Investor Reporting Quick Reference

Investor Reporting Quick Reference

June 2009

Notice The information in this publication is intended to provide general guidance to Freddie Mac Servicers. The information is offered as an aid in, not a substitute for, complying with requirements set forth in the Single-Family Seller/Servicer Guide (the Guide). Each Freddie Mac approved Servicer must comply with all applicable provisions in the Guide, and all other purchase documents, as that term is defined in the Guide. This manual does not constitute as one of the purchase documents.

The requirements and the guidelines in this publication are subject to changes by Freddie Mac at any time.

Publication number: 266

Initial Printing: March 1997

Last Updated: June 2009

Copyright© 2009 Federal Home Loan Mortgage Corporation. All rights reserved.

Table of Contents

Investor Reporting Quick Reference Page i Freddie Mac June 2009

Table of Contents Getting Started What to Report and Remit ................................................................................................................................................................. 1 When to Report and Remit ................................................................................................................................................................ 2 Remittance Options ........................................................................................................................................................................... 3 How to Report and Remit Reporting ..................................................................................................................................................................................... 6 Remitting...................................................................................................................................................................................... 6 What to do After You Sell Freddie Mac a Mortgage.......................................................................................................................... 7 The Big Picture.................................................................................................................................................................................. 9 Reports Used for Investor Reporting................................................................................................................................................ 10 Need Help? Contact Your Freddie Mac Loan Portfolio Specialist................................................................................................................. 13 Utilize our Educational Offerings................................................................................................................................................ 13 Call Us..................................................................................................................................................................................... 13

Resolving Data Discrepancies

The Basics....................................................................................................................................................................................... 15 Understanding the Daily Edit Reports ............................................................................................................................................... 15 The Loan Level Missing Report............................................................................................................................................... 16 The Edits to be Cleared Report............................................................................................................................................... 17 The System Cleared Edits Report............................................................................................................................................ 18 How to Use the Daily Edit Reports and Prioritize Which Edits to Resolve First.................................................................................. 19 Loan Edit Codes ............................................................................................................................................................................. 22 Basic Edits ............................................................................................................................................................................... 23 Edits for Exception Codes ........................................................................................................................................................ 25 Edits for Accounting Cycle........................................................................................................................................................ 34

Table of Contents

Investor Reporting Quick Reference Page ii Freddie Mac June 2009

Edits for Last Payment Received Date....................................................................................................................................... 37 Edits for Exception Date........................................................................................................................................................... 39 Edits for Interest Due................................................................................................................................................................ 41 Edits for Principal Due .............................................................................................................................................................. 42 Edits for Unpaid Principal Balance ............................................................................................................................................ 44 Edits for Prepayment Penalty and Note Holder.......................................................................................................................... 47

MIDANET for the PC

Software Version and Site Number Version Number....................................................................................................................................................................... 48 Site Number............................................................................................................................................................................. 48 Commonly Used Function Keys............................................................................................................................................... 49 How to Access MIDANET Screens Communications ....................................................................................................................................................................... 50 Loan Level Monthly Reporting.................................................................................................................................................. 51 Sending Us a Revision in MIDANET for the PC What is a Revised Transaction?................................................................................................................................................. 54 When to Send a Revision.......................................................................................................................................................... 54 How to Send a Revised Transaction.......................................................................................................................................... 54

Reconciling Your Portfolio

The Basics....................................................................................................................................................................................... 55 Understanding the Monthly Reconciliation Reports The Monthly Account Statement............................................................................................................................................. 56 The Seller/Servicer Remittance Analysis................................................................................................................................. 57 The Detailed Adjustment Report............................................................................................................................................. 59 The Loan Reconciliation Difference Report ............................................................................................................................ 60 How to Use the Monthly Reconciliation Reports............................................................................................................................... 66

Table of Contents

Investor Reporting Quick Reference Page iii Freddie Mac June 2009

Custodial Accounts

Establishing and Maintaining Accounts.............................................................................................................................................. 67 Reconciling Accounts Principal and Interest Accounts................................................................................................................................................. 68 Important Points About the Principal and Interest Custodial Account Reconciliation................................................................... 71 Escrow Accounts ..................................................................................................................................................................... 71 Important Points About the Escrow Account Reconciliation....................................................................................................... 73 Resolving Variances.................................................................................................................................................................. 73 Important Points About Variances............................................................................................................................................. 74 Custodial Account Reconciliation and Cash Management Checkpoints ...................................................................................... 75 Transfers of Servicing What is a Transfer of Servicing?....................................................................................................................................................... 77 Concurrent Versus Subsequent ........................................................................................................................................................ 77 Who are the Players?....................................................................................................................................................................... 77 The Basics....................................................................................................................................................................................... 78 The Details ...................................................................................................................................................................................... 79

Table of Contents

Investor Reporting Quick Reference Page iv Freddie Mac June 2009

Getting Started What to Report and Remit

Freddie Mac Document Investor Reporting Quick Reference 1 June 2009

Getting Started Reporting and remitting are processes that require accuracy and proper timing. The brief descriptions here give you an outline of the Servicers’ responsibilities. See the Single-Family Seller/Servicer Guide and the Where to Get More Information page at the end of this section for more detailed information.

What to Report and Remit Reporting and remitting are separate activities:

Reporting is the process of transmitting information to Freddie Mac based on the accounting activity (or non-activity) for each mortgage in your Freddie Mac portfolio.

You must report to Freddie Mac all mortgages in your Freddie Mac portfolio.

You must report each loan in your Freddie Mac portfolio regardless of whether any activity occurred for the loan during the reporting period.

Report data that accurately reflects activity applied to each loan in your Freddie Mac portfolio. There are two types of mortgage/loan activity: non-exception and exception.

Non-exception activity is regular monthly activity of principal and interest payments made according to the terms and conditions of the security instrument executed by the borrower. This activity includes first-time reporting on newly funded mortgages, reporting regular principal and interest payments from borrowers on active mortgages, and reporting on inactive mortgages.

Exception activity is any exception to regular monthly principal and interest payments that changes the mortgage status. Examples of exception activity include paying off a mortgage in full, reinstating a mortgage from foreclosure, or a third party sale foreclosure.

Remitting is the process of initiating a transfer of funds due Freddie Mac from your Freddie Mac custodial account.

Getting Started When to Report and Remit


When to Report and Remit Reporting and remitting is divided into two major parts: monthly processing and interim processing:

Monthly processing is cyclical reporting and remitting completed every month at the same time.

Freddie Mac’s accounting cycle is a one-month period that begins on the 16th of each month and ends at the close of business on the 15th of the following month, or the previous business day if the 15th falls on a non-business day. The accounting cycle determines the timing for monthly reporting. The timing for monthly remittances is determined by the remittance option selected when the mortgage was sold to Freddie Mac. The remittance option is listed on the Funding Detail Report sent to you at the time of funding. Servicers may select more than one remittance option in their portfolio.

Interim processing is event-driven reporting, and remitting that is completed throughout the month in response to certain mortgage activities, such as payoffs and third-party foreclosure sales. Throughout the month, you must report exception activity for payoffs within two business days of the activity date, and for third-party foreclosure sales you must report exception activity within five business days of the activity date.

Example: A payoff that occurred on 1/5/xx must be reported by 1/7/xx.

The receipt-of-funds date determines the timing for interim reporting. The type of mortgage activity determines the timing for interim remittances.



Remittance Options Freddie Mac must have access to funds by the remittance due date.

There is a one business-day lag between the day funds are called in, and the day funds are available to Freddie Mac. Therefore, you must call in funds no later than 9:00 p.m. Eastern time on the business day prior to the remittance due date.

The five most commonly used remittance options are described below. See the Funding Detail report to determine the remittance option for a mortgage.

If the remittance option is... Funds are due to Freddie Mac by... Remit funds for... Accelerated Remittance Cycle (ARC) A contract-specified business day. If the date is not

specified, use the third business day following the accounting cutoff.

Actual principal reduction (including curtailments and prepayments)

Net yield interest (including interest due on reinstated mortgages)

Gold The third business day following the accounting cutoff.

First Tuesday The first Tuesday of the calendar month following the accounting cutoff.

Original, including Class B Multifamily mortgages

Super Accelerated Remittance Cycle (Super ARC)

A contract-specified calendar day between the 1st and 15th calendar day of the month. The funds must be available the preceding business day if the calendar day is a non-business day.

Super ARC remittances use the scheduled/scheduled accounting procedure because funds are remitted before the accounting cutoff.

Scheduled principal

Scheduled interest

Previous cycle’s curtailments collected



The following table lists the reporting due dates, remitting due dates, and exception codes used to report non-exception and exception activities.

Monthly processing

Exception Code

Activity Description Report activity within five business

days after the….

Remittances are due…

N/A Newly funded mortgage

Mortgage we funded during the current accounting cycle.

Accounting cutoff By the contract-specified remittance option due date

Active Current or delinquent mortgage that has not been inactivated and is not in foreclosure.

40 Inactivation Mortgage in which you have initiated and notified us of foreclosure and are transferring the loans to an inactive status.

N/A Inactive Mortgage you inactivated in a previous accounting cycle; no principal or interest due.

N/A

50 Reinstatement Mortgage inactivated in a previous accounting cycle, brought current can include mortgages that have a completed workout or loan modification.

By the contract-specified remittance option due date

72 FHA/VA foreclosure/ conveyance

A claim has been filed with the FHA/VA on a property that did not sell at foreclosure sale.

No funds are due; you receive a credit for the interest advanced on the contract-specified remittance option due date.

70 Transfer to REO (real estate owned)

Mortgage property was acquired by us through foreclosure or deed-in-lieu of foreclosure.

80 Principal Balance Correction

Mortgage on which the ending UPB is higher than the beginning UPB.

By the contract-specified remittance option due date



Interim Processing

Exception Code

Activity Description Report activity within…. Remittances are due…

60 Payoff - Matured Mortgage was paid in full during the accounting cycle.

2 business days after the receipt of funds

Within 5 business days of receipt of funds

61 Payoff – Prepaid

65 Payoff – Repurchase You are repurchasing (buying back) a mortgage with our approval.

30 days following the date of our notification requiring or approving the repurchase

Within 5 business days of the exception date

66 Payoff – ARM converting to a fixed rate

Borrower is exercising the conversion option for convertible ARM sold under the repurchase program.

5 business days after the exception date (exception date may be no later than the deadline specified in the contract)

71 Third-Party foreclosure sale - Conventional

Property was purchased by a third party at foreclosure sale.

2 business days after the receipt of funds

Note: the exception date is the foreclosure sale

Within 5 business days of receipt of funds

73 Third-Party foreclosure sale – FHA/VA mortgage

Getting Started How to Report and Remit


How to Report and Remit

Reporting Use Freddie Mac’s Mortgage Information Direct Access Network (MIDANET®) to report mortgage information. You may also use MIDANET to receive confirmation from Freddie Mac that we have received your reports and to print reports that we send you. MIDANET includes two automated reporting media: MIDANET for the Personal ComputerTM (MIDANET for the PC), and central processing unit to central processing unit (CPU-to-CPU). Contact (800) FREDDIE for MIDANET installation instructions or see the MIDANET for the PC section of this publication for basic information about using MIDANET for the PC.

The data that reflects the activity for a mortgage is referred to as a loan-level transaction. Use MIDANET to report loan-level transactions to Freddie Mac monthly for each mortgage in your Freddie Mac portfolio. Freddie Mac can only process one transaction per loan so you should summarize each mortgage’s monthly activity into one transaction. After you report, Freddie Mac sends daily edit reports to notify you of any discrepancies or edits in your loan-level transactions. Resolve edits as necessary to report correctly for the cycle. See the Resolving Data Discrepancies in this publication for information on resolving reporting discrepancies.

At the end of the month, after Freddie Mac processes a loan-level transaction for every mortgage you service for us, we create reports to send you. These monthly reconciliation reports summarize the loan-level activity on your Freddie Mac portfolio for the accounting cycle. You can use these reports to reconcile your Freddie Mac portfolio, including your custodial account. See Reconciling Your Portfolio and Custodial Accounts for information on using the monthly reconciliation reports.

Remitting Remit funds due Freddie Mac through Global Payments, Inc. (GPI), a third party vendor that collects funds on our behalf.

Seller/Servicers have two methods to remit funds, through touch-tone phone (follow the voice prompts), or transmit online via Investor Accounting ManagerSM (IAM). When you become a Freddie Mac Servicer, we will provide you with a toll-free remittance number and your identification number. See www.FreddieMac.com for more information regarding IAM.

There is a one business-day lag between the day funds are called in and the day funds are available to Freddie Mac. Therefore, you must call in funds no later than 9:00 p.m. Eastern time on the business day previous to the remittance due date.

Getting Started What to do After You Sell Us a Mortgage


What to do After You Sell Freddie Mac a Mortgage

Once Freddie Mac successfully processes the purchase transmission, the mortgage is funded and you receive funding documentation and either Cash or a PC. You also receive a Loan Purchase Statement and Funding Detail report. The Funding Detail report provides loan-level backup for the purchase summaries. For each sale you receive one or more Funding Detail reports.

The Funding Detail report is the most important document for ensuring your investor reporting system is in sync with Freddie Mac’s. You must receive this report before reporting to us on a mortgage for the first time. Use the Funding Detail report to verify the accuracy of mortgage data to avoid errors in loan setup and reporting. See the MIDANET for the PC section in this quick reference for information on downloading data from the Funding Detail report to set up your investor reporting to Freddie Mac. Reporting and remitting requirements for newly funded mortgages are determined by the funding date and the mortgage balance at the end of the accounting cycle. Freddie Mac reporting and remitting requirements are described in the following table:

If the funding date is between the…

And the ending unpaid principal balance at the accounting cutoff…

Report and remit…

1st and 15th of the month Is not different from the funded balance Nothing. You may elect to report for the first time either at the accounting cutoff in the funding month or in the following month, when the monthly interest is due.

Is different from the funded balance Principal due and zero interest. Reporting is mandatory since principal is due.

16th and the end of the month Is not different from the funded balance One month’s interest, even if you do not receive a payment from the borrower. Reporting is mandatory since interest is due.

