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Freddie Mac Document Custody Procedures HandbookMarch 2012

Freddie Mac

Document Custody Procedures Handbook


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Freddie Mac Document Custody Procedures Handbook

March 2012 ii Table of Contents

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March 2012 iii Table of Contents

Table of Contents

CHAPTER 1 - DOCUMENT CUSTODIAL OPTIONS AND REQUIREMENTS .................................................................... 1

Overview ......................................................................................................................................................... 2

Document Custodians ..................................................................................................................................... 2

Eligibility .......................................................................................................................................................... 3Application and Approval Process ................................................................................................................... 4Access to the Selling System/Document Custodian Roles ............................................................... ................. 4Annual Reporting ............................................................................................................................................ 4Terminating the Custodial Relationship .................................. ..................................... .................................... 5

CHAPTER 2 - DUTIES AND RESPONSIBILITIES ........................................................................................................... 1

Compliance and Controls................................................................................................................................. 2Changes to Institution Information .................................. ...................................... ..................................... ..... 7Insurance Coverage ......................................................................................................................................... 8

CHAPTER 3 - DOCUMENT DELIVERY AND PROCESSING PROCEDURES ..................................................................... 1

Background ..................................................................................................................................................... 2Documentation to be Verified ................................... ...................................... ..................................... ........... 3Verification Requirements ................................... ..................................... ...................................... ................. 3

Data Verification ............................................................................................................................................. 4

Note Verification ........................................................................................................................................... 11Borrowers Signature..................................................................................................................................... 11Lost Note Affidavits ....................................................................................................................................... 15Endorsements ............................................................................................................................................... 16

Endorsement Chains ..................................................................................................................................... 18Assignments .................................................................................................................................................. 19Reviewing Supplemental Documentation ..................................... ..................................... ............................ 22Resolving Discrepancies ................................................................................................................................ 23

Post-Certification Corrections to Note .................................... ..................................... .................................. 23

Retention Period ........................................................................................................................................... 23

New York Consolidation, Extension and Modification Agreements (NY CEMAs) ......................................... 24

MERS-Registered Mortgages ..................................... ...................................... ..................................... ......... 25

CHAPTER 3A - MIDANET DELIVERY AND PROCESSING PROCEDURES ..................................................................... 1

Introduction .................................................................................................................................................... 2

Verifying Data and Documentation ................................................................................................................. 2

Resolving Discrepancies .................................................................................................................................. 2Completing Certification.................................................................................................................................. 3MERS Registered Mortgages ........................................................................................................................... 4

CHAPTER 3B - ULDD DELIVERY AND PROCESSING PROCEDURES ............................................................................. 1

Introduction .................................................................................................................................................... 2Uniform Loan Delivery Dataset .................................. ...................................... ..................................... ........... 3Resources ........................................................................................................................................................ 7


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March 2012 iv Table of Contents

CHAPTER 4 - DOCUMENT RELEASE PROCEDURES .................................................................................................... 1

Introduction .................................................................................................................................................... 2Form 1036 Requirements .................................... ..................................... ...................................... ................. 2

Form 1036DC Requirements ........................................................................................................................... 3

Document Release Types ................................................................................................................................ 3New York Consolidation, Extension and Modification Agreement (NY CEMA) Mortgage Note Release

Procedures ...................................................................................................................................................... 4Paid in Full Notes ............................................................................................................................................. 5Return of Released Documents ....................................................................................................................... 5Control and Safekeeping of Released Documents ..................................... ...................................... ................. 5Retention Period ............................................................................................................................................. 5

CHAPTER 5 - SUBSEQUENT TRANSFERS OF SERVICING AND CUSTODY PROCEDURES ............................................. 1

Introduction .................................................................................................................................................... 2General Responsibilities .................................................................................................................................. 2Evidence of Transferee Document Custodian Approval ................................... ..................................... ........... 3

Transferor Document Custodian Responsibilities ............................................ ..................................... ........... 3Transferee Document Custodian Responsibilities ..................................... ...................................... ................. 4

Transfers of Servicing of MERS Registered Mortgages ..................................... ..................................... ........... 5Termination of Custodial Agreement ...................................... ..................................... .................................... 6Extension Approval ......................................................................................................................................... 6

CHAPTER 6 - PROCESSING BALLOON/RESET MORTGAGES ...................................................................................... 1

Overview ......................................................................................................................................................... 2Processing Balloon/Reset Mortgages .............................................................................................................. 2Certifying Balloon Loan Modifications ............................................................. ..................................... ........... 2Loan Modification Custody .................................. ..................................... ...................................... ................. 3

APPENDIX A - JOB AIDS ............................................................................................................................................ 1

JOB AID 1 FIXED RATE NOTE .................................................................................................................... 2

JOB AID 2 ADJUSTABLE RATE NOTE ........................................................................................................ 5

JOB AID 3 ADJUSTABLE RATE NOTE (CONVERTIBLE) .............................................................................. 9

JOB AID 4 FIXED RATE BALLOON NOTE ................................................................................................ 15

JOB AID 5 CHAIN OF ASSIGNMENTS AND ENDORSEMENTS .................................................................. 20

APPENDIX B - MISMO JOB AIDS ............................................................................................................................... 1

JOB AID 1 FIXED RATE NOTE .................................................................................................................... 2

JOB AID 2 ADJUSTABLE RATE NOTE ........................................................................................................ 5

JOB AID 3 ADJUSTABLE RATE NOTE (CONVERTIBLE) .............................................................................. 9

JOB AID 4 FIXED RATE BALLOON NOTE ................................................................................................ 15

APPENDIX C - FORMS .............................................................................................................................................. 1

FORM 1FOUND NOTE CERTIFICATION...................................................................................................... 2


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Freddie Mac Document Custody Procedures Handbook PrefaceMarch 2012 1

Preface

This Handbook is intended to supplement the requirements and information inFreddie Mac's Single-Family Seller/Servicer Guide (the Guide, which is one ofthe Purchase Documents). The Guide has priority over this Handbook, so that

any conflict between them, such as may occur when the Guide is updated oramended, should be resolved to favor the Guide. Similarly, conflicts between theGuide andForm 1035, the Document Custodial Agreement, are resolved to favor

the Guide; thus, Form 1035 need not be re-executed or amended to reflect

changes in the Guide. We intend to update the Handbook periodically.

Capitalized terms used in the Handbook are defined in the Guide; however,please note that certain terms and phrases, including the following, may be useddifferently in the Handbook:

"Assignment" refers to the Intervening Assignments and includes any

instrument used to assign the security instrument to Freddie Mac. SeeGuide Section 18.1.

"Form 1034" may refer collectively to all versions or to a specific version,as the context requires. Because the Handbook assumes that Mortgagesare delivered to Freddie Mac through the selling system, most referenceswill be to Form 1034E, the version of Custodial Certification Scheduleused for selling system deliveries.Form 1034B, Custodial CertificationSchedule Balloon Loan Modification, is used in conjunction withBalloon/Reset Loan modifications.Form 1034S, Custodial CertificationSchedule Summary, is a summary form of the hardcopyForm 1034(fixed-

rate mortgages) or1034A (ARMs) that may contain a list of datacorrections.Form 1034T, Subsequent Transfer Custodial CertificationSchedule, summarizes information for Mortgages transferred in a Transferof Servicing or transfer of custody.

