Freddie Mac Single-Family Seller/Servicer Guide Section 2101.7 — Fidelity insurance coverage

Freddie Mac Single-Family Seller/Servicer Guide Section 2101.7 — Fidelity insurance coverage

2101.7: Fidelity insurance coverage (04/13/16) (a) Documentation Fidelity insurance coverage may be documented on a bond form acceptable to Freddie Mac or on the standard bond form currently mandated by or acceptable to the government agency that has regulatory or supervisory authority over the Seller/Servicer. If the Seller/Servicer is not regulated or supervised, Freddie Mac will accept coverage documented on the bond form Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-16 commonly issued to institutions similar to the Seller/Servicer. The coverage may be provided in policy forms with names that include, but are not limited to, Fidelity Bond, Mortgage Bankers Bond, Financial Institution Bond, Financial Institution Crime Policy or Bankers Blanket Bond. Whichever policy form is relied upon to document the coverage required by Freddie Mac, the Seller/Servicer warrants that the terms of such coverage meet all of the requirements in Section 2101.7(b). (b) Scope Fidelity insurance coverage must protect the Seller/Servicer against loss resulting from dishonesty, theft and/or fraud committed by officers and/or employees of the Seller/Servicer as well as by persons duly authorized to act on the Seller/Servicer’s behalf in the origination and/or sale of Mortgages and/or Servicing of Mortgages or REO, including, but not limited to, the following: ■ Employees of outside firms while providing legal services to the Seller/Servicer or performing as data processors of checks or other accounting records for the Seller/Servicer — unless such firms have provided to the Seller/Servicer satisfactory evidence of fidelity insurance at least equal to that required of the Seller/Servicer by Freddie Mac ■ Persons assigned to the Seller/Servicer through an intervening employer or agency to perform the usual duties of an employee of the Seller/Servicer on a contingent or temporary basis, and ■ Interns For this section, REO includes the following: ■ REO held for investment ■ REO acquired in the settlement of Mortgages (e.g., foreclosed Mortgages) Fidelity insurance must also: ■ Protect Freddie Mac, as an investor, against losses that Freddie Mac incurs in connection with dishonesty, theft and/or fraud committed by any partner, sole proprietor or major shareholder of the Seller/Servicer ■ Not be limited solely to dishonesty, theft and/or fraud committed for improper personal gain ■ Provide that the insurer will name Freddie Mac, as an investor, as sole loss payee on payment drafts the insurer issues for losses that Freddie Mac incurs in connection with acts covered by the insurance, and Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-17 ■ Give Freddie Mac, as an investor, the right to file a claim directly with the insurer for losses that Freddie Mac incurs in connection with acts covered by insurance, irrespective of whether the Seller/Servicer tenders a claim under the bond in connection with the events that give rise to the claim filed by Freddie Mac 2101.7: Fidelity insurance coverage (Future effective date 06/08/26) (a) Documentation Fidelity insurance coverage may be documented on a bond form acceptable to Freddie Mac or on the standard bond form currently mandated by or acceptable to the government agency that has regulatory or supervisory authority over the Seller/Servicer. If the Seller/Servicer is not regulated or supervised, Freddie Mac will accept coverage documented on the bond form commonly issued to institutions similar to the Seller/Servicer. The coverage may be provided in policy forms with names that include, but are not limited to, Fidelity Bond, Mortgage Bankers Bond, Financial Institution Bond, Financial Institution Crime Policy or Bankers Blanket Bond. Whichever policy form is relied upon to document the coverage required by Freddie Mac, the Seller/Servicer warrants that the terms of such coverage meet all of the requirements in this section. (b) Scope Fidelity insurance coverage must protect the Seller/Servicer against loss resulting from dishonesty, theft and/or fraud committed by any of the following persons (referred to as “Designated Agents”), whether acting alone or in collusion with others: ■ Any officer or employee of the Seller/Servicer ■ Any employee of an outside firm while they are providing legal, data processing or other accounting services for the Seller/Servicer ■ Any person assigned to the Seller/Servicer through an intervening employer or agency to perform the usual duties of an employee of the Seller/Servicer on a contingent or temporary basis, and ■ Any intern of the Seller/Servicer Fidelity insurance must also include the following provisions for the benefit of Freddie Mac, as holder of an insurable interest in the Mortgages and/or REO originated, sold and/or serviced by the Seller/Servicer: ■ Freddie Mac is