Is different from the funded balance Principal reduction and one month’s interest.

Use the following formula to calculate the principal due to us:

Funded balance - Ending balance = Principal due

Use the following formula to calculate monthly interest due to us:

Beginning Unpaid Principal Balance (UPB) x Accounting Net Yield (ANY) ÷ 12 months = Monthly interest due

Getting Started What to do After You Sell Freddie Mac a Mortgage


Monthly interest is always due in arrears for your Freddie Mac portfolio. This means interest is for the previous calendar month for any accounting cycle’s reporting. Freddie Mac is not due any monthly interest if we did not own the mortgage during any part of the previous month. When Freddie Mac purchases a mortgage we reimburse you for the portion of the month we did not own the mortgage. Therefore, you are required to report and remit interest for the entire month regardless of what day of the month we fund the mortgage. Monthly interest due to us is calculated on a 30-day month regardless of the actual number of calendar days in the month.

Apply a borrower’s mortgage payment to interest and principal by:

Calculating the interest portion based on the outstanding unpaid principal balance (UPB) as of the last paid installment date.

Applying the balance of the principal and interest payment as a principal reduction.

The following timeline illustrates the interest and principal you would report and remit for a May accounting cycle:

April Interest

Report April’s interest at May’s cycle

4/1 5/1 5/15 6/14/16

Report principal collected

Getting Started The Big Picture


The Big Picture Put simply, here are the ongoing things you must do to report and remit to us for your Freddie Mac portfolio.

1 On a daily basis

Deposit mortgage payments into the principal and interest custodial account and escrow custodial account.

Report your loan-level transactions for prepaid and matured payoffs within two business days of receipt of funds. Report all other liquidations within five business days of receipt of funds.

Remit your liquidations within four business days of receipt of funds. Freddie Mac should receive the remittance within five business days of receipt of funds.

2 Within the first three business days of the month

Transmit your electronic default reporting (EDR) to us via MIDANET, even if you have no delinquent loans.

3 After the accounting cutoff (usually the 15th of the month)

Report your loan-level transactions within five business days.

Remit 3-day ARC and Gold remittances within two business days. Freddie Mac should receive the remittance within three business days.

4 On the business day prior to the first Tuesday of the following month

Remit your First Tuesday remittances. Freddie Mac should receive the remittance by the First Tuesday due date.

Getting Started Reports Used for Investor Reporting


Reports Used for Investor Reporting

Report Name Originator How Communicated Purpose ARM Notification Freddie Mac sends to you when

an adjustable-rate mortgage in your portfolio has a rate adjustment.

Investor Accounting Manager Provides detailed information about the rate adjustment.

ARM Trial Balance Freddie Mac sends to you at your request.

Investor Accounting Manager Provides detailed information about adjustable-rate mortgages in your portfolio.

Detailed Adjustment Report Freddie Mac sends to you monthly, if applicable.

Investor Accounting Manager Lists manual adjustments to your account.

Detailed Remittance Report Freddie Mac sends to you at your request.

Investor Accounting Manager ( Provides the amount due for principal and interest for each loan in your portfolio for an accounting cycle.

Edits to be Cleared Report Freddie Mac sends to you daily during the monthly reporting cycle.

MIDANET for the PC, Investor Accounting Manager

Lists loans with edits to resolve. You will need to transmit a revised transaction for each loan on this report.

Electronic Default Reporting (EDR)

You send to Freddie Mac monthly. See your EDR Guide for timing requirements.

MIDANET for the PC Provides us with information about loans in your portfolio that are in default or foreclosure.

Funding Detail Freddie Mac sends to you when you sell a mortgage to us.

MIDANET for the PC Provides detailed information that your system should mirror about your sale of a mortgage to us.


I Freddie Mac Document Investor Reporting Quick Reference 11 June 2009

Report Name Originator How Communicated Purpose Loan Level Missing Report Freddie Mac sends to you daily

during the monthly reporting cycle (16th through the end of the month) once we process 75% of your transactions.


Lists loans that that to be reported or loans that have an unresolved edit on the Edits to be Cleared report.

Loan Level Transaction You send to Freddie Mac monthly or if there is exception activity for a mortgage.

MIDANET for the PC, MIDANET CPU-to-CPU

Provides us with information for a given cycle about activity on each loan in your portfolio.

Loan Level Trial Balance Freddie Mac sends to you at your request.

Investor Accounting Manager ( Provides detailed information about each loan in your portfolio.

Loan Reconciliation Difference Report

Freddie Mac sends to you monthly at month end after we complete our monthly processing.


Summarizes loan-level reporting edits for an accounting cycle. Used for reconciling your custodial accounts(s).

Monthly Account Statement Freddie Mac sends to you monthly after we complete our monthly processing.


Provides a portfolio-level recap of the amount due to us. Used for reconciling your custodial accounts.

Consolidated Monthly Billing Statement

Freddie Mac sends to you monthly, close to the 10th of the month (to be remitted by the last business day of the same month).

Hard copy via mail Provides information about fees and penalties associated with the servicing of your portfolio.



Report Name Originator How Communicated Purpose Seller/Servicer Remittance Analysis

Freddie Mac sends to you monthly.

Investor Accounting Manager Compares what you remitted through Global Payments, Inc. (GPI) to what we expected you to remit.

Servicer Performance Profile Freddie Mac sends to you monthly.

MIDANET for the PC, FreddieMac.com

Provides you with information on how well you are meeting our servicing guidelines, requirements, criteria, and standards.

System Cleared Edits Report Freddie Mac sends to you daily during the monthly reporting cycle.


Lists loans with edits that our system cleared and processed.

Getting Started Need Help?


Need Help?

Contact Your Freddie Mac Loan Portfolio Specialist

If you need help with your investor reporting, contact your Freddie Mac Loan Portfolio Specialist. To quickly identify your Freddie Mac Loan Portfolio Specialist’s name and telephone number, contact (800) FREDDIE.

Utilize our Educational Offerings

Online publications and reference materials are available to provide you quick access to the most current information that will help and guide you in doing business with Freddie Mac or consider attending one of Freddie Mac’s servicing workshops if you

Have general questions about investor reporting and remitting

Need to know how to reconcile your portfolio

Need to know how to interpret and use the various reports that we send you.

Freddie Mac classes are offered across the country throughout the year. The Learning Center is your online resource for everything Freddie Mac Campus has to offer. You’ll locate training, information and reference materials on a wide variety of Servicing topics.

Call Us

If you need help with… Contact Custodial Accounts (800) FREDDIE or your Freddie Mac Loan Portfolio Specialist

EDR or the Foreclosure/DIL Notification process (800) FREDDIE

Educational Resources The Learning Center at www.freddiemac.com/learn

Fee invoices or statements (800) FREDDIE

Getting Started Need Help?


If you need help with… Contact Investor Accounting (general reporting, remitting and reconciling) (800) FREDDIE or your Freddie Mac Loan Portfolio Specialist

Loan Repurchases Fees and Claims email [email protected]

MIDANET (imports/exports, downloads or general questions) (800) FREDDIE

Transfers of Servicing Transfer of Servicing Team (703) 903-4209 or (703) 903-4113

Resolving Data Discrepancies The Basics


Resolving Data Discrepancies

The Basics

When Freddie Mac receives your loan transactions, we notify you the next business day of any data discrepancies between what you reported and what we expected. We compare the data you transmit to us each day against our database and notify you of any discrepancies via our daily edit reports. Each discrepancy (or edit) is listed on our daily edit reports with an edit code that identifies and explains the discrepancy. All of our edit codes are listed and explained in the Loan Edit Codes section of this booklet. Freddie Mac expects you to resolve the edits listed on your daily edit reports and ensure that you have given us accurate information. There are four distinct things that you must do for each edit:

1 Review the edit, determine its cause, and, if needed, send Freddie Mac a revised transaction before the reporting due date.

2 Correct the cause of the data discrepancy and take preventive action to eliminate a repeat occurrence in the next reporting cycle.

3 Determine if your remittance to Freddie Mac needs to be adjusted, and remit funds if necessary.

4 Determine if your custodial account needs to be adjusted, and adjust it if necessary.

Understanding the Daily Edit Reports

The daily edit reports are available to Servicers through MIDANET for the PC and through Investor Accounting Manager application. See the MIDANET for the PC section of this publication for details on accessing the reports on MIDANET for the PC. To access Investor Accounting Manager, contact (800) FREDDIE.

You will receive from us the following three edit reports:

§ Edits to be Cleared report

§ System Cleared Edits report

§ Loan Level Missing report

Each report is described on the following pages.

Resolving Data Discrepancies Understanding the Daily Edit Reports


The Loan Level Missing report

The Loan Level Missing report identifies all outstanding monthly loan-level transactions. It includes both loans that you did not report to Freddie Mac and loans with unresolved edits on the Edits to be Cleared report. The Loan-Level Missing report is available daily only during the monthly reporting cycle (between the 16th and the end of the month) the day after 75% of your monthly loan transactions are processed in our system. You will receive this report daily until we close our cycle.

REPORT ID: LL03611R FREDDIE MAC PAGE: 1ACCOUNTANT: 1E1209 LOAN LEVEL REPORTING RUN DATE: 03/20/XXACCT CYCLE: 03/02/XX SERVICER LOAN TRANSACTIONS MISSING REPORT TIME: 00:05:56

SERVICERNUMBER LOANS MISSING CURRENT CYCLE TRANSACTIONS

123456 123456781 123456782* The total number of mortgages itemized on this report

NUMBER OF MISSING LOANS FOR THIS SERV = 2

This is your Servicer number* Indicates an edit exists for thismortgage. You need to referto the Edits to be Cleared reportto identify the problem andtransmit a revision.

Mortgages without an *have not yet been reported, or werereported with an invalid loan number



The Edits to be Cleared report

The Edits to be Cleared report identifies loan transaction edits that prevent Freddie Mac from processing the transaction until you take immediate action to resolve the edit error. It is available to you on a daily basis throughout the month regardless of whether or not you have actual edits. If you have no edits, the report displays a “No data in error” status message.

REPORT: PL02350R FREDDIE MAC PAGE: 1ACCOUNTANT: 1-E1-209 LOAN LEVEL REPORTING RUN DATE: 03/23/XX

EDIT ERROR REPORT TIME: 23:30:07EDITS TO BE CLEARED

CYCLE:XX0315 SERVICER : 123456 ABC BANK, F.S.B. PHONE: (555) 555-1212

FREDDIE UNPAID NET USER EDITMAC SERVICER DUE DATE PRINCIPLEPRINCIPAL INTEREST PRINCIPAL YIELD EXCP EXCP PREPAYMENT NO ID CORR ERR

LOAN NMBR LOAN NUMBER LPI DUE DUE BALANCE RATE CODE DATE PENALTY TE IND CODE

GROUP # : 5632064799822191 1629531 02/01/XX 0.00 203.76 30,093.22 8.125 00/00/00 303

TOTAL TRANSACTIONS IN ERROR: 1

The edit code(s) assigned The total of all loans with The Accounting Net Yield to this transaction outstanding edits that appear rate for this loan according on this report to Freddie Mac system

The exception code reportedfor this loan.



The System Cleared Edits report

The System Cleared Edits report identifies loan transaction edits that our system resolved and continued processing. Our system adjusts and processes principal due and interest due discrepancies less than $1,000 for non-exception transactions and of less than $5 for exception transactions. If the amount of a discrepancy is not within Freddie Mac’s tolerance amount, our system will not process the information and an edit will appear on the Edits to be Cleared report. You must take action to resolve data errors in your system that created edits on the System Cleared Edits report so that edits do not reoccur. The report is available to you on a daily basis throughout the month regardless of whether or not you have actual edits. If you have no edits, the report will display a “No data in error” status message.

REPORT: PL02310R FREDDIE MAC PAGE: 1ACCOUNTANT: 1-E1-209 LOAN LEVEL REPORTING RUN DATE: 01/01/XXXX

EDIT ERROR REPORT TIME: 04:00:42SYSTEM CLEARED EDITS

CYCLE: XX0315 SERVICER: 123456 ABC BANK, F.S.B. PHONE: (555) 555-1212

FREDDIE UNPAID NET USER EDITMAC SERVICER DUE DATE PRINCIPAL INTEREST PRINCIPAL YIELD EXCP EXCP PREPAYMENT NO ID CORR ERR

LOAN NMBR LOAN NUMBER LPI DUE DUE BALANCE RATE CODE DATE PENALTY TE IND CODE

GROUP # : 107854394719748 20-104624-4 03/01/XX 1,010.72 7.31 0.00 7.450 61 03/7/XX 0.00 0 600

EXPECTED 7.51TOTAL TRANSACTIONS IN ERROR: 1

The edit code(s) An amount will appear in this assigned to this

The total of all mortgages the line for principal, interest, UPB The exception code transaction system cleared that appear on or prepayment penalty when reported for this mortgage this report the amount you reported was

changed by our system. There may also be a change for exception code or exceptiondate.

Resolving Data Discrepancies How to Use the Daily Edit Reports and Prioritize Which Edits to Resolve First


How to Use the Daily Edit Reports and Prioritize Which Edits to Resolve First

Freddie Mac systems display all applicable edit codes on each edit report even if resolution of a particular edit resides with us. We provide you with all applicable edit codes so that you are aware of the action being taken for each loan. When using the edit reports and resolving edits, refer to the Edit Codes section of this quick reference for helpful information about each edit code.

Perform activities 1-4 listed below to prioritize which edits you should clear first. Your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE will work with you to create an action plan for resolving the data discrepancies. You should complete steps 1-4 during cyclical monthly reporting, between the accounting cycle cutoff and the end of the calendar month. You should complete steps 2-4 for interim reporting throughout the month.

Step Process to Prioritize and Resolve Edits

1

2

Review the Loan Level Missing report to get an overall picture of what you need to research and resolve to ensure all loans are accurately reported. The Loan Level Missing report includes all loans Freddie Mac did not process, including system-rejected loans and loans not reported. The Loan Level Missing report provides each individual Freddie Mac loan number, and a total count of all outstanding loans.

