Freddie Mac Single-Family Seller/Servicer Guide Section 9501.2 — Firm minimum requirements

Freddie Mac Single-Family Seller/Servicer Guide Section 9501.2 — Firm minimum requirements

9501.2: Firm minimum requirements (09/10/25) This section contains information related to: ■ Standards and practices ■ Firm structure and resources ■ Experience and expertise ■ Compliance and ethics ■ Management and oversight ■ Technology and reporting ■ Diversity and communication The Servicer must ensure that all firms selected and retained to handle Freddie Mac Default Legal Matters meet the firm minimum requirements specified in this section (“Firm Minimum Requirements”) and all other applicable Freddie Mac requirements. The Firm Minimum Requirements are as follows. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-3 (a) Standards and practices (i) Firm practice The firm’s practice areas must include end-to-end: ■ Default-related legal services: foreclosure, bankruptcy, loss mitigation (e.g., deeds-in- lieu of foreclosure), default-related litigation and ■ REO-related legal services: eviction, REO closing and related litigation. The firm must: ■ Be familiar with industry standards in the jurisdiction in which it practices ■ Understand the jurisdiction legal processes and requirements in default-related and REO-related legal services; and ■ Understand the substantive legal issues in the jurisdiction (e.g., standing) Additionally, the Servicer must consider firm experience in the following areas: foreclosure mediation, the Fair Debt Collection Practices Act, title curative issues and general housing-related issues (e.g., rent control, Section 8, lead paint liability, health code violations, foreclosure redemption, confirmation and ratification, condominium associations, homeowners associations (HOAs), mobile home matters or Cooperative Share Loans (see Chapter 8801 for special Servicing requirements for Cooperative Share Loans)). The firm should also have some experience with delegation for loss mitigation. The Servicer must also consider the firm’s membership in default-related and REO- related trade and industry groups, attendance or participation in State bar associations, seminar and lecture participation and attendance and any other activities relevant to default-related and REO-related law practice. (ii) Timelines The Servicer must review the firm’s completion timelines and confirm that the firm is able to track, monitor and complete foreclosure and bankruptcy matters in compliance with applicable law and Freddie Mac timeline requirements, taking into consideration outside factors that impact compliance with Freddie Mac timelines such as new foreclosure requirements and court delays. (iii) Information privacy The firm must maintain physical, technical and procedural controls and effective information security and data management to: Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-4 ■ Ensure the security and confidentiality of personally identifiable information (PII) and confidential information, whether in paper, electronic or other form ■ Protect against any threats or hazards to the security or integrity of such information; and ■ Protect against unauthorized access to or use of such information The firm must implement controls meeting or exceeding industry standards, including, as applicable, standards promulgated by the International Office for Standardization or National Institute for Standards and Technology. Specifically: ■ The firm must ensure that PII that is stored on the firm’s systems and workstations is encrypted at rest at all times ■ The firm must have secured storage for promissory notes and other original documents to prevent theft and to ensure protection against fire, flood or other damage ■ The firm may not perform, outsource or send to any affiliate outside of the United States or its territories any legal work on Freddie Mac-owned or guaranteed Mortgages, including any storage of Freddie Mac data ■ The firm may not send any PII underlying Freddie Mac-owned or guaranteed Mortgages outside the United States The firm must have written policies, procedures and processes in place by the date of the submission of the Servicer Selection Form related to protection of PII and fraud prevention, including policies, procedures and processes related to: ■ Background checks of all employees ■ Protection of PII ■ Fraud prevention and identification; and ■ Incident response and notification protocols for data breaches and other security incidents The Servicer must review and confirm that the firm meets these requirements for information security, data management, protection of PII and fraud prevention. (b) Firm structure and resources (i) One staffed office with physical presence in jurisdiction Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-5 The Servicer must confirm that the law firm has at least one appropriately staffed office physically located in a jurisdiction in which the firm is retained for Freddie Mac Default Legal Matters. An appropriately staffed office means a physical brick and mortar office at which law firm employees regularly work that is not a place of residence and that contains the usual equipment and facilities necessary to operate a law practice. A law firm must be registered, licensed and/or permitted, as necessary, with the appropriate jurisdictional authorities for all jurisdictions in which it