Freddie Mac Single-Family Seller/Servicer Guide Section 9603.3 — Financial and legal obligations

Freddie Mac Single-Family Seller/Servicer Guide Section 9603.3 — Financial and legal obligations

9603.3: Financial and legal obligations (09/10/25) This section contains requirements related to: ■ Property Condition Certificate (PCC) process ■ Condominium/homeowners association (HOA) or Cooperative Corporation assessments, ground rents and property taxes for REO ■ Eviction requirements for REO ■ Reimbursement of expenses incurred on an REO property ■ Final settlement between the Servicer and Freddie Mac for REO ■ Late execution of REO repurchase (a) PCC process The Servicer may review the REO Overview report, accessible via the “REO” tile of the Servicer’s Servicer Performance Profile (see Exhibit 88, Servicing Tools), for the property status, including the PCC completion date. The Servicer may also call Customer Service at 800-FREDDIE to obtain this information. Freddie Mac will not send the Servicer a written notice of the sale of the REO. (b) Condominium/HOA or Cooperative Corporation assessments, ground rents and property taxes for REO (i) REO located in a Condominium Project, Planned Unit Development (PUD) or Cooperative Project or subject to a leasehold estate Pursuant to Section 9603.1(a), the Servicer is no longer responsible for paying condominium/ HOA or Cooperative Corporation assessments (see Chapter 8801 for special Servicing requirements for Cooperative Share Loans), Condominium Unit maintenance fees or Cooperative Unit Maintenance Fees, and ground rents, as applicable, upon the successful reporting of the foreclosure sale or deed-in-lieu of foreclosure to Freddie Mac via Resolve®. In special circumstances, Freddie Mac may require the Servicer to pay assessments after the foreclosure sale date, in order to protect Freddie Mac’s interests. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9603 As of 11/19/25 Page 9603-7 (ii) Reimbursement of duplicate assessments and property tax payments In the event the Servicer has complied with the requirements of this section and the duplication of assessments and property tax payments exists, Freddie Mac will reimburse the Servicer for its portion of the duplicate payment(s) in accordance with the requirement in this chapter and Chapter 9701. To receive reimbursement for the duplicate payment(s), the Servicer must submit a request for reimbursement to Freddie Mac via e-mail (see Directory 6) and include in that request proof of the Servicer’s compliance with the applicable requirements and proof of the payment of the expenses. Freddie Mac will not reimburse the Servicer for any such duplicate payments if the Servicer does not meet the requirements in this section and/or the requirements in Chapter 9701. In such instances, the Servicer may seek a refund from the condominium association, HOA or Cooperative Corporation or taxing authority to which duplicate payments were made. (c) Eviction requirements for REO Freddie Mac will conduct the eviction proceedings if the property is occupied. If Freddie Mac requests information or documentation from the Servicer pertaining to the eviction, then the Servicer must provide the information or documentation to Freddie Mac within the requested time frames. (d) Reimbursement of expenses incurred on an REO property For an REO not acquired by a third party at the foreclosure sale or for legal expenses not legally collectible from the third-party purchaser, Freddie Mac will reimburse the Servicer for reasonable expenses incurred in accordance with the provisions in Chapter 9701; Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses; and/or those approved by Freddie Mac during the foreclosure process. (e) Final settlement between the Servicer and Freddie Mac for REO After Freddie Mac has received all proceeds from the sale of the REO and the Servicer has submitted all expense reimbursement requests to Freddie Mac through PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88), Freddie Mac will calculate and complete the final settlement of foreclosure expenses between the Servicer and Freddie Mac. Freddie Mac will bill the Servicer for the Servicer’s proportionate share of any expenses Freddie Mac has advanced during the REO holding period if Freddie Mac is not able to recover them from the Servicer’s share of the proceeds. Otherwise, Freddie Mac will net these expenses against the Servicer’s proportionate share of the sale proceeds, and Freddie Mac will send the balance of the Servicer’s share to the Servicer. Freddie Mac will also Freddie Mac Single-Family Seller/Servicer Guide Chapter 9603 As of 11/19/25 Page 9603-8 collect any fees, charges or other amounts the Servicer owes Freddie Mac with this settlement. (f) Late execution of REO repurchase Freddie Mac may request a Servicer to repurchase a Mortgage post-foreclosure and after investor reporting ceases and the loan has been transferred to REO. If the Servicer does not remit proceeds to Freddie Mac in accordance with the time frame and requirements in Section 8303.3(f), the Servicer will be assessed a late execution of REO repurchase compensatory