§ If a loan appears without an asterisk (*), Freddie Mac did not receive a transaction for the loan, or you reported the loan with an invalid Freddie Mac loan number. Contact your Freddie Mac Loan Portfolio Specialist if you have questions.

§ If a loan appears with an asterisk (*), Freddie Mac received a loan transaction for the loan but the transaction was rejected. The loan will appear on the Edits to be Cleared report. You must resolve all edits that appear on the Edits to be Cleared report.

Analyze the Loan Level Missing report and determine the number of missing loans and the steps needed to ensure each loan is successfully reported to us. If your Loan Level Missing report shows:

§ A large number of loans that have not been reported (no asterisk), then determine the date your loans were reported or are to be reported and contact your Freddie Mac Loan Portfolio Specialist.

§ A small number of loans that have not been reported (no asterisk), then research each loan and ensure each loan is reported.

§ Loans that have been reported, but have edit errors (asterisk), then go to Step 2.




3 Review the Edits to be Cleared report to look for the cause of the discrepancies. Determine whether there is a single common cause that explains why many of the loans appear on the report or whether each transaction requires research to determine the cause of the discrepancy. In some cases, you may have more than one edit for a loan. Review all the edits in combination to determine the cause and resolution.

§ If there are multiple loans appearing on the Edits to be Cleared report with the same error code or transaction type, then

1 Research a sampling of the loans on the report to determine if they share a common cause.

2 Determine the cause of the data discrepancy.

3 If the edit is caused by an error on your system, correct the cause of the data discrepancy and send us a revised transaction with the corrected information.

4 If the edit is caused by an error on our system, notify your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE immediately and send them a copy of the supporting documentation so that we can correct the error.

5 Take preventive action to eliminate repeat occurrences.

§ If the loans appearing on the Edits to be Cleared report have various types of error codes or transaction types, then

q Resolve the discrepancies for each transaction type and send a revised transaction according to the following priority:

1 Payoffs and foreclosure transaction edits within 1 business day.

2 FHA/VA HUD Conveyances and REO transaction edits within 2 business days.

3 All other transaction edits within 2 business days.

q If an edit is caused by an error on our system, notify your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE immediately and send them a copy of the supporting documentation so that we can correct the error.




4 Review the System Cleared Edits report to determine if you agree with the final transaction that we processed. If the transaction was

§ Incorrectly reported but accurately adjusted by our system, then correct the cause of the error by the next accounting cutoff to prevent re-occurrences.

§ Accurately reported but incorrectly adjusted by our system, then notify your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE immediately and then send them a copy of all supporting documentation.

Resolving Data Discrepancies Loan Edit Codes


Loan Edit Codes

Use the following list of the most common loan edits as a guide to help you resolve reporting discrepancies on the edit reports. The list provides the edit number, possible causes of reporting discrepancies, possible action to resolve the reporting discrepancies, and the applicable transactions type.

Codes beginning with… Are edits to…

1 Basic information

2 Exception codes

3 The accounting cycle

4 The due date of last paid installment

5 The exception date

6 Interest due

7 Principal due

8 The unpaid principal balance

9 The prepayment penalty and note holder

Resolving Data Discrepancies Loan Edit Codes / Basic Edits


Basic Edits

Edit Code Number

Explanation of Code Possible Cause of Edit Possible action(s) to Resolve Edit… Apply to this transaction type

100 NA Error in our system database. None. Freddie Mac will resolve this error. NA

101 Invalid Freddie Mac loan number.

There was a data entry error when the loan was set up on your system or keyed into MIDANET.

§ Correct the loan number and send a revision.

All

A payoff for a newly funded loan occurred before the first accounting cycle cutoff.

None. Our system will reflect and accept the loan on the 15th business day of the month.

A loan processed by Freddie Mac in a previous cycle as an REO, payoff, third party sale, or an FHA/VA conveyance and was not removed from your servicing system.

Stop reporting this loan number.

§ If the loan had been processed as an REO and was redeemed, forward the funds to our REO department.

§ If the loan had been processed as a payoff in error or as an FHA/VA conveyance and was redeemed, contact your Freddie Mac Loan Portfolio Specialist.




Resolving Data Discrepancies Loan Edit Codes / Basic Edits


Edit Code Number


105 Incorrect Servicer number for the loan.

Data Entry Correct the Servicer number and send a revis ion. All

Loan transferred to another Servicer or loan failed to transfer to you.

§ Determine the appropriate accounting cycle for the loan to be transferred.

§ Coordinate reporting and remitting with the other Servicer involved.

§ Submit amended Form 981, if necessary.

§ Inform your Freddie Mac Loan Portfolio Specialist of the status.

Payoff or foreclosure transaction correctly reported by transferee between the TOS effective date and end of month. Our system will not reflect the transfer of servicing until month end.

Contact your Freddie Mac Loan Portfolio Specialist to ensure the transaction will be processed once our database is updated to reflect the transfer of servicing.


107 Invalid Servicer number. A Servicer number was reported with the transaction that is not defined in our system.

Correct the Servicer number and send a revision. All


109 Transaction received after cycle closed. Any outstanding edit that is not resolved by our system finaling date becomes a 109E edit until the first of each month.

The transaction was received after Freddie Mac closed the cycle.

Ensure correct transaction is processed in the next accounting cycle.

All


Resolving Data Discrepancies Loan Edit Codes / Edits for Exception Codes


Edits for Exception Codes

Edit Code Number


200 Invalid exception action code.

Only the following transaction codes may be reported:

blank = Non-exception 40 = Inactivation 50 = Reinstatement 60 = Payoff - matured 61 = Payoff - prepaid 65 = Payoff - repurchase 66 = Payoff - conversion 70 = REO 71 = Foreclosure - Conventional Third

Party Sale 72 = Foreclosure - FHA/VA

Conveyance 73 = Foreclosure - FHA/VA Third Party Sale 80 = Balance Correction

Send a revision with the appropriate transaction code.

All

201 Exception code specifies wrong loan type.

Reported transaction code 72 or 73 for a conventional foreclosure or code 71 for an FHA/VA foreclosure.

§ Determine the correct loan product (FHA/VA or conventional) and send a revision.

§ Contact your Freddie Mac Loan Portfolio Specialist and provide supporting documentation if you believe we are in error.

Foreclosure – All



Edit Code Number


202 Invalid loan status. The loan is currently in an incorrect status to process the transaction type that you reported.

§ Validate that you reported the correct activity or sale result via EDR or the Foreclosure/DIL Notification.

o If the activity reported is incorrect, send another EDR transmission to correct it.

o If the sale result reported is incorrect, contact the Non-Performing Loans department.

§ Validate that the correct exception code was reported and send a revision if necessary.

§ Inactivation

§ Reinstatement

§ Foreclosure - All

§ REO

203 Loan already inactivated. Reported an inactivation transaction for a loan that was inactivated in a previous cycle.

§ Validate the transaction code.

§ Once inactivated in a prior cycle, report the loan as a non-exception until the loan is reinstated, paid off, sold at a third-party foreclosure sale, or transferred to REO.

Inactivation

204 Loan is not currently inactivated.

You are reinstating a loan that we have as active.

Validate the transaction code and retransmit a revision.

Reinstatement

206 Timely P&I and Alternate Method loans can not be inactivated.

Loan is either Timely P&I or uses the Alternate Method of accounting and should not be inactivated.

§ Validate the type of loan on your system.

§ You must report scheduled principal and interest on a timely P&I loan until the loan is paid off, sold at a third-party foreclosure sale, or transferred to REO.

§ Report a non-exception transaction for alternate method loans.

Inactivation

207 Field must be numeric. Data entry error. Verify figures and send a revision, if applicable. All

208 Code 80 Needed for balance correction.

You reported a UPB higher than the previous cycle UPB on a loan that does not allow negative amortization, and the transaction is not reported as a balance correction.

§ Validate the transaction.

§ Contact your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE if the loan is a loan modification.

Non-exception



Edit Code Number


209 Inactive Timely P&I or Alternate Method loan must be reinstated.

Error in our system database. None. Freddie Mac will resolve this error. Non-exception

210 Balance Correction not needed

You reported a UPB lower than the previous cycle UPB and the transaction is reported as a balance correction.

Validate the transaction we processed. Balance correction

211 Reported as a repurchase but not approved as a repurchase.

You reported an exception code 65 for a loan we have not approved for repurchase.

If the loan…

§ Has been approved for repurchase or is a delinquent recourse loan, then send Freddie Mac Loan Portfolio Specialist a copy of the repurchase letter or the Freddie Mac approved Form 105. We will adjust our system and the edit error.

§ Is an ACARM that you cannot process as a normal conversion, then notify your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE. We will adjust our system and the edit error will clear.

§ Is a modification/refinance that you must report as a repurchase, then notify your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE. We will adjust our system and the edit error will clear.

§ Has not been approved for repurchase, then report he loan as a non-exception for the current cycle. Send a letter requesting repurchase if repurchase is desired for the following cycle.

§ Repurchase

§ Payoff- Repurchase

212 Reported repurchase but we approved a waiver.

You reported a repurchase transaction, but we waived the repurchase requirement.

Verify the exception code and send a revision. Payoff - Repurchase



Edit Code Number


213 Reported conversion for a fixed rate loan that is not convertible.

A convertible ARM exception code was reported for a loan that we do not identify as a convertible product.

§ If the loan is a convertible ARM that follows the repurchase path, send the support documentation to your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE. We will adjust our system and process a payoff to clear the edit.

§ Verify the exception code and send a revised transmission, if necessary.

Payoff - Conversion

214 Loan was previously reported and processed as an REO or FHA/VA HUD conveyance.

The loan was previously reported and processed as an REO or FHA/VA HUD conveyance.

§ Correct the loan number and send a revision.

§ Stop reporting this loan number.

o If the loan had been processed as an REO and was redeemed, forward the funds to the REO department.

o If the loan had been processed as a payoff in error or as an FHA/VA conveyance and was redeemed, contact your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE.

All except inactivation

215 Loan reinstatement by default management.

The loan has been moved from foreclosure to delinquent or active status, therefore we expect a reinstatement transaction.

Determine the correct status of the loan.

§ If the loan was incorrectly taken out of foreclosure, submit a revised electronic default reporting (EDR) transaction to us. We will then update the loan status and eliminate the edit error.

§ If the loan in no longer in foreclosure, a reinstatement transaction must be reported.

Non-exception

Balance Correction for inactive loans




Edit Code Number


220 Verify transaction; redemption may exist.

You reported an FHA/VA conveyance or third party sale and the accuracy of the exception code and the existence of a redemption period should be verified.

§ Validate that you have reported the correct FHA/VA foreclosure code.

§ Verify that no redemption period exists. If one does, revise the transaction to a non-exception. Continue to report the loan as a non-exception until the redemption period expires or the property is redeemed.

Foreclosure - FHA/VA Conveyance, FHA/VA Third Party Sale



Edit Code Number





224 Sale result is not REO. You have not previously reported the sale result as REO via the Foreclosure/DIL Notification.

Report the REO sale result via the Foreclosure/DIL Notification.

REO

You reported the sale result as something other than an REO.

Contact the Non-Performing Loans department for assistance with correcting the reported sale result or send a revision with the correct exception code.

225 Sale result is not Third Party.

You have not previously reported the sale result as a third-party sale via the Foreclosure/DIL Notification.

Report the third party sale result via the Foreclosure/DIL Notification.

Foreclosure - Conventional third-party sale, FHA/VA third-party sale

You reported the sale result as something other than a third party sale.

Contact the Non-Performing Loans department for assistance with correcting the reported sale result or send a revision with the correct exception code.

226 Sale result is Deed-in-lieu, loan has not been placed in REO.

You have reported the sale result, via the Foreclosure/DIL Notification, as deed-in-lieu.

If the deed-in-lieu sale result is…

§ Correct, then contact your Freddie Mac Loan Portfolio Specialist or (800) FREDDI.

§ Incorrect, then contact our Non-Performing Loans department.


§ REO



Edit Code Number


227 Sale result is not FHA/VA conveyance.

You have not previously reported the sale result as an FHA/VA conveyance via the Foreclosure/DIL Notification.

Report the third party sale result via the Foreclosure/DIL Notification.

Foreclosure - FHA/VA Conveyance

You reported the sale result as something other than an FHA/VA conveyance.

Contact the Non-Performing Loans Department for assistance with correcting the reported sale result or send a revision with the correct exception code.




231 Reported convertible ARM repurchase for matured loan.

You reported a matured loan as a convertible ARM repurchase.

We processed this transaction as a matured payoff. Verify this is correct.

Payoff

232 Reported matured loan, but the loan has an outstanding repurchase.

You transmitted an incorrect exception code. Retransmit the loan with the correct exception code. Payoff

You tried to submit a matured payoff when a required repurchase was expected.

Contact our Fees and Claims unit to request the repurchase to be waived to allow the matured payoff to be processed.

233 Reported the loan as prepaid but the loan has an outstanding repurchase request.

You transmitted an incorrect exception code. _____________________________________

You tried to submit a prepaid payoff when a required repurchase was expected.

Retransmit the loan with the correct exception code. __________________________________________

Contact our Fees and Claims unit to request the repurchase to be waived to allow the prepaid payoff to be processed.

Payoff



Edit Code Number


234 Payoff reported as a repurchase but the repurchase is in appeal.

You reported the loan as a repurchase although the repurchase is still in the appeal process and we did not expect you to report the loan as a repurchase.

Contact our Fees and Claims unit to request the appeal be removed from this loan.

Payoff



Edit Code Number


235 Reported the loan as a convertible ARM repurchase but the loan has an outstanding repurchase.

You transmitted an incorrect exception code. Retransmit the loan with the correct exception code. Payoff

You tried to submit a convertible ARM repurchase when a required repurchase was expected.

Contact our Fees and Claims unit to request the repurchase to be waived to allow the convertible payoff to be processed.

236 Loan is in REO status; can not process payoff.

You reported a payoff for a loan that is in REO status.

Verify the loan status and if the REO status is

§ Correct, then retransmit as an REO transaction.