protected against any loss it incurs in connection with dishonesty, theft and/or fraud committed by any partner, sole proprietor or major shareholder of the Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-18 Seller/Servicer, whether acting alone or in collusion with others and without any limitation as to improper personal gain ■ Freddie Mac is named as a sole loss payee on payment drafts the insurer issues for losses that Freddie Mac incurs in connection with acts covered by the insurance ■ Freddie Mac has the right to file a claim directly with the insurer if the Seller/Servicer fails to file a claim for a covered loss incurred by Freddie Mac when reasonably available ■ Bankruptcy or insolvency of the insured or of the insured’s estate will not relieve the insurer of any of its obligations under the bond (c) Limits and deductibles/retentions required The minimum acceptable limits per fidelity loss or occurrence are listed in the following table. The maximum amount of fidelity bond coverage required is $150 million. Base* Minimum required insurance limit Maximum deductible clause based on face value of policy $100 million or less $300,000 Higher of 10% or $100,000 Over $100 million up to $1 billion + 0.150% of the next $400 million + 0.125% of the next $500 million Over $1 billion + 0.100% of any amount over $1 billion 15% Note: The deductible cannot exceed 1% of the Seller/Servicer’s total net worth. *Base = The highest of total annual Home Mortgage and Multifamily Mortgage origination, sale or Servicing volume, including Home Mortgages and Multifamily Mortgages held in portfolio. The Seller/Servicer must include in its Base the UPB of all Mortgages for which it holds the related Servicing Contract Right, regardless of whether a Servicing Agent has been engaged to perform subservicing on behalf of the Seller/Servicer. A Servicing Agent must only include in its Base the UPB of Mortgages for which it holds the related Servicing Contract Right and need not include the UPB of Mortgages for which the Servicing Agent has been engaged to perform subservicing on behalf of another Seller/Servicer. Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-19 2101.8: Mortgagee’s errors and omissions (E&O) insurance coverage (06/10/20) (a) Documentation Mortgagee’s errors and omissions (E&O) insurance coverage must be documented on policy forms commonly issued to institutions similar to the Seller/Servicer. The coverage may be provided in policy forms with names that include, but are not limited to, Mortgage Bankers Bond, Mortgage Errors & Omissions, Mortgage Impairment, Mortgage Holders Liability, Professional Liability or Mortgage Protection. Whichever policy form is relied upon to document the coverage required by Freddie Mac, the Seller/Servicer warrants that the terms of such coverage meet all of the requirements in Section 2101.8(b) below. (b) Scope The coverage must protect the Seller/Servicer against loss resulting from negligence, errors or omissions committed by the persons required to be covered by the Seller/Servicer’s fidelity insurance, under Section 2101.7(b), while performing their duties with respect to Mortgages originated and/or sold by the Seller and/or Mortgages or REO serviced by the Servicer. Such duties include, but are not limited to, the following: ■ Determining whether the Mortgaged Premises are located in Special Flood Hazard Areas (SFHA) as defined by the Director of the Federal Emergency Management Agency (FEMA) ■ Ensuring that the Mortgaged Premises are insured in accordance with Chapter 4703 ■ Maintaining, where applicable, FHA insurance, VA guaranty, RHS guaranty or mortgage insurance on the Mortgages ■ Complying with applicable reporting requirements of the FHA, VA, RHS or MI, and ■ Ensuring the payment of property taxes and any other mandatory assessments on the Mortgaged Premises or REO For this section, REO includes the following: ■ REO held for investment ■ REO acquired in the settlement of Mortgages (e.g., foreclosed Mortgages) Mortgagee’s E&O insurance coverage must also: Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-20 ■ Provide that the insurer will name Freddie Mac, as an investor, as sole loss payee on payment drafts the insurer issues for losses that Freddie Mac incurs in connection with acts covered by the insurance, and ■ Give Freddie Mac, as an investor, the right to file a claim directly with the insurer for losses that Freddie Mac incurs in connection with acts covered by the insurance, irrespective of whether the Seller/Servicer tenders a claim under the policy in connection with the events that give rise to the claim filed by Freddie Mac 2101.8: Mortgagee’s errors and omissions (E&O) insurance coverage (Future effective date 06/08/26) (a) Documentation Mortgagee’s errors and omissions (E&O) insurance coverage must be documented on policy forms commonly issued to institutions similar to the Seller/Servicer. The coverage may be provided in policy forms with names that include, but