fee. The compensatory fee will be calculated by multiplying the amount of the remittance shortage by the highest quoted prime rate on the last Business Day of the month in which the REO repurchase occurred in the print edition of The Wall Street Journal in its regular column entitled “Money Rates” plus 3%. If the prime rate is not published, then Freddie Mac will determine the comparable rate. The amount of the late remittance and the number of days that the remittance is late is based on a 365-day year and determines the amount of the late execution of REO repurchase compensatory fee due to Freddie Mac. There is a minimum charge of $50 on any late remittance. For purposes of calculating the charge, Freddie Mac uses the rate described above for any late remittances occurring between the first day after the Accounting Cycle and up to and including the last day of the following Accounting Cycle. Note: Refer to Section 8303.5(h) for the compensatory fee assessed for late execution of a repurchase request if not an REO. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-1 Chapter 9701: Reimbursement of Expenses 9701.1: General expense reimbursement policies (09/10/25) This section contains requirements related to: ■ Reimbursement of expenses ■ Servicer expense approval authority ■ Request for pre-approval (RPA) ■ Freddie Mac’s rights concerning expense reimbursement ■ Expense reimbursement submission time frames (a) Reimbursement of expenses This chapter contains Freddie Mac’s guidelines and requirements for using PAID (Payments Automated Intelligent and Dynamic) (see Exhibit 88, Servicing Tools) to request and obtain reimbursement for eligible expenses incurred in connection with a workout or foreclosure of a Mortgage serviced for Freddie Mac. The expense reimbursement process is governed by the requirements in this chapter, Sections 2401.1 and 2404.2, Chapter 2405, other Purchase Documents and the following: 1. The terms and conditions of the Mortgage documents 2. Applicable law 3. Requirements of the FHA, RHS, VA or MI, if applicable If foreclosure proceedings are discontinued, all fees and costs the Servicer incurs must be collected from the Borrower (unless prohibited by applicable law). The Servicer must not charge the Borrower for: ■ Any costs or fees that the Servicer has not incurred, and ■ Reinstatement or relief fees that are not allowed by applicable law or the Purchase Documents Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-2 If applicable law prohibits reimbursement from the Borrower, Freddie Mac will share the expenses with the Servicer in proportion to Freddie Mac’s interest in the Mortgage. (b) Servicer expense approval authority Servicers may incur legal and other expenses in accordance with the established limits in Exhibit 57, 1- to 4-Unit Property Approved Expense Amounts; Exhibit 57A, Approved Attorney, Foreclosure, Mediation, Postponement Fees and Title Expenses, and Exhibit 57B, Approved Bankruptcy Attorney Fees, without Freddie Mac’s prior approval. (c) RPA Prior to the Servicer incurring the expense or expenses, if possible, the Servicer must obtain written pre-approval from Freddie Mac by submitting an RPA via the RPA functionality in PAID to: ■ Exceed the expense limits in Exhibits 57, 57A and Exhibit 57B ■ Incur certain expenses as set forth in Exhibit 74, Expense and Income Codes for Expense Reimbursement Requests ■ Incur expenses not set forth in Exhibit 74 All RPAs will require the Servicer to submit supporting documentation. Freddie Mac will not provide pre-approval for, or reimbursement of expenses considered non-reimbursable (as set forth in Section 9701.4(a)). (d) Freddie Mac’s rights concerning expense reimbursement Freddie Mac reserves the following rights: 1. Freddie Mac may deny the Servicer’s request for reimbursement or curtail a portion of such expenses if Freddie Mac does not receive the Servicer’s request within the required time frames specified in Section 9701.1(e) 2. Freddie Mac will not reimburse the Servicer for expenses incurred on Mortgages repurchased by the Servicer or Mortgages subject to full recourse or indemnification. However, when applicable, the Servicer must submit expenses on any Mortgage that is pending repurchase. If the Servicer is required to repurchase Freddie Mac’s interest in a Mortgage in accordance with Chapter 3602, Freddie Mac’s calculation of the repurchase price will include all amounts the Servicer was reimbursed. 3. If Freddie Mac does not exercise its right to set off amounts owed to Freddie Mac against other funds owed to a Servicer, Freddie Mac will bill the Servicer for expenses and/or losses incurred or discovered after the repurchase notification date and/or the date of Freddie Mac’s receipt of the repurchase proceeds from the Servicer Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-3 4. If Freddie Mac audits the Servicer’s reimbursement requests and determines that a previously reimbursed expense was not eligible for reimbursement, Freddie Mac may bill the Servicer for any amounts due to Freddie Mac on the Servicer’s monthly Servicer Non-Performing Loans Invoice. Note: Refer to Section 9102.1 for information on the payment of Servicing Non- Performing Loans Invoices via an Automated Clearing House draft. 