Freddie Mac Single-Family Seller/Servicer Guide §9701.1 — General expense reimbursement policies (09/10/25)
Freddie Mac Guide §9701.1 (General expense reimbursement policies). Gap-fill (verbatim, ID-diff).
Verbatim regulatory text
Verbatim provisions from Freddie Mac Single-Family Seller/Servicer Guide §9701.1 — General expense reimbursement policies (09/10/25) — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
Freddie Mac Guide 9701.1
(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 Guide 9701.1
701-2 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 Guide 9701.1
701-3 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 Guide 9701.1
701-4 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 Guide 9701.1
701-5 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.