"Mortgage file" refers to the Servicers file.

"Note" refers to the instrument evidencing a Borrower's indebtedness,and includes any Power of Attorney or modifying instrument, such as amodification agreement, conversion agreement, and assumption of liabilityor release of liability agreement. "Notes" may also refer to all documents

held for Freddie Mac, as the context requires.

"Note file" refers to the Document Custodians file and the documents

retained in that file pursuant to the Form 1035, Document Custodial

Agreement.

"Seller/Servicer" refers to the entity primarily or exclusively sellingMortgages to, or servicing Mortgages for, Freddie Mac. We have tried to
http://freddiemac.com/cim/pdf/Form1035.pdfhttp://freddiemac.com/cim/pdf/Form1035.pdfhttp://freddiemac.com/cim/pdf/Form1035.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/sell/forms/pdf/1034b_effective_10_01_11.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034b_effective_10_01_11.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034b_effective_10_01_11.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034a.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034a.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034t.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034t.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034t.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034t.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034a.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034b_effective_10_01_11.pdfhttp://www.freddiemac.com/singlefamily/http://freddiemac.com/cim/pdf/Form1035.pdf


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use either the term "Seller" or "Servicer" where that is more accurate.However, absent a Transfer of Servicing, the same entity may be bothSeller and Servicer, although you may be interacting with differentpersonnel. Using this convention should help clarify the different roles.

Throughout the Handbook,'you'

and'your'

refer to the DocumentCustodian.

Freddie Mac does not provide direct document custodial services toSeller/Servicers. However, Freddie Mac does perform oversight of documentcustody program requirements and overall management of the certificationprocesses and requirements. As such, all Document Custodians will continue tosubmit to Freddie Mac the following completed and executed forms, asapplicable:

Form 1034B, Custodian Certification Schedule Balloon Loan

Modification, upon certifying the information contained in a Balloon LoanModification, in accordance with the requirements of

In connection with the sale of Mortgages to Freddie Mac throughMIDANET,

Guide Section 83.103

Forms 1034S, Custodian Certification Schedule Summary, and1034SM, Custodian Certification Summary for Multiple PurchaseContracts, upon verifying the documents and performing the certificationsrequired in accordance with GuideSection 18.6

Form 1034T, Subsequent Transfer Custodial Certification Schedule, uponperforming the verifications and certifications in connection with a Transferof Servicing or transfer of custody

Freddie Mac (Directory 9) will:

Process requests for assistance with Mortgage discharges, satisfactions,and releases of lien or similar and other matters related to the chain of titlefor Mortgages owned by Freddie Mac when we are identified as the lienholder in the land records. Please use the Request for Assistance form

found on our web page athttp://www.freddiemac.com/cim/docex.html .

Process MERS Transfer of Beneficial Rights and resolve issues

concerning transactions affecting Freddie Mac on the MERS registrationsystem.

Servicers may contract with Freddie Macs Designated Custodian instead ofcontracting with another Freddie Mac-approved Document Custodian. Except asotherwise required by the context, references in this Handbook to DocumentCustodian include the Designated Custodian.
http://www.freddiemac.com/sell/forms/pdf/1034b.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034b.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.allregs.com/ao/main.aspx?did2=a991ca1241204847997dc33cf2921c19http://www.allregs.com/ao/main.aspx?did2=a991ca1241204847997dc33cf2921c19http://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034sm.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034sm.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/sell/forms/pdf/1034t.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034t.pdfhttp://www.freddiemac.com/cim/docex.htmlhttp://www.freddiemac.com/cim/docex.htmlhttp://www.freddiemac.com/cim/docex.htmlhttp://www.freddiemac.com/cim/docex.htmlhttp://www.freddiemac.com/sell/forms/pdf/1034t.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/sell/forms/pdf/1034sm.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034s.pdfhttp://www.allregs.com/ao/main.aspx?did2=a991ca1241204847997dc33cf2921c19http://www.freddiemac.com/sell/forms/pdf/1034b.pdf


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For information on certification and custody of mortgages originated in whole orin part electronically, please refer to Freddie Mac's eMortgage Guide, found onFreddie Macs website athttp://www.freddiemac.com/singlefamily/elm/pdf/eMortgage_Guide.pdf .Selling,Servicing, and acting as Document Custodian for eMortgages for Freddie Mac

requires special contract provisions.

We hope that you find this Handbook helpful, and we would like to hear from youregarding any comments and questions that you have about your status as aFreddie Mac Document Custodian and the custodial duties and functions.
http://www.freddiemac.com/singlefamily/elm/pdf/eMortgage_Guide.pdfhttp://www.freddiemac.com/singlefamily/elm/pdf/eMortgage_Guide.pdfhttp://www.freddiemac.com/singlefamily/elm/pdf/eMortgage_Guide.pdf


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Freddie Mac Document Custody Procedures Handbook Document Custodial Options and RequirementsMarch 2012 1 Chapter 1

Document Custodial Options andRequirements

1

Contents

Topic Page

Overview 2

Document Custodians 2

Eligibility 3

Application and Approval Process 4

Access to the Selling System/Document Custodian Roles

4

Annual Reporting 4

Terminating the Document Custodial

Relationship

5

Chapter


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Document Custodial Options and Requirements


Overview

A Seller/Servicer selling Mortgages to Freddie Mac must ensure that the Notes,assignments, and related documents are delivered to you according to theFreddie Mac Single-Family Seller/Servicer Guide (Guide). This chapter describes

relationships, duties and responsibilities among the Document Custodian, theSeller/Servicer, and Freddie Mac for certifying and safeguarding our Notes.

The Designated Custodian has been qualified by Freddie Mac to be an approvedDocument Custodian with which Servicers may contract for custodial services.The Designated Custodian is referred to in this chapter only as a custodialoption. References to Document Custodian in this chapter are deemed toinclude the Designated Custodian as appropriate.

Document Custodians

Seller/Servicers must select either Freddie Macs Designated Custodian or

another Freddie Mac approved Document Custodian for the Mortgages soldand/or serviced for each Seller/Servicer number. SeeGuide Section 18.1.

The following chart identifies the general requirements for each Custodian option.

DocumentCustodian

Contract Requirements Document Requirements

DesignatedCustodian

Requires a fully executedForm 1035DC, DesignatedCustodial Agreement: Single-Family Mortgages.

Seller sends Notes,supplemental documents andIntervening Assignments to theDesignated Custodian.

Third-PartyDocumentCustodian

Requires approval fromFreddie Mac and a fullyexecutedForm 1035,Custodial Agreement: Single-Family Mortgages.

Seller sends Notes,supplemental documents andIntervening Assignments to theThird-Party DocumentCustodian.

Self-Custodian Requires approval fromFreddie Mac and a fullyexecuted Form 1035,Custodial Agreement: Single-Family Mortgages.

Seller sends Notes,supplemental documents andIntervening Assignments to itstrust department, which hastrust powers granted by its

primary regulator.