§ Incorrect, then contact our Non-Performing Loans department.

Payoff

237 Loan reported as a prepaid payoff, but loan has matured.

You reported a matured loan as a prepaid payoff.

We processed this transaction as a matured payoff, as shown on the System Cleared Edits report. Verify that the loan is a matured payoff.

Payoff



240 Reported matured; repurchase is in appeal.

You reported a loan as matured, but the required repurchase is in appeal.

Contact our Fees and Claims unit to have the repurchase waived so the loan can be processed as a matured payoff.

Payoff

241 Reported prepaid; repurchase is in appeal.

You reported a loan as prepaid, but the required repurchase is in appeal.

Contact our Fees and Claims unit to have the repurchase waived so the loan can be processed as a prepaid payoff.

Payoff

Resolving Data Discrepancies Loan Edit Codes / Edits for Accounting Cycle


Edits for Accounting Cycle

Edit Code Number


300 The accounting cutoff date is an invalid date.

Your transaction contained an invalid cycle date.

Retransmit the transaction with the correct accounting cycle date.

All

301 The reporting cycle is not the current cycle or the next cycle.

The incorrect accounting cycle was transmitted with the loan-level transaction.

Retransmit the transaction with the correct accounting cycle date.

Payoff

302 The transaction for the next accounting cycle has been received, but there is no transaction for the current cycle.

The transaction for the next cycle is transmitted before Freddie Mac processes the current cycle transaction for that loan (i.e., a payoff for the 16th is transmitted prior to your monthly transmission for the cycle).

The edit will clear itself once the current cycle transaction is transmitted and processed.

All

303 Partial duplicate/possible correction.

A loan transaction has been previously processed and a second transaction has been received but it is not marked as a revision.

Note that you may receive this edit code although the error is corrected.

§ Determine the correct transaction you need to transmit to us.

§ Retransmit as a revision, if applicable.

All

305 Transaction received before the accounting cutoff.

A loan transaction has been received prior to the cutoff. (Only payoffs and foreclosures can be reported before the accounting cutoff.)

Verify the transaction is accurate. Our system will process the loan after the accounting cutoff.

§ Inactivation

§ Reinstatement

§ REO

§ Non-exception

§ Balance Correction

306 Freddie Mac database will be revised.

You reported a revision for a loan we have already accepted.

This is just a warning not an edit. If your revision caused any edit codes they need to be addressed.

All



Edit Code Number


307 NA Freddie Mac database warning. None. We will address this warning. All

308 Exact error—transaction ignored.

You retransmitted a loan transaction for a loan that has an edit, but the values are the same as the original transaction that was in error.

Resolve the original edit codes and send a revision. All

309 Duplicate error—transaction dropped.

You reported the same loan number twice in your transmission or you reported a revised transaction for a loan that had an edit and the revised transaction has different values than the original transaction in error.

Verify the transaction we processed and send a revision if necessary.

All

310 Exact duplicate—transaction ignored.

You transmitted duplicate transactions for the same loan number. The transactions are exactly the same.

No action is necessary, although you should determine why a transaction was reported twice.

All

311 Incorrect accounting cycle. The accounting cycle for the transaction is not the current accounting cycle.

Correct the accounting cycle and send a revision. § Inactivation

§ Reinstatement

§ REO

§ Non-exception

§ Balance correction



Edit Code Number


312 Next cycle transaction already processed.

A transaction for the current cycle has already been processed and either a payoff or a foreclosure for the next cycle already exists. We can not allow any changes to the current cycle transaction.

Inform your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE that you need to revise the current cycle’s transaction. The Freddie Mac Loan Portfolio Specialist will delete the next cycle payoff or foreclosure, then:

§ If the current transaction was marked as a revision we will process it.

§ If it was not marked as a revision, send a revised transaction.

§ Retransmit the following cycle’s transaction.

§ Payoff

§ Foreclosure - third party sale

313 NA Freddie Mac database warning. None. We address this warning. All

314 Next cycle transaction reported, but should be current cycle.

You reported a transaction with an exception date that is before the current accounting cutoff, but with a future accounting cycle date.

§ Verify the accounting cycle and exception date

§ Report the transaction as a revision for the current accounting cycle.

All



Edits for Last Payment Received Date

Edit Code Number


400 DDLPI is an invalid date. Data entry error. § Verify the DDLPI and retransmit. § Foreclosure - All

§ Payoff - All

§ REO

401 DDLPI is not a delinquent date.

The reported DDLPI is not a delinquent date.

§ Verify the DDLPI and retransmit. § Inactivation

§ Foreclosure - Conventional third-party sale, FHA/VA third-party sale

404 Reported DDLPI does not match DDLPI reported by default management.

The reported DDLPI does not match the DDLPI that was reported via EDR.

§ If Default Management reported the incorrect DDLPI, then send a new EDR transaction and we will adjust our system to clear the edit.

§ If the wrong DDLPI was reported on the investor reporting transaction, then send us a revised transaction.

§ Foreclosure - FHA/VA Conveyance

§ REO

410 Last payment received date (LPRD) missing.

You did not report the loan LPRD with the transmission.

§ If this edit appears on the System Cleared Edits report, then ensure the correct last payment received date is reported next cycle.

§ If you receive this edit with another edit on the Edits to be Cleared report, then correct the last payment received date and the other edit, and send a revision.


§ REO

Resolving Data Discrepancies Loan Edit Codes / Edits for Last Payment Received Date


Edit Code Number


411 The LPRD is invalid. Data entry error.

§ If this edit appears on the System Cleared Edits report, then ensure the correct last payment received date is reported next cycle.


§ Reinstatement

§ Non-exception

412 The LPRD is prior to the origination date.

Data entry error. § If this edit appears on the System Cleared Edits report, then ensure the correct last payment received date is reported next cycle.


§ Reinstatement

§ Non-exception

413 The LPRD is greater than the current date.

Data entry error. § If this edit appears on the System Cleared Edits report, then ensure the correct last payment received date is reported next cycle.


§ Reinstatement

§ Non-exception

Resolving Data Discrepancies Loan Edit Codes / Edits for Exception Date


Edits for Exception Date

Edit Code Number


500 Exception action date is an invalid date.

Data entry error. Correct the exception date and send a revision. § Payoff


§ REO

501 Exception date is required. We require that you report an exception date for all payoff, foreclosure and REO transactions.

Correct the exception date and send a revision. § Payoff - All


§ REO

502 Exception date is not applicable.

You reported an exception date for a transaction that does not require an exception date.

Validate the transaction Freddie Mac processed. § Inactivation

§ Reinstatement

503 Exception date is in the future.

The exception date for the transaction cannot be in the future.

Correct the exception date and send a revision. § Payoff - All


§ REO

504 Exception date after the current cycle.

The exception date falls in a future accounting cycle.

Verify the exception date and the accounting cycle and send a revision.

§ REO

505 Exception date is not equal to the foreclosure sale date.

The exception date does not equal the foreclosure sales date that was reported via the Foreclosure/DIL Notification.

§ If the foreclosure sale date reported via the Foreclosure/DIL Notification was incorrect, then contact our Non-Performing Loans department for assistance with correcting the sale date.

§ If the exception date reported was incorrect, then send a revised transaction.

§ Foreclosures - Conventional Third Party Sale

§ FHA/VA Third Party Sale

506 Exception date is before current cycle.

You reported an exception date that is before the current cycle.

Verify the exception date and send a revision if necessary. § Payoff - All


§ REO

Resolving Data Discrepancies Loan Edit Codes / Edits for Exception Date


Edit Code Number


507 Exception date is not in reported cycle.

You reported an exception date which is within the next cycle, but a cycle date for the current cycle.

Verify the exception date and cycle date and send a revision.

§ Payoff - All


508 Exception date is prior to purchase date.

You reported a payoff date that is prior to the date we purchased the loan.

§ If the exception date reported is

§ Correct and the purchase date is incorrect, then notify us and we will adjust the purchase date.

§ Incorrect and the purchase date is correct, then send a revised transaction with the correct exception date.

Payoff - All

509 Interest was not edited due to an incorrect exception date or DDLPI.

This edit error is issued when an exception date or DDLPI error occurs.

§ When correcting the exception date or DDLPI, the interest must be recalculated.

§ Payoff - All


§ REO

510 Exception date is prior to purchase date.

You reported an exception date that is prior to the date we purchased the loan.

§ Verify the exception and purchase dates.

§ If the exception date reported is

§ Correct and the purchase date is incorrect, then notify us and we will adjust the purchase date.

§ Incorrect and the purchase date is correct, then send a revised transaction with the correct exception date.

§ Foreclosure

§ REO

512 Foreclosure sale date is before the foreclosure begin date.

Foreclosure sale date reported via the Foreclosure/DIL Notification is before the foreclosure begin date reported via EDR.

Verify the foreclosure sale.

If the foreclosure sale date reported is

§ Correct and the begin date is incorrect, then send another EDR transmission to correct the date.

§ Incorrect and the begin date is correct, then contact our Non-Performing Loans department.


§ REO

Resolving Data Discrepancies Loan Edit Codes / Edits for Principal Due


Edits for Interest Due

Edit Code Number


600 Interest due is calculated incorrectly.

The reported interest does not match our calculated interest.

§ Verify the Accounting Net Yield Rate (ANY) including the note rate and servicing fee rate.

If your ANY is § Correct, then notify your Freddie Mac Loan Portfolio

Specialist or (800) FREDDIE.

§ Incorrect, then correct your database and send a revision.

§ All

601 Interest due cannot be zero.

We require interest for all reinstatement transactions (partial reinstatements can have a zero reported interest amount).

If the transaction is § Not a valid partial reinstatement, then verify the interest

reported and send a revision.

§ A valid partial reinstatement, then we will clear the edit.

§ Reinstatements

602 Interest can not be zero on an active loan.

We require interest on all exception transactions. We require interest on all non-exception transactions unless the loan has been inactivated in a previous cycle, or uses the Alternate Method of accounting, or is a new purchase loan funded between the 1st-15th of the current calendar month.

Verify the transaction we processed, the ANY and send a revision.

§ Non-exception


605 Delinquent interest may be due on Alternate Method loans.

You reported a transaction for a loan reported under our Alternate Method program where delinquent interest may be due.

You need to verify if any delinquent interest is due and send a revision if necessary.

§ Reinstatement

§ Payoff- All


Resolving Data Discrepancies Loan Edit Codes / Edits for Interest Due


Edit Code Number


606 Interest due must be zero for an inactive loan.

Interest can not be reported on a loan that is inactive.

Validate whether the loan should be reinstated or not.

If a payment

§ Has been received, then you must reinstate the loan. § Has not been received, then send a revision as a non-

exception with zero principal and interest due.

Non-exception for an inactive loan.

Edits for Principal Due

Edit Code Number


700

Principal due is calculated incorrectly.

Last cycle’s ending balance minus the current cycle’s reported ending balance multiplied by the participation percentage does not equal the principal due reported.

Validate the principal due, the ending balance and the participation percentage. Send a revision.

All

701 Principal due is less than zero but negative amortization is not allowed.

You reported negative principal reduction on a loan that does not allow negative amortization.

§ Validate the principal reduction reported and the product type.

§ If the loan allows for negative amortization, contact your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE and provide supporting documentation.

§ If the loan does not allow for negative amortization and the principal reduction is

o Correct, then send a revision to reinstate the loan with zero principal due and report a balance correction next cycle.

o Incorrect, then send a revised reinstatement.

Reinstatement

Resolving Data Discrepancies Loan Edit Codes / Edits for Principal Due


Edit Code Number


702 Principal due must be zero. You reported principal reduction on an inactivation, REO or FHA/VA conveyance transaction.

If a payment

§ Has been received, then send a revision as a non-exception.

§ Has not been received, then send a revised transaction with no principal reduction.

§ Inactivation


§ REO

703 Principal due is less then zero on a loan that does not allow negative amortization.

You reported negative principal due without a balance correction code on a loan that does not allow negative amortization.

§ Validate the principal reduction reported and the product type.

§ If the loan allows for negative amortization, contact your Freddie Mac Loan Portfolio Specialist and provide supporting documentation.

§ If the loan does not allow for negative amortization and the principal reduction is

o Correct, then send a revision with the balance correction code.

o Is incorrect, then send a revision.

Non-exception

705 Principal due must be zero for an inactive loan.

You reported principal reduction for an inactive loan.

If a payment

§ Has been received, then you must reinstate the loan.

§ Has not been received, then no action is required.

Non-exception for an inactive loan

706 Negative principal in excess of $3,000.

You reported a transaction with a negative principal amount greater than $3,000.

No action is required if we approve the negative principal reduction. Contact (800) FREDDIE or your Freddie Mac Loan Portfolio Specialist for approval.

If we do not approve the negative principal reduction request, you may be requested to transmit a revision.

Non-exception or Balance Correction

Resolving Data Discrepancies Loan Edit Codes / Edits for Unpaid Principal Balance


Edits for Unpaid Principal Balance

Edit Code Number


801 Ending UPB must not be zero.

You reported a zero ending UPB for a transaction that does not allow it. You must use a payoff or third party sale exception code if the ending balance is zero.

Verify the correct ending balance and transaction code and send a revision.

§ Non-exception


§ Inactivation

§ Reinstatement

§ REO


802 Ending UPB must be zero. You reported an ending UPB greater than zero on a transaction that liquidates the loan.

Verify the correct ending balance and transaction code and send a revision.

§ Payoff

§ Foreclosure - Conventional Third Party Sale, FHA/VA Third Party Sale

803 Ending UPB increased but negative amortization is not allowed.

You reported an ending UPB greater than the previous cycle’s ending UPB for a loan that does not allow negative amortization.

Validate the UPB reported.

If the UPB is

§ Correct, then send a revised reinstatement with no principal reduction and report a balance correction next cycle.

§ Incorrect, then send a revised reinstatement with the correct UPB.

Reinstatement



Edit Code Number


804 Ending UPB is not equal to previous cycle’s ending UPB.

You reported an exception transaction with an ending UPB that differs from last cycle’s UPB

Verify the correct ending balance and transmit a revision.