are not limited to, Mortgage Bankers Bond, Mortgage Errors & Omissions, Mortgage Impairment, Mortgagee Interest, Mortgage Holders Liability, Professional Liability or Mortgage Protection. Whichever policy form is relied upon to document the coverage required by Freddie Mac, the Seller/Servicer warrants that the terms of such coverage meet all of the requirements in this section. (b) Scope The coverage must protect the Seller/Servicer against loss resulting from negligence, errors or omissions committed by the Seller/Servicer or any Designated Agent (as defined in Section 2101.7(b)) while performing, at a minimum, the following duties with respect to Mortgages originated and/or sold by the Seller and/or Mortgages or REO serviced by the Servicer: ■ Determining whether the Mortgaged Premises are located in Special Flood Hazard Areas ■ Ensuring that the Mortgaged Premises are insured in accordance with Chapter 4703 ■ Maintaining, where applicable, FHA insurance, VA guaranty, RHS guaranty or mortgage insurance on the Mortgages ■ Complying with applicable reporting requirements of the FHA, VA, RHS or MI, and ■ Ensuring the payment of property taxes and any other mandatory assessments on the Mortgaged Premises or REO Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-21 E&O insurance coverage must also include the following provisions for the benefit of Freddie Mac, as holder of an insurable interest in the Mortgages and/or REO originated, sold and/or serviced by the Seller/Servicer: ■ Freddie Mac is named as a loss payee on payment drafts the insurer issues for losses that Freddie Mac incurs in connection with acts covered by the insurance ■ Freddie Mac has the right to file a claim directly with the insurer if the Seller/Servicer fails to file a claim for a covered loss incurred by Freddie Mac when reasonably available ■ Bankruptcy or insolvency of the insured or of the insured’s estate will not relieve the insurer of any of its obligations under the policy (c) Limits and deductibles E&O coverage must equal the amount of the Seller/Servicer’s fidelity bond coverage. However, Freddie Mac does not require E&O coverage in excess of: ■ $10 million if the Base (as defined in Section 2101.8(c)) consists only of Home Mortgages ■ $30 million if the Base consists of Home Mortgages and Multifamily Mortgages Freddie Mac will accept E&O policies providing coverage per Mortgage if the insurance limit per Mortgage is no less than the UPB of the largest Mortgage originated and/or sold by the Seller/Servicer, whichever is highest, provided that Seller/Servicer must review the balances of the Mortgages before each premium renewal date to determine whether the above limitation needs to be increased as the result of the origination of higher balance Mortgages during the last coverage period. For policies that provide coverage per Mortgage loan, the maximum deductible amount for each Mortgage loan cannot be more than 5% of the insurer’s liability per Mortgage loan. For policies that provide coverage per aggregate loss, the deductible is determined in accordance with the following table: Base* Maximum deductible Less than $1 billion The greater of $100,000 or 10% of the face amount of the policy Equal to or greater than $1 billion 15% of the face amount of the policy * Base = The highest of total annual Home Mortgage and Multifamily Mortgage origination, sale or Servicing volume, including Home Mortgages and Multifamily Mortgages held in portfolio. The Seller/Servicer must include in its Base the UPB of all Mortgages for which it holds the related Servicing Contract Right, regardless of whether a Servicing Agent has been engaged to perform subservicing on Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-22 behalf of the Seller/Servicer. A Servicing Agent must only include in its Base the UPB of Mortgages for which it holds the related Servicing Contract Right and need not include the UPB of Mortgages for which the Servicing Agent has been engaged to perform subservicing on behalf of another Seller/Servicer. 2101.9: Seller/Servicer insurance reporting requirements (12/07/20) (a) Certificate of insurance Within 30 days of obtaining or renewing fidelity and/or mortgagee’s errors and omissions (E&O) insurance, the Seller/Servicer must submit to Freddie Mac (see Directory 1) a certificate of insurance and related documentation showing the following information: ■ Name and address of insurer and insurance broker ■ Bond or policy number ■ The Seller/Servicer as named insured or joint named insured ■ Type of insurance and coverage; limit of liability on a per loss, occurrence or mortgage basis (specify) and/or any applicable aggregate limit of coverage; and effective dates of coverage ■ Deductible amounts ■ Any endorsement or optional coverage modifying the original bond or policy if the endorsement or optional coverage reinforces compliance with Freddie Mac’s requirements or effectively reduces the coverage required by Freddie Mac. Reference to a