Freddie Mac Single-Family Seller/Servicer Guide Section 8502.3 — Negative Amortization

Freddie Mac Single-Family Seller/Servicer Guide Section 8502.3 — Negative Amortization

8502.3: Negative Amortization (07/09/25) Negative Amortization results whenever the amount of monthly interest calculated at the Note rate exceeds the Borrower’s scheduled monthly interest payment to the Servicer. Increases and decreases in Negative Amortization are to be accounted for in the calculation of principal due Freddie Mac for each Accounting Cycle as set forth in Chapter 8301. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-1 Chapter 8503: Servicing Requirements for Borrowers who are Servicemembers and their Dependents 8503.1: Definitions related to Servicing loans, relief and workout options for Servicemembers and their Dependents (07/09/25) This section contains requirements related to: ■ Definitions related to Servicing Mortgages of Servicemembers ■ Relief options exclusive to Servicemembers and their Dependents ■ Other relief and workout options for Servicemembers and their Dependents (a) Definitions related to Servicing Mortgages of Servicemembers As used in this chapter, the following terms shall have the same definitions as those provided in the Servicemembers Civil Relief Act (SCRA) and any applicable regulations as they shall be amended from time to time: ■ Dependent ■ Military Service ■ Period of Military Service ■ Servicemember The term Permanent Change of Station (PCS) shall have the same meaning as that provided by the Joint Federal Travel Regulations, Volume 1, promulgated by the United States Department of Defense, Defense Management Travel Office. The term “State Military Relief Law” shall mean any State law that provides benefits, protections or relief to members of the armed forces relating to a Mortgage. For example, and not by way of limitation, the New Jersey Soldiers’ and Sailors’ Civil Relief Act (N.J.S.A. §§ 38:23C-1 et seq.), is a State Military Relief Law. State Military Relief Laws generally extend SCRA protections to individuals not covered by the SCRA and therefore afford greater protections than the SCRA provides. (b) Relief options exclusive to Servicemembers and their Dependents Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-2 (i) Servicer responsibilities Servicers must comply with the SCRA and all State Military Relief Laws as they apply to any Borrower or Mortgage. The Servicer must be familiar and comply with all the provisions of the SCRA and State Military Relief Laws and monitor changes to such laws to ensure continuing compliance. In cases where military orders are required, Servicers may accept the following alternative forms of documentation: ■ When provisions of the SCRA require a Servicemember to provide a copy of his or her military orders*, Servicers may accept: ❑ Official military orders that reflect the start date of the Period of Military Service ❑ A certification, including a certificate obtained from the Defense Manpower Data Center, that delineates the start date of a Servicemember’s Period of Military Service ❑ A letter that is on official letterhead from the military unit to which the Servicemember is assigned, is signed by the Servicemember’s commanding officer and contains the following: A statement that the letter is intended to be relied upon by creditors for SCRA purposes, the Servicemember’s full name and Social Security Number, home address, start and end dates of the Period of Military Service and commander’s contact telephone number; or ❑ Any document the Department of Defense deems a substitute for official orders *References to “military orders” in the Guide include the alternative documentation outlined above that Servicers may accept in lieu of official military orders. ■ Servicers may accept written requests for the SCRA interest rate relief via facsimile, U.S. mail, or electronic submission, such as e-mail or transmitting an online form ■ Servicers may, but are not required to, accept an oral request for SCRA interest rate relief if the Servicer has established processes, policies and procedures that, at a minimum, positively identify the requestor and enable the Servicer to record the request and make the recording available to Freddie Mac upon request ■ Servicers must submit a request for SCRA interest reimbursement, in accordance with Section 8503.2(d), within 24 months of the end date of a Servicemember’s Period of Military Service Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-3 Freddie Mac will not reimburse Servicers for SCRA interest rate differential requests when the amount requested exceeds the amount of interest represented by the Note Rate minus 6%. (ii) Borrower eligibility for SCRA protection The SCRA applies to any Borrower who is a Servicemember during a Period of Military Service if the following conditions are met: ■ The Mortgage is the contractual obligation of the Servicemember as the Borrower or co-Borrower under the Note; or as obligee under a written agreement by which the Servicemember assumes the Borrower’s liability under the Note and the Borrower is released from such liability, and ■ The Servicemember executed the Note or the assumption agreement before the reporting date or effective date of the Servicemember’s Period of Military Service as shown in military orders Note: Refer to Sections 8503.2(a) through 8503.2(g) for applying SCRA provisions on Mortgages. (iii)Foreclosure relief extended to Servicemembers and their Dependents by Freddie Mac in addition to SCRA provisions and State Military Relief Laws Freddie Mac offers foreclosure