If a payment

§ Was received, then send a non-exception.

§ Was not received, then send a revision with the corrected UPB.

Inactivation

If a payment

§ Was received, and the loan was

o Inactive, then send a revision as a reinstatement.

o Active, then send a revision as a non-exception.

§ Was not received, then send a revision with the corrected UPB.

§ Foreclosure- FHA/VA

§ Conveyance

§ REO

805 Reported UPB is not equal to previous UPB.

You reported a change in UPB on an inactive loan.

Verify the UPB that we processed. You must transmit a revision for a reinstatement if a payment was received.

Non-exception for an inactive loan

806 Neg Am balance not adjusted due to balance correction (code 80).

You reported a principal balance correction for a loan that allows negative amortization.

Verify that you reported the correct transaction and send a revision if necessary.

Balance Correction

807 Ending UPB must not be less than zero.

You reported an ending UPB less than zero.

Verify the correct UPB and send a revision. § Non-exception


§ Reinstatement

808 NA Error in our system database. None. We will resolve these edits. NA

809 NA Error in our system database. None. We will resolve these edits. NA



Edit Code Number


810 Payoff balance is greater than purchase balance.

You reported a payoff balance which is greater than the purchase balance.

If you reported the incorrect payoff balance, then transmit a revision with the correct UPB.

If we have the incorrect purchase balance or negative principal reduction has been previously applied on the loan, you need to send your Freddie Mac Loan Portfolio Specialist or (800) FREDDIE the supporting documentation.

Payoff

Resolving Data Discrepancies Loan Edit Codes / Edits for Prepayment Penalty and Note Holder


Edits for Prepayment Penalty and Note Holder

Edit Code Number


900 Prepayment penalty must be zero.

You reported a prepayment penalty on a loan that does not allow one.

Contact your Freddie Mac Loan Portfolio Specialist if the note allows a prepayment penalty.

§ Payoff - All

§ Foreclosure

901 Note holder field has an invalid code.

You must report one of the following in the note holder field:

0 = Freddie Mac 1 = Seller/Servicer 2 = Third Party

Verify the correct note holder and send a revision. § Inactivation

§ Reinstatement

§ Payoff - All

§ Foreclosure

902 Note holder is required and field is blank.

You must report one of the following in the note holder field:

0 = Freddie Mac 1 = Seller/Servicer 2 = Third Party

Verify the correct note holder and send a revision. § Inactivation

§ Reinstatement

§ Payoff - All

§ Foreclosure

903 NA Freddie Mac database warning. None. We will address this warning. All

905 Prepayment premium not due.

You reported a prepayment penalty that is not due to us.

Send a revision without a prepayment penalty. Payoff - All

906 Prepayment penalty cannot be a negative amount.

You reported a negative amount for the transaction.

Verify the correct prepayment penalty and transmit a revision.

Payoff - Prepaid

908 Prepayment premium must be verified.

You need to verify the prepayment penalty you reported.

Verify the amount and retransmit if different. Contact your Freddie Mac Loan Portfolio Specialist if it was correct.

Multifamily and selected single family payoffs

MIDANET for the PC Software Version and Site Number


MIDANET for the PC You need the Disk Operating System (DOS) to run MIDANET® for the PC.

Software Version and Site Number

A MIDANET® for the PC site is a personal computer (PC) on which one registered set of MIDANET for the PC software is installed. Each site is identified by a site number. The site number is a unique identifier for each set of MIDANET software. It serves as the address for transmitting and receiving data. Each copy of MIDANET for the PC has software version and site numbers. They are displayed on the copyright screen, as shown

below. Our customer service staff may ask you for your version and site numbers if you call (800) FREDDIE with questions regarding MIDANET for the PC.

Version Number

The first and second digits of the version number identify the year of the most recent major software enhancement. The third and fourth digits are the release number, beginning with 01, for the most recent software update for the current year. The fifth and sixth digits indicate the download number, beginning with 01, for the most recent software update for the current year and release number. When you log on to MIDANET for the PC, the MIDANET system will check your version number to ensure you are using the most recent version of the software. The MIDANET system will not let you access our network if you are not using the most recent version of the software. Call (800) FREDDIE if this

happens to you.

Site Number The first four digits of the site number are the first four digits of your Seller/Servicer number. The last three digits are unique to your set of MIDANET for the PC software and identify it from other sets of MIDANET software within your institution. We strongly recommend that you not share your MIDANET for the PC software with others in your office. More than one PC will have the same site number if you share software, and our system only recognizes one occurrence of a site number. This means that if you copy the same set of software onto more than one PC, only one site will receive

M I D A N E T - Federal Home Loan Mortgage Corporation

Version 98.01.27

Site 9999132

Copyright Federal Home Loan Mortgage Corporation 1998 a licensed proprietary work; all rights reserved.

The following is CONFIDENTIAL INFORMATION – limited

distribution to authorized persons only. This software is protected under the U.S. Copyright Act of 1976. Unauthorized duplication, distribution, or use is

strictly prohibited.

MIDANET and Freddie Mac are service marks of the Federal Home Loan Mortgage Corporation.

MIDANET for the PC Software Version and Site Number


downloads, such as software updates and reports, from us. We will give you as many copies of the MIDANET for the PC software as you need free of charge so you do not have to share software.

Commonly Used Function Keys:

F3: Displays the Help panel(s) for the current screen.

F9: Returns to the previous menu or screen

F10: Returns to the Main menu

MIDANET for the PC How to Access MIDANET Screens


How to Access MIDANET Screens

Communications

Description Keystroke Sequence from Main Menu

Communications Options Setup 4, 6

Transmit Freddie Mac Data 4, 2

Receive Other Data

n Contracts/Purchase Statements

n Funding Detail

n Confirmation Messages

n Reports in Freddie Mail

4, 1

Process Transmission Confirmations 4, 3

View Transmission/ File Status 4, 5, 1

Print Transmission Log (prints entire log; to print a particular transmission, do a screen print)

4, 5, 2

Delete Transmission Log 4, 5, 3

Maintain Transmitted Files 4, 4



Loan-Level Monthly Reporting


Enter Loan-Level Data, Detail Entry

n Load Funding Detail Data 7, 1, 3

n Cycle Loan-Level Data 7, 1, 2

n Add / Revise / Update / Browse / Delete Loan-Level Data 7, 1, 1

n Package / Unpackage / Loan-Level Data (Enter “Y” in the “Mark For Transmit” field)

7, 1, 1

Enter Loan-Level Data, Batch Entry

n Add / Update / Browse / Delete Loan-Level Data Formats 7, 2, 4

n Import Loan-Level Data 7, 2, 1

n Print Loan-Level Import Reports 7, 2, 2

n Export Loan-Level Data 7, 2, 3

Print Loan-Level Reports 7, 4

Transmit Loan-Level Data (Mark “X” for each file to transmit) 4, 2

Process Confirmation Messages

n Receive Confirmation Messages 4, 1

n View Confirmation Messages 4, 3



Loan-Level Monthly Reporting


Edit Reports

n Print / Browse / Delete Edit Reports, if you communicate activity to us daily through MIDANET

5, 6, then select (P)rint, (B)rowse, or (D)elete with the arrow key*

n Print / Browse / Delete Edit Reports, if you do not communicate activity to us daily through MIDANET

4, 1, Press F10 to Main Menu, 5, 6, then select (P)rint, (B)rowse, or (D)elete with the arrow key*

Purchase Statements

n Receive Purchase Data 4, 1

n Print Cash Purchase Forms (15) 7, 8, 1

n Print Guarantor Purchase Forms (15A/B) 7, 8, 2

n Print WAC ARM Purchase Forms (15C) 7, 8, 3

n Print Mortgage Funding Detail Reports 7, 8, 4

n Process Export Purchase Data 7, 8, 5, 1

n Process Purchase Data Formats 7, 8, 5, 2

Perform Status Reset (Puts all of a cycle’s data in a “packaged” status. Do this if we request that you resend all of your cycle data.)

7, 5

Monthly Delete (Deleted data cannot be retrieved.) 7, 6

Compress Data (To maintain clean files.) Enter 5,1,1 (Enter “X” for each file to compress)



*Reports are displayed by name in chronological order starting from the newest report to the oldest report. Contact your Freddie Mac Loan Portfolio Specialist if a notice is displayed on page one of the report you selected indicating the number of edits you have made to the report exceeds our threshold. Your Freddie Mac Loan Portfolio Specialist will send you a complete report by mail. We cannot retrieve deleted data..



Sending Freddie Mac a Revision in MIDANET for the PC

What is a Revised Transaction?

During loan-level monthly reporting, our system views a loan transaction that is marked as a revision as the transaction that you truly intend to report, even if you reported (or will report) other transactions for the same loan in the same accounting cycle. The primary difference between a revision and a non-revision is that a revised transaction, if it passes all edits, will automatically replace any loan transaction previously applied to our system.

When to Send a Revision

Any time a transaction is reported more than once for the same loan for the same accounting cycle, mark the transaction that you intend for us to process as a revision.

Send us a revised transaction

n When clearing an edit reflected on the Edits to be Cleared Report (Edits reflected on the System Cleared Edits report have already been adjusted and applied to our system. Send us a revision to these edits only if what we processed was incorrect.)

n When replacing a loan transaction previously reported and accepted by our system

How to Send a Revised Transaction

To send us a revision, you must use the Revise function and not the Add function when prompted by MIDANET for the PC.

Reconciling Your Portfolio The Basics


Reconciling Your Portfolio

The Basics

Freddie Mac provides you with several reports to use in managing your Freddie Mac portfolio. The reports provide information about your account, what you reported to us, what we processed, what remittances we received from you, and what amounts were due to us. These reports help you reconcile your investor reporting and custodial principal and interest account, and help you manage your overall Freddie Mac performance.

Understanding the Monthly Reconciliation Reports

We provide you with the following reports:

§ The Monthly Account Statement

§ The Seller/Servicer Remittance Analysis

§ The Detailed Adjustment Report

§ The Loan Reconciliation Difference Report

Freddie Mac provides the monthly reconciling reports during the reporting cycle (referred to as preliminary reports) and, at month end (referred to as final reports).

þ Preliminary reports: If you report and resolve all data discrepancies within five business days before the end of the month, you may access preliminary reports via Investor Accounting Manager on FreddieMac.com. Use these preliminary reports to begin reconciling your monthly loan activity and custodial account, or use them to make revisions to prior loan transactions.

þ Final reports: Final reports are available after we close out our monthly accounting cycle (usually near the end of the month). Use these reports to reconcile your investor reporting and your custodial account activity for the month. You will receive a final report even if you previously accessed a preliminary report.

The monthly reconciliation reports are available to you through MIDANET for the PC and Investor Accounting Manager. See MIDANET for the PC for details on accessing the reports on MIDANET for the PC.

The monthly reconciliation reports are described on the following pages.

Reconciling Your Portfolio Understanding the Monthly Reconciliation Reports


The Monthly Account Statement The Monthly Account Statement is a summary report that reflects your total amount due to us as of the accounting cycle cutoff. The report includes beginning and ending balances, total amounts due from all loans processed for your Servicer number, the total remittances made available to us during the cycle, and any adjustments we made to your account including charge-off credits, loan modification credits, and other billings. You can access a preliminary Monthly Account Statement via Investor Accounting Manager. The Monthly Account Statement is available at month end via MIDANET for the PC and through Investor Accounting Manager.

SERVICER: 123456 AS OF 03/15/XX TIME: 21:42:27 BEGINNING BALANCE 68,725.00

PRINCIPAL INTEREST PREPAY TRANSACTION APPLIED DUE DUE PENALTY TOTAL P&I

NON EXCEPTIONS 22,686.00 43,211.00 0.00 65,897.00 PREPAID PAYOFF (61) 96,725.00 399.80 0.00 97,124.80

ADD TOTAL PRINCIPAL & INTEREST 119,411.00 43,610.80 0.00 163,021.80 163,021.80

LESS REMITTANCES MADE 153,610.00

ADD ADJUSTMENTS MADE BY FREDDIE MAC 0.00 ENDING BALANCE 78,136.80

The interest due on each line will include both the monthly and exception interest for the transaction

The total of adjustments posted and other billings to your account. The detailed breakdowns for this number will also appear on the Detail Adjustment Report.

Total liability to reconcile as of the accounting cutoff equals the beginning balance plus P&I beginning balance plus P&I, minus remittances plus or minus adjustments. Reconcile your custodial account balance to this total liability.

The sum of the principal due, interest due and prepayment penalties

The total of all funds made available to us during the cycle

Amount carried forward from previous cycle



The Seller/Servicer Remittance Analysis

The Seller/Servicer Remittance Analysis, also referred to as the Cash Statement, is a summary report available via Investor Accounting Manager that recaps your daily remittances via Global Payments, Inc. (GPI), your beginning and ending cumulative balances, the dates your remittances are available to us, the Amount Due (calculated on the investor reporting transactions we process for you), and your cumulative overage/shortage balance. A preliminary report is available via IAM between the 16th business day of the monthe until five business days before the end of the month. It will list the same information as a final report except it will not display any billings, adjustments made by us, or earned income credits. A final Seller/Servicer Remittance Analysis is available the first week in the calendar month following the accounting cutoff.