form number is not acceptable. A copy of the endorsement or optional coverage is required if the endorsement or optional coverage cannot be summarized substantively on the certificate. ■ The insurer’s agreement to notify Freddie Mac (see Directory 1) at least 30 calendar days before the insurer, on its own initiative, cancels or non-renews the Seller/Servicer’s coverage for any reason ■ The insurer’s agreement to notify Freddie Mac (see Directory 1) within 10 Business Days after the insurer, on its own initiative, reduces or restrictively modifies the Seller/Servicer’s coverage for any reason or, at the Seller/Servicer’s request, cancels or non-renews the Seller/Servicer’s coverage ■ The insurer’s agreement to notify Freddie Mac (see Directory 1) within 10 Business Days after the insurer’s payment to the Seller/Servicer of a claim that (i) applies to a coverage written with an aggregate limit of insurance and (ii) depletes such aggregate limit of insurance by more than 50% Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-23 (b) Annual certification The Seller/Servicer must certify compliance with Freddie Mac’s requirements for fidelity and mortgagee’s E&O insurance on its Annual Certification Report, submitted in accordance with Sections 2101.10 and 2101.11. (c) Notice of loss or change in coverage The Seller/Servicer must report to Freddie Mac the following events within 10 Business Days of their occurrence using the Change and Activity Report, submitted in accordance with Section 2101.12: ■ The determination that any single act of embezzlement, theft of funds or fraud or mortgagee’s E&O loss has caused loss exceeding $100,000, whether or not Freddie Mac’s interests are affected or a claim is filed with the insurer, or ■ The receipt of a notice from the insurer that the insurer has taken or intends to take action to cancel, reduce, not renew or restrictively modify the Seller/Servicer’s fidelity and/or mortgagee’s E&O insurance for any reason. The Seller/Servicer must include a copy of the insurer’s notice and detail the reasons for the insurer’s action or intended action if not stated in the insurer’s notice. The Seller/Servicer must also report its effort to obtain replacement coverage or otherwise satisfy Freddie Mac’s insurance requirements. 2101.9: Seller/Servicer insurance reporting requirements (Future effective date 06/08/26) (a) Reporting of insurance documentation Within 30 days of obtaining or renewing any required bond or policy, the Seller/Servicer must submit to Freddie Mac (see Directory 1) a certificate of insurance and related documentation showing the following information: ■ Name and address of insurer and insurance broker ■ Bond or policy number ■ The Seller/Servicer as named insured or joint named insured ■ Type of insurance and coverage; limit of liability on a per loss, occurrence or mortgage, or claims-made basis (specify) and/or any applicable aggregate limit of coverage; and effective dates of coverage ■ Deductible or retention amounts Freddie Mac Single-Family Seller/Servicer Guide Chapter 2101 As of 05/06/26 Page 2101-24 ■ Any endorsement or optional coverage modifying the original bond or policy if the endorsement or optional coverage reinforces compliance with Freddie Mac’s requirements or effectively reduces the coverage required by Freddie Mac. Reference to a form number is not acceptable. A copy of the endorsement or optional coverage is required if the endorsement or optional coverage cannot be summarized substantively on the certificate. ■ The insurer’s agreement to notify Freddie Mac (see Directory 1): ❑ At least 30 calendar days before the insurer, on its own initiative, cancels or non- renews the Seller/Servicer’s coverage for any reason ❑ Within 10 Business Days after the insurer, on its own initiative, reduces or restrictively modifies the Seller/Servicer’s coverage for any reason or, at the Seller/Servicer’s request, cancels or non-renews the Seller/Servicer’s coverage (b) Reporting of loss or change in coverage The Seller/Servicer must report to Freddie Mac the following events within 10 Business Days of their occurrence using the Change and Activity Report, submitted in accordance with Section 2101.12: ■ The determination that any single act covered under the required bonds and policies has caused loss exceeding $100,000, whether or not Freddie Mac’s interests are affected or a claim is filed with the insurer, or ■ The receipt of notice from any insurer that such insurer has taken or intends to take action to cancel, reduce, not renew or restrictively modify any required Seller/Servicer insurance coverage for any reason. The Seller/Servicer must include a copy of the insurer’s notice and detail the reasons for the insurer’s action or intended action if not stated in the insurer’s notice. The Seller/Servicer must also report its effort to obtain replacement coverage or otherwise satisfy Freddie Mac’s insurance requirements.

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