Seller/Servicer and Document Custodian should enter into a written agreementregarding Document Custodian's charges and fees for document custodialservices (e.g., Note certification, storage, release and copying); however, theagreement may not contain terms that conflict with the Form 1035 or thisHandbook, such as Freddie Mac's ability to gain access to the Notes without theSeller/Servicer's consent.
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Compensation for custodial services is the sole responsibility of the Servicer.See Guide Section 18.1. A Document Custodian may not act in a manner thatmight adversely affect Freddie Mac or its interests, or fail to perform its custodialduties because of non-payment by a Seller/Servicer.

A Document Custodians vault will be assigned only one Document Custodiannumber, regardless of the number of Seller/Servicers relationships for which itholds Notes for Freddie Mac. Each relationship between a Seller/Servicer and athird-party or self-custodian requires a separate Document Custodial Agreement.Mortgages sold under a particular Seller/Servicer number will automatically beassociated with the Document Custodian that certifies the Note at delivery. ASeller/Servicer must have a separate Seller/Servicer number for each custodialrelationship. SeeGuide Sections 18. and1 18.3.

Document Custodians with more than one vault will need a separate DocumentCustodian number from Freddie Mac for each vault.

The agreements that govern the certification and safeguarding of Notes sold toFreddie Mac are the Custodial Agreement: Single-Family Mortgages (Form1035), a tri-party agreement between Freddie Mac, the Seller/Servicer, and theDocument Custodian, and the Designated Custodial Agreement: Single-FamilyMortgages (Form 1035DC), a tri-party agreement among Freddie Mac, theSeller/Servicer, and the Designated Custodian. By executing the Form 1035, theSeller/Servicer and the Document Custodian represent and warrant to each otherand to Freddie Mac that the Document Custodian satisfies our document custodyeligibility requirements, found in Form 1035, this Handbook and the Guide, asthey may be amended from time to time. See Form 1035 andGuide Section

18.3for more information. If a Document Custodian fails to maintain or complywith the eligibility requirements (seeGuide Section 18.4), the Seller/Servicermust contact Freddie Macs Counterparty Credit Risk Management department(CCRM) immediately at:

Attn: Counterparty Credit Risk ManagementFreddie Mac1551 Park Run Drive, MS D3AMcLean, VA 22102-3110Phone: (571) 382-3434 Opt. 2Fax: (866) 743-0087

Eligibility

The Document Custodian eligibility requirements appear inSection 18.2 of theGuide. An institution must meet the requirements found within Section 18.2forFreddie Mac to approve it as a Document Custodian including, but not limited to,being a financial institution that is supervised and regulated; meeting FreddieMacs Minimum Acceptable Net Worth requirement or investment grade rating asdefined in Guide Section 18.2; and performing the document custody function ina trust department that is established and operated under trust powers granted
http://www.allregs.com/http://www.allregs.com/http://www.allregs.com/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/cim/pdf/Filled-Form_1035DC_OCT%201.pdfhttp://www.freddiemac.com/cim/pdf/Filled-Form_1035DC_OCT%201.pdfhttp://www.freddiemac.com/cim/pdf/Filled-Form_1035DC_OCT%201.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/cim/pdf/Filled-Form_1035DC_OCT%201.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.allregs.com/http://www.allregs.com/http://www.allregs.com/


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by the Document Custodians primary regulator.

Application and Approval Process

A Seller/Servicer electing to use a Document Custodian other than theDesignated Custodian must contact CCRM to apply for approval.

The applicant institution must contact CCRM for information on the applicationprocess and the required documentation. When the necessary documentation isreceived, CCRM will review it to determine whether to grant approval, and notifyboth the Seller/Servicer and applicant of its decision. SeeGuide Sections 18.2and18.3for eligibility criteria and further information.

We will send a copy of the fully executedForm 1035to both the Seller/Servicerand Document Custodian for their records. See Guide Section 18.3. The SellerServicer must receive an original, fully executed Form 1035 from Freddie Macbefore the:

Seller/Servicer delivers any documents to a Document Custodianpursuant toGuide Section 16.8, or

Document Custodian accepts any documents from a Seller/Servicer.

Access to the Selling System/Document Custodian Roles

In connection with use of the selling system, the Document Custodian mustprovide information to Freddie Mac regarding Document Custodian's authorizedselling system users and their designated user roles. The Document Custodianmust submit this information to Freddie Mac by completing and submittingForm901, Document Custodian Selling System Authorized User Identification andCertification Form, for each Seller with which the Document Custodian has

established a custodian relationship, in accordance withGuide Section 18.3.

Upon receipt of the completed form, Freddie Mac will assign user roles in theselling system and issue user IDs and/or passwords to Authorized Users.

See Guide Sections A1.9 and A1.12 for information on system security and useraccess, respectively.

Annual Reporting

By March 31st

of each year, each Document Custodian must complete the AnnualDocument Custodian Eligibility Certification Report (Document Custodian annual

report) and submit it to CCRM. Custodians must also submit any otherinformation that Freddie Mac may request in conjunction with the Annual Reportor otherwise. SeeForm 1035.

Concurrent with submission of itsForm 16SF, Annual Eligibility CertificationReport, to CCRM, Seller/Servicer certifies its Document Custodian(s) ifapplicable, continues to meet all the Document Custodian eligibility requirementsstated in the Guide. Seller/Servicers must also submit any other information that
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Freddie Mac may request. SeeForm 1035andGuide Section 4.9for moreinformation.

Terminating the Custodial Relationship

Any party to aForm 1035 may terminate it upon proper notice to the other

parties. Upon such notice, all Freddie Mac Notes must be transferred to a newapproved Document Custodian or the Designated Custodian within 30 days asdescribed in Chapter 5 of this Handbook andGuide Section 18.7. The DocumentCustodian being terminated must fulfill the custodial duties until all Notes havebeen transferred to and

Freddie Mac may terminate any Document Custodial Agreement among FreddieMac, a Seller/Servicer and a Document Custodian in our sole discretion upon 30days written notice.

recertified by the Transferee Document Custodian.

Freddie Mac may terminate a Form 1035 immediately if:

1. We modify our requirements for document custody,

2. A Seller/Servicer:

Is suspended or disqualified, or Is unable to comply with our eligibility standards, or Performs unsatisfactorily

or

3. A Document Custodian, in Freddie Macs sole judgment:

Does not meet the eligibility requirements or criteria for custody, or Performs unsatisfactorily, or If any circumstance occurs or exists that might adversely affect the

Document Custodian or our Notes or assignments or the interests ofFreddie Mac.

SeeGuide Sections 18.1and18.7and Section 6 of Form 1035 for moreinformation.

A Document Custodian may terminate the Form 1035 upon at least 30 dayswritten notice to the Seller/Servicer and to CCRM.

A Seller/Servicer may terminate a Form 1035 upon 30 days written notice to theDocument Custodian and to CCRM. The Seller/Servicer must then select a newDocument Custodian.
http://freddiemac.com/cim/pdf/Form1035.pdfhttp://freddiemac.com/cim/pdf/Form1035.pdfhttp://freddiemac.com/cim/pdf/Form1035.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://freddiemac.com/cim/pdf/Form1035.pdfhttp://freddiemac.com/cim/pdf/Form1035.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://freddiemac.com/cim/pdf/Form1035.pdfhttp://www.freddiemac.com/singlefamily/http://freddiemac.com/cim/pdf/Form1035.pdf


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Freddie Mac Document Custody Procedures Handbook Duties and ResponsibilitiesMarch 2012 1 Chapter 2

Duties and Responsibilities 2

Contents

Topic Page

Compliance and Controls 2

Changes to Institution Information 7

Insurance Coverage 8

C

hapter


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Duties and Responsibilities


Compliance and Controls

The Document Custodian must certify the Notes and assignments delivered by aSeller/Servicer and hold them in trust for us. Document Custodians must certifyand safeguard Notes and assignments as required by the Guide,Form 1035andthis Handbook and adhere to the highest professional and ethical standards.

