Learning Center Glossary

• The borrower has voluntarily and intentionally relinquished ownership, claim, and control, or
• As otherwise defined under local laws.

• Net yield
• Alternative
• Scheduled/Scheduled
• Guaranteed timely principal and interest

The amount of principal and interest reported and remitted for mortgage activity is determined by the contract-specified accounting method selected at the time the mortgage was sold to Freddie Mac.

• The Servicer's directors, officers, employees and controlling persons
• Spouses of the Servicer's directors, officers and controlling persons
• Members of the immediate family of the Servicer's directors, officers and controlling persons who have the same home as such persons or who are directors or officers of any subsidiary or holding company affiliate of the Servicer
• Corporations or organizations (other than the Servicer or a corporation or organization through which the Servicer operates) of which a director, officer or controlling person of the Servicer is an officer or partner or is, directly or indirectly, either alone or with his or her spouse, the owner of 10% or more of any class of equity securities or the owner with other directors, officers and controlling persons of the Servicer and their spouses of 25% or more of any class of equity securities
• Trusts or other estates in which a director, officer or controlling person of the Servicer or the spouse of such person has a substantial beneficial interest or for which such person or spouse serves as trustee or in a similar fiduciary capacity

• Members of the board of directors
• Chief executive officer
• Chief operating officer
• Vice presidents in charge of principal business functions (such as sales, administration or finance), and other persons who perform similar policy-making functions
• Persons without formal titles also may be members of management

• Entities for which investments are accounted for by the equity method by the enterprise; trusts for the benefit of employees, such as pension and profit-sharing trust that are managed by or under the trusteeship of management
• Principal owners of the enterprise; its management, members of the immediate families of principal owners of the enterprise and its management, and other parties with which the enterprise may deal if one party controls or can significantly influence the management or operating policies of the other, to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests
• Any party that can significantly influence the management or operating policies of the transacting parties or that has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests

AFFORDABLE SECOND
The Guide glossary
Subsidized secondary financing or other financial assistance, evidenced in the land records, that is provided by An Agency and that meets the requirements of Section 25.1(g):

An Affordable Second is not eligible for sale to Freddie Mac.

An agency must be one of the following:

• A municipality which includes any duly authorized authority or agency of the federal, State, local, or municipal government
• A nonprofit community or religious organization, other than a credit union
• The Borrower's employer, or
• A regional Federal Home Loan Bank under one of its affordable housing programs

• Calculate interest based on the last reported ending Unpaid Principal Balance (UPB) and the Accounting Net Yield (ANY). The ANY equals the note rate less the servicing fee.
• Report and remit the interest only if you receive it from the borrower.
• Report and remit the actual principal collected from the borrower during the accounting cycle (16^th - 15^th).

• Has a Risk Class of Caution,
• Has assessment results of eligible for A-minus, and
• Meets the requirements of Chapter C33

AMOUNT EXISTING LIENS
Loan Prospector^®
Outstanding balance of the mortgage(s) to be paid off by this loan, including second trusts and Home Equity Lines of Credit, recorded against the subject property to be paid off by this loan.

For example, if the borrower's current first mortgage has an unpaid principal balance of $90,000, and the current second mortgage on the same property has an unpaid principal balance of $10,000, the amount existing liens would = 100,000.

• A municipality which includes any duly authorized authority or agency of the federal, State, local or municipal government
• A nonprofit community or religious organization, other than a credit union
• The Borrower's employer, or
• A regional Federal Home Loan Bank under one of its affordable housing programs

ARM QUALIFYING PITI
Loan Prospector ^®
For Adjustable Rate Mortgage (ARM) products, this is the principal, interest, taxes and insurance (PITI) based on the interest rate that must be used for qualifying the borrower per the ARM calculation rules as indicated in the product guidelines.

AVERAGE NUMBER OF DAYS TO REPORT PAYOFFS
Servicing: Servicer Performance Profiles
For Servicer Performance Profiles, a metric that calculates the average number of days in which a Servicer reports all of the payoffs per accounting cycle.

BALLOON MATURITY DATE
The Guide glossary
For a Balloon/Reset Mortgage, the Balloon Maturity Date is the maturity date of the Balloon Note.

• The Balloon Maturity Date for a 5-year Balloon/Reset Mortgage is the date that is 59 months after the scheduled Due Date of the first monthly principal and interest payment.
• The Balloon Maturity Date for a 7-year Balloon/Reset Mortgage is the date that is 83 months after the scheduled Due Date of the first monthly principal and interest payment.

BALLOON/RESET MORTGAGE
The Guide glossary
A Balloon/Reset Mortgage is a fixed-rate, level-payment Home Mortgage with the following characteristics:

• The monthly principal and interest payment is based on an amortization schedule calculated to pay the original principal balance in full in 360 months.
• The unpaid principal balance (UPB) of the Balloon Note is due as a lump sum on the Balloon Maturity Date.
• The Borrower has a Reset Option at the Balloon Maturity Date.