practices. (ii) Jurisdiction-wide coverage and use of local counsel The Servicer must ensure that the firm has the ability to cover foreclosure, bankruptcy, eviction, REO closing matters and default-related litigation throughout the jurisdiction. If the firm has partnerships or relationships with third parties (e.g., local counsel, trustee companies or title companies) that will perform or complete some aspect of the default- related and REO-related work, the Servicer must require the firm to: ■ Obtain disclosure from the firm regarding such relationships and the extent to which third parties will be relied upon, and ■ Determine whether the firm has a reasonable contingency plan for the loss of any of those relationships or operational processes In evaluating any such third-party relationship, the Servicer must consider the length of time the relationship has existed and the adequacy of the firm’s written policies to mitigate third-party risk. If a firm uses local counsel to handle matters within the jurisdiction, the Servicer must ensure that the firm has a process to select, manage and review the local counsel and their work product. The process must be designed to ensure that local attorneys are qualified and adequately trained and have a satisfactory history with respect to bar complaints, sanctions and similar matters. For a firm’s contested caseload (e.g., contested foreclosures and litigated cases), the firm’s reliance on local counsel must be minimal. Any use of local counsel for these matters must be structured so that the retained firm will direct and manage the local counsel on those matters. (iii) Firm capacity As of the date of the submission of the Servicer Selection Form via https://www.freddiemacsats.com/Security/Login, the Servicer must: ■ Confirm that the firm has the ability to accept additional referrals Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-6 ■ Confirm that the firm is not operating at full capacity, given the existing facilities, personnel and technology. Alternatively, the firm must outline to the Servicer’s satisfaction the steps and time frame necessary to be in a position to handle additional referrals while still maintaining appropriate firm-to-file and staff-to-file ratios. ■ Confirm that the firm has contingency plans to deal with a contraction in the market (iv) Insurance requirements The Servicer must confirm that the firm has an appropriate level of malpractice and errors and omissions insurance coverage in place or be able to obtain an appropriate amount of insurance by the date of the submission of the Servicer Selection Form. The appropriate level of insurance coverage will depend upon the total number of Freddie Mac and Fannie Mae files the firm is managing or expects to manage when being evaluated by the Servicer. The firm must have the ability to obtain the appropriate amount of insurance coverage under the requirements as follows: ■ Tier I: Volume of 0–4,499 foreclosure matters, coverage of not less than $1 million per occurrence with an aggregate of not less than $3 million ■ Tier II: Volume of 4,500–19,999 foreclosure matters, coverage of not less than $5 million per occurrence with an aggregate of not less than $5 million; and ■ Tier III: Volume of 20,000 or more foreclosure matters, coverage of not less than $8 million per occurrence with an aggregate of not less than $8 million The required level of insurance is determined by the higher of the Freddie Mac or Fannie Mae pending foreclosure volume. Example: If a firm had 2,000 Freddie Mac foreclosure matters and 4,501 Fannie Mae foreclosure matters, the firm would fall within Tier II, and the required coverage would be not less than $5 million per occurrence with an aggregate of not less than $5 million. Beginning in 2014, Servicers must conduct an updated coverage analysis annually, with the appropriate level of insurance to be determined by the number of matters being handled as of June 1 of each year. When an annual review reveals a need to increase a firm’s coverage, firms will have until December 31 of each year to obtain any required increased coverage. Servicers may grant firms additional time to obtain increased coverage, if necessary, to reach the routine renewal date for the firm’s policy but may not grant extensions beyond June 1 of the following year. (v) Financial resources The Servicer must confirm that the firm has adequate financial resources and the financial ability to make required advances in connection with filing fees and costs necessary to process default-related and REO-related matters. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-7 The Servicer must review the firm’s financial statements and/or other firm financial documents in order to confirm that the firm has sufficient reserves or credit lines to manage operating expenses. (vi) Business continuity The Servicer must confirm that the firm has business continuity and/or disaster recovery plans in place to recover critical business functions. The firm must have a documented succession/continuity plan in the event of loss of the firm owners/partners. (c) Experience and expertise (i) Firm has adequate, relevant jurisdiction-specific experience The Servicer must confirm that a law firm has at least two full-time attorneys dedicated to default Mortgage practice in each jurisdiction in which the law firm has been selected and retained for default-related legal services (the “Qualifying Attorneys”), with special rules applicable to select jurisdictions. The law firm must have at least two Qualifying Attorneys in each jurisdiction in which the law firm has been selected and retained for default-related legal services, one with at least eight years and a second with at least five years of jurisdiction-specific experience in: ■ Foreclosure (including, where applicable, confirmation, redemption and ratification matters) ■ Bankruptcy ■ Loss mitigation ■ Eviction ■ REO closing and related litigation (collectively, “default Mortgage practice”) Each Qualifying Attorney must be an owner, partner or full-time employee of the firm. The law firm can meet the requirement that the Qualifying Attorneys are “in each jurisdiction” in one of two ways: ■ If the law firm does not have an appropriately staffed and equipped office in the jurisdiction, the two Qualifying Attorneys must: ❑ Reside in the relevant jurisdiction ❑ Be licensed and in good standing to practice law in the relevant jurisdiction Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-8 ❑ Practice law on a full-time basis, and ❑ Devote more than fifty percent (50%) of their working time to default Mortgage practice in the relevant jurisdiction ■ If the law firm has an appropriately staffed and equipped office in the jurisdiction, one or both of the two Qualifying Attorneys may reside outside of the jurisdiction, provided the Qualifying Attorneys not residing in the relevant jurisdiction ordinarily work out of the firm’s office(s) in the relevant jurisdiction (except during situations involving national or regional emergencies such as natural disasters, health-related pandemics or epidemics and other situations making it appropriate and reasonable for the firm to not require employees to report for work at the firm’s office(s)) The Servicer must obtain a list of the names of the firm’s managing attorneys, partners and associates with the years of experience in each area (foreclosure, bankruptcy, eviction, REO closing and related litigation). Special rules apply to the following jurisdictions: ■ The States of Alaska, Idaho, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, West Virginia and Wyoming ■ The U.S. territories of Guam, Puerto Rico, Samoa and the U.S. Virgin Islands ■ The District of Columbia In these jurisdictions, the two Qualifying Attorneys must: ■ Be licensed and in good standing to practice law in the relevant jurisdiction, and ■ Practice law on a full-time basis While Freddie Mac expects that Servicers will give preference to firms that employ at least two attorneys who reside in the relevant jurisdiction and devote more than fifty percent (50%) of their working time to default Mortgage practice in the relevant jurisdiction, Servicers may use a firm that does not meet these two standards if the firm otherwise meets the Firm Minimum Requirements. When submitting the Servicer Selection Form pursuant to Section 9501.3(a)(i), the Servicer must identify the Qualifying Attorneys for each relevant jurisdiction. At a minimum, the Servicer must: ■ Identify where the attorneys reside by city or county Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-9 ■ Identify the jurisdictions in which the attorneys are licensed and are in good standing to practice law ■ State whether the attorneys practice law on a full-time basis ■ Describe the employment relationship between the firm and the attorneys, such as whether the attorneys are owners, principals, members, shareholders, partners, associates or other employees (ii) Prior volume experience Servicers must confirm the firm and/or managing attorney(s) has completed a sufficient number of foreclosure, bankruptcy, loss mitigation, eviction and REO matters within the past 24 months to demonstrate that the firm has experience in representing creditors in default-related matters. For the 24-month period, the Servicer must review the total number of matters referred, the total number of matters completed and the number of matters currently pending for each of the following areas: foreclosure, bankruptcy, loss mitigation, eviction and REO closing. What constitutes a sufficient number of completed default-related and REO-related legal services will vary depending upon the jurisdiction at issue, the volume the Servicer expects to refer to the firm and the relative size of the firm. Servicers must consider these factors when making this determination. (iii) Jurisdiction-specific industry references The Servicer must obtain from the firm at least two jurisdiction-specific Mortgage Servicers or default-related references, or, if the firm has been in existence less than one year, the partners or shareholders of the firm must provide at least two Servicer or default-related references in connection with work performed in the particular jurisdiction. (iv) Staff experience The Servicer must determine whether the firm’s non-attorney staff has reasonable experience. In determining what constitutes reasonable experience, the Servicer must consider the average years of experience, education, qualifications and demonstrated ability of the non-attorney staff in relation to their respective levels of responsibility. (d) Compliance and ethics (i) Attorney licensing The Servicer must confirm that the firm’s attorneys who will handle Freddie Mac Default Legal Matters are licensed to practice and in good standing in the jurisdiction