In order to protect Borrower privacy, Document Custodians must not releaseoriginal documents, copies of documents, or any

Pursuant to Form 1035, Freddie Mac may, with or without prior notice, performan on-site audit that relates to Notes and assignments held for Freddie Mac, onthe following:

information about a Borrower ora Mortgage held in custody for Freddie Mac to anyone except Freddie Mac, aFreddie Mac-approved agent, such as designated counsel or the Servicer, evenif the person asking is the Borrower or someone claiming to be the Borrower. Ifthe person is claiming to be the Borrower, you should direct him or her to thecurrent Servicer. Because of periodic reporting requirements relating to certainmortgage-backed securities, the Seller or a previous Servicer of a Mortgage mayrequest loan-level information; you must direct all such inquiries to the currentServicer. Please contact Freddie Mac if you have any questions regardingBorrower privacy.

All records and documents held by a Document Custodian,

The vault itself (facilities, security, etc.), and/or

The Document Custodians policies and procedures relating to the custodialfunctions.
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The chart below identifies a number of compliance controls; this information isnot all-inclusive.

Custodial Functions Compliance Controls

Hold Notes and assignments in trust forthe sole benefit of Freddie Mac Do not enter into any understanding,agreement or relationship with anyparty to obtain, retain or claim anyinterest, including ownership orsecurity, in Mortgages owned byFreddie Mac, unless specificallyapproved in writing, in advance by us.

Maintain custody and control of theNotes and assignments

Track Notes held for Freddie Mac inaccordance with note trackingrequirements set forth in the Guideand this Handbook

Affix the Freddie Mac loan numberto the Note, if advised by theSeller/Servicer that Freddie Macrequires it

Physically segregate Freddie MacNotes from those held for otherinvestors, if advised by Freddie Macto do so

SeeGuide Sections 18.2and18.6forfurther information.

Certify Notes, supplemental documentsand assignments

See Chapter 3 of this Handbook fordetailed information.

Release documents to Servicer ordesignated counsel


Release documents to TransfereeDocument Custodian


If a Note cannot be found in the vault after the Document Custodian has receivedand certified it, the Document Custodian should contact Freddie Mac forinstructions. See Guide Directory 9.
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The chart below identifies the minimum standards for the Document Custodian tomaintain its eligibility as a Document Custodian and properly certify andsafeguard the Notes. SeeGuide Section 18. .1

Standard Activity or Requirement

Employ internal controls and useprudent business practices tosafeguard and maintain our Notesand assignments.

Provide fire-resistant storage with aminimum of two hours protection. SeeGuide Section 18.2(b).

Provide fire extinguishers or other fireretardant equipment or devices invaults.

Restrict access to the vault topersonnel with appropriate credentials,i.e. Secure ID, PIN, etc., or individualsescorted by personnel with appropriate

credentials.

Maintain a visitors log of, and providean escort to, anyone accessing thevault and/or portions of the buildingwhere custodial activities areconducted.

Ensure that staff is knowledgeablein handling Notes and assignments,and performing other custodialduties, including access to and use

of the Freddie Mac selling system.See Guide Sections A1.12 and18.2(b).

Provide access to our reference materialsand publications, including:

The Guide (available on AllRegs)

This Handbook

The Document Custodial Operationswebsite:http://www.freddiemac.com/service/cim

Bulletins and Industry Letters

Obtain access to the selling system andensure access security.
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Standard Activity or Requirement

Self-Custodians must ensure thatdocument custody functions areseparate from Mortgage origination,

selling, or servicing. SeeGuideSection 18.2(c), (d) and (e).

The document custody department andstaff must be independently andseparately managed from any functional

area that performs Mortgage origination,selling, or servicing, and must maintainseparate records, files and operations.

Develop and maintain anindependent document tracking andreporting system to monitor Notesand assignments, to track Notereleases and returns, and to identifyphysical location of Notes. SeeGuide Section 18.2(b).

Include the Freddie Mac loan number inthe note tracking system. TheDocument Custodian must referencethe Freddie Mac loan number on allcorrespondence and relateddocuments.

If the Freddie Mac loan number

begins with a 0, the 0 must beincluded in your note trackingsystem.

Include the Servicers loan number inthe system.

Cross-reference the Freddie Mac loannumber for each Mortgage with theServicers loan number.

Document Custodians note trackingsystem must be separate and

independent of the Servicers systems.

Periodically, you will be required toprovide an electronic list of the FreddieMac loan numbers for all Notes youhold. You will be provided with detailsconcerning file format and where tosend the file. Please ensure that thecomplete 9-digit loan number isprovided, including any preceding zeros,to avoid having that loan flagged as aninvalid loan number.

We do not use the contract number afterfunding. The Freddie Mac loan numbertracks subsequent loan transactions,including Transfers of Servicing.
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Activity Requirement

Maintain and regularly update writtenprocedures. See Guide Section18.2(b).

Compare your procedures to thisHandbook, the Guide andForm 1035toensure that they meet our requirements.

Maintain a disaster recovery(business continuity) plan. SeeGuide Section 18.2(b).

Your plan must include:

Immediate (within 24 hours) notice toFreddie Mac if your facility is affectedby a disaster,

Email address:[email protected]

Fax number: (703) 738-2141

A process for physicalrecovery/restoration of documents,

Plans to recover tracking system data,including electronically maintainedinformation,

Relocation/restoration of facilities toensure ability to perform custodialfunctions, and

Periodic testing and updating of theplan.

Submit Annual Document CustodianEligibility Certification Report. See

Form 1035.

In order to maintain eligibility, submit theAnnual Document Custodian Eligibility

Certification Report by March 31st

eachyear.

Refer to our website:http://www.freddiemac.com/service/cim/docs/dc_elig_cert_report.doc

or contact:[email protected]

Terminate custodial relationship withServicer.

See Chapter 1 of this Handbook for furtherinformation.

As Document Custodian, you are

responsible for ensuring a smoothtransfer of all Notes, assignmentsand supplemental documents.
http://freddiemac.com/cim/pdf/Form1035.pdfhttp://freddiemac.com/cim/pdf/Form1035.pdfhttp://freddiemac.com/cim/pdf/Form1035.pdfmailto:[email protected]:[email protected]://www.freddiemac.com/service/cim/docs/dc_elig_cert_report.dochttp://www.freddiemac.com/service/cim/docs/dc_elig_cert_report.dochttp://www.freddiemac.com/service/cim/docs/dc_elig_cert_report.docmailto:[email protected]:[email protected]:[email protected]://www.freddiemac.com/service/cim/docs/dc_elig_cert_report.dochttp://www.freddiemac.com/service/cim/docs/dc_elig_cert_report.docmailto:[email protected]://freddiemac.com/cim/pdf/Form1035.pdf


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Changes to Institution Information

To ensure that Freddie Macs records for Document Custodians are accurate,Document Custodians must notify Freddie Mac, as set forth below, of aninstitution name or address change for the vault, changes in the vault contact

person or institutional organizational changes, such as mergers orconsolidations.