Servicer Number: Servicer Name: Servicer Contact Name:

Freddie Mac Seller/Servicer Remittance Analysis

10/16/XXXX through 11/15/XXXX

Last Updated: 11/30/XXXX 12:00:00 AM Final

Amount Received Amount Due

Date P&I, Adj, Int. Advanced

P/O, TP FCL. Corrections P&I, Int. Advanced

P/O, TP FCL Adj. Adj. Code Balance Int. Reimbursement

100,000.00 Oct 16 0.00 0.00 0.00 0.00 0.00 0.00 100,000.00 0.00

Oct 17 0.00 0.00 0.00 0.00 100,000.00 0.00 0.00 0.00 Oct 18 15,000.00 0.00 0.00 15,000.00 0.00 0.00 0.00 0.00 Oct 19 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 20 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 21 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 23 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 24 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 26 0.00 0.00 0.00 0.00 120,000.00 0.00 (120,000.00) 37.80

Oct 27 0.00 0.00 0.00 0.00 0.00 0.00 (120,000.00) 37.80

Oct 28 0.00 0.00 0.00 0.00 0.00 0.00 (120,000.00) 37.80

Oct 29 0.00 120,000.00 0.00 0.00 0.00 0.00 0.00 0.00 Oct 30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Oct 31 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Nov 1 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Nov 2 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Nov 3 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Nov 4 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Nov 5 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Nov 6 0.00 0.00 0.00 300,000.00 0.00 0.00 (300,000.00) 94.52 Nov 7 300,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 8 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 9 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 11 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 12 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 13 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 14 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Nov 15 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Totals 315,000.00 120,000.00 0.00 315,000.00 220,000.00 0.00 0.00 207.92

Total Interest Reimbursement Due to Freddie Mac calculated at (Prime Rate 8.5% plus 3%) / 365 …………......207.92

Amounts you remitted are categorized by non-payoff remittances (principal and interest, curtailments, reductions in negative amortization, reinstatement interest, interest advanced by REO, adjustment); payoffs, repurchases, and third-party sale foreclosures; and corrections.

The ending daily cash balance as of the last day of the cash cycle.

Amounts Freddie Mac expects you to remit, categorized by non-payoff amounts (principal and interest, curtailments, reductions in negative amortization, reinstatement interest, interest advanced by REO); payoffs, repurchases, and third party sale foreclosures; and adjustments we made which are identified by code and also appear on the Detailed Adjustment report.



The Detailed Adjustment Report

The Detailed Adjustment report is a report that itemizes all of the adjustments posted to your account. Examples of adjustments reflected on this report are RTC minority principal and interest billings, Servicemembers Civil Relief Act (SCRA) credits, charge off adjustments, discounts on convertible adjustable-rate mortgages, and loan modifications. Use this report to identify adjustments posted to your account on the Monthly Account Statement and the Seller/Servicer Remittance Analysis. We report Freddie Mac fees and penalties to you separately on the Servicer Billing Statement since they are considered a cost of servicing and an expense, not part of your Freddie Mac portfolio. You will receive the Detailed Adjustment report via Investor Accounting ManagerSM at the end of the month after we process a transaction for every mortgage you service for Freddie Mac.

Freddie MacDetailed Adjustment Report

Servicer 123456Cycle 03/15/XXXX

FM Adjustment Adjustment Adjustment Loan # Amount Description Post Date

775386898 -43.19 Interest Adjustment775723258 1,483.00 Interest Adjustment A description of the

adjustment.1,439.81

The Freddie Mac Loannumber (if applicable). No loan number willshow if a loan number The last amount will is not applicable. be the total of all the The dollar amount of

adjustments. This each adjustment.number appears on the adjustment line of theMonthly AccountStatement.



The Loan Reconciliation Difference Report

The Loan Reconciliation Difference report summarizes loan-level transaction reporting edits for a particular accounting cycle. The report is divided into four sections, each containing different loan transaction scenarios: Loan Transactions Applied by Freddie Mac, Loan Transactions Applied by Servicer, Invalid Freddie Mac Loan Number Reported, and Incorrect Servicer Number Reported. The Loan Reconciliation Difference report is available at month end via MIDANET for the PC and via Investor Accounting Manager.



Section 1, Loan Transactions Applied by Freddie Mac, contains þ Transactions where we processed data

that differed from what you reported þ Transactions we added manually because

they were not reported to us

Section 2, Loan Transactions Applied by Servicer, contains þ Revised transactions you reported that

we processed þ Transactions reported more than once

within an accounting cycle

Section 3, Invalid Freddie Mac Loan Number Reported, contains þ Transactions you reported with an

invalid Freddie Mac loan number

Section 4, Incorrect Servicer Number Reported, contains þ Transactions you reported with an

incorrect Servicer number

REPORT: XXXXXXXX Freddie Mac Page: 1Accountant: 2A2123 Loan Level Reporting Date: 03/30/XXXX Loan Reconcilliation Difference Report Time: 11:27:55 Cycle: XX0315 Servicer: 123456ABC Bank FINAL Section 2: Loan Transactions Applied by Servicer

Servicer FM Principal Interest Prepayment UPB Exceptions R USR TRN DI Error Ln Number Ln Number Due Due Premium Code Date V ID STA FF Date Code

402884 467418801 143.84 1,032.16 0.00 147,748.29 REJ * 03/20/XXXX 600402884 467418801 143.84 1,047.57 0.00 147,748.29 Y LNH 03/20/XXXX

DIFFERENCE 0.00 15.41 0.00 AGE = 0

REPORT: XXXXXXXX Freddie Mac Page:Accountant: 2A2123 Loan Level Reporting Date:

Loan Reconcilliation Difference Report Time:

Cycle: XX0315 Servicer: 123456 ABC Bank

Section 3: Invalid Freddie Mac Loan Number Reported

Servicer FM Principal Interest Prepayment UPB Exceptions R USR TRN DI ErrorLn Number Ln Number Due Due Premium Code Date V ID STA FF Code Date

166867 525612222 143.84 1,032.16 0.00 147,748.28 REJ 101 03/20/XXXX

REPORT: XXXXXXXX Freddie Mac Page: Accountant: 2A2123 Loan Level Reporting Date:

Loan Reconcilliation Difference Report Time: Cycle: XXXX0315 Servicer: 123456 ABC Bank Section 4: Incorrect Servicer Number Reported

Servicer FM Principal Interest Prepayment UPB Exceptions R USR TRN DI Error TRNS Ln Number Ln Number Due Due Premium Code Date V ID STA FF Code Date

166862 123456789 184.00 1,200.14 0.00 211,000.00 REJ 105 03/20/XXXX

XXXXXXXX Freddie Mac Page:Accountant: 2A2123 Loan Level Reporting Date: 03/30/XXXX

Loan Reconciliation Difference Report Time: 11:27:55

Cycle: XX0315 Servicer: 123456 ABC Bank FINAL

Section 1: Loan Transactions Applied by Freddie Mac

Servicer FM Principal Interest Prepayment UPB Exceptions R USR TRN DI ErrorLn Number Ln Number Due Due Premium Code Date V ID STA FF Date Code

402884 467418801 698.62 0.00 0.00 27,659.31 00/00/00 REJ * 03/20/XXXX 600402884 467418801 698.62 193.07 0.00 27,659.31 FM- LNH 03/20/XXXX

DIFFERENCE 0.00 193.07 0.00 ANY = 08.176 % AGE = 0



REPORT: LL00800R FREDDIE MAC PAGE: 1ACCOUNTANT: 2E1001 LOAN LEVEL REPORTING DATE: 05/27/99

LOAN RECONCILIATION DIFFERENCE REPORT TIME: 13:07:55CYCLE: 99/05/15 SERVICER: 123456 ABC BANK, FSB FINAL

SECTION 2: LOAN TRANSACTIONS APPLIED BY SERVICER

SERVICERLN NUMBER

FMLN NUMBER

PRINCIPALDUE

INTERESTDUE

PREPAYMENTPREMIUM

UPB EXCEPTIONCODE DATE

RV

USRID

TRNSTA

DIFF

TRANSDATE

ERRCODE

1111111111111 121212121 0.00 126.98 0.00 24,575.92 00/00/00 REJ * 05/18/99 6001111111111111 121212121 0.00 133.12 0.00 24,575.92 00/00/00 FM ACC 05/18/991111111111111 121212121 0.00 133.12 0.00 24,575.92 00/00/00 SS DEL 05/19/991111111111111 121212121 0.00 133.12 0.00 24,575.92 00/00/00 Y LNH 05/19/99

DIFFERENCE 0.00 6.14 0.00 ANY = 6.50000% AGE = 30

A “Y” in this column indicates that you reported

this transaction as a revision.

Indicates who performed the action. Blank = Servicer

FM = Freddie Mac SS = Servicer. This indicator appears

when a revision is transmitted that deletes a previous transmission.

SL = Freddie Mac. This indicator appears when we simulate a loan transaction because an accepted

transaction is not in the system when the system closes.

Any values other than those above indicate a Freddie Mac Freddie Mac

Loan Portfolio Specialist.

Tells you the action performed. REJ = Transaction rejected ACC = Transaction previously accepted (always precedes a DEL). ADD = Transaction added by a Freddie Mac Freddie Mac Loan Portfolio Specialist DEL = Deleted transaction DUP = Duplicate transaction LNH = Final transaction accepted by our system.

An asterisk (*) in this column indicates a transaction was used to calculate the principal and interest difference.

The edit code(s) assigned to this transaction. The difference between the amount

of the final transaction accepted by our system (indicated by “LNH” in

the TRN STA column) and the amount of the transaction used to

calculate the principal and interest difference (indicated by an asterisk

in the DIFF column).

The length of time the loan has had an edit outstanding in consecutive cycles. For example, an age of 30 means this

loan has appeared on the Loan Reconciliation Difference report for

two consecutive cycles.



The Four Sections of the Loan Reconciliation Difference Report

Section 1: Loan Transactions Applied by Freddie Mac

Section 1 lists transactions we adjusted, for which we did not receive or accept transactions or revised transactions from you. These transactions appear on the Edits to be Cleared daily edit report. There may be more than one line for each mortgage because each transaction is listed separately. Transactions appearing in Section 1 are typically valid reconciling items and result in remittance differences.

Section 1 - Loan Transactions Applied by Freddie Mac

Transaction Scenario Possible Impacts to You Example of Scenario on Report

Edits without Revisions

Freddie Mac processed data that is different from what you reported. Note that the principal and interest difference identified is the difference between what we processed and the transaction you reported. The edit appears on the System Cleared Edits report if our system processed the transaction.

P&I Reconciliation - Most likely a reconciling item.

Remittance - An adjustment to your cash remittance is most likely needed.

Custodial Account Reconciliation - Most likely a reconciling item.

Amount Loan Due User ID Rev Status Diff 1 100 REJ * 1 150 FM- LNH Diff 50

Edits with Revisions

Freddie Mac processed data that is different from what you reported, and you reported a revised transaction that we did not process. Note that the principal and interest difference identified is the difference between what we processed and the revised transaction you reported.

P&I Reconciliation - Most likely a reconciling item.

Remittance - An adjustment to your cash remittance is most likely needed.

Custodial Account Reconciliation - Reconciling item may either be the difference identified, or the difference between what we processed and the non-revised transaction (if one exists).

Amount Loan Due User ID Rev Status Diff 1 100 Y REJ * 1 150 REJ 1 175 FM- LNH Diff 75

Loans not reported by Servicer

You did not report a transaction for a loan, and we ultimately added the transaction. Transactions in this section may offset transactions appearing in Section 3, Invalid Loan Number Reported. Note that the principal and interest difference identified is for the entire amount we processed on the loan transaction.

P&I Reconciliation - Most likely a reconciling item, unless offset by a transaction identified in another section.

Remittance - An adjustment to your cash remittance is most likely needed, unless offset by a transaction identified in another section.

Custodial Account Reconciliation - Most likely a reconciling item, unless offset by a transaction identified in another section.

Amount Loan Due User ID Rev Status Diff 1 100 FM- ADD 1 100 FM- LNH Diff 100



Section 2: Loan Transactions Applied by Servicer Section 2 lists mortgages for which you transmitted more than one transaction and we accepted one of the transactions. There will be more than one line for each mortgage because each transaction is listed separately. You must look individually at each loan appearing in Section 2 to determine whether a reconciliation or cash difference exists.

Section 2 - Loan Transactions Applied by Servicer

Transaction Scenario Possible Impacts to You Example of Scenario on Report Servicer Revisions Rejected

You reported a non-revised transaction, which was accepted. A revised transaction was also reported, but was not processed. Although Freddie Mac processed a transaction that you reported, it was probably not the intended transaction. Note that the principal and interest difference identified is the difference between the transaction we processed and your revision that we did not process.

P&I Reconciliation - Most likely a reconciling item if the revision was truly the intended transaction.

Remittance - An adjustment to your cash remittance is needed if the revision was the intended transaction and the revised principal and interest amount was remitted.

Custodial Account Reconciliation - May or may not be a custodial account reconciling item, depending on whether the revised principal and interest was deposited into the custodial account before the cutoff.

Amount Loan Due UserID Rev Status Diff 1 100 LNH 1 180 Y REJ * Diff - 80

Servicer Revisions Accepted

You reported a revised transaction, which was accepted. Although we processed the intended transaction, a custodial account reconciling difference may still occur. Note that the principal and interest difference identified is the difference between the revised transaction we processed and the other transaction (if one exists) you reported.

P&I Reconciliation - Not a reconciling item as long as the revision was truly the intended transaction.

Remittance - No adjustment to your cash remittance is needed if the revision was the intended transaction and the revised principal and interest amount was remitted.

Custodial Account Reconciliation - May or may not be a custodial account reconciling item, depending on whether the revised principal and interest was deposited into the custodial account before the cutoff.

Amount Loan Due UserID Rev Status Diff 1 100 REJ * 1 140 Y LNH Diff 40

Servicer Duplicates

You reported more than one transaction, and neither is a revision. We processed one of these transactions. Although Freddie Mac processed a transaction you reported, it may not have been the intended transaction. Note that the principal and interest difference identified is the difference between the transaction we processed and your other transaction which was not processed.

P&I Reconciliation - May or may not be a reconciling item depending on which transaction you truly intended.

Remittance - No adjustment to your cash remittance is needed as long as the amount remitted matches the transaction you intended.

Custodial Account Reconciliation - May or may not be a custodial account reconciling item, depending on which transaction was intended and what amount was deposited into the custodial account prior to the cutoff.

Amount Loan Due UserID Rev Status Diff 1 100 REJ * 1 120 LNH Diff 20



Section 3: Invalid Freddie Mac Loan Number Reported

Section 3 lists loan numbers you reported that our system did not recognize as valid. These loan numbers appear on the Edits to be Cleared daily edit report with error code 101E. There will be one line for each mortgage.

