Freddie Mac Single-Family Seller/Servicer Guide 9501.5 — Servicer oversight and reporting

This section contains requirements related to: ■ Servicer use of connectivity and invoice processing system ■ Servicer reporting on Freddie Mac Default Legal Matters ■ Servicer monitoring and management of firm ■ Escalation of firm issues to Freddie Mac

(a) Servicer use of connectivity and invoice processing system A Servicer, whether acting directly or through any vendor, service provider or outsourcing company, may employ electronic monitoring, management, reporting or information and document delivery processes technology, referred to in this section as a “Connectivity System,” and an invoice processing system as outlined below. (i) Connectivity System A Servicer may employ a Connectivity System to assist with fulfilling Servicing obligations such as: ■ Packaging and referring foreclosure and bankruptcy cases to the firm ■ Communicating information and delivering documents between the Servicer and the firm as well as any other third parties requiring access to the Connectivity System; and ■ Managing and monitoring foreclosure and bankruptcy cases If a Servicer uses a Connectivity System: ■ Freddie Mac will reimburse the Servicer for the actual cost of the connectivity fee up to the maximum expense limit specified in Section 9701.3(a) ■ The Servicer must provide the firm with use of and access to the identical Connectivity System ■ The Servicer must permit or continue to permit the firm to integrate its own technology systems with the Connectivity System at no cost to the firm; and ■ The Servicer must not pass on any Connectivity System related charges to the Borrower or the firm (ii) Invoice processing system A Servicer may employ an invoice processing system for managing the submission and payment of invoices. If a Servicer, whether acting directly or through a vendor or outsourcing company, processes firm invoices electronically: ■ Freddie Mac will reimburse the Servicer for the actual cost of the invoicing fee up to the maximum expense limits specified in Section 9701.3(a); and ■ The Servicer must not pass on any invoice processing related charges to the Borrower or the firm The amounts specified in Section 9701.3(a) for connectivity and invoice processing systems are the maximum amounts for which a Servicer may seek reimbursement for the life of the default (i.e., the duration of the foreclosure, including any Freddie Mac Default Legal Matter such as bankruptcy). Example: If a Servicer has already referred a Mortgage to foreclosure and it then becomes necessary to take action with respect to a bankruptcy related to such Mortgage, or if a Servicer has already referred a file for bankruptcy and foreclosure has commenced following the bankruptcy referral, the Servicer may be reimbursed only for one connectivity fee. Likewise in this scenario, if the Servicer is using an invoice processing system, then the Servicer may only seek reimbursement for one invoicing fee associated with the foreclosure and for one invoicing fee associated with the bankruptcy during the life of the default.

(b) Servicer reporting on Freddie Mac Default Legal Matters The Servicer must provide reports related to firm performance, management of foreclosure and bankruptcy processes, oversight of firm compliance and performance and other related matters as required by Freddie Mac. Servicers must ensure that all firms retained for Freddie Mac Default Legal Matters report data required by Freddie Mac directly to Freddie Mac accurately and in the time frames prescribed. This includes required daily reporting by its retained law firms, via the Attorney Data Reporting (ADR) System (see Exhibit 88, Servicing Tools), of key metrics such as: ■ Milestones during the lifecycle of Freddie Mac Default Legal Matters ■ Delays affecting prompt and efficient completion of the Freddie Mac Default Legal Matter ■ Successful loss mitigation activities ■ Litigation detail during the lifecycle of certain non-routine litigation matters ■ Completion of the Freddie Mac Default Legal Matter Key metrics generally must be reported to Freddie Mac within 24 hours of occurrence unless otherwise prescribed in related training materials for the web-based attorney reporting system. Servicers may obtain access to the ADR System and monitor their law firms’ reporting progress by completing the ADR Servicer Access Request Form available on the Freddie Mac Default-Related Legal Services webpage at https://sf.freddiemac.com/working-with-us/servicing/default-related-legal-services. If a Servicer has further questions regarding ADR System access, they may contact Freddie Mac at [email protected].