Event Description

Document Custodianaddress change

Certain changes will necessitate a newForm 1035.For instance, if you move Notes held for one or moreServicers to a new vault, but will continue to maintainthe Notes for other Servicers at the old vault, you willneed an additional Document Custodian number andForm 1035 that documents the relationship between

your new vault and the particular Seller/Servicernumbers supported there.

Moving Notes (except pursuant to a Form1036, Request for Release of Documents)requires prior approval by Freddie Mac.

All Freddie Mac Notes associated with aparticular Seller/Servicer number must be heldin the same Document Custodian vault, or withthe Designated Custodian.

Each Document Custodian location must havea unique Freddie Mac-assigned DocumentCustodian number.

Changes in DocumentCustodian name,organization, eligibility oroperational contact names,e-mail address, and phonenumber.

Provide written notification to:

Freddie Mac CCRM1551 Park Run Drive, MS D3AMcLean, VA 22102-3310
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Insurance Coverage

Document Custodians must maintain the following insurance coverage, at aminimum:

Errors and Omissions Insurance covering claims resulting from the

Document Custodians breach of duty, neglect, errors and omissions,misstatement, misleading statements or other wrongful acts committed in theconduct of document custodial services.

Financial institution bond or equivalent insurance covering any lossresulting from employee dishonesty, physical damage or destruction to, orloss of any Notes or assignments while these documents are located on theDocument Custodians premises.

Transit Insurance Coverage: Notes that move between DocumentCustodians or from one Document Custodian's vault to another must becovered by transit insurance. If Document Custodian and Seller/Servicer

agree in writing that the Document Custodian will assume liability for theNotes during the move, then Document Custodian must maintain insurancethat covers physical damage to and destruction or loss of the Notes. If thereis no written agreement allocating liability, then the Seller/Servicer is liable forthe Notes and must obtain insurance as described in Guide Section 18.4(c).Document Custodian must provide, or must verify that the servicer providestransit insurance on Notes released to designated counsel.

For additional information, seeGuide Sections 18.2and18.4.
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Freddie Mac Document Custody Procedures Handbook Document Delivery and Processing ProceduresMarch 2012 1 Chapter 3

Document Delivery and ProcessingProcedures

3Contents

Topic Page

Background 2

Documentation to be Verified 3

Verification Requirements 3

Data Verification 4

Note Verification 11

Borrowers Signature 11

Lost Note Affidavits 15

Endorsements 16

Endorsement Chains 18

Assignments 19

Reviewing Supplemental Documentation 22

Post-Certification Corrections to Note 23

Resolving Discrepancies 23

Post-Certification Corrections to Notes 23

Retention Period 23

New York Consolidation, Extension andModification Agreements (NY CEMAs)

24

MERS-Registered Mortgages 25

C

hapter


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Document Delivery and Processing Procedures


Background

Document Custodians are responsible for verifying certain information containedin the Notes and related documents for the Mortgages sold to Freddie Mac andfor certifying that you have performed those verifications and that the original

documents are in your possession. We refer to this process as certification orcertifying the Notes.

This chapter details our requirements for certifying Notes being sold to FreddieMac, including those sold with a Concurrent Transfer of Servicing. Forinformation on Subsequent Transfers of Servicing, seeSection 56.1of the Guideand Chapter 5 of this Handbook. Unless the Document Custodian receives acopy of the Purchase Documents between the Seller/Servicer and Freddie Mac,including the first page with the Seller/Servicer number, the pages with theexceptions detailed, and the signature pages, the Document Custodian must notdeviate from the requirements of this Handbook or the Guide.

The process for certifying Mortgages sold to Freddie Mac through the sellingsystem can be found in this chapter. The process for certifying Notes sold toFreddie Mac through MIDANET is described in Chapter 3A. Except asspecifically noted in Chapter 3A, all of the requirements to certify Notes soldthrough the selling system also apply to Notes sold through MIDANET.

The information in this chapter is intended to help you fulfill your responsibilitiesas an approved Document Custodian. This Handbook is a reference tool thatcomplements Freddie Macs Single-Family Seller/Servicer Guide(the Guide). Itdoes not replace the requirements in the Guide, and in the event of a conflict, theGuide controls.

Before you may accept a delivery of Notes from a Seller, Freddie Mac mustapprove you as a Document Custodian for the Servicer that will service theMortgages. Refer to Chapter 1 of this Handbook for additional information onbecoming an approved Document Custodian.

Sellers may use independent delivery agents, particularly for bulk or seasonedloan portfolio sales through MIDANET. If such an agent contacts you or youreceive loan data with respect to the Mortgages from a third party, you must askto see written evidence of its relationship with the Seller, such as a copy of thefirst and signature pages of their contract with the Seller or the paragraph in theFreddie Mac Master Commitment that recognizes the agency arrangement. Youmay rely on the representations of such an agent as if the Seller made them, as

the Seller remains liable for the accuracy and completeness of all data. ContactFreddie Mac if you have any questions regarding delivery by an agent. SeeGuide Directory 9.

Effective April 23, 2012 Form 11 and Form 13SF terms will be delivered asMISMO/XML data defined terms. Please see Chapter 3B for the MISMO/XMLdata defined terms that will be presented in the selling system and Form 1034E.
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Documentation to be Verified

The Seller must deliver to you, as the approved Document Custodian, the Note,any applicable assignments, and the related documentation for each Mortgage itis selling to Freddie Mac. The Form 1034E or Note Delivery Cover Sheet will

accompany each delivery of Notes. You may also receive documents thatprovide additional Note terms, clarify legal terms, and/or complete the requireddocumentation for a particular Mortgage.

Examples of these supplemental documents include

Addendum to the Note

Agreement to Convert

Assumption Agreement

Modification Agreement

Power of Attorney Name Affidavit

Signature Affidavit

An Allonge, because it is physically a part of the Note, is not technically asupplemental document, and if endorsements are made on the Allonge, theymust be delivered as part of the Note.

Verification Requirements

Upon receipt of a delivery of Notes from the Seller, you must

Verify the data. The information on each Note must match thecorresponding information in the selling system or applicable Form 1034.

Verify the Note. The Note must be original and complete. The Note mustalso be originated on a Fannie Mae/Freddie Mac, a Freddie Mac, or aFannie Mae Uniform Instrument. Seehttp://www.freddiemac.com/uniform/for a complete list of current Uniform Instruments.

Verify the chain of endorsements (Note).

Verify the chain of assignments (security instrument).

Once you have verified the accuracy of the data and that the documents comply

with our requirements, you may certify the loan. Certification is complete in theselling system when you

Indicate in the selling system that you have certified individual loans orloans in batch; or

Have submitted proposed data corrections to the Seller, and the Selleraccepts the proposed changes.
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Data Verification

The table below lists the data elements requiring verification for all Notes. Youmust compare these data elements in the selling system to the informationcontained on each applicable Note. For additional information on these dataelements, particularly as they relate to special delivery requirements for certain

Mortgage Products, seeForm 11andForm 13SF.