relief in addition to that provided by the SCRA or State Military Relief Laws. Servicers must not initiate or, if already initiated, must not complete foreclosure of a Mortgage where a Servicemember is a Borrower, and the Mortgaged Premises is the Primary Residence of the Servicemember, regardless of when the Mortgage was originated, during his or her Period of Military Service or for one year after the date Military Service ends. Additionally, Servicers must not initiate or, if already initiated, must not complete foreclosure on a Mortgage, during a Servicemember’s Period of Military Service or for one year after the date Military Service ends, when the Borrower: ■ Is a Dependent of a Servicemember and the Mortgaged Premises is the Primary Residence of the Servicemember or a Dependent of a Servicemember; or ■ Was a Servicemember who died during the Period of Military Service and the Mortgaged Premises continues to serve as the Primary Residence of a Dependent of the Servicemember Example: If the Borrower is the spouse of a Servicemember who left Military Service on January 1st, and the Mortgaged Premises are the Primary Residence of the Servicemember or the spouse, then the Servicer must not initiate or complete foreclosure until after January 1st of the following year. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-4 If the Servicer believes that there are unusual circumstances that warrant initiating or completing foreclosure prior to the time allowed by this subsection 8503.1(b)(iii), such as the Mortgaged Premises being vacant or abandoned, the Servicer must contact Freddie Mac (see Directory 5) to obtain prior written approval to initiate or complete foreclosure proceedings. The Servicer must report a Servicemember who is receiving relief from Freddie Mac as outlined in this subsection 8503.1(b)(iii) as “paying as agreed” to any consumer reporting agency to which the Servicer reports. (c) Other relief and workout options for Servicemembers and their Dependents If a Servicemember or Dependent experiences an eligible hardship, such as receipt of PCS orders, and does not qualify for protection under the provisions of the SCRA or State Military Relief Laws, or qualifies but chooses to explore other options, the Servicer must evaluate the Servicemember for the most appropriate relief or workout option in accordance with Chapter 9102. If a Servicemember requires additional relief beyond what is currently available in the Guide, Servicers should contact their Freddie Mac representative. 8503.2: Applying and Servicing Servicemembers Civil Relief Act (SCRA)-capped Mortgages (08/13/25) This section contains requirements related to: ■ Applying SCRA provisions ■ Calculation of new monthly payment for SCRA-capped Mortgages ■ Application of payments on SCRA-capped Mortgages ■ Accounting reports for SCRA-capped Mortgages ■ Rate changes on SCRA-capped ARMs ■ Servicing compensation for SCRA-capped Mortgages ■ Retroactive rate cap for SCRA-capped Mortgages (a) Applying SCRA provisions (i) Interest rate cap Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-5 If the Servicemember and the Mortgage qualify for the SCRA’s maximum interest rate protection and the Servicemember has submitted a written request for protection in accordance with the SCRA, Freddie Mac will: ■ For a Servicemember who is a member of a reserve component, begin applying the interest rate cap with the first monthly Mortgage payment due after the Servicemember receives his or her orders ■ For a Servicemember who is a member of the uniformed services as defined by 10 U.S.C. 101(a)(5) or a Servicemember who belongs to the National Guard, begin applying the interest rate cap with the first monthly Mortgage payment due after the reporting date or effective date of the Servicemember’s Period of Military Service ■ Reinstate the Mortgage to its contractual rate of interest beginning with the second monthly Mortgage payment due one year after the date the Servicemember’s Period of Military Service terminates If the Borrower is delinquent on his or her monthly payments, the Servicer must contact Freddie Mac (see Directory 5) via Form 105, Multipurpose Loan Servicing Transmittal, no later than five Business Days after receiving the request for interest rate relief. For reinstatement purposes, the contractual rate of interest is defined as follows: ■ For a fixed-rate Mortgage, the same rate that was in effect before the reporting date or effective date of Military Service, or the date the Servicemember received orders (for members of a reserve component) ■ For an ARM, the rate to be determined or calculated based on the last interest rate that would have been in effect, or the last payment adjustment that otherwise would have taken place, during the rate cap period If the interest rate cap request is made by the Servicemember in accordance with the SCRA notice provisions and it is received by the Servicer no later than 180 days after the Period of Military Service terminates, the Servicer must apply the interest rate cap retroactively to the first monthly Mortgage payment due after the reporting date, effective date of Military Service or date the Servicemember received orders (for members of a reserve component). However, Freddie Mac will bear the interest loss only from the first monthly Mortgage payment due after the Funding Date. (ii) Written notice to Servicemember, Freddie Mac Within 15 Business Days of receiving an interest rate cap request on a Mortgage that meets the requirements of the SCRA, the Servicer must provide written notice of approval to the Servicemember or the Servicemember’s representative, as applicable. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-6 Freddie Mac does not prescribe a particular form of notice. The notice must contain the following at a minimum: 1. The amount of the monthly installment of principal and interest calculated at the rate of 6% per year 2. The amount of the monthly installment of Escrow, if any, which remains unchanged unless insurance coverage, property tax rates or other assessments are modified 3. The total amount and first Due Date of the new monthly Mortgage payment 4. The reinstatement of the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember is released from Military Service 5. If known at the time, the scheduled date the Servicemember will be released from Military Service and the Due Date of the first monthly payment at the reinstated contractual rate of interest Within 30 Business Days of receiving the request, the Servicer must: 1. Retain a copy of military orders* evidencing the Servicemember’s military status and start and end dates of his or her Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request 2. Send a CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) to Freddie Mac (see Directory 3) documenting the start and end dates of the Servicemember’s Period of Military Service *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. Once the Servicer has received a request from the Borrower (or the Borrower’s authorized representative) and a copy of his or her military orders, the Servicer must implement the interest rate cap. While the rate cap is in effect, the Servicer must report and remit on the Mortgage in accordance with Section 8106.1 and Chapter 8503. (iii) Assessing a Servicemember’s ability to pay at the Note Rate Unless there are unusual circumstances, Freddie Mac does not require the Servicer to assess the material effect of Military Service on a Borrower’s ability to continue making payments on the Mortgage at the contractual rate of interest. The Servicer must Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-7 implement the 6% rate cap, upon request of a Borrower, provided that the Borrower meets the requirements of the SCRA. If the Servicer becomes aware of unusual circumstances that give it reason to believe the Servicemember’s ability to pay at the contractual rate of interest is not materially affected by a call to Military Service, then the Servicer must notify its investor reporting specialist (see Directory 3) that Freddie Mac may wish to investigate the Servicemember’s financial circumstances. The Servicer must include any facts to support its supposition and copies of the following: ■ The military orders evidencing the Servicemember’s call to Military Service ■ Form 65, Uniform Residential Loan Application ■ The Note Freddie Mac may determine that a Servicemember’s request for the interest rate cap should be challenged. If so, Freddie Mac will provide the Servicer with instructions on how to proceed. Freddie Mac may decline to implement an interest rate cap if the rate cap was improperly granted to a Servicemember or if the Mortgage did not qualify for SCRA protection (for example, the Servicemember was already in a Period of Military Service at the time the Mortgage was originated). If Freddie Mac informs the Servicer that Freddie Mac declines the request, then within five Business Days, the Servicer must advise the Servicemember or the Servicemember’s representative in writing, citing the specific reasons the Mortgage does not qualify for the interest rate cap and offer to consider other forms of assistance. If further guidance is required, the Servicer may contact its investor reporting specialist (see Directory 3). (iv) Status updates, reinstatements While the interest rate cap is in effect, the Servicer must periodically, but no less than every three months, verify that the Servicemember is still in a Period of Military Service or that no changes have been made to the duration/term of the Period of Military Service that may affect the Servicemember’s eligibility to receive relief. If the Servicemember informs the Servicer, or if the Servicer learns by other means, that the Servicemember’s Period of Military Service has ended, the Servicer must send a written notice to the Servicemember at least 30 days before the reinstatement of the contractual interest rate indicating that the interest rate cap has been terminated and the monthly Mortgage payment has been reinstated to its contractual rate of interest. The written notice of reinstatement of the Mortgage should advise the Servicemember of the following: Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-8 ■ The amount of the monthly Mortgage payment when reinstated to its contractual rate of interest, specifying such interest rate ■ The date the reinstated monthly payment amount is first due ■ That he or she must furnish a copy of military orders showing any extension of the Period of Military Service beyond the originally scheduled release date, if applicable ■ That he or she must furnish a copy of DD Form 214 to document his or her release from a Period of Military Service The Servicer must follow the pertinent instructions in the table below: Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The military orders submitted with the interest rate cap request state the end date of the Period of Military Service ■ 30 days prior to the release date, query the Defense Manpower Data Center website (https://www.dmdc.osd.mil/appj/dwp/index.jsp) to determine if there has been a change to the duration/term of the Period of Military Service ■ If the duration/term of the Period of Military Service has not changed, send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), 30 days before the end of the period for which the interest rate is capped at 6% Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-9 Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The Period of Military Service has been extended based on notice from the Servicemember, his or her representative, or a certificate obtained from the Defense Manpower Data Center Within 10 Business Days of learning of the extension, notify the Servicer’s investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-10 Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: No evidence of extension of the Period of Military Service has been provided by the Servicemember or his or her representative within 30 days of the scheduled release date and a query of the Defense Manpower Data Center website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Send the Servicemember or his or her representative a written notice that the Servicer will reinstate the monthly Mortgage payment to its contractual rate of interest, including the effective date of the payment change (which is the second monthly payment due following the date that is one year after the Servicemember’s release date), and request documentation of the Servicemember’s release from Military Service (for example, DD Form 214) ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Servicemember’s release date Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-11 Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: If, as a result of the Servicer’s notification, the Servicemember notifies the Servicer that his or her Period of Military Service has been extended and provides the Servicer with copies of military orders evidencing such extension or a query of the Defense Manpower Data Center website reveals a change to the duration/term of the Period of Military Service, then the Servicer must notify its investor reporting specialist via CSV file (see Exhibit 71) that the end date of the Servicemember’s Period of Military Service has changed within 10 Business Days of receiving the notification from the Servicemember and the Servicer must notify the Servicemember of the new date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs. Retain a copy of the of military orders evidencing the Servicemember’s military status and Period of Military Service and all other related documentation in the Mortgage file and make it available to Freddie Mac upon request. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-12 Servicer responsibilities for interest rate reinstatement after military service If: Then the Servicer must: The Servicemember’s Period of Military Service has ended and a query of the Defense Manpower Data Center Website does not indicate a change to the duration/term of the Period of Military Service Take the following steps: ■ Reinstate the monthly Mortgage payment to its contractual rate of interest beginning with the second monthly payment due following the date that is one year after the Period of Military Service ended ■ Send the Servicemember or his or her representative written notice of the date the Mortgage will reinstate to its contractual interest rate at least 30 days before the reinstatement of the interest rate occurs ■ Remove the Mortgage from the Servicer’s monthly (or quarterly) Interest Rate Differential text file (see Exhibit 72, Text File Format to Request SCRA Interest Rate Differential) the second month following the date that is one year after the Period of Military Service ended (v) Foreclosure relief The Servicer must not foreclose or initiate foreclosure proceedings against a Borrower who is a Servicemember except in accordance with the SCRA and State Military Relief Laws. See Sections 8503.1(b) and 8503.1(c) for Freddie Mac-specific foreclosure relief in addition to that provided by the SCRA or State Military Relief Laws. When foreclosure is allowed to proceed and if a mortgage insurance claim is eventually filed, the Servicer must notify the MI that the Mortgage was subject to SCRA or State Military Relief Laws so that: ■ Interest for SCRA-capped payments due, but unpaid by the Servicemember, is claimable at the Note rate, not at the SCRA-capped rate ■ Claimable interest will not be curtailed by the MI for a delay that was caused solely by the Servicer’s compliance with applicable law Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-13 For further guidance on relief or remedies (other than interest rate cap under the SCRA) involving Servicemembers who are serving or have served a Period of Military Service, the Servicer must consult with their legal counsel or contact Freddie Mac (see Directory 5). (vi) Late charges The Servicer must waive all late charges or penalties resulting from Mortgage payments deferred, restructured or rate-capped under the SCRA or if required by State Military Relief Laws. (vii) Credit reporting The Servicer must report a Servicemember who is receiving the protection of the SCRA or State Military Relief Laws as “paying as agreed” to the credit repositories. The Servicer must fully comply with the SCRA and State Military Relief Laws as they relate to credit reports kept on Servicemembers who exercise their statutory rights to military relief. (viii) Maintaining correspondence and documentation The Servicer must maintain records of all communications with, and copies of all correspondence and documentation to or from, Servicemembers seeking Mortgage relief for hardship caused by Military Service in the