Section 3 - Invalid Freddie Mac Loan Number Reported

Transaction Scenario Possible Impacts to You Example of Scenario on Report Invalid Reported Freddie Mac Loan Number

You reported a transaction with an invalid loan number. Note that no principal and interest difference is processed for the loan.

P&I Reconciliation - May or may not be a reconciling item depending on whether 1) an incorrect loan number was reported for a valid loan or 2) data was reported on a truly invalid or previously liquidated loan.

Remittance - No adjustment to your cash remittance is needed as long as the data we accepted matches the data for the invalid loan number.

Custodial Account Reconciliation - May or may not be a reconciling item depending on whether money was deposited into the custodial account for a truly invalid loan. (Example: funds for another investor’s loan deposited into the Freddie Mac custodial account.)

Amount Loan Due UserID Rev Status Diff 1 100 REJ 2 120 REJ 3 175 REJ

Section 4: Incorrect Servicer Number Reported

Section 4 lists loan numbers that were reported with an incorrect Servicer number. These loan numbers appear on the Edits to be Cleared daily edit report with error code 105E. There will be one line for each mortgage.

Section 4 - Incorrect Servicer Number Reported

Transaction Scenario Possible Impacts to You Example of Scenario on Report Loans Reported in Error - Incorrect Servicer Number

You reported a loan transaction for a loan that does not match the Servicer of record on our system. Note that no principal and interest difference is shown processed the loan.

P&I Reconciliation - Most likely a reconciling item if you are actually servicing the loan but we have a different Servicer of record (possibly due to a transfer of servicing, or reporting to us under multiple Servicer numbers).

Remittance - Our share of principal and interest needs to be forwarded to the Servicer of record. If you already remitted to us, the funds need to be recouped.

Custodial Account Reconciliation - Most likely a reconciling item since funds will be in the custodial account on the 15th with no corresponding Freddie Mac liability.

Amount Loan Due UserID Rev Status Diff 1 100 REJ 2 120 REJ 3 175 REJ

Reconciling Your Portfolio How to Use the Monthly Reconciliation Reports


How to Use the Monthly Reconciliation Reports

For detailed information about how to use the monthly reconciliation reports and how to reconcile your custodial accounts, please refer to Freddie Mac’s educational materials and workshops. For more information,

þ Contact (800) FREDDIE

þ Check out our education site on GoldWorks

þ Visit the Learning Center at http://www.FreddieMac.com/learn

þ Contact your Freddie Mac Loan Portfolio Specialist

In general, use the

n Monthly Account Statement to reconcile your custodial account

n Seller/Servicer Remittance Analysis to analyze your remittances and cash balance

n Detailed Adjustment report to prepare your remittances and reconcile your custodial account

n Loan Reconciliation Difference report to identify adjustments you need to make to your reporting, remitting, or custodial account(s)

Custodial Accounts Establishing and Maintaining Accounts


Custodial Accounts Freddie Mac requirements for the custodial account process are detailed in Chapters 76-79 of the Single-Family Seller/Servicer Guide (the Guide). The following tips, checklists, and information are designed to help Servicers effectively manage their Freddie Mac custodial accounts.

Establishing and Maintaining Accounts § Immediately establish custodial accounts for both principal and interest (P&I) and escrow (T&I) payments for Freddie Mac loans.

§ Establish demand deposit accounts or interest-bearing deposit accounts (such as money market deposit accounts or savings accounts). Do not deposit or invest funds into money market mutual funds.

§ Properly title accounts.

§ House accounts at an eligible depository.

§ Hold only Freddie Mac principal and interest in the P&I account.

§ Use escrow accounts for escrow funds held on behalf of the borrower. Examples of funds held on behalf of a borrower that you should deposit into an escrow account include: partial payments, taxes and insurance, suspense, buydown subsidy, forbearance, repair and replacement, and restoration.

§ Keep funds segregated at all times.

§ Apply bi-weekly mortgage payments and deposit the funds into the P&I account as payments are received, provided the bi-weekly arrangement was part of the original mortgage note when the loan was sold to Freddie Mac (i.e., the due date per the note is every two weeks).

§ Establish disbursement clearing accounts for P&I and escrow, if needed.

§ Restrict investments to federal funds and limited time deposits.

§ File new Letter Agreements and Signature Cards with Freddie Mac when changing names, accounts, or depository institutions.

§ Notify Freddie Mac’s Institutional Eligibility-Custodial Department of all changes to accounts, including title changes, however minor, of the institution where you hold your custodial account.

Custodial Accounts Reconciling Accounts / P&I Accounts


Reconciling Accounts

Freddie Mac expects you to perform custodial account reconciliations monthly within 45 days of the accounting cutoff. Keep your reconciliation up-to-date and maintain it as a stand alone and complete package from other documents. We expect you to fund all variances, identified or unidentified, within 90 days of the accounting cycle in which the variance originates. Always maintain a properly funded account where sufficient funds are available for the next remittance due Freddie Mac. In other words, your account must never have a negative balance, even if your bank allows it.

Each month, Freddie Mac randomly selects Servicers to send in copies of three cycles of P&I and Escrow reconciliations. This custodial account review ensures Freddie Mac funds are safeguarded and provides definitive guidance to manage your cash flow activities. Keep your reconciliation up-to-date and maintain it as a separate package from other documents. You must send support documentation for every line item on the worksheet when you are requested to submit your custodial account reconciliations. It may be easier and faster to include the support documentation with your reconciliation.

Principal and Interest Accounts

Reconcile the P&I account balance (as of the accounting cycle cutoff) to the total liability due Freddie Mac (as of the cutoff) from the Monthly Account Statement. Use Form 59, Principal and Interest Custodial Account Reconciliation Worksheet, which can be found in the Single-Family Seller/Servicer Guide and in our publication, Understanding Custodial Accounts, which is available on the Learning Center.

The diagram on the following page identifies the documentation you need to:

§ Complete Form 59

§ Send to us with your reconciliation when we request it



1a From your bank statement for the cycle being reconciled.

1b From the following month’s bank statement or the monthly collections report. Outstanding debits are withdrawals initiated as of the cutoff that are debited the first business day after the accounting cutoff being reconciled. Explanation of the withdrawal is also required.

4a The cumulative total of prepaid interest. From the page

of your prepaid report that shows totals.

4b The cumulative total of prepaid principal. From the page of your

prepaid report that shows scheduled/scheduled totals.

4c The total of minority principal and interest. From the Minority

Principal and Interest bill that is due to be remitted by the 15th of the

following month .

6b The total cumulative variance, from the previous cycle’s Form 59.

1c From the following month’s bank statement or the monthly collections report. Deposits in transit are collections as of the accounting cycle cutoff that are reflected on the bank statement as deposited the following business day after the accounting cutoff being reconciled (two business days if you are using a lock box).

2 The ending balance from the final Monthly Account Statement for the cycle being reconciled (per MIDANET or Investor Accounting Manager). 3a and 3b The cumulative totals of delinquent interest on active and inactive mortgages. From the page of your delinquent report that shows totals.

3c The cumulative total of delinquent principal for scheduled/scheduled loans. From the page of your delinquent report that shows totals.



The following table provides an overview of how to reconcile the principal and interest custodial account. All of the worksheets used to reconcile the principal and interest custodial account are available in the Guide and in our Understanding Custodial Accounts publication available on the Learning Center.

Step Procedure Refer to the section in the Understanding Custodial Accounts workshop manual

1 Calculate the overall cumulative variance and the current cycle variance by completing the Principal and Interest Custodial Account Reconciliation Worksheet (Form 59).

Reconciling Principal and Interest Custodial Accounts

2 Calculate the amount of the cash disbursements variance by completing the Cash Disbursements to Amount Remitted Worksheet. There will be a cash disbursements variance if you withdrew funds from your principal and interest custodial account for any reason other than remitting the funds to us through Global Payments Incorporated (GPI).

Reconciling Cash Disbursements

3 Calculate the amount of the cash receipts variance by completing the Cash Receipts to Current Amount Due Worksheet. There will be a cash receipts variance if the amount of your deposits for the cycle does not equal the Total Amount Due us for the cycle.

Reconciling Cash Receipts

4 To ensure you are reconciling to the correct figure, complete the following calculation:

Cash Receipts Worksheet total - Cash Disbursements Worksheet total = Current Cycle Variance (6c)


5 Identify the transactions that are causing any cash disbursements variance, and determine what action you need to take for each transaction.

Reconciling Cash Disbursements

6 Identify the transactions that are causing any cash receipts variance, and determine what action you need to take for each transaction.

Reconciling Cash Receipts

7 Identify the transactions that are causing any cumulative variance. We expect you to fund all variances, identified or unidentified, within 90 days of the accounting cycle in which the variance originates.




Important Points About the Principal and Interest Custodial Account Reconciliation

þ An outstanding debit is a withdrawal (other than a GPI System remittance) that was initiated as of the accounting cutoff that has not been debited from the bank account. An outstanding debit may include debits such as NSF checks or recovery of advances initiated but not withdrawn as of the accounting cutoff, and shown as a separate line item on the bank statement. Outstanding debits may occur infrequently. You will not have an outstanding debit due to a remittance via GPI because the funds are made available to us at the same time the funds are withdrawn from your custodial account.

þ Deposits in transit are collections as of the last business day of the cycle for transactions reported in the current cycle that are not reflected in the custodial account bank balance as of the cutoff date. There is a timing difference between when the deposit is initiated and when it is reflected on the bank statement (i.e., a one-day lag, a two-day lag if you use a lock box).

þ Delinquent and prepaid totals should be cumulative totals, not current cycle only.

þ Minority principal and interest totals should be taken from the Minority Principal and Interest Due Report for the current cycle (remitted the following month). This only applies to loans where we have negotiated the purchase of the minority participation of previously purchased Freddie Mac loans.

þ A consolidated reconciliation must be completed if you maintain more than one principal and interest account.

þ Form 59 captures the actual custodial account position as of the accounting cutoff. Use a variance summary log to identify any difference between the adjusted liability and the adjusted bank balance.

Escrow Accounts

Reconcile the escrow account balance to the total positive loan-level escrow liability per the trial balance as of the same date. We suggest you use our Escrow Custodial Account Reconciliation Worksheet, Form 59E, which can be found in our Single-Family Seller/Servicer Guide and in our Understanding Custodial Accounts publication. The escrow custodial account, like the principal and interest custodial account, must be reconciled as of the accounting cycle cutoff. Many Servicers choose to also reconcile at month end. Our minimum requirement is that the escrow account be reconciled as of the accounting cutoff.

The diagram on the following page identifies the documentation you will need to

n Complete the Escrow Custodial Account Reconciliation Worksheet

n Send to us with your reconciliation when we request it

Custodial Accounts Reconciling Accounts / Escrow Accounts


1a From your bank statement for the cycle being reconciled.

1b From the following month’s bank statement or the monthly collections report. Outstanding debits are withdrawals initiated as of the cutoff that are debited the first business day after the accounting cutoff being reconciled. Explanation of the withdrawal is also required.

2c From the total page of the trial balance that supports the total

suspense liability. Suspense funds are partial payments or unapplied funds held in escrow until a full payment is applied to the principal and interest

account.

2d From a screen print of the loan history or report that verifies the total

suspense liability (the escrow balances of any loans funded by us as of the

accounting cutoff, but not included in your trial balance totals on line 2a) at the

time of the accounting cutoff for the accounting cutoff being reconciled.

2e From the total pages of the trial balances that support the amounts of

any other funds that are held on the behalf of a borrower. Examples of

other funds include buydown or replacement reserves. The balance of

this type of account must equal the total of buydown funds deposited at the time

we purchased a mortgage, minus the monthly buydown amount, times the

number of payments applied since our purchase.

1c From the following month’s bank statement or the monthly collections report. Deposits in transit are collections as of the accounting cycle cutoff that are deposited the first business day after the accounting cutoff being reconciled (two business days if you are using a lock box).

2a From the total page of the trial balance that supports the total escrow liability.

2b From the total page of the trial balance that supports the total escrow liability. If the escrow balance total on the trial balance nets negative escrow balances against positive escrow balances, you must add the total amount of negative escrow back to the netted figure to capture the total positive escrow liability.

3b The total cumulative variance, from the previous cycle’s Escrow Custodial Account Reconciliation Worksheet.

Custodial Accounts Reconciling Accounts / Escrow Accounts


Important Points About the Escrow Custodial Account Reconciliation

þ You must advance funds from your corporate account into the escrow custodial account whenever a deficiency occurs in an individual account. You cannot use one borrower’s overage to cover another borrower’s shortage. Make a daily advance for escrow balances that fall below zero on individual loans. As a borrower brings their escrow balance into the positive, you may repay the advance.

þ You must reconcile to the total positive escrow balance. If the trial balance nets the positive and negative escrow, the amount of the negative escrow needs to be added back to the netted figure to arrive at the total positive escrow liability.

þ An escrow custodial account must be opened even if you do not plan to escrow loans. The account is set up to receive any funds held on the borrowers’ behalf to include, but not exclusively, partial payments, suspense funds, reserves, buydown funds, or insurance claim proceeds.

þ Perform a consolidated reconciliation if you have more than one escrow account.

þ Use suspense or unapplied categories to allocate partial payments held in escrow.

Resolving Variances

As described in our Understanding Custodial Accounts publication, we suggest you use a variance summary log to identify the individual transactions that make up a principal and interest or escrow custodial account variance.

When logging a variance on the variance summary log

n Carry an amount to be deposited into a custodial account as a positive dollar amount.

n Carry an amount to be withdrawn from a custodial account as a negative dollar amount.

Variances do not necessarily reflect errors in managing the borrower’s funds, and can be the result of timing differences. Check to see if the variances are the result of any of the following:

n Deposit adjustments

n Repurchases

n Investment interest

n Unfunded escrow advances

n Debits to the bank account that are not for Freddie Mac remittances

n Initial monthly interest for newly funded loans not deposited in full

Custodial Accounts Reconciling Accounts / Variances


n Items on the Detailed Adjustment Report not yet adjusted to your custodial account

n Transfer of servicing discrepancies

n Unrecovered corporate advances

n Amortization differences

n Delinquent and prepaid totals miscalculated

n Recovery of your servicing fee that was deposited with a borrower’s gross payment

n Discrepancies caused by reporting errors (reported versus deposited)

n Posting errors

Important Points About Variances

þ We expect you to fund all variances, identified or unidentified, within 90 days of the accounting cycle in which the variance originates.