Freddie Mac systems and publications are not always consistent in theirterminology. In the table below, we list the various terms for the same dataelements in the following order: selling system (Form 1034E), Forms 11 and 13SF,and MIDANET (Form 1034).

The parenthetical numbers in the data elements column correspond to thenumbered boxes on Job Aids 1-4.

Freddie Mac no longer requires that the Freddie Mac loan number be affixed to theface of the Note in most circumstances. SeeGuide Sections 16.4(e)and18.6(a).

Alternative Document Custodian Verification Process

For Mortgages with respect to which Seller submits the Notes and assignmentsto the Document Custodian prior to receiving theForm 1034and associatedelectronic data that will be provided to Freddie Mac, the alternative verificationprocess described below will be deemed to satisfy the certification requirements:

(A) Prior to delivering a Note to the Document Custodian, Seller captures allNote information that the Document Custodian is required to certify andtransmits such data (Seller's loan data) electronically to the DocumentCustodian;

(B) Upon receiving a Note, the Document Custodian must independentlyverify that the information on the Note matches Seller's loan data;

(C) Upon receipt of theForm 1034and the data delivery in the selling system,the Document Custodian must conduct an electronic comparison ofSeller's loan data previously verified by the Document Custodian, to theselling system data (except that the Document Custodian is not requiredto verify the Seller/Servicer loan number) and, on the basis of suchcomparison, the Document Custodian must notify the Seller of any issuesand enter the appropriate certification status in the selling system to

complete the certification, once any issues are resolved; and

(D) The Document Custodian must have computer and other systems in placeto verify that:

(i) The Seller's loan data includes all the data fields that are includedin theForm 1034and the selling system; and
http://www.freddiemac.com/sell/forms/pdf/11.pdfhttp://www.freddiemac.com/sell/forms/pdf/11.pdfhttp://www.freddiemac.com/sell/forms/pdf/11.pdfhttp://www.freddiemac.com/sell/forms/pdf/13sf.pdfhttp://www.freddiemac.com/sell/forms/pdf/13sf.pdfhttp://www.freddiemac.com/sell/forms/pdf/13sf.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/singlefamily/http://www.freddiemac.com/singlefamily/http://www.freddiemac.com/sell/forms/pdf/1034.pdfhttp://www.freddiemac.com/sell/forms/pdf/13sf.pdfhttp://www.freddiemac.com/sell/forms/pdf/11.pdf


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(ii) The Seller's loan data as of the Delivery Date is the same as theForm 1034and the selling system data used to certify theMortgage;

Data Elements Compare to Note

Freddie Mac loannumber (1)

Nine-digit loan number, provided to the Seller by FreddieMac (must appear in the upper right-hand corner of eachNote, if required). If the Freddie Mac loan number is on theNote, it must be verified.

Note date (2)

Date of Note (Forms11, 13SF, and 1034)

The original Note Date that is printed on the first page ofthe Note.

For additional information relating to converted, modified,construction, or similar Mortgages, see the instructions in

Form 11.

If the Borrower dates their signature in ink at time ofclosing, then that date takes priority over the date printedon the face of the Note. The Document Custodian shouldnot certify the Note, and propose the Borrower signed dateas the Note Date.

Property street (3) Street address for the Mortgaged Premises as indicatedon the Note mayinclude:

Street type (e.g., Circle; Court; Avenue; Road;

Boulevard), Unit number, if applicable, and

Direction, if applicable (e.g., 123 East Main Street,1000 Connecticut Avenue, NW

Standard or obvious abbreviations for street type anddirection are acceptable.

).

Misspelled street designations are acceptable, providedthat the intended word is still apparent. For example:

"Road" spelled as "Raod";

"Street" spelled as "Streeet"; or

"Circle" spelled as Cricle

For certain Mortgages, such as Construction toPermanent Mortgages, the street address on the Notemay not be complete. Enter the discrepancy in the sellingsystem, and contact the Seller for documentationconfirming the street address to certify the Note
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Property city (4) City or town in which the Mortgaged Premises is locatedindicated on the Note.

Property state (5) State in which the Mortgaged Premises is locatedindicated on the Note.

Property zip code (6) Postal Zip Code of the Mortgaged Premises indicated onthe Note.

Zip Codes sometimes change. If a Zip Code has beenaltered on the Note, it is not necessary for the Borrower toinitial that change. If the Zip Code delivered in the sellingsystem does not match the Zip Code on the Note, youmay certify the Note if the U.S. Postal Service website(http://zip4.usps.com/zip4/welcome.jsp ) confirms that theZip Code delivered in the system is correct for the propertyaddress. We recommend keeping a print out of the webpage in the file.

Original LoanAmount (7)

(Forms 11 and13SF)

Original principal amount indicated on the Note. ForMortgages that have been modified or converted prior todelivery, the loan amount as of the modification orconversion. Our systems do not permit delivery of cents inthis field. Sellers are instructed to omit cents. DocumentCustodians may certify loans where the loan amount onthe Note differs from the loan amount on the Form 1034 by

no more than one dollar. Dollar amounts in the sellingsystem may be rounded up to the next dollar.

Original InterestRate (8)

Note Interest Rate(Forms 11 and13SF)

The original interest rate indicated on the Note.

Original P&IPayment Date (9)

Date of First P&IPayment (Forms 11and 13SF)

The Due Date of the first full principal and interest (P&I)payment indicated on the Note.

For Mortgages that have been modified or converted priorto delivery, the due date of the first full P&I payment of themodified Mortgage as indicated in the modification orconversion agreement.
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Original MaturityDate (10)

Note Maturity Date(Forms 11 and13SF)

The date of the final P&I payment indicated on the Note.

Original P&IPayment (11)

Monthly P&IPayment (Forms 11and 13SF)

The full monthly principal and interest (P&I) paymentindicated on the Note.

For modified or converted Mortgages, the monthly P&Ipayment in effect after the modification or conversion asspecified in the modification or conversion agreement.

Borrower name (12) First name, middle name or initial, and last name of the

first Borrower indicated on the Note. Borrower names mayappear on the Note First Name first or last name first, if thelast name is followed by a comma.

Co-Borrower name(13)

First name, middle name or initial, and last name of Co-Borrower indicated on the Note. Typed name on the Note,when present, may be reversed than as shown on theForm 1034 or within the selling system.

Modification/Conversion date (24)

Mod/Conv Date(Forms 11 and13SF)

For modified or converted Mortgages, the date on whichthe modification or conversion was effective.

For one closing construction to permanent Mortgages, thedue date of the first P&I payment of the permanentMortgage.

For Construction Conversion and Renovation Mortgagesusing Integrated Documentation, the Due Date of the firstprincipal and interest payment of the PermanentFinancing.

If you have difficulty identifying a Mortgage as one of the types mentioned above,

contact the Seller for additional information.

You must verify the six-digit Seller/Servicer number; this enables you to track theNotes properly through your tracking system, and to verify that you have aForm1035with that Seller/Servicer.
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In addition to the data elements in the table above, you must also verify thefollowing data elements for all ARMs.


Convertible (23) Indicates whether the ARM has a feature that allowsthe adjustable interest rate to convert to a fixed rate.If the ARM is a Convertible ARM, the option toconvert will be stated on the Note.