The term "Balloon/Reset Mortgage," as used in this Guide, refers to both

• A Balloon/Reset Mortgage that has a Balloon Note with an original term of five years ("5-year Balloon/Reset Mortgage")
• A Balloon/Reset Mortgage that has a Balloon Note with an original term of seven years ("7-year Balloon/Reset Mortgage")

BANKRUPTCY
Servicing: Default Management
A judicial proceeding whereby a person’s creditors are allowed to have his or her estate administered for their benefit. This action affects the borrower’s personal liability for the debt, but does not affect the lien or the mortgage.

BOOK-ENTRY FORM
The Guide glossary
A PC or Giant PC that is issued in Book-Entry Form is:

• Issued by means of an entry on the books and records of a Federal Reserve Bank. The entry includes the name of the security investor, the original principal balance owned by the security investor, the CUSIP Number, the PC Coupon, the PC Pool Number and the security description code. The security description code is a four-character code used by the Federal Reserve Bank book-entry system to describe the issuer and the type of security.
• Evidenced only by that entry and not by a certificated security

BOOK-ENTRY RULES
The Guide glossary
The Book-Entry Rules are provisions in effect from time to time that:

• Set forth the terms and conditions under which Freddie Mac may issue PCs and Giant PCs in Book-Entry Form
• Authorize the Federal Reserve Banks to act as Freddie Mac's agents in connection with PCs and GIant PCs issued by entries on the books and records of Federal Reserve Banks

These rules are contained in Title 1, Part 462 of the Code of Federal Regulations.

BORROWER
The Guide glossary
The Borrower is the party obligated to repay the indebtedness secured by the Mortgaged Premises.

For a Home Mortgage, the Borrower must be one of the following:

• An individual or individuals (not a corporation or partnership)
• A living trust, subject to the conditions in Section 22.10(a) and 22.10(b)
• An Illinois land trust, subject to the conditions in Section 22.10(a)

BORROWER INTENTION/REQUEST STATEMENT
Servicing: Balloon/Resets
The sample statement designed by Freddie Mac for a Servicer to use with a Required Notice to a Borrower whose Balloon/Reset Mortgage is maturing. The statement is used to help determine if the Borrower:

• Will be paying off the Balloon/Reset Mortgage at maturity
• Elects to exercise the Reset Option
• Wants to Reset, but does not meet one or more of the Reset Conditions

BRANCH NUMBER
Loan Prospector^®
The lenders' branch identification code for the branch associated with the loan.

Loan Prospector AUS does not validate. Change this field if you assign to a different Seller/MSP requiring a different branch number.

BROKER/TPO NUMBER
Loan Prospector^®
Freddie Mac-assigned Third-Party Originator (TPO) number for TPOs (e.g., brokers) accessing Loan Prospector^® directly.

BUSINESS DAY
The Guide glossary
A Business Day is a day other than:

• A Saturday or Sunday
• A day on which the Federal Reserve Bank of New York (or other agent acting as Freddie Mac's fiscal agent) is authorized or obligated by law or executive order to remain closed
• A day on which the offices of Freddie Mac are closed

In the Guide, the word "day" without the modifier "business" refers to a calendar day.

CASH (or Market Value)
Loan Prospector^®
The dollar amount of the cash or market value of the borrower's applicable asset type.

The market value is the price at which an asset is transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent facts and neither being under any compulsion to buy or sell. Market value and cash value tend to be equal.

CASH MANAGEMENT
Servicing: Investor Accounting
The process of:

• Collecting borrowers’ payments
• Posting payments, reversals and adjustments to borrowers’ loan histories
• Depositing borrowers’ payments into the appropriate accounts (i.e., custodial, principal and interest, and escrow accounts)

CASH MANAGEMENT REPORTS
Servicing: Investor Accounting
Outputs of the cash management process that help you when completing your custodial account reconciliation process, including the following:

• Loan History
• Daily Collections Report
• Bank Statement

CASH OUT AMOUNT
Loan Prospector^®
For a cash-out refinance mortgage, the amount of the proceeds that:

• Exceeds the total of the money needed to repay the existing first mortgage, closing cost, financing cost, prepaid items, and
• Allows for a cash disbursement to the borrower (or any other payee) exceeding 2% of the new loan amount or $2,000, whichever is less, or
• Satisfies any outstanding junior liens where their entirety was not used to acquire the subject property, or
• A mortgage placed on a property previously owned free and clear by the borrower is always considered a cash-out refinance mortgage