Mortgage file. (ix) Transfers of Servicing When a Transfer of Servicing includes Mortgages that have any type of military relief, including Mortgages with interest rates capped under the SCRA or with suspended foreclosures, the Transferor must identify each such Mortgage to the Transferee before transferring the Mortgage files to the Transferee. See Chapter 7101 for more information on Transfers of Servicing. (x) Monthly reporting to Freddie Mac Default action code 32 – “Military Indulgence”: Servicers should use only default action code 32 to report default processes that are delayed due to the Borrower being in a Period of Military Service and covered under the SCRA or foreclosure relief provided to Servicemembers and their Dependents in accordance with Section 8503.1(b). When utilizing default action code 32, Servicers must provide the date default processes were suspended and continue to report each month that the Servicemember is receiving foreclosure protection under the SCRA or Section 8503.1(b). Default reason code 14 – “Military Service”: When reporting Mortgage relief, loan modifications, or liquidation options extended to Servicemembers, Servicers must report Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-14 the default action code associated with the specific relief, modification, or liquidation option. Servicers must also report the default reason code 14 to indicate the hardship was caused by military service. Note: For additional information about EDR, refer to Section 9102.6. (b) Calculation of new monthly payment for SCRA-capped Mortgages If the interest rate on a Mortgage is capped in accordance with Section 8503.2(a), the Servicer may choose between the following two methods for calculating the new monthly payment amount: ■ Reamortization of the Mortgage based on the interest rate of 6%, or ■ Implementation of the 6% rate using the original amortization schedule (i) Revised interest rate, reamortized Mortgage This method applies in calculating the principal and interest (P&I) payment amount both at: ■ The interest rate of 6% ■ The reinstated contractual rate of interest The Servicer must use the following formula: a x (b/12) P&I = ------------------- 1 - (1 + b/12)-c a = Mortgage UPB 1. For 6% rate: scheduled UPB after application of the last payment made before the Due Date of the first payment at 6% 2. For reinstatement to contractual rate: scheduled UPB after application of the last payment made before the Due Date of the second payment due one year after the Servicemember’s Period of Military Service ends b = interest rate 1. Rate applicable to the rate cap period: 6% 2. Rate applicable when reinstated to contractual rate: for fixed-rate Mortgages, use the original Note rate; for ARMs, use the current applicable index plus margin Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-15 c = actual number of remaining payments, using a calculated term to maturity (ii) 6% rate cap, original amortization schedule Under this method, the Servicer must calculate the Borrower’s monthly P&I at 6% as follows: d + e = monthly P&I d = scheduled principal as calculated per amortization schedule in effect before rate cap e = accrued interest = current cycle Ending UPB x (.06/12) Upon reinstatement to the contractual rate of interest, the P&I amount will correspond to the amortization schedule in effect before the rate cap. (c) Application of payments on SCRA-capped Mortgages Monthly payments made by Servicemembers on SCRA-capped Mortgages must be applied in accordance with Section 8103.3(a). (d) Accounting reports for SCRA-capped Mortgages The Servicer must report each SCRA-capped Mortgage in accordance with Section 8303.2(d)(i). Net yield interest due must be calculated based on the current Accounting Net Yield (ANY) rate. The Servicer will receive credit for the interest rate differential, which is defined as follows: ■ Interest rate differential = ANY less adjusted interest rate ■ Adjusted interest rate or Mortgage with Note Rate higher than net yield = 6% less Servicing fee paid to the Servicer Each month the Servicer must: 1. Continue to report the contractual principal and interest payment in the monthly loan- level transaction for each Mortgage subject to the SCRA interest rate reduction 2. Deposit the full contractual monthly payment of each Mortgage subject to the SCRA interest rate reduction into the Servicer’s Freddie Mac Custodial Account 3. Calculate the interest rate differential reimbursement due to the Servicer for the interest rate differential on each SCRA-capped Mortgage To effectively manage Mortgages that are eligible for the SCRA interest rate cap, Servicers should take the following steps: Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-16 1. Notify Freddie Mac via CSV file (see Exhibit 71, CSV File Format to Report Loans Eligible for the SCRA Interest Rate Subsidy) of each new Mortgage that becomes eligible for the SCRA interest rate cap 2. Request reimbursement of the interest rate differential on a monthly (or quarterly) basis via text file. (See Exhibit 72, Text File Format to Request SCRA Interest Rate Differential.) 