First rate adjustment date(14)

The First Change Date indicated on the Note.

Index Source (15) The source of the fluctuating economic indicatorspecified in the Note, the value of which is used toadjust the Note Rate periodically. SeeGuide Exhibit

30.

Index Lookback Days (16) The number of days between the Interest ChangeDate and the date the Index value is determined.Expressed in the Note as the number of days beforethe Interest Change Date.

For most ARMs, the number of days indicated inthe Note will be 45. For certain ARMs that have aFirst Business Day (FBD) of the monthimmediately preceding the month in which the

Interest Change Date occurs, the number of daysis 25.

Note margin (17) Percentage added to the Index value to determinethe new interest rate (Note Rate) on eachadjustment date. The mortgage margin is indicatedon the Note.

Interest Rate Rounded (18) The percentage to which the interest rate (NoteRate) will be rounded on each Interest Date. Thisamount will be .125% for all ARMs, unless anotherpercentage or calculation is authorized in thePurchase Documents.

1st Rate Adjustment maxrate (19)

The maximum interest rate (Note Rate) to which anARM may adjust at the First Change Date.Expressed as a percentage in the Note (may needto be calculated).
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1st Rate Adjustment minrate (20)

The minimum interest rate (Note Rate) to which anARM may adjust at the First Change Date.Expressed as a percentage in the Note (may need

to be calculated).

Periodic Interest Rate Cap(21)

The maximum increase or decrease in the interestrate (Note Rate) on any Interest Change Date afterthe first Interest Change Date. Expressed as apercentage in the Note.

Life-of-loan max rate (22) The maximum interest rate (Note Rate) to which anARM may adjust over the life of the loan. Expressedas a percentage in the Note.

As announced in Bulletin 2012-3, the Freddie Mac selling system (sellingsystem) transition period (i.e., the period during which the selling system will beupdated with the new Uniform Loan Delivery Dataset (ULDD)-named fields andlayout) will begin on April 23, 2012. As a result of the transition to ULDD namedfields, effective for Adjustable-rate Mortgages (ARMs) with Settlement Dates on orafter April 23, 2012, Document Custodians that certify ARMs against the legacyForm 1034A should disregard reviewing the fields identified as the 1st Adj Maxand 1st Adj Min, respectively.

If you discover discrepancies between any of the data elements in the sellingsystem and the Note or other documentation issues for a given Mortgage, you

must not certify it. You must enter the data discrepancy in the selling system or, ifyou and the Seller agree, you may use an alternate method to reportdiscrepancies, even though references through this chapter direct you to enterthe discrepancy in the selling system.

If you have proposed changes, the Seller may receive an email notice, or theSeller may monitor outstanding certification issues through the selling system.The Seller may accept or reject the proposed changes. If the Seller

Accepts all proposed changes and there are no document discrepanciesoutstanding, the Note will be automatically certified. You need not performany further action to complete the certification.

Rejects any of the proposed changes or documentation discrepancies,you must work with the Seller to resolve the issues.


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Issue Resolution

Borrower Name in theselling system differs fromNote

Enter the discrepancy in the selling system. TheSeller must send you evidence of a name change ora Name Affidavit.

See Borrowers Signature section on pages 11-13for further information concerning allowablevariances.

Note data elements do notagree with the data in theselling system.

Enter the proposed changes to the data in theselling system. The Seller must either:

Accept your changes, in which case nofurther action on your part is necessary; or

Reject your changes. You may not certify theNote unless the Seller provides you withcorrected documentation.

Changes on Note; white-outs and cross-outs arenot initialed by Borrowers.

Enter the discrepancy in the selling system andreturn Note to the Seller to have the Borrower initialall changes.

Changes to Freddie Mac loan number, closinglocation, typed name under signature and Zip Codedo not require Borrowers initials.

Freddie Mac loan numberis changed on the Note.

No action is required, provided that the Freddie Macloan number that appears on the Note matches theFreddie Mac loan number in the selling system.

FHA case number ischanged or incorrect onthe Note.

No action required. This is not a certified field.

Seller reports experiencinga fail after you havecertified the Note.

Fails may occur for a number of reasons notrelated to certification. Refer the Seller to 800-FREDDIE.

Refer to Section 2 of theCertifying Mortgages for Freddie Macmanual for the

process for entering proposed data changes(http://www.freddiemac.com/learn/pdfs/deliver/ss_certmort.pdf ).
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Note Verification

The Note must be original and complete. Freddie Mac will not accept Notesmarked as duplicate original, corrected copy, or similar, even if there isan original signature, or if the words duplicate original or corrected copy arecrossed through with or without initials. Please contact Freddie Mac immediately

if you receive such a Note.

A Sellers Purchase Documents may permit certain variances from requirements,such as original Notes or Uniform Instruments. You must receive a copy of therelevant portion of the Sellers Purchase Documents that waive or supplementour standard Guide requirements before you may certify the Note.

Borrowers Signature

You must verify that the signature on the Note for each Borrower is an originalink signature. Signatures in pencil are not acceptable. Stamped or other non-traditional methods of signing may be acceptable in certain circumstances, such

as the Borrowers physical impairment. In these cases, a Signature Affidavit orsupporting documentation, such as a court order, is required.

Borrower names may appear on the Note first name first or last name first if thelast name is followed by a comma. Such reversal of the first and last names onthe Note may be certified, if there is no inconsistency between names identifiedin the delivery data.

There is no requirement that the Borrowers name be typed or printedunder the signature line of the Note. However, the name as signed must notconflict with a name typed or printed under the signature. If the Borrowers nameon the Note does not match the data in the selling system, it must be treated as

oversigned or undersigned as described below.If a Borrower initials one page of the Note, then those initials must appear onevery page except the signature page. While there is no requirement that theBorrower initial the Note, you may not certify a Note where some pages of theNote are initialed and others are not.

Oversigning or Undersigning Documents

Borrowers may oversign or undersign their names.

Oversigning occurs when something is included in the Borrowerssignature that does not appear in the typed or printed name on the Noteand/or in the selling system. Suffixes such as MD, PhD, Sr., Jr. arenot required to be certified, and may be considered oversigning.

Undersigning occurs when the Borrowers signature does not containelements such as a middle name or initial that is included in the typed orprinted name on the Note and/or in the selling system.

Oversigning and undersigning are acceptable and do not require a NameAffidavit or Signature Affidavit provided there is no conflict between the signedname and a typed or printed name on the Note and/or in the selling system.


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You may encounter the following situations:

Acceptable Unacceptable

Signature SignatureJohn Q. Public John Z. Public

Typed Name John Quincy Public Typed Name John Quincy Public

Signature is undersigned, but does not conflict with thetyped name.

Signature conflicts with typed name. This is acceptable only if asignature affidavit is provided showing that John Quincy Publicsigns documents as John Z. Public.


Signature SignatureJohn Public John Q. Public

Typed Name John Quincy Public Typed Name John Quincy Public, Trustee

Signature is undersigned, but does not conflict with thetyped name.

For a Borrower that is a living trust (may also be referred to as ainter vivos trust or revocable trust), the signatures of both thesettlor and the trustee must appear on the Note. See signatureby trustee below.