CASH PURCHASE CONTRACT
The Guide glossary
A Cash Purchase Contract may be any one of the following Purchase Contracts:

• Form 1, Fixed-Rate Mortgage Purchase Contract Confirmation (RNY Cash)
• Form 2, Adjustable-Rate Mortgage Purchase Contract Confirmation
• Form 9, Fixed-Rate Mortgage Purchase Contract Confirmation (Gold Cash®)
• Mandatory Cash Contract
• Best Efforts Contract
• WAC ARM Cash Contract

CASH RECEIPT
Servicing: Investor Accounting
Any transaction that increases your bank balance, and may include:

• Collections
• Deposits
• Bank credits
• Journal entries

Most cash receipts will be for amounts collected in the payment processing area (i.e., borrower payments and payoff proceeds). Cash receipts should have a specific transaction type or designation on your bank statement to make them readily identifiable.

CASH STATEMENT (or the Seller/Servicer Remittance Analysis)
Servicing: Investor Accounting
A summary report Freddie Mac sends you that can help you manage and monitor your remittance process. The report summarizes:

• Daily remittances via Global Payments, Inc. (GPI) and the dates your remittances are available to us
• Total amounts due based on what we process for your loan level transactions and any adjustments
• Beginning and ending cumulative balances, and your cumulative overage/shortage balance
  

CONSTRUCTION CONVERSION MORTGAGE
The Guide glossary

A Mortgage, the proceeds from which are used for Permanent Financing that replaces the Interim Construction Financing obtained by the Borrower to:

• Purchase or refinance, as applicable, the land on which the site-built home or Manufactured Home will be constructed or affixed, and
• Construct a new site-built home, or
• Purchase and permanently affix to the site and convert to real property, a new Manufactured Home.

CONTAMINATED SITES
The Guide glossary
A Contaminated Site is any real property that has been identified:

• By any federal, State or local government entity as containing one or more Hazardous Substances, or
• In any media report as possibly being subject to investigation or review by any federal, State or local government entity as a source of contamination by one or more Hazardous Substances

CONTRACT
See Purchase Contract.

CONTRACT COMMITMENT AMOUNT
The Guide glossary
For the Guarantor and MultiLender Swap programs, the Contract Commitment Amount is the dollar amount of Mortgages that Freddie Mac agrees to purchase, as specified on Form 3, Summary Agreement (Guarantor Program); Form 5, Summary Agreement (MultiLender Swap); or in a Master Commitment Contract:

• For whole loans, the Contract Commitment Amount is the aggregate unpaid principal balance (UPB) of the Mortgages.
• For participation loans, the Contract Commitment Amount is the aggregate UPB of the Mortgages multiplied by Freddie Mac's Percentage of Participation.

The Seller's obligation to sell the Contract Commitment Amount is mandatory or optional.

CONTRACT NON-COMPLIANCE FEE or CHANGE FEE
Servicing: Investor Accounting
An amount Freddie Mac assesses based on the following circumstances:

(a) $100 per mortgage per occurrence when you request us to:

1. Perform database changes to correct your error
2. Produce reports to reconstruct your records
3. Process the database changes necessary to complete an approved waiver to the Guide or contract terms

If Freddie Mac processes the same contract noncompliance change for 100 or more loans in your portfolio, we will limit your fee for the particular occurrence to $10,000. We exempt mortgages included in a Subsequent Transfer of Servicing from contract noncompliance fee for 90 days following the effective date of the transfer to allow you time to complete your due diligence efforts.

(b) $100 per mortgage or transaction up to $10,000 maximum per occurrence if:

1. You fail to report a disposition code on a Balloon/Reset Mortgage by 4:30pm EST on the 44th day prior to the Balloon Maturity Date. If the 44th day prior to the Balloon Maturity Date is a non-Business Day, then the disposition codes are due the next Business Day, or
2. Form 1034b, Custodial Certification Schedule (and the unrecorded Balloon Loan Modification, Form 3293, if you use Freddie Mac's Document Custodial Services (DCS) as your note holder) is received by DCS later than 10 calendar days after the Balloon Maturity Date.

If the 11th calendar day is a non-Business Day, then the documents must be received by DCS the last Business Day prior to the 11th calendar day, or Form 1034b, Custodial Certification Schedule (and the unrecorded Balloon Loan Modification, Form 3293, if you use Freddie Mac's Document Custodial Services (DCS) as your note holder) is not received and certified by DCS by the second Business Day prior to the accounting cycle cutoff in the month following the Balloon Maturity Date.

CONVERTIBLE ARM
The Guide glossary
A Convertible ARM is an adjustable-rate Mortgage (ARM) as to which the Borrower has the option, exercisable during a Conversion Window, to convert the adjustable interest rate to a fixed interest rate pursuant to a Conversion Formula.

