Freddie Mac Single-Family Seller/Servicer Guide §9402.1 — Freddie Mac rights and litigation types (12/17/25)
Freddie Mac Guide §9402.1 (Freddie Mac rights and litigation types). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §9402.1 — Freddie Mac rights and litigation types (12/17/25) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Guide 9402.1
(12/17/25) This section contains requirements related to: ■ Freddie Mac rights ■ Routine and non-routine litigation (a) Freddie Mac rights Freddie Mac reserves the right to direct and control all litigation involving a Freddie Mac- owned or guaranteed Mortgage, regardless of whether Freddie Mac is a named party. The Servicer and all law firms handling the litigation, whether selected and engaged pursuant to Chapter 9501 or Section 8601.5(g) or 9402.2(b), must cooperate fully with Freddie Mac in the prosecution, defense and handling of the matter. Note: Refer to Section 9401.1(b) for Freddie Mac rights when the requirements of this section regarding Servicer and law firm cooperation with Freddie Mac in the prosecution, defense and handling of litigation involving Freddie Mac-owned or guaranteed Mortgages are not met. (b) Routine and non-routine litigation (i) Definition of routine and non-routine litigation The Servicer should be familiar with the following definitions: Definitions of routine and non-routine litigation N Non-routine litigation A contested action in which the Borrower alleges case-specific defenses or issues that, if successful, would create negative legal precedent beyond the immediate case
Freddie Mac Guide 9402.1
402-2 Definitions of routine and non-routine litigation R Routine litigation A contested action in which the Borrower alleges case-specific defenses or issues that, if successful, would not create negative legal precedent beyond the immediate case Examples of non-routine litigation that must be reported to Freddie Mac as non-routine litigation include, but are not limited to, the following: ■ Actions that name Freddie Mac as a party ■ Actions that seek monetary relief against Freddie Mac, including any claim (including counterclaims, cross-claims or third-party claims in foreclosure or bankruptcy actions) for damages against Freddie Mac or its officers, directors or employees ■ Actions that challenge the validity, priority or enforceability of a Freddie Mac-owned or guaranteed Mortgage or seek to impair Freddie Mac’s interest in an REO, including, by way of example: ❑ An action seeking to demolish a structure on the property or the property as a result of a code violation ❑ An action seeking to avoid a lien based on a failure to comply with a law or regulation ❑ An attempt by a junior lienholder to assert priority over a Freddie Mac-owned or guaranteed Mortgage or extinguish Freddie Mac’s interests ❑ A quiet title action seeking to declare Freddie Mac’s lien void; and ❑ An attempt by a Borrower to effect a cramdown of a Mortgage in bankruptcy as to which Freddie Mac has not delegated authority to the Servicer or law firm to address ■ Actions that present an issue that may pose significant legal or reputational risk to Freddie Mac include, by way of example: ❑ Any issue involving Freddie Mac’s conservatorship; its conservator, FHFA; Freddie Mac’s status as a federal instrumentality; or an interpretation of Freddie Mac’s charter ❑ Any assertion that Freddie Mac is a federal agency or otherwise part of the U.S. government
Freddie Mac Guide 9402.1
402-3 ❑ Any “due process” or other constitutional challenge ❑ Any challenge to the methods by which Freddie Mac does business ❑ Any putative class actions involving a Freddie Mac-owned or guaranteed Mortgage ❑ Challenges to the standing of the Servicer to conduct foreclosures or bankruptcies that, if successful, could create negative legal precedent with an impact beyond the immediate case ❑ Challenges to the methods by which MERS® does business or its ability to act as nominee under a Mortgage ❑ Any “show cause orders” or motions for sanctions relating to a Freddie Mac- owned or guaranteed Mortgage, whether against Freddie Mac, the Servicer, a law firm or a vendor of the Servicer or law firm ❑ Any appellate or other action for post-judgment relief in any foreclosure, bankruptcy or legal action in which Freddie Mac is a named party ❑ Foreclosures on HUD-Guaranteed Section 184 Native American Mortgages ❑ Any environmental litigation relating to a Freddie Mac-owned or guaranteed Mortgage ❑ A need to foreclose judicially in a State where non-judicial foreclosures predominate ❑ Any claim brought by a governmental body ❑ Cross-border insolvency proceedings under Chapter 15 of the Bankruptcy Code ❑ Any claim of predatory lending or discrimination in Mortgage origination or Servicing; and ❑ Any claim implicating the interpretation of the terms of the Fannie Mae/Freddie Mac Uniform Instruments ■ Actions involving an eNote or eMortgage (as those terms are defined in Section 1402.1(b)) Given the evolving nature of default-related litigation, it is not possible to provide an exhaustive list of non-routine litigation. Each contested action presents unique circumstances, and the Servicer should evaluate each action on a case-by-case basis to determine whether a contested action is routine or non-routine.