þ An overage or shortage on your Seller/Servicer Remittance Analysis is already incorporated into the ending balance of your Monthly Account Statement which, in turn, is reconciled to your bank statement. Your Seller/Servicer Remittance Analysis ending balance, although important, has no bearing on the principal and interest reconciliation process. Do not refer to your Seller/Servicer Remittance Analysis when identifying your principal and interest variance.

þ When you are requested to submit your custodial account reconciliations, you must send in supporting documentation for every variance. o Repurchases: A copy of the cycle’s MIDANET payoff report with the loan highlighted. o Newly funded loans: The loan history and a copy of the MIDANET non-exception report or schedule reflecting the new loan(s). o Investment interest: A copy of the bank statement with the amount highlighted. o Amortization differences: The last page of the schedule/report reflecting amortization differences. o Unidentified variances: A bank statement showing verification of the deposit/withdrawal correcting the variances. Any variance, even if

unidentified, must be funded within 90 days. o Escrow posting errors: A copy of the loan history that verifies the escrow balance at the time of the accounting cutoff.

Custodial Accounts Checkpoints


Custodial Account Reconciliation and Cash Management Checkpoints

Below is a list of checkpoints that will help to ensure your custodial account reconciliations and cash management practices are in compliance with our requirements. Most of these items apply to both P&I and escrow accounts, unless otherwise noted.

This list is not all inclusive and should not be the only control measure used to ensure proper performance. Please refer to the Freddie Mac Single-Family Seller/Servicer Guide (the Guide), Chapters 76 through 79 for more detailed information on depository eligibility, account set-up and monthly activity management.

1. Ensure all funds are held in Freddie Mac titled DDA accounts or interest bearing accounts, maintained at eligible depositories. You must, at a minimum, maintain one P&I account and one escrow account for servicing of Freddie Mac loans. Even if escrow funds will not be collected from borrowers, the escrow account must be established in the event you receive funds held on behalf of the borrower, such as insurance claims proceeds, partial payments, or buydown funds.

2. Ensure updated/current Letter Agreements (Forms 1057 or 1059 for P&I accounts and forms 1058 and 1060 for Buydown and Escrow Accounts) and signature cards are on file at Freddie Mac.

3. Ensure Freddie Mac funds are never commingled with other funds, and that Freddie Mac P&I funds are segregated from escrow funds held on behalf of the borrower.

4. Ensure payments are deposited into the appropriate Freddie Mac DDA or interest bearing accounts no later than the first business day after receipt of payment (2 business days if you are using a Lock Box Agent or other service to collect payments).

5. Ensure deposits are made daily as payments are received, and that the bank account continually maintains a positive balance.

6. Ensure all custodial accounts are reconciled monthly as of the accounting cutoff. Each reconciliation (P&I and escrow) must be prepared as a consolidated reconciliation.

7. Ensure reconciliations are prepared within 45 days of the accounting cutoff.

8. Ensure reconciliations compare the funds on deposit as of the accounting cutoff to the total liability for that same period. (See Guide - Form 59, Principal and Interest Custodial Account Reconciliation Worksheet, and the Monthly Account Statement. You also will find both P&I and escrow reconciliation worksheets in our Understanding Custodial Accounts publication and the Guide.

Custodial Accounts Reconciling Accounts / Checkpoints


9. Ensure accounts are adequately funded by addressing and adjusting for reconciliation variances within 90 days.

10. Ensure all other billings and advances are made timely and that sufficient funds are on deposit in the account for upcoming remittances due so that a positive balance is always maintained.

11. Ensure escrow advances are deposited daily, as necessary to cover deficiencies in individual borrower escrow balances. (If payment of a vendor charge will cause an individual borrower escrow balance to fall below a zero balance, the Servicer must advance funds into the escrow account sufficient to prevent a negative borrower escrow balance. You may not use the escrow collections from one mortgage to offset the deficiency of another.)

12. Ensure systems and reports are available monthly to provide the necessary portfolio-level and loan-level information needed to reconcile the custodial accounts and resolve variances timely.

13. Ensure monthly delinquent interest advanced and prepaid interest cumulative totals are calculated at the pass-through rate (accounting net yield).

14. Ensure documentation is available to support all deposits to, and withdrawals from, Freddie Mac custodial accounts.

15. Ensure differences from your Loan Reconciliation Difference report are adjusted for when compared to your loan-level P&I deposits.

16. Ensure reconciliations and supporting documentation are maintained in stand-alone packages, at an on-site accessible location, for a minimum of one year.

17. Ensure payments are applied in accordance with the requirements of the Security Instrument and the Guide.

18. Ensure payments deficient by more that $25 are held on deposit in the escrow account as suspense funds until the full P&I payment is received. As an alternative, deficient payments may be returned directly to the borrower with explanation.

19. Ensure investments are in compliance with Section 79.8 of the Guide.

20. Ensure management quality controls are in place to review and sign off on all reconciliations, whether prepared internally or by other servicing/accounting agents.

Transfers of Servicing What is a Transfer of Servicing?


Transfers of Servicing

What is a Transfer of Servicing?

Simply put, a transfer of servicing moves the responsibility of servicing a Freddie Mac mortgage from one Seller/Servicer to another. The transfer can by assignment, sale, conveyance or other means. The move affects all servicing duties and responsibilities (as set forth in the purchase documents) for mortgages and real estate owned (REO) properties owned in whole or in part by us. We determine, at our discretion, whether to approve each transfer of servicing. The Servicer receiving mortgages must be eligible to receive a transfer of servicing.

Concurrent Versus Subsequent

There are two types of transfers of servicing, differentiated by when the transfer takes place: concurrent and subsequent.

§ If a transfer occurs at the time of sale of a mortgage(s) to Freddie Mac, it is referred to as a concurrent transfer of servicing.

§ If a transfer occurs after the sale of the mortgage(s) to Freddie Mac, it is regarded as a subsequent transfer of servicing. A subsequent transfer can include an entire portfolio of mortgages, or individual mortgages.

Who are the Players?

There are three parties involved: the transferor, the transferee, and Freddie Mac.

§ You are the transferor if you transfer, or propose to transfer, the servicing of all or part of your mortgage portfolio.

§ You are the transferee if you acquire, or propose to acquire, the servicing of all or part of a mortgage portfolio.

Transfers of Servicing The Basics


The Basics What Happens When Example

A subsequent transfer of servicing is negotiated between Servicers

Transferor will transfer loans 111234567, 221234567, 331234567, 441234567, and 551234567. All loans were sold under the Gold remittance option.

Transferor submits transfer request information to Freddie Mac: Form 981, a $500 processing fee, and a list of mortgages to be transferred

30 Business days prior to effective transfer date

January 14 Transferor submits transfer request information to Freddie Mac: Form 981, a $500 processing fee, and a list of mortgages to be transferred (via MIDANET for the PC)

Transferor receives confirmation of receipt of list of loans

The same day that Freddie Mac receives the list of loans to be transferred

January 14 Transferor receives confirmation of Freddie Mac’s receipt of the list of loans

If loan or transfer errors are found, transferor receives exception reports via Freddie Mail

One business day after Freddie Mac receives list of loans to be transferred

January 18 Transferor receives loan exception report via Freddie Mail with loan 551234567 in error because it paid off on January 5

Transferor and transferee receive approval notification or denial letters from Freddie Mac

Seven to ten business days after Freddie Mac receives transfer request

January 27 Transferor and transferee receive approval notification from Freddie Mac.

Transferor reports loan-level monthly activity for newly transferred mortgages

Within five business days of the accounting cutoff

February 17

Transferor reports loan-level monthly activity for loans 111234567, 221234567, 331234567, and 441234567 for the February accounting cycle (January 15 through February 15).

Transferee begins reporting and remitting for payoffs and third-party sale foreclosures with exception dates after the effective transfer date

On or after the effective transfer date (first business day after the accounting cutoff)

February 18

Loan number 441234567 pays off on February 18. Transferee reports within five business days through MIDANET for the PC and remits through Global Payments Incorporated (GPI).

Transferor remits cash through Global Payments Incorporated (GPI) for amounts due on mortgages

Gold, ARC or First Tuesday remittance date

February 18

Since all four active loans are Gold loans, transferor remits cash due, through Global Payments Incorporated (GPI), at 9 a.m. on February 18.

Transferee reports delinquency information for newly transferred mortgages

First through eighth business day of the calendar month after transfer is effective

By March 9

Loan 111234567 is 60 days delinquent. Transferee reports this delinquency information via MIDANET for the PC.

Transferee reports loan-level monthly activity for newly transferred mortgages

Within five business days of the accounting cutoff

By March 22

Transferee reports loan-level monthly activity for the first time for loans 111234567, 221234567, and 331234567.

Transferee remits cash through Global Payments Incorporated (GPI) for amounts due on newly transferred mortgages


March 18 Since all three of the loans are Gold loans, transferee remits cash due, through Global Payments Incorporated (GPI), at 9 a.m. on March 18.

Transfers of Servicing The Details


The Details

Here are the seven simple stages involved in a loan-level subsequent transfer of servicing. For complete Freddie Mac requirements, please refer to Chapter 56 of the Single-Family Sellers’ and Servicers’ Guide.

What Happens and Who Does It

Stage Timeframe Transferor (transferring mortgages)

Transferee (acquiring mortgages)

Freddie Mac

1.

Initiating

Transfer

At least 60-90 calendar days prior to effective transfer date

§ Negotiates transfer with transferee.

§ Submits list of loans to be transferred via MIDANET for the PC or CPU-to-CPU.

§ Signs Form 981 and obtains transferee’s signature.

§ Mails Form 981 and $500 transfer processing fee to Freddie Mac. Requests for transfers of single-family mortgages should be submitted to: Freddie Mac 8200 Jones Branch Drive

McLean, VA 22102-3110 MS 387 Attn: Transfers of Servicing

§ Verifies eligibility to receive transferring mortgages, paying attention to special products and tier ranking.

§ Negotiates transfer with transferor.

§ Signs Form 981.

§ Receives Form 981 and processing fee, and begins approval process.

§ Receives list of loans to be transferred via MIDANET for the PC and send confirmation of receipt of file to transferor.






Freddie Mac

2.

Within 1 business day after receipt of the list of loans to be transferred

If errors are found, receives exception reports via Freddie Mail, listing loan errors or transfer errors.

§ Verifies list of loans to be transferred.

§ If errors are found, transmits exception reports to transferor via Freddie Mail.

Processing

Request

Within 1- 2 days after receipt of the list of loans to be transferred

Provides any missing or inaccurate loan information to Freddie Mac via MIDANET for the PC.

Provides any missing or inaccurate information to Freddie Mac or to the transferor.

§ Contacts transferor and transferee for inaccurate/missing information on forms.

Within 7- 14 days after receipt of Form 981, fee, and list of loans to be transferred

Receives approval notification via Freddie Mail or a letter.

Or

Receives information to amend the transfer.

Or

Receives denial letter.

Receives approval notification via Freddie Mail or a letter.

Or

Receives information to amend the transfer.

Or

Receives denial letter.

Transmits or mails approval notifications.

Or

Contacts Servicers to amend their request.

Or

Mails denial letter.






Freddie Mac

3.

Exchanging

Mortgage

Data

No later than effective date of transfer on first business day after accounting cutoff

Provides notice to all borrowers in accordance with the Real Estate Settlement Procedures Act (RESPA) and other applicable laws.

Delivers records for transferring loans to transferee.

Document custodian delivers mortgage notes and required documentation to transferee’s document custodian.

Receives records for transferring loans from transferor.

Provides notice to all borrowers in accordance with the Real Estate Settlement Procedures Act (RESPA) and other applicable laws.

Document custodian receives mortgage notes and required documentation from transferor’s document custodian.

No later than 30 days after effective transfer date

Delivers to transferee/

§ Mortgage and REO

§ Notice of transfer

§ Unpaid charges

§ Insurance policies

§ Payment history

§ Notice to third parties

Receives from transferor

§ Trial balances

§ Correspondence and reports

§ Service contracts

§ Automatic payments

§ Other documents

2nd or 3rd business day of the month following the effective date of TOS

Receive data from IAM regarding new loans transferred.

Receive data from IAM regarding new loans transferred.

4.

Reporting Exception

Data

On or after the first business day after the accounting cutoff

Begins reporting and remitting for payoffs and third-party sale foreclosures on newly transferred loans.

Processes payoffs and third-party sale foreclosures reported by transferee. Posts cash due amounts to transferee. (If the transferor reports payoffs and foreclosures with a sale date, Freddie Mac will process the exceptions and not transfer the mortgages.)






Freddie Mac

5.

Monthly

Within 5 business days of the accounting cutoff

Reports loan-level monthly activity for the cycle prior to the effective transfer date.

Receives loan-level monthly activity from transferor and posts cash due to transferor.

Loan-Level Reporting

(Pre-


Remits cash amounts due, through Global Payments Incorporated (GPI), for newly transferred loans.

Posts cash received under transferor’s Seller/Servicer number.

Transfer Data)

Last business day of the month

Freddie Mac’s system updates with transferee Seller/Servicer number.

6.

Reporting Delinquency

Data

1st-8th business day of the following month

Reports delinquency information for newly transferred loans.

Receives delinquency reporting information from transferee.

7.

Monthly Loan-Level Reporting

(Post-

Within 5 business days of the accounting cutoff

Reports loan-level monthly activity for newly transferred loans.

Receives loan-level monthly activity from transferee and posts cash due to transferor.

Transfer Data)

At remittance option cash due date (Gold, ARC, or First Tuesday)

Remits cash amounts due, through Global Payments Incorporated (GPI), for newly transferred loans.

Posts cash received under transferee’s Seller/Servicer number.

Investor Reporting Quick Reference

Documents

Transcript of Investor Reporting Quick Reference