5. The expenses submitted on the final claim for a Mortgage insured by the FHA or guaranteed by the VA or RHS not subject to recourse or indemnification will not be reimbursed until Freddie Mac has received the full amount of claim proceeds from the applicable entity. Note: Freddie Mac will reimburse the Servicer for additional expenses that appear on the claim forms the Servicer submits to the applicable entity only if Freddie Mac receives these funds in the claim proceeds from the applicable entity. 6. Freddie Mac reserves the right to require the Servicer to obtain competitive bids from multiple vendors on property preservation work that exceeds the expense limits specified in Exhibit 57 (e) Expense reimbursement submission time frames Expenses for which the Servicer is seeking reimbursement must be submitted in PAID. Servicers may enter expenses in PAID as they are accrued; however, Servicers will not receive reimbursement until the mortgage modification, short sale or charge-off has settled on Freddie Mac systems or the deed-in-lieu of foreclosure, third-party sale or foreclosure sale has been successfully reported to Freddie Mac. Expense reimbursement submission time frames provided for in this Section 9701.1(e) are not applicable for Mortgages insured by the FHA or guaranteed by the VA or RHS. For expenses incurred on Mortgages insured by the FHA or guaranteed by the VA or RHS not subject to recourse or indemnification, the Servicer must submit expenses in PAID after Freddie Mac has received the claim payment from the applicable entity (see Section 9603.2(a) on FHA/VA/RHS claim filing and Section 9603.2(d) on receipt of claim payment), but no later than 60 days after Freddie Mac has received the claim payment. (i) Reimbursement of loan modification expenses With the exception of recordation fees, Servicers must enter all loan modification-related expenses in PAID that were not capitalized in the modification or otherwise paid by the Borrower (including unrecoverable expenses described in Section 9701.1(e)(iv)) no later than 90 days after the settlement date in Freddie Mac systems. Recordation fees (expense code 300003) must be submitted no later than 180 days after the settlement date in Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-4 Freddie Mac systems. (ii) Reimbursement of expenses for short-sales, charge-offs, deeds-in-lieu of foreclosure, third-party sales and foreclosure sales Servicers must enter the initial expenses related to a short-sale, charge-off, deed-in-lieu of foreclosure, third-party foreclosure sale or a foreclosure sale in PAID that were not paid by the Borrower (including unrecoverable expenses described in Section 9701.1(e)(iv)) no later than 45 days after the workout is settled on Freddie Mac systems or the foreclosure sale is successfully reported to Freddie Mac. Additional expenses must be entered no later than 60 days after the workout is settled on Freddie Mac systems or the foreclosure sale is successfully reported to Freddie Mac. Note: During the REO holding period (i.e., the time period from Freddie Mac’s acquisition of the property to the sale of the REO), the Servicer may review the status of the REO by monitoring the REO Overview Report, accessible via the “REO” tile of the Servicer’s Servicer Performance Profile (see Exhibit 88). The Servicer may also call Customer Service at 800-FREDDIE to obtain this information. Freddie Mac will not send the Servicer a written notice of the sale of the REO. Usually, the Servicer only needs to submit one claim, referred to as the “final” claim. Any additional claim submissions are referred to as “supplemental.” (iii)Reimbursement of other expenses Servicers must enter the initial expenses for the following expenses in PAID no later than 45 days after completion of the event, and any additional expenses must be entered no later than 60 days: ■ Expenses (e.g., legal fees and/or legal costs) considered unrecoverable from the Borrower under applicable federal, State or local law upon reinstatement or payoff of the Mortgage (including unrecoverable expenses described in Section 9701.1(e)(iv)) ■ Bankruptcy completion on a current Mortgage for which the Servicer obtained Freddie Mac’s written pre-approval to incur the legal expense via the RPA functionality in PAID pursuant to Section 9401.2(c)(i) (iv) Unrecoverable expenses Freddie Mac will reimburse certain expenses (e.g., legal fees and/or legal costs), as set forth in Exhibit 74 considered unrecoverable from the Borrower under applicable federal, State or local law upon reinstatement or pay off of the Mortgage or upon completion of a mortgage modification. Freddie Mac Single-Family Seller/Servicer Guide Chapter 9701 As of 04/08/26 Page 9701-5 For any other expense a Servicer believes to be unrecoverable from the Borrower under applicable federal, State or local law, the Servicer must obtain written pre-approval from Freddie Mac by submitting an RPA via the RPA functionality in PAID.

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