CORPORATION
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A legally defined form of business ownership. The business entity is owned by a group of stockholders who share in the profits but may or may not share in the liabilities. A corporation is legally defined as a person and must file corporate tax returns.

CREDIT/CONSTRUCTION/SETTLEMENT PERIOD
The Guide Glossary
The 18-month period beginning with the oldest date of the Borrower's credit, capacity or collateral documents and ending with the Settlement Date for sales under the Freddie Mac Selling System (Selling System), or the Delivery Date for sales under MIDANET; during which time:

• The Seller must process and underwrite the Mortgage, and
• The construction or renovation of a site-built home, or the installation and conversion to real property of a Manufactured Home, must be completed, and
• The Mortgage must be sold to Freddie Mac.
  

CREDIT SCORE
The Guide glossary
A number summarizing an individual's credit profile that indicates the likelihood that a Borrower will repay future obligations.

• Principal and Interest Custodial Accounts
• Principal and Interest Disbursement Clearing Custodial Accounts
• Escrow Custodial Accounts
• Buydown Custodial Accounts

DAILY RESPONSE REPORT
Servicing: Balloon/Resets
A report that Freddie Mac transmits to you via MIDANET for the PC®. The report is issued when

• Your request for a rate lock for a Reset request is denied because one or more of our system edits was triggered
• We approve a Reset request through the Freddie Mac review path
• We advise you to consider a Borrower for a workout option or to foreclose on a Balloon/Reset Mortgage
• We have identified a Mortgage as having an imminent danger of default.

DATE & TIME (Assigned, Assessed or Requested)
Loan Prospector^®
The date and time the following action occurred:

• Assigned - date and time the loan was assigned.
• Assessed - date and time the loan was assessed by Loan Prospector^®.
• Requested - date and time the loan was received by Loan Prospector^®.

DATE OF SELLER'S OFFER
The Guide glossary
The Date of Seller's Offer is the date the Seller telephones Freddie Mac offering to sell Mortgages to Freddie Mac. Freddie Mac will insert this date on the Purchase Contract in the applicable space for each offer Freddie Mac accepts. For example, for the Guarantor program, the Date of Seller's Offer is the date specified as such on Form 3, Summary Agreement (Guarantor Program). For the MultiLender Swap program, the Date of Seller's Offer is the date specified as such on Form 5, Summary Agreement (MultiLender Swap).

DEED OF TRUST
Servicing: Default Management
A type of security instrument in which the borrower conveys a trust to hold property to a third party (trustee) as security for the lender, with the condition that the trustee will reconvey the title upon payment of the debt and conversely, will sell the property and pay the debt in the event of a default by the owner.

DEFECT RATE
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The portion of mortgages from an entire portfolio that are not of investment quality and would not meet the requirements of the Seller, investor or mortgage insurer. When referring to Freddie Mac, this rate would be the proportion of mortgages which we would require to be repurchased due to contract violations.

DEFICIENCY
Servicing: Default Management
The difference between the balance outstanding on a loan and proceeds from the foreclosure sale of the property.

DELINQUENCY
The Guide glossary
Delinquency occurs when all or part of the Borrower's monthly installment of principal, interest and, where applicable, Escrow is unpaid after the due date.

DELIVERY DATE
The Guide glossary
With respect to the sale of Mortgages to Freddie Mac, "Delivery Date" means the date when all of the following have been completed:

• The delivery to, and acceptance by, Freddie Mac of all loan data and other information and documentation required by the Purchase Documents to Freddie Mac, and
• The delivery and certification of the Notes and delivery of all other required documentation to Freddie Mac or a Custodian approved by Freddie Mac, as applicable, and
• Freddie Mac has taken possession of all documentation required for submission to Freddie Mac.

DETAILED ADJUSTMENT REPORT
Servicing: Investor Accounting
Examples of other billings: RTC minority principal interest billings; SCRA; chargeoffs. You will not receive this report if you did not incur adjustments or other billings this accounting cycle.

DISCREPANCY
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The state when information in a file or set of documents does not show internal consistency or some information is lacking.

DOCUMENT PREPARATION
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The process of creating documents that will be used to legally transfer title and/or perfect a lien position.

DOCUMENTATION LEVEL
Loan Prospector^®
The category listed on the Full Feedback Certificate that defines the minimum level of documentation that must be obtained for the mortgage. Documentation Levels are:

• Streamlined Accept (Conventional loans)
• Standard Accept (Conventional loans)
• Accept (FHA and VA loans)
• Refer (FHA and VA loans)

DOCUMENTATION LEVEL
The Guide glossary
The Documentation Level shown on the Feedback Certificate indicates the minimum level of documentation acceptable for a Loan Prospector^® Mortgage.