3. Remove the loan from the text file (see Exhibit 72) and revert the Mortgage to the normal contractual interest rate 12 months after the end date of the Servicemember’s Period of Military Service Adjustments to each SCRA-capped Mortgage for the previous month must be reported via text file (see Exhibit 72) to Freddie Mac (see Directory 3) monthly, or if the Servicer chooses on a quarterly basis, not later than the third Business Day before the end of the month. Freddie Mac will enter the total credit in the “Adjustment Line” of the Monthly Account Statement (MAS) and will apply the credit against the amount Freddie Mac drafts for that Accounting Cycle and make the appropriate adjustment to the Principal and Interest Custodial Account. If, prior to the end of the month, an SCRA-capped Mortgage pays off or is involved in a Transfer of Servicing, or if the Servicemember’s Period of Military Service ends, the Servicer must complete a separate text file (see Exhibit 72) for the affected Mortgage and submit it to Freddie Mac (see Directory 3) within five Business Days. If the Servicer disagrees with the interest credit Freddie Mac gives the Servicer, the Servicer must notify Freddie Mac (see Directory 3) in writing within 30 days of the date of the MAS. The notification must state: 1. The Seller/Servicer number 2. The applicable Freddie Mac loan number(s) 3. A brief description of the problem 4. The unpaid balance for any disputed credit 5. Military orders* supporting the relief period requested *References to “military orders” in the Guide include the alternative documentation outlined in Section 8503.1(b) that Servicers may accept in lieu of official military orders. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8503 As of 08/13/25 Page 8503-17 The Internal Revenue Service (IRS) Form 1098, Mortgage Interest Statement, that the Servicer files in accordance with Section 8106.2(a) should reflect the reduced interest amount paid by the Borrower during the rate cap period. (e) Rate changes on SCRA-capped ARMs Freddie Mac notifies the Servicer of ANY changes on ARMs in accordance with Section 8502.2. When monthly net yield interest is reported on the Loan-Level Transaction for an SCRA-capped adjustable Mortgage, the Servicer must calculate the interest based on the new net yield shown in Freddie Mac’s Notification of ARMs Group Net Yield Adjustment. Freddie Mac will calculate the interest credit due to the Servicer in accordance with Section 8503.2(d). (f) Servicing compensation for SCRA-capped Mortgages The Servicer’s compensation for Servicing an SCRA-capped Mortgage will be based on a Servicing Spread that remains at the rate in effect before the first month to which the rate cap applies. (g) Retroactive rate cap for SCRA-capped Mortgages Retroactive application of the SCRA rate cap under Section 8503.2(a) must be processed as follows: (i) Reimbursement to the Servicemember The Servicer must calculate the difference between the amount of interest paid by the Servicemember at the contractual rate of interest and the amount of interest due at 6%, for the applicable benefit period. At the Servicemember’s option, the resulting amount may be credited to the UPB of the Mortgage or to reduce monthly Escrow installments, or refunded to the Servicemember. (ii) Reimbursement to the Servicer The Servicer must calculate the credit that results from the retroactive interest rate differential and notify Freddie Mac (see Directory 3) of the amount of the credit the Servicer is claiming (see Section 8503.2(d)). Freddie Mac will validate the credit amount the Servicer requests and enters it on the “Adjustment Line” of the Servicer’s MAS. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8504 As of 11/01/25 Page 8504-1 Chapter 8504: Outreach Requirements for Servicing Mortgages with Deferred Balances and Buydown Plans (11/01/25) 8504.1: Outreach and notification requirements for Mortgages with low interest-bearing UPB and a deferred balance that are approaching the Mortgage maturity date or payoff of the interest-bearing UPB (07/09/25) This section contains information related to: ■ Outreach requirements ■ Written notification requirement For Mortgages with an outstanding non-interest bearing UPB (or deferred balance) that is due at the time of maturity or payoff of the interest-bearing UPB, Servicers must complete additional outreach in accordance with the requirements below. Servicers are reminded that for delinquent Borrowers, the Servicer must continue to follow all existing Guide requirements, including collection efforts in order to achieve quality right party contact and the loss mitigation evaluation hierarchy unless they conflict with the requirements below. (a) Outreach requirements As early as 180 days but no later than 150 days before the Mortgage maturity date or the projected payoff date of the interest-bearing UPB (the “projected payoff date”), the Servicer must take the following actions: ■ Provide written notice to the Borrower informing the Borrower that the non-interest bearing UPB will become due and provide the projected payoff date or pending Mortgage maturity date, as applicable, and the amount of the non-interest bearing UPB ■ Upon establishing contact with the Borrower, discuss with the Borrower that the non- interest bearing UPB will become due on the projected payoff date or pending Mortgage maturity date and determine, based on communication with the Borrower, whether the Borrower is able to pay the non-interest bearing UPB on the maturity date or projected payoff date Freddie Mac Single-Family Seller/Servicer Guide Chapter 8504 As of 11/01/25 Page 8504-2 ■ Send an exception review request to Freddie Mac if the Servicer determines that the Borrower is unable to pay the amount due As early as 75 days and no later than 60 days before the Mortgage maturity date or the projected payoff date, the Servicer must take the following actions: ■ If the Servicer has not established contact with the Borrower, send an additional notice to the Borrower informing the Borrower that the non-interest bearing