in which Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-10 the firm is being retained. Legal work must be performed by attorneys licensed in the jurisdiction. (ii) Ethics and professional standards The firm must demonstrate a history of legal practice that comports with applicable legal and ethical standards and reflects high professional standards. The Servicer must conclude that the firm does not, in the totality of the circumstances, pose a legal and/or reputational risk or exhibit systematic issues that may lead to reputational and/or legal risk to Freddie Mac. The Servicer must obtain the following information from the firm in order to evaluate the sufficiency of the firm’s professional standards: ■ Any sanctions against the firm or any of its present or former attorneys in the past five years, including the nature of the sanctions and if they relate to a loan-level matter or systemic firm practice, and, if related to firm practice, any corrective actions taken by the firm ■ Any bar complaints/reprimands against present and former firm attorneys in the past 10 years and whether the complaints were closed, are pending or resulted in some form of adverse action ■ Any government investigations involving firm practices in the past 10 years and whether the investigations involved firm practices or are related to client investigations ■ Any damages or settlement of claims as a result of an allegation of professional negligence against the firm or its attorneys in the past five years (i) in excess of $20,000 in any single occurrence and $50,000 in the aggregate, or (ii) reflect a possible pattern of professional negligence, regardless of amount; and ■ Any significant litigation asserting systemic issues with firm processes or legal work, such as any class-action lawsuit against the firm If the Servicer is aware of any of the above items that involve the firm’s professional standards but which were not disclosed by the firm, the Servicer must disclose them to Freddie Mac in the Servicer Selection Form. The Servicer must obtain a disclosure from the firm regarding whether the firm (or any of its partners, shareholders or employees while acting as a partner, shareholder or principal at another firm) has been previously terminated by Freddie Mac or Fannie Mae or had referrals suspended by Freddie Mac or Fannie Mae. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-11 The Servicer must obtain a certification from the firm that, to the best of the firm’s knowledge, the firm’s documents have been and continue to be prepared, executed and/or notarized in compliance with applicable law. If the firm reports that the firm, its attorneys, notaries or third parties that the firm relies on to perform any aspect of default-related or REO-related services have previously prepared, executed or notarized documents that have not been in compliance with applicable law, the Servicer must conclude that the firm has instituted controls, procedures and processes to address the contributing cause(s) of the firm’s failure to comply with applicable law in order to execute the Servicer Selection Form. Freddie Mac expects Servicers to exercise sound judgment and consider the totality of the circumstances in evaluating the potential legal and reputational risks posed by a firm to Freddie Mac. The items for consideration outlined above are not intended to be exhaustive or to disqualify a firm from retention if the Servicer concludes that the firm is acceptable considering the totality of the circumstances. (iii) Conflicts of interest Attorneys must not be affected by a conflict of interest or a potential conflict of interest when handling Freddie Mac Default Legal Matters. The Servicer must retain the most qualified attorneys in compliance with Freddie Mac requirements to assist with processing Freddie Mac Default Legal Matters without regard to arrangements that could provide a financial or personal benefit directly or indirectly to the Servicer, its employees, outsource companies or third-party vendors used by the Servicer to assist in Servicing defaulted Mortgages. On the Servicer Selection Form, the Servicer must disclose to Freddie Mac any current, past (within the last five years) or pending personal and/or financial relationships between: ■ The Servicer and the firm, including its partners and shareholders (as applicable) and ■ The firm, including its partners and shareholders (as applicable), and any outsourcing company or other third-party vendor used by the Servicer to assist in Servicing defaulted Mortgages (iv) Adverse matters No substantial part of the firm’s practice can include matters that are adverse to financial institutions, including Freddie Mac or Fannie Mae. Adverse matters to financial institutions include: ■ Condominium association, HOA or Cooperative Corporation foreclosures ■ Consumer debtor or mortgagor representation Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-12 ■ Bankruptcy trustee representation; or ■ Any other client(s) that may create a potential conflict of interest (v) Disclosure of third-party service providers The Servicer must require the firm to disclose the identity of and relationship with any entities the firm relies upon to provide third-party support functions performed on the Servicer’s behalf, including, but not limited to, title searches, title insurance, posting, publication and process services. The