form 105, Multipurpose Loan Servicing Transmittal, to Freddie Mac (see Directory 5) with all supporting documentation, which may include, but is not limited to, the last recorded document in the chain of title, and include the document Freddie Mac needs to execute. Note: Refer to Sections 8101.2(b) and 8601.2(b) for requirements on obtaining a Limited Power of Attorney for Freddie Mac to sign documents on behalf of Freddie Mac. If an assignment of the Security Instrument to Freddie Mac has been recorded and the Servicer is conducting the foreclosure in its name, then the Security Instrument must be assigned back to the Servicer before the foreclosure counsel files the first legal action. Refer to Section 9301.5(a)(i) for an explanation of first legal action. To have the Security Instrument assigned back to the Servicer, the Servicer must submit a completed assignment with a Request for Assistance Form (available at: https://sf.freddiemac.com/docs/pdf/fact-sheet/sats699.pdf), to Freddie Mac (see Directory 9). Freddie Mac will endeavor to execute the assignment and return it to the Servicer within 10-12 Business Days of receiving the documents. If the Servicer is foreclosing on a Mortgage registered with MERS®, the Servicer must prepare and execute (using the Servicer’s employee who is a MERS authorized “signing officer”) an assignment of the Security Instrument from MERS to the Servicer. The Servicer must record the prepared assignment where required by State law. State mandated recordings are non-reimbursable by Freddie Mac, are not considered part of the Freddie Mac allowable foreclosure counsel fees and must not be billed to the Borrower. If the Mortgage is an FHA, Section 502 GRH or VA Mortgage, then the Servicer must follow FHA, RHS or VA guidelines to determine whose name the foreclosure action should be brought. Note: Refer to Section 6301.2(d) for additional information on Freddie Mac’s requirements for assignments of the Security Instrument.

(d) Solicitation during the foreclosure process If a Servicer previously determined that a Borrower, who was less than 60 days delinquent at the time of evaluation, did not qualify for any alternative to foreclosure and the Borrower subsequently becomes 60 days delinquent, then the Servicer must continue its solicitation and collection efforts with the Borrower in accordance with the requirements of Chapter 9102. Continued solicitation includes sending another Borrower Solicitation Package, as applicable, if documentation needs to be refreshed in order to perform the subsequent evaluation of the Borrower for alternatives to foreclosure. Unless required to continue contact attempts by applicable law, attempts to contact any delinquent Borrower and related loss mitigation solicitations must discontinue 60 days prior to a foreclosure sale date for judicial foreclosures or 30 days prior to a foreclosure sale date for non-judicial foreclosures. Loss mitigation solicitations while the Mortgage is in foreclosure must be communicated to and coordinated with the foreclosure counsel, as appropriate. A Servicer must keep the foreclosure counsel informed of the status of relevant alternative to foreclosure negotiations and must notify the foreclosure counsel within two Business Days after arrangements for an alternative to foreclosure have been agreed to or within two Business Days after the Mortgage is fully reinstated.

(e) Servicer’s responsibility to work with foreclosure counsel (i) After Servicer referral Once the Servicer has referred a Mortgage to foreclosure, the Servicer must work with the foreclosure counsel to: 1. Identify any viable alternatives to foreclosure 2. Monitor the progress of the foreclosure 3. Facilitate prompt and efficient completion of the foreclosure proceedings and acquisition of clear and marketable title, including conducting the foreclosure in a way that will expedite an eviction of the tenant or Borrower (ii) Communication Servicer must maintain communication with the foreclosure counsel so that the Servicer can manage the foreclosure effectively. No less than one time per month, the Servicer must require the foreclosure counsel to report the status of the foreclosure, request any documentation needed from Servicer and report any relevant information to the Servicer. The Servicer must maintain this information in the Mortgage file or on its Mortgage system. (iii)Compliance with the Servicemembers Civil Relief Act (SCRA) A Servicer must ensure foreclosure counsel complies with the SCRA and all State Military Relief Laws as they apply to any Borrower or Mortgage including verification that the Borrower is not a Servicemember currently serving a Period of Military Service (as those terms are referenced in Section 8503.1(a)), or if the Borrower was a Servicemember, that more than one year has elapsed since their period of Military Service ended. (See Section 9701.3(a) regarding when verification should be completed by foreclosure counsel). (iv) Providing information to the foreclosure counsel For any Mortgage that the Servicer refers for foreclosure, the Servicer must provide complete written reinstatement or payoff figures to foreclosure counsel, workout specialist or outsourcing vendor requesting the information. This information must be provided within two Business Days of the date on which a written request is received. The Servicer may provide the written reinstatement or payoff figures via a paper document, facsimile or e-mail. If the foreclosure counsel requests additional information and/or documentation from the Servicer (such as certificates of judgment), at any time, the Servicer must provide such requested information and/or documents within three Business Days after receipt of the request, or within such earlier time frame if necessary to comply with timing requirements under applicable law or court orders and procedures. (v) Foreclosure counsel fees Foreclosure counsel fees and costs must be reasonable and comparable to those customarily charged in the area where the property is located. Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses, provides Freddie Mac’s expense limits for foreclosure counsel fees. The Servicer must obtain Freddie Mac’s written approval prior to incurring foreclosure counsel fees in excess of the expense limits. Refer to Section 9701.1(c) for details on obtaining Freddie Mac’s written pre-approval for exceeding the expense limits in Exhibit 57A. (vi) Fees and Borrower’s defenses Freddie Mac will reimburse the Servicer for Freddie Mac’s proportionate share of expenses for responding to Borrower defenses. Refer to Section 9402.1(b) and Chapter 9701 for details regarding expense reimbursements.