Freddie Mac Guide 9402.1
402-4 (ii) Legal actions and strategies initiated by the Servicer A Servicer must obtain written approval (see Directory 5) from the Freddie Mac Legal Division prior to initiating the following legal actions and strategies: ■ Filing a new legal action, other than a Freddie Mac Default Legal Matter, on behalf of Freddie Mac ■ Filing a motion to intervene in a pending legal action on behalf of Freddie Mac ■ Appealing or otherwise challenging a judgment in any foreclosure or bankruptcy proceeding or any legal action in which Freddie Mac is a named party ■ Filing a notice of removal to federal district court for any legal action in which Freddie Mac is a named party ■ Asserting any position in a legal action that relates to Freddie Mac’s status as a government-sponsored enterprise, its conservatorship, or its conservator, FHFA ■ Propounding discovery requests or otherwise serving or providing any discovery responses on behalf of Freddie Mac (iii)Referring to Freddie Mac in litigation Freddie Mac must be described in legal proceedings as “Federal Home Loan Mortgage Corporation (“Freddie Mac”), a corporation organized and existing under the laws of the United States of America.” Freddie Mac may not be referred to as a “government agency.” (iv) MERS-registered Mortgages See Section 8101.5(b) for additional requirements relating to notices from MERS and MERS-registered Mortgages.
Freddie Mac Guide 9402.1
Litigation reporting, notification and legal representation (09/10/25) This section contains information related to: ■ Reporting and notification requirements for litigation ■ Counsel retained by Servicers pursuant to Servicer’s duty to indemnify Freddie Mac
Freddie Mac Guide 9402.1
402-5 (a) Reporting and notification requirements for litigation (i) EDR requirements The Servicer must monitor all Freddie Mac Default Legal Matters and act without delay and in accordance with applicable law when responding to any litigation matter. If litigation involves a Mortgage that is 30 or more days delinquent, the Servicer must report the litigation matter to Freddie Mac via EDR within the first three Business Days of the month following the month in which the Servicer became aware of the litigation using default action code 33 (Contested Foreclosure and Litigation). (ii) Legal reporting requirements for non-routine litigation (A) Notifying Freddie Mac of non-routine litigation The Servicer must act without delay and notify Freddie Mac within two Business Days of determining that the Freddie Mac Default Legal Matter involves or evolves into non-routine litigation. All notifications must be sent via e-mail (see Directory 5). If the Servicer retains counsel not selected and engaged pursuant to Chapter 9501 to handle the non-routine litigation matter (see Sections 8601.5(g) and 9402.2(b)), the notification to Freddie Mac must include the name, address, phone number and e- mail address of the Servicer’s counsel and a brief summary, including but not limited to: ■ The issues presented, ■ The Freddie Mac loan number, ■ The docket number, ■ The case caption and court, and ■ Any relevant pleadings Once Freddie Mac has been notified accordingly, the Servicer and the law firm(s) handling the non-routine litigation matter must periodically update Freddie Mac on the progress of the litigation. Freddie Mac must be provided sufficient opportunity, but no less than five Business Days before the filing deadline, to review and comment upon any substantive pleadings, including, but not limited to: ■ Motions, ■ Replies, ■ Briefs, and
Freddie Mac Guide 9402.1