Servicer must also require the firm to disclose whether the firm has a process to select and regularly review costs and performance of vendors of related sources to ensure competitive pricing and high quality. (e) Management and oversight (i) Staff oversight The Servicer must confirm that the firm has appropriate attorney-to-staff ratios to ensure appropriate staff oversight given the size of the firm and the firm’s operational structure. The Servicer must consider whether the firm practices in a judicial or a non-judicial jurisdiction, the firm’s case management practices, the jurisdiction-specific process, attorney and staff experience, firm technology and firm infrastructure. (ii) File oversight The Servicer must confirm that the firm has appropriate (i) attorney-to-file and (ii) staff- to-file ratios, given the size of the firm and the firm’s operational structure. The Servicer must take into consideration whether the firm practices in a judicial or a non-judicial foreclosure jurisdiction, the firm’s case management practices, the jurisdiction-specific processes, attorney and staff experience, firm technology and firm infrastructure. (iii)Employee training The Servicer must confirm that the firm has written policies for employee training, including privacy training. When determining whether a firm’s employee training is adequate, the Servicer must review the frequency of training, the presence of policies and procedures and firm handbooks, manuals and job aids. (iv) Quality control The Servicer must confirm that the firm has written policies, procedures and/or processes in place by the date of the submission of the Servicer Selection Form, to ensure the proper management and supervision of staff and the proper preparation, review, execution and notarization of default-related documents and REO-related documents. The Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-13 Servicer must also confirm the firm has an escalation process for employees to raise document execution and other quality control issues to firm management. The Servicer must obtain documentation and information related to the firm’s process for ensuring compliance with its policies, procedures, processes and training, such as an internal compliance program and/or quality control reviews. (f) Technology and reporting (i) Technology The Servicer must confirm that the firm has adequate technology in place or technological capabilities to provide reporting, communication and tracking of key events and milestones, including access to PACER/ECF or other similar systems to obtain case and docket information from federal appellate, district and bankruptcy court records. Additionally, the Servicer must confirm that the firm is able to provide status reports and track significant dates and events for foreclosure, bankruptcy, evictions and REO closings and has the capability to measure the duration between various process stages, to identify process impediments (e.g., holds) and to parse holds into different categories. If a firm is multi-jurisdictional or has partnerships or relationships with third parties (e.g., local counsel, trustee companies or title companies) that will perform or complete some aspect of the default-related or REO-related work or if the firm relies on other offices to perform some aspect of the work or provide operational support, the Servicer must confirm that the firm maintains a reliable and secure means of exchanging matter information between each office and any third party the firm relies upon. The Servicer must require the firm to describe whether the firm currently uses a universal translation technology to communicate information between their technological system and the various Servicers’ systems, or the firm must explain its method for transmitting information efficiently, accurately and securely to Servicers. (ii) Technology staffing The Servicer must confirm that the firm has adequate in-house technical expertise or readily available vendor support to ensure compliance with Freddie Mac’s automated reporting requirements. (iii)Capability to report via the Attorney Data Reporting (ADR) System The Servicer must confirm that the firm has the capability to provide daily reporting to Freddie Mac of key metrics (i.e., volume, milestones, delays, loss mitigation successes, litigation detail, etc.) via the ADR System (see Exhibit 88, Servicing Tools), pursuant to Section 9501.5(b). The Servicer must also ensure that the firm has staff responsible for reporting data directly to Freddie Mac using the ADR System. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9501 As of 09/10/25 Page 9501-14 (g) Diversity and communication (i) Diversity data The Servicer must confirm that the firm has the capability to report diversity data to the Servicer and Freddie Mac, if necessary. (ii) Referrals The Servicer is responsible for ensuring that the firm complies with Freddie Mac requirements and applicable laws regarding referrals and payment of related fees and benefits, as further described in Sections 9501.4(b) and 9501.4(c). The Servicer must not require the firm to use vendors, outsource companies or other third-parties specified by the Servicer as a condition of receiving a referral of a Freddie Mac Default Legal Matter.

Source: Freddie Mac Single-Family Seller/Servicer Guide Section 9501.2 — Firm minimum requirements · source URL · snapshot 5869ee9e606cd4ae