(c) Servicer monitoring and management of firm The Servicer is responsible for managing and monitoring all aspects of the firm performance, providing necessary assistance to the firm relating to Freddie Mac Default Legal Matters and undertaking all activities required to protect Freddie Mac’s interest in the Mortgage. The Servicer must also ensure that the firm is in compliance with applicable Freddie Mac requirements and that the firm receives all training and documentation relating to applicable Freddie Mac requirements, either separately or as part of the Servicer’s standard training. (i) Compliance processes The Servicer must develop and have in place policies and procedures regarding oversight and compliance of firms handling Freddie Mac Default Legal Matters. The Servicer must have policies and procedures reasonably designed to ensure that firms handling Freddie Mac Default Legal Matters are in compliance with the limited retention agreement, the applicable provisions of the Guide and applicable law. The Servicer’s ongoing compliance monitoring must address the following minimum elements: ■ Ongoing eligibility under the Firm Minimum Requirements specified in Section 9501.2 ■ Compliance with the limited retention agreement, including the fee and cost guidelines; and ■ Firm performance and processes necessary to ensure Servicer’s compliance with applicable Guide requirements The Servicer must conduct periodic compliance reviews and training as appropriate. In determining the frequency of firm compliance reviews, the Servicer must consider the overall risk posed to Freddie Mac by the firm (legal, reputational and financial), firm file volume, performance, any changes in staffing ratios or levels, any litigation against the firm alleging systemic issues, any media coverage regarding the firm and the prior results of any firm compliance reviews. (ii) Freddie Mac review of compliance process Freddie Mac reserves the right to review the Servicer’s compliance process. Freddie Mac may require Servicers to conduct additional compliance activities related to firms handling Freddie Mac Default Legal Matters, such as additional firm compliance reviews. The Servicer must make available to Freddie Mac upon request the materials relating to its performance and compliance monitoring of firms handling Freddie Mac Default Legal Matters, including: ■ Information regarding the scope and methodology of the Servicer’s compliance monitoring ■ The schedule of firm compliance reviews conducted ■ The identity of any vendors used in the firm compliance reviews ■ All documentation from the firm compliance reviews; and ■ All findings, reports or remediation plans resulting from the firm compliance reviews In addition, Freddie Mac may require a Servicer to change the scope of its compliance process used to monitor firms handling Freddie Mac Mortgages. (iii)Freddie Mac right to audit firm Freddie Mac also reserves the right to directly conduct firm audits and firm on-site visits as Freddie Mac deems necessary. Freddie Mac audits and visits may focus on items such as: ■ Fee and cost compliance ■ Servicer compliance with Freddie Mac requirements, and ■ High-risk issues, including: ❑ Compliance with applicable laws ❑ Reputational risk ❑ Unsatisfactory results of Servicer firm compliance reviews; and ❑ Conflicts of interest involving Freddie Mac-owned or guaranteed Mortgages

(d) Escalation of firm issues to Freddie Mac (i) Escalation of issues The Servicer must notify Freddie Mac via e-mail (see Directory 1) within two Business Days of discovery, or sooner if circumstances warrant, if the Servicer becomes aware of any issues or concerns relating to a firm (including a specific employee or vendor of a firm) or a Freddie Mac Default Legal Matter, including, but not limited to: ■ Any information regarding a firm that may warrant a firm’s suspension, termination or Servicer request to transfer Freddie Mac Default Legal Matters to another firm ■ Information suggesting legal or reputational risk posed by the firm such as bar complaints, sanctions or litigation alleging systemic issues with the firm, firm attorney or firm practices ■ Security incidents that compromise the security, confidentiality or integrity of “sensitive customer information” and that the security incident is related to Freddie Mac-owned or guaranteed Mortgages (refer to Section 1301.2(f)) ■ Actual or alleged fraud on the part of the firm ■ Federal, State or local governmental inquiries, including congressional inquiries, regarding a firm, Freddie Mac-owned or guaranteed Mortgages or Freddie Mac or Servicer practices affecting Freddie Mac-owned or guaranteed Mortgages ■ Non-routine litigation (as described in Section 9402.1(b)) ■ Media inquiries relating to Freddie Mac, a firm or Freddie Mac-owned or guaranteed Mortgages ■ Volume or capacity issues with the firm ■ Breach of the limited retention agreement between the firm and Freddie Mac or the contract between the firm and the Servicer ■ Legal matters such as regulatory updates and specific reporting on certain matters (e.g., transfer tax matters) ■ Any systemic issues with the firm ■ Systemic Servicer issues related to file suspensions and foreclosure holds (e.g., failure to properly implement new statutory changes); and ■ Any material changes in the ownership, partnership or organization of the firm after executing the limited retention agreement. Such notifications should include instances where a named partner leaves the firm or a major practice group separates from the firm. (ii) Procedures relating to issues and concerns When a Servicer provides Freddie Mac notice of an issue requiring Freddie Mac’s attention, the Servicer must designate in its e-mail one or more points of contact. Freddie Mac may request that the Servicer obtain additional information from the firm regarding the issue that was escalated to Freddie Mac, and the Servicer must promptly provide the requested information to Freddie Mac. (iii)Freddie Mac rights Freddie Mac reserves the right to issue direction to Servicers and firms regarding escalated issues. Note: Refer to Section 9501.6(c) for more information about Freddie Mac’s reservation of rights. (iv) Escalated issue – confidential information Any issue that is identified and escalated to or by Freddie Mac pursuant to this section (other than non-routine litigation) is considered to be “confidential information” as defined in Sections 1201.8 and 8101.4(d). The Servicer must comply with the requirements of such sections with respect to treatment of any escalated issue.