UPB will become due and provide the projected payoff date or pending Mortgage maturity date, as applicable, and the amount of the non-interest bearing UPB ■ Upon establishing contact with the Borrower, discuss with the Borrower that the non- interest bearing UPB will become due on the projected payoff date or pending Mortgage maturity date and determine, based on communication with the Borrower, whether the Borrower is able to pay the non-interest bearing UPB on the maturity date or projected payoff date ■ Send an exception review request to Freddie Mac if the Servicer determines that the Borrower is unable to pay the amount due After the initial solicitation but no earlier than 180 days before the maturity date or the projected payoff date, the Servicer may send additional notices at its discretion leading up to the maturity date or projected payoff date. (b) Written notification requirement When sending the required written notification set forth above in Section 8504.1(a) to Borrowers regarding the non-interest bearing UPB that is due, the Servicer must refer to Exhibit 1104, Freddie Mac Borrower Non-Interest Bearing Balance Notice. Use of this exhibit is optional; however, it contains the minimum information that must be conveyed to the Borrower. 8504.2: Outreach requirements for Mortgages with buydown plans (11/01/25) As outlined in Section 4204.3, Freddie Mac will purchase Mortgages with temporary subsidy buydown plans (buydown plans). Buydown plans allow the Borrower to benefit from temporary subsidies of the monthly payment of principal and interest. The buydown plan may not extend for more than three years after the first scheduled payment date. In coordination with the terms of the buydown agreement and the requirements outlined in Section 4204.3, the Servicer must send notification detailing any respective payment change to the Borrower 90 days prior to the applicable payment change. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8601 As of 12/17/25 Page 8601-1 Chapter 8601: Servicing Requirements for Senior Subordinate Mortgages 8601.1: Servicing responsibilities, Borrower interactions and key terms (09/10/25) The brown font text used throughout this chapter denotes the special requirements for Servicing Senior Subordinate Mortgages. Text in black or green font denotes general Servicing requirements that also apply elsewhere in the Guide. This section contains requirements related to: ■ Key terms and definitions used in this chapter ■ Servicing Senior Subordinate Mortgages ■ Freddie Mac’s rights and Servicer rights, duties and obligations ■ Servicer use of Servicing Tools ■ Borrower inquiries (a) Key terms and definitions used in this chapter A Servicer that receives a notice that it services a Senior Subordinate Mortgage should be familiar with the following terms. Servicing Senior Subordinate definitions F Freddie Mac Guaranteed Mortgage Any Mortgage purchased by Freddie Mac that is then deposited into or transferred to a securitization trust for which Freddie Mac is a guarantor of some or all of the payments owed to holders of the securities issued by that trust. Freddie Mac-Owned Mortgage Any Mortgage purchased by Freddie Mac that is owned by Freddie Mac, in whole or in part, and which currently is not owned by a securitization trust or deposited into a pool backing participation certificates. S Freddie Mac Single-Family Seller/Servicer Guide Chapter 8601 As of 12/17/25 Page 8601-2 Senior Subordinate Mortgage A Senior Subordinate Mortgage is a Mortgage previously owned by Freddie Mac that Freddie Mac has transferred to a Senior Subordinate Trust. Senior Subordinate Trust A securitization trust formed by Freddie Mac into which Freddie Mac transfers ownership of certain Freddie Mac-Owned Mortgages, which become Senior Subordinate Mortgages upon transfer; Freddie Mac may serve as trustee, master servicer, master custodian and, with respect to certain securities issued by the Trust, guarantor of payments owed on those securities. (b) Servicing Senior Subordinate Mortgages Servicers of Senior Subordinate Mortgages must follow specific guidelines to ensure compliance with Freddie Mac’s Servicing requirements. The following key points outline these obligations: ■ Servicers of Senior Subordinate Mortgages must comply with all Servicing requirements of the Guide, including the additional Servicing requirements specified in this chapter that are applicable only to Senior Subordinate Mortgages ■ Freddie Mac will provide prior written notice to the Servicer of the date on which a Freddie Mac-Owned Mortgage becomes a Senior Subordinate Mortgage subject to the requirements set forth in this chapter ■ In any Guide section that requires a Servicer to act in Freddie Mac’s best interests, Servicers of a Senior Subordinate Mortgage must continue to do so on behalf of Freddie Mac in its capacity as trustee and/or master servicer of a Senior Subordinate Trust ■ Except as set forth in Section 8601.4(a), unless a Servicer receives notification from Freddie Mac that it services a Senior Subordinate Mortgage, the Servicer must not apply any of the requirements set forth in this chapter but rather should continue Servicing in accordance with all other Servicing requirements of the Guide and applicable Purchase Documents ■ If any Servicing requirement in this Chapter 8601 is inconsistent with a Servicing requirement set forth elsewhere in the Guide, the Servicer must comply with the Servicing requirement set forth in this Chapter 8601 with respect to any Senior Subordinate Mortgage or Senior Subordinate Trust (c) Freddie Mac’s rights and