DUE DATE
The Guide glossary
The Due Date is the date on which the Borrower's monthly installment of principal, interest and where applicable, Escrow, is due as stated in the Note. For Initial Interest^SM Mortgages during the Interest Only Period, it is the date on which the Borrower's monthly installment of interest and where applicable, Escrow, is due.

DUE DATE OF LAST PAID INSTALLMENT (DDLPI)
The Guide glossary
The Due Date of Last Paid Installment (DDLPI) is the Due Date of the last fully paid monthly installment of principal, interest and Escrow (if any) (not the date on which such payment was credited or the date of the next scheduled installment).

DUE-DILIGENCE REVIEW
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A type of review in which the quality of a mortgage portfolio is assessed.

DUE-ON-SALE CLAUSE
Servicing: Default Management
A type of acceleration clause calling for a debt under a mortgage or deed of trust to be due in its entirety upon an unauthorized transfer of ownership of the security property.

Newly Built Home Mortgages

Construction Conversion and Renovation Mortgages

EFFECTIVE DATE OF TRANSFER
The Guide glossary
For a Concurrent Transfer of Servicing, the Effective Date of Transfer is the applicable Funding Date or Settlement Date.

For a Subsequent Transfer of Servicing, the Effective Date of Transfer is the requested transfer date set forth on Form 981, Agreement for Subsequent Transfer of Servicing of Single-Family Mortgages, unless the Transferor and Transferee are otherwise advised by Freddie Mac. This date must be the first Business Day following the cutoff date for a Freddie Mac accounting cycle.

ERRORS AND OMISSIONS INSURANCE (E&O INSURANCE)
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A liability insurance coverage for loss caused by errors, omissions and negligence committed by persons covered by the policy in the usual activities of a lender. Fraudulent behavior is not included.

ESCROW AGENTS
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The person or organization having a fiduciary responsibility to both the buyer and property seller (or lender and borrower) to see that the terms of the purchase/sale (or mortgage) are carried out. Also called escrow company or escrow depository.

• The project (all units and Common Elements owned by any Master Association) is fully completed and not subject to any additional phasing or additions, and
• At least 90 percent of the total units in the project have been conveyed to the unit purchasers other than the developer, and
• The unit owners control the homeowners association.

• The buydown plan extends for more than two years after the first scheduled payment date, or
• The effective interest rate during the buydown period is more than two percentage points below the Note Rate of the Mortgage regardless of the duration of the buydown period.

• Key Number (Loan Prospector AUS Key Number)
• Transaction Number (AUS Transaction Number)
• Borrower, property and loan information
• Transaction processing issues
• Risk Class/Classification
• Documentation Level/Classification
• Minimum Assessment Feedback (MAF)
• Mortgage insurance decision
• Purchase restrictions
• Waiver and warrant messages
• Processing messages

• Late reported payoff noncompliance
• Late remittance interest reimbursement
• Contract noncompliance and contract change

FIDELITY INSURANCE
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A liability insurance coverage for loss caused by dishonest or fraudulent acts committed by persons covered by the policy.

• The loan data and applicable documentation required by the Selling System must be provided to Freddie Mac
• All of the purchase edits and allocation errors identified by the Selling System with respect to the Mortgages must be resolved in accordance with Freddie Mac requirements
• The Notes for all Mortgages in the applicable Contract must be delivered to and certified by the Document Custodian
• Seller must provide wire transfer instructions in the Selling System that account for the entire UPB associated with the Contract
• And, for Mortgages allocated to a contract that are pledged to a Warehouse Lender, either the Seller or the Warehouse Lender must submit a complete and fully executed Form 996E, Release of Warehouse Lender Security Interest, to Freddie Mac in accordance with the requirements of Section 19.4 (Cash) and 19.5 (Guarantor or MultiLender Swap), as applicable.

All of the foregoing must be completed by 8:00 p.m. Eastern time on the Final Delivery Date. The Final Delivery Date shall be the Business Day immediately preceding the date that the selected Settlement Cycle begins.

See Section B15.11, C15.11 or D15.11 regarding additional instructions and requirements for wire transfer instructions and delivery of the Form 996E, Warehouse Lender Release of Security Interest (available only through the Selling System), when applicable.

The Final Delivery Date is also referred to as the Final Delivery Due Date in the Selling System, and the two terms can be used interchangeably.

• The lien is acceptable to private institutional first-mortgage investors in the area where the Mortgaged Premises are located.
• The lien grants to the lienholder a claim against the property that, under the law of the jurisdiction where the Mortgaged Premises are located, is prior to the rights of all others, subject only to prior liens and encumbrances expressly waived by Freddie Mac pursuant to Section 39.4.

• Mortgages that originate in April have the first payment due on June 1.
• Mortgages that originate in May have the first payment due on July 1. 