402-6 ■ ■ Proposed orders (B) Notification of a modification of a Mortgage subject to active non-routine litigation If the Mortgage is subject to active non-routine litigation, and the Servicer determines the Borrower is eligible for a Freddie Mac Flex Modification®, the Servicer must: ■ Conduct a review through its in-house or outside counsel to determine that it is appropriate to send the Trial Period Plan offer per applicable laws ■ Ensure that any active litigation and settlement negotiations by Servicer’s counsel are not undermined and that Freddie Mac’s interests are not adversely impacted If it is deemed appropriate to send based upon the aforementioned review, the Servicer or the Servicer’s counsel must send the Trial Period Plan offer to an eligible Borrower’s counsel or, if not represented, to the Borrower directly when that Borrower’s Mortgage is subject to active non-routine litigation. (iii)Legal expenses for non-routine litigation The Servicer must obtain Freddie Mac’s prior written approval before incurring any expenses in the Servicing of a non-routine litigation matter. To obtain Freddie Mac’s approval, the Servicer must: ■ Contact Freddie Mac with details of the non-routine litigation matter (see Directory 5) according to the reporting requirements in Section 9402.2(a)(ii) ■ Submit a request for pre-approval (RPA) in PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools) for all non-routine litigation legal expenses that are reimbursable to the Servicer. The RPA submission must include an estimate of the attorney’s fees and litigation costs and the attorney’s hourly rate. When a delay in taking protective action might result in the impairment of the property or jeopardize Freddie Mac’s lien position, the Servicer must immediately submit an RPA. 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, as determined in Freddie Mac’s sole discretion, Freddie Mac will reimburse the Servicer. (b) Counsel retained by Servicers pursuant to Servicer’s duty to indemnify Freddie Mac (i) Servicer responsibilities for retaining counsel in litigation
Freddie Mac Guide 9402.1
402-7 From time to time, the Servicer may retain counsel to represent Freddie Mac and/or the Servicer in litigation involving allegations that, if true, could subject the Servicer to liability to Freddie Mac for a failure to comply with any selling or Servicing representation or warranty or requirement of the Guide or other Purchase Documents. In these cases: ■ When the Servicer retains counsel for this purpose, the Servicer remains liable for legal fees and costs incurred in the defense of any litigation, as well as any and all losses, judgments, damages and expenses, including fees and costs entered against and incurred on behalf of Freddie Mac ■ Freddie Mac will reimburse the Servicer for Freddie Mac’s proportionate share of expenses for responding to Borrower defenses (ii) Counsel selection and notification requirements Counsel retained and paid by Servicers pursuant to Section 9402.1(b) and this section do not need to be selected and engaged pursuant to Chapter 9501. For all other Freddie Mac Default Legal Matters, the Servicer must use counsel selected and engaged pursuant to Chapter 9501. Servicers must notify Freddie Mac (see Directory 5) of its retention of counsel not selected and engaged pursuant to Chapter 9501 and are required to comply with the reporting requirements in Section 9402.2(a)(ii). (iii)Litigation management and transitioning legal matters The Servicer must ensure that the law firm to which the Freddie Mac Default Legal Matter was originally referred is updated on the current status of the litigation either by the Servicer or its new counsel. Unless the entire legal matter or action is resolved, the Servicer is responsible for transitioning the Freddie Mac Default Legal Matter back to the law firm for further proceedings. This transition must occur no later than one Business Day after the resolution of the litigation matter. (iv) Borrower responsibility for legal fees When the Security Instrument provides for the Borrower to reimburse the Servicer for any legal fees and costs incurred, the Servicer should: ■ Instruct its counsel to notify the Borrower about his or her responsibility for such expenses ■ Ensure its counsel resolve such matters through stipulation or any other expeditious manner that will minimize fees and costs to the Borrower
Freddie Mac Guide 9402.1
501-1 Chapter 9501: Selection, Retention and Management of Law Firms for Freddie Mac Default Legal Matters