Servicer rights, duties and obligations Freddie Mac retains all rights and remedies set forth in the Guide, including, but not limited to, Section 8101.1(d), except as modified below with respect to the rights set forth in Sections 9204.1(c), 7101.1(b)(iv), 9301.8(g) and 9301.9(a). Freddie Mac Single-Family Seller/Servicer Guide Chapter 8601 As of 12/17/25 Page 8601-3 Unless otherwise specified in this chapter, a Servicer of a Senior Subordinate Mortgage shall continue to have the same rights, duties and obligations with respect to Freddie Mac as it does as a Servicer of any other Freddie Mac-Owned or Guaranteed Mortgage. Consistent with Section 8101.1(c), the Servicer shall remain an independent contractor of Freddie Mac. The Servicer may enter into a contract with a Senior Subordinate Trust provided it first obtains written approval from Freddie Mac. Except as specified in a contract between the Servicer and Senior Subordinate Trust, a Servicer of Senior Subordinate Mortgages will not owe any duties or obligations to a Senior Subordinate Trust nor will it have any rights against the Senior Subordinate Trust. (i) Freddie Mac’s rights Consistent with Section 9204.1(c), Freddie Mac’s approval or settlement of a workout does not limit its right to review the Mortgage file and invoke its remedies under the Guide. If Freddie Mac determines as a result of its review of the Mortgage file or otherwise discovers any failure by a Servicer to comply with Servicing requirements of the Guide or any other Purchase Documents, Freddie Mac has the right to require the Servicer to: 1. Compensate Freddie Mac and hold it harmless for any loss, damage or expense (including court costs, attorney fees and incentive payments) incurred by Freddie Mac, and/or 2. Repurchase a Mortgage that Freddie Mac repurchased from a Senior Subordinate Trust at any time under any of the circumstances outlined in Section 3602.2(b) (ii) Unauthorized Transfer of Servicing With respect to the rights set forth in Section 7101.1(b)(iv) regarding a Servicer’s transfer of its Servicing portfolio (in whole or in part) without Freddie Mac’s prior written approval will result in the assessment of a compensatory fee as determined by Freddie Mac not to exceed 1% of the Senior Subordinate Trust’s share of the UPB of the Mortgages that are being transferred. (d) Servicer use of Servicing Tools Any license, user agreement, term of use or similar document or requirement set forth in the Guide or other Purchase Document applicable to a Servicer’s electronic communications with Freddie Mac or the Servicer’s use of any Servicing Tools in connection with the Servicing of Mortgages under the Guide shall govern, and the same terms, conditions, and obligations and requirements shall apply to, a Servicer’s electronic communications or use of any Servicing Tools in connection with the Servicing of any Senior Subordinate Mortgage or REO owned by a Senior Subordinate Trust. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8601 As of 12/17/25 Page 8601-4 If the license, user agreement, terms of use or similar document in the Purchase Document does not expressly permit the Servicer to use such Servicing Tools in connection with the Servicing of any Senior Subordinate Mortgage or REO owned by a Senior Subordinate Trust, such use is hereby deemed permitted but subject to and conditioned on all other terms, conditions, obligations and limitations applicable to the Servicer’s use of the such Servicing Tools contained in the applicable license, user agreement, terms of use or similar document in the Guide or applicable Purchase Document (including, but not limited to, all “as is” language, all liability limitations and any restrictions governing use by third parties). (e) Borrower inquiries This subsection has been adapted from Section 8101.4(a) to reflect special Servicing requirements for Senior Subordinate Mortgages. The Servicer must respond promptly to any Borrower inquiries about the ownership or assignee of a Senior Subordinate Mortgage. When responding to such inquiries, the Servicer may, after verifying the Borrower’s identity, inform the Borrower that: ■ The Mortgage is owned by the Senior Subordinate Trust designated in the Freddie Mac notice informing the Servicer that the Mortgage became a Senior Subordinate Mortgage ■ Freddie Mac is master servicer and trustee to the Senior Subordinate Trust; and ■ The Servicer services the Mortgage in accordance with Freddie Mac’s Servicing requirements, as required by the Senior Subordinate Trust If the Servicer is unable, for instance in a telephone conversation, to verify that it is the Borrower who is requesting the information, the Borrower must request the information in writing. If requested, in addition to the information in the preceding bullets, the Servicer must also provide the Borrower with Freddie Mac’s address, Freddie Mac’s telephone number and the Freddie Mac loan number associated with the Borrower’s Mortgage. The address and telephone number that the Servicer must provide to the Borrower are: [Insert legal name of Senior Subordinate Trust] c/o FREDDIE MAC, Trustee 8200 JONES BRANCH DRIVE MCLEAN, VA 22102 (800) FREDDIE If the Servicer provides the Borrower with the requested information by telephone, the Servicer must provide the same information to the Borrower in writing. See Sections 7101.6(b), 7101.7(a), 7101.7(c) and 8101.4(d) for additional Servicing obligations related to Borrower inquiries. Freddie Mac Single-Family Seller/Servicer Guide Chapter 8601 As of 12/17/25 Page 8601-5

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