• Is purchasing the Mortgaged Premises
• Will reside in the Mortgaged Premises
• Had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the Mortgaged Premises

FORECLOSURE
Servicing: Default Management
A legal procedure in which collateral property is sold in an attempt to satisfy the outstanding debt of a mortgage.

FRAUD
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Intentional misrepresentation of the truth to deceive another person or entity.

FUNDING DETAIL REPORT
Servicing: Investor Accounting
A loan-level backup record of the purchase summaries. For each sale you receive one or more Funding Detail report(s).

GIANT PC OFFERING CIRCULAR
The Guide glossary
The Giant PC Offering Circular is the offering circular in effect on the Date of Seller's Offer that relates to the Mortgage being purchased and the Giant PC being sold in the MultiLender Swap. The Giant PC Offering Circular is the Offering Circular for Giant and other Other Pass-Through Certificates.

Each Giant PC Offering Circular incorporates any supplements to that offering circular, as well as supplements to the PC Offering Circular for each underlying PC, in effect on the Date of Seller's Offer.

GUARANTEED TIMELY PRINCIPAL AND INTEREST ACCOUNTING METHOD
Servicing: Investor Accounting
An accounting method where remittances are due either on the ARC day specified in the purchase contract, or on the First Tuesday of the month. Interest and principal is calculated the same using either the Scheduled/Scheduled or the Guaranteed Timely P& I method.

• Calculate interest in arrears based on the ending Unpaid Principal Balance (UPB) last reported and the Accounting Net Yield (ANY). The ANY equals the note rate less the servicing fee.
• Report and remit the scheduled interest and principal regardless of what you receive from the borrower.The only reporting difference between these methods is the scheduled/scheduled loans can be inactivated and Guaranteed Timely Principal and Interest loans cannot.

HAZARD DISTRESSED BPO
The Guide glossary
A Hazard Distressed BPO is conducted to determine the value of a damaged property.

HOME POSSIBLE® MORTGAGE
The Guide glossary
A Mortgage that offers underserved qualified Borrowers flexible underwriting, low downpayment options, expanded loan-to-value (LTV) and total loan-to-value (TLTV) ratios, and other special underwriting features. Home Possible Mortgages must be originated in accordance with Chapter A34.

• A Home Possible^SM 97 Mortgage is a Home Possible Mortgage that requires a minimum downpayment of 3%.
• A Home Possible^SM 3% Cash Mortgage is a Home Possible Mortgage that requires a minimum downpayment of 3% from Borrower Personal Funds for a purchase transaction Mortgage or 3% from Equity and/or Borrower Personal Funds for a "no cash-out" refinance transaction.

HOME POSSIBLE NEIGHBORHOOD SOLUTION® MORTGAGE
The Guide glossary
A Home Possible Mortgage that:

• Is originated to a Borrower who is a teacher, school administrator, law enforcement officer, fire fighter or health care worker (as described in Section A34.7(c)
• Has special underwriting flexibilities described in Sections A34.5, A34.9(d) and A34.10(b) and
• Meets the requirements for a Home Possible Neighborhood Solution Mortgage in Chapter A34

A Home Possible Neighborhood Solution^SM 97 Mortgage is a Home Possible Neighborhood Solution Mortgage that requires a minimum downpayment of 3%.

A Home Possible Neighborhood Solution^SM 3% Cash Mortgage is a Home Possible Neighborhood Solution Mortgage that requires a minimum downpayment of 3% from Borrower Personal Funds for a purchase transaction Mortgage or 3% from Equity and/or Borrower Personal Funds for a "no cash-out" refinance transaction.

The infile credit report is not stored by Loan Prospector^® AUS. It is recommended that you print the infile credit report immediately after a credit assessment by selecting Credit Infiles from the results list. Then activate the screen for printing by clicking in the infile report area and selecting Print.

INTEREST RATE (Also Known As: Initial Interest Rate)
Loan Prospector^®
The initial interest rate payable under the note.

INTEREST RATE RANGE
Selling System
The number of days between the date you take out a cash contract and the date you must completely fulfill the contract including delivery of all documentation as well as funding. You may enter any 51 basis point range as long as the beginning and ending interest rates are divisible by one-eighth.

INTERIM CONSTRUCTION FINANCING
The Guide glossary
There is no Interim Construction Financing with Newly Built Home Mortgages.

For Construction Conversion Mortgages and Renovation Mortgages, Interim Construction Financing is the short term financing that provides the Borrower with funds to:

• Build a new site-built home,
• Purchase and permanently affix to the site and convert to real property, a new Manufactured Home,
• Repair, restore, rehabilitate or renovate an existing site-built home, and/or
• Purchase or refinance the land on which the improvements, including the new Manufactured Home, will be situated.