Signature SignatureJohn Quincy Public John Quinn Public

Typed Name John Q. Public Typed Name John Quincy Public

Signature is oversigned, but does not conflict with thetyped name.

Signature conflicts with typed name. This is acceptable only if aSignature Affidavit is provided showing that John Quincy Publicsigns documents as John Quinn Public.

Illegible Signature and Signature Contradictions

A signature affidavit or name affidavit is a notarized document that is requiredwhen the Borrowers signature contradicts or is not consistent with a typed orprinted name below the signature line on the Note or in the selling system. We

prefer an original affidavit; however, a copy is acceptable.

If a signature affidavit is used, the signature on the affidavit must closelyresemble the signature on the Note.

A Borrowers illegible signature is acceptable if the typed or printed name on theNote and the Borrowers name in the selling system match.

When the Borrowers signature is illegible and there is no typed or printed nameon the Note, enter this as a document discrepancy in the selling system. You willneed to obtain copies of other legal documents, such as the name affidavit orsignature affidavit that contain the Borrower name and signature, to compare. Ifthey closely resemble each other, the signature is acceptable.


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Power of Attorney

If the Note is executed on behalf of the Borrower by an attorney-in-fact pursuantto a Power of Attorney (POA), it must be clear that the Note has been signed byan attorney-in-fact. You must verify that the POA is dated on or before the NoteDate.

The Seller must deliver the original notarized POA. The Document Custodian isnot expected to review the content of the POA. SeeGuide Section 16.5foradditional information.

A general POA may be used by the signatory to execute the Note if that ispermitted under the law of the State in which the Mortgaged Premises is located.

Freddie Mac requires that a POA be notarized even if state law or local customsdo not.

Acceptable May be Acceptable

Signature

Typed NameJohn Quincy Public

Samuel Signatory,Attorney-in-Fact for John

Quincy Public

SignatureTyped Name John Quincy Public

Samuel Signatory

The signature indicates that Samuel Signatory isexecuting the document under a POA from John QuincyPublic.

The POA designating Samuel Signatory as John QuincyPublics Attorney-In-Fact for execution of Mortgagedocuments that is in effect on the date the documentswere signed must be received and attached to the Note.

This is not acceptable if the Note is received with no additionaldocumentation.

Seller must provide documentation to support Samuel Signatorysauthority to execute the Note on the Borrowers behalf.

This manner of signature is not a preferred methodof executing a document under a POA, since it is notclear why or under what authority Samuel Signatory

is executing the document.

Freddie Mac will accept a POA that is notarized by a military officer if thenotarization is made pursuant to the Servicemembers Civil Relief Act 506(b),which permits a service member during a period of military service to make anaffidavit before any superior commissioned officer. See alsoGuide Section82.1.

If the original POA is missing:

A copy is acceptable if the original POA has been sent to the recordersoffice or the copy contains recordation information.

You must notify the Seller/Servicer if the original POA is missing for Notesin a Subsequent Transfer of Servicing.

See GuideSection 16.5.
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Uniform Instruments

The Guide requires that all Notes be executed on the Uniform Instruments (1-4Family) for the jurisdiction where the Mortgaged Premises are located. FreddieMac does not expect Document Custodians to conduct further verificationregarding the printed or standard text of the Note if the agency tagline indicating

a Uniform Instrument is present. SeeGuide Section 6.7; the Forms are listed inExhibit 4Single-Family Uniform Instruments, and atwww.FreddieMac.com/uniform.

The following apply to ensure that the Note(s) meet the Uniform Instrumentsrequirement.

The agency identifier tagline must appear on each page of the Note; aNote without the agency tagline will be considered non-standard.

Unless specified in the Purchase Documents, the Document Custodianmay not certify a Note that is not executed on a Uniform Instrument. TheSeller must be contacted and the Note returned.

Sellers may reprint Uniform Instruments on their own letterhead, bycomputer, or otherwise as they choose. However, the text of the UniformInstruments must remain unchanged and the tagline identifying theinstrument as a Uniform Instrument must remain a part of the documenteither Fannie Mae/Freddie Mac, Freddie Mac or Fannie Mae.

We do not object to supplemental

Form numbers do not change when Guide Exhibit 4 is updated.

tag line information by forms companiesor the lender; however, the original verbiage in the tag line of the UniformInstrument may not be changed.

As new generations of instruments are developed, and electronic formatreplaces hard copy forms, Freddie Mac may explore new methods ofdenoting legally required changes in the Uniform Instrument form number.

The Spanish translations of certain Uniform Instruments that are available onFreddie Mac's website are for borrower education and reference only and are notacceptable as original, signed mortgage documents. They may be found athttp://www.freddiemac.com/uniform/spanish.html .

Lost Note Affidavits

In certain instances, you may receive a Lost Note Affidavit (LNA) instead of the

original Note. If the LNA meets these requirements, you may verify loan data onthe Note copy attached to the LNA. The LNA must be placed in the Note file inlieu of the Note.

The LNA must be an original, signed in ink by an officer of the Seller.

The LNA must be notarized.

The LNA must be addressed to Freddie Mac. If you receive an LNAaddressed otherwise, contact Freddie Mac (see Directory 9).
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The LNA must include:

o The name of each Borrower on the Note,

o The original principal amount of the Note, and

o The Note Date.

A complete copy of the entire missing Note must be attached to the LNA,including all required signatures and endorsements complete to the Seller.

The Seller must provide you with evidence that Freddie Mac has approveddelivery of an LNA. This may include a copy of the portion of the PurchaseDocuments between Freddie Mac and the Seller that identifies specificMortgages. If there is a specific mortgage list, the Document Custodianmust ensure that each LNA received is included on that list. If the Sellersubmits other written documentation, it must indicate that Freddie Mac hasapproved the LNAs and list the affected Mortgages.

If the LNA meets these requirements, you must verify the loan data from the Note

copy attached to the LNA. The LNA and Note copy must be filed in the Note filein lieu of the Note.

If the copy of the Note does not include the complete endorsement chain,the LNA must contain a statement to the effect that the photocopy of theNote was made in the ordinary course of business prior to the Notesendorsement. Original endorsements on the Note copy are not acceptable.

If, after Freddie Mac purchases a Mortgage with a LNA, the Servicer recovers theoriginal Note, the Servicer should deliver it to you together with a signed "FoundNote Certification" form (See Appendix C) that identifies the related Mortgageand contains certain representations relating to the original Note. You must

review the Note to verify that it is an original document that matches the copy ofthe note attached to the LNA: if it is, you should place the original Note in theMortgage file, execute the Found Note Certification form where indicated andreturn the form, together with the complete LNA, to the Servicer. The Servicer willthen contact Freddie Mac, and your duties and responsibilities with respect to theoriginal Note are the same as if it had been delivered to you prior to FreddieMac's purchase of the related Mortgage. If the Servicer is unfamiliar with thisprocess, please instruct them to contact Freddie Mac (Section 9) directly.

Endorsements

When a Note is sold to Freddie Mac, the Seller must endorse the Note in blankPay to the order of ., Please contact Freddie Mac if you receive anendorsement in another form or with alternate language. While you may certifya Note endorsed Payable to , we will ask the Seller to change their practicefor the future. The following must be clearly typed or printed:

The name of the institution making the endorsement (Seller-endorser)

The name