INTERVENING ASSIGNMENT
The Guide glossary
An Intervening Assignment is an assignment of a Security Instrument:

• That reflects a transfer(s) of a Mortgage's ownership prior to the time the Mortgage is sold by a Seller/Servicer to Freddie Mac
• From a Transferor to a Transferee in conjunction with a Concurrent Transfer of Servicing or a Subsequent Transfer of Servicing
• To or from MERS, in conjunction with a Mortgage being registered or deregistered in MERS

INVESTMENT PROPERTY
The Guide glossary
A 1- to 4-unit residential property, other than a Primary Residence or second home, that is:

• Owned by an individual, who is also a Borrower, and
• Suitable for year-round rental and occupancy

LATE REMITTANCE INTEREST REIMBURSEMENT FEE
Servicing: Investor Accounting
A fee assessed when you fail to comply with the required remittance procedures. If the remittance funds are not available to us by the remittance due date, we assess an interest reimbursement fee.

• The buydown plan extends for two years or less after the first scheduled payment date and
• The effective interest rate during the buydown period is two percentage points or less below the Note Rate of the Mortgage, regardless of the duration of the buydown period

LOAN LEVEL MISSING REPORT
Servicing: Investor Accounting
A report that lists mortgages you did not report to us this accounting cycle and mortgages with unresolved edits on the Edits To Be Cleared report. Once our system accepts a transaction for a mortgage, it drops off the report except for:

• 101 Invalid Freddie Mac loan number—stays on the Edits to be Cleared Report until our system has closed for the cycle
• 303 Partial Duplicate/Possible Correction—appears on the Edits to be Cleared Report the following business day only

“Zero (0) loans missing” message appears when you have no transactions for this report.

LOAN PRODUCT
The Guide glossary
For Mortgages sold through the Freddie Mac Selling System (Selling System), Loan Product means Mortgage Product as that term is defined in the Glossary.

LOAN-TO-VALUE RATIO (LTV)
Loan Prospector^®
The loan-to-value (LTV) ratio is obtained by dividing the First Lien Mortgage amount by the lesser of the property's purchase price or appraised value of the mortgaged premises. (First Lien Mortgage Amount / (the lesser of the Purchase Price or Appraised Value).

LOOKBACK PERIOD
Servicing: Investor Accounting
The number of calendar days you count back from the interest change date to determine the current index.

The Guide glossary
For adjustable-rate Mortgages (ARM), the Lookback Period is the date on which the Index value used to calculate the new Note Rate is determined. The Lookback Period is stated in the Note and is generally expressed as the number of days preceding the Interest Change Date or as the first Business Day of the month immediately preceding the Interest Change Date.

MANUALLY UNDERWRITTEN MORTGAGE
The Guide glossary
A Mortgage for which the Seller makes the determination regarding Borrower creditworthiness and excessive layering of risk that is one of the following:

• A Mortgage that was never submitted to Loan Prospector
• A Mortgage that was submitted to Loan Prospector and received an AUS status of invalid, ineligible or incomplete
• A Mortgage that was submitted to Loan Prospector and received a Risk Class of Caution and was not eligible for A-minus

MANUFACTURED HOME
The Guide glossary
A Manufactured Home is a one-unit dwelling built on a permanent chassis in accordance with the National Manufactured Construction and Safety Standards Act as promulgated by the Department of Housing and Urban Development (HUD) and affixed to a permanent foundation.

MANUFACTURED HOME PURCHASE AGREEMENT
The Guide glossary
An agreement between the Manufactured Home purchaser and the retailer or dealer from whom the Manufactured Home is purchased. The Manufactured Home Purchase Agreement must be either the manufactured housing purchase agreement required to be used under applicable State law or if none is required, the Jenkins Business Forms Manufactured Housing Form 500 or a State-specific Form 500 or a substantially equivalent form.

MASTER AGREEMENT
The Guide glossary
A Master Agreement is an agreement between Freddie Mac and the Seller providing the terms for origination, underwriting, delivery and any other relevant terms under which Freddie Mac will purchase eligible Mortgages over a fixed period of time. In order to obtain pricing terms and to sell eligible Mortgages to Freddie Mac, the Seller will also need to enter into one or more Master Commitment Contracts under the Master Agreement. Nothing contained in a Master Agreement shall obligate Freddie Mac to purchase or Seller to sell Mortgages until a Master Commitment Contract has been executed by the parties, if required by the terms of the Master Agreement, or if Freddie Mac has issued the Master Commitment Contract.

MASTER COMMITMENT CONTRACT
The Guide glossary
The Master Commitment Contract is an agreement between Freddie Mac and the Seller providing the terms under which Freddie Mac will purchase eligible Mortgages over a fixed period of time.

MAXIMUM MASTER AGREEMENT AMOUNT
The Guide glossary
The Maximum Master Agreement Amount is the total aggregate unpaid principal balance (UPB) of all Home Mortgages multiplied by the Freddie Mac Percentage of Participation, if any, that can be delivered under the terms of the Master Agreement.

MINIMUM ASSESSMENT FEEDBACK (MAF)
The Guide glossary
A type of feedback message included on the Feedback Certificate. MAF includes all messages that reference:

• Whether an appraisal or inspection is required
• The minimum level of inspection required, if any
• Whether the Property Inspection Alternative (PIA) is allowed
• Any other feedback messages that relate to the collateral for the Mortgage

MONTHLY ACCOUNT STATEMENT (MAS)
Servicing: Investor Accounting
A representation of the balance for your investor reporting system. The ending balance represents your liability due Freddie Mac as of the accounting cutoff. The MAS lists for the accounting cycle:

• Beginning and ending amounts due to us
• The total amount due for each transaction type
• Total remittances you made to us during the accounting cycle
• Adjustments we made to your account including other billings

MONTHLY INCOME
Loan Prospector^®
Total stable monthly income for the borrower that can reasonably be expected to continue for at least the next three years.

Stable monthly income includes the following:

• Primary employment base earnings
• Recognizable secondary income such as bonuses, commissions, overtime, part-time employment, or unemployment compensation

Self-employed income should be included in this field, or in the Monthly Income Breakdown fields, if considered for qualification purposes.

MONTHLY INTEREST
Servicing: Investor Accounting
One full month of interest calculated at the ANY, based on the current accounting cycle’s beginning UPB. It is due for all mortgages that were active at the beginning of the current accounting cycle.

MORTGAGE BROKER
The Guide glossary
A person or entity that specializes in loan originations, receiving a commission (from a Correspondent or other lender) to match Borrowers and lenders. The Mortgage Broker performs some or most of the loan processing functions such as taking loan applications, or ordering credit reports, appraisals and title reports. Typically the Mortgage Broker does not underwrite or service the loan and generally does not use its own funds for closing; however a Mortgage Broker could fund a Mortgage on a lender's behalf and such a Mortgage will be considered, and should be delivered as, a Mortgage Broker third party origination Mortgage. The Mortgage is generally closed in the name of the lender who commissioned the Mortgage Broker's services.

MORTGAGE SERVICE PROVIDER
The Guide glossary
An entity or individual engaged to handle or perform, for a Seller or Correspondent, part of the mortgage application processing, underwriting, funding or post closing functions, but not any activities related to obtaining an application for a wholesale origination. This entity or individual is typically paid on a fee basis for services performed, with the payment of fees not being contingent on Mortgage approval or closing. Mortgage Service Providers include:

• Contract underwriters
• Contract processing firms
• Contract quality control services
• Escrow companies and settlement agents
• Contract document preparation companies

MSP ASSIGNMENT
Loan Prospector^®
Assignor (always a Lender) selects a Mortgage Service Provider (MSP) to share "Modify" access on the loan data.

NEGATIVE ADJUSTMENTS
Servicing: Investor Accounting
Deducted (shown as negative) amounts that need to be withdrawn from the bank account, or that you are waiting for Freddie Mac to process a debit on the Monthly Account Statement. Following are examples of transactions that you would carry as a negative adjustment:

• Payments deposited for loans not sold to us
• Interest on new fundings due in future cycles, and not included on the prepaid report
• Amortization differences when your prepaids are greater than your delinquents from the prepaid report
• Servicing fees deposited into the custodial account
• Minority participation loans not owned by us

NET MARGIN
The Guide glossary
For adjustable-rate Mortgages (ARM), the Net Margin is the Margin minus the Minimum Contract Servicing Spread.

NET YIELD ACCOUNTING METHOD (also known as Scheduled/Actual)
Servicing: Investor Accounting
An accounting method used by most mortgages to:

• Calculate interest based on the last reported ending Unpaid Principal Balance (UPB) and the Accounting Net Yield (ANY). The ANY equals the note rate less the servicing fee.
• Report and remit one-month’s interest regardless of what you receive from the borrower.
• Report and remit the actual principal collected from the borrower during the accounting cycle (16th –15th)

NEW CONDOMINIUM PROJECT

A New Condominium Project is a Condominium Project in which:

• The project (all units and Common Elements including Common Elements owned by any Master Association) is not fully completed, or is subject to additional phasing or annexation, or
• Fewer than 90 percent of the total number of units in the project have been conveyed to the unit purchasers other than the developer, or
• The developer has not turned control of the homeowners association over to the unit owners.

NEWLY BUILT HOME MORTGAGE
The Guide glossary
A Mortgage, the proceeds from which are used for the purchase of a newly constructed site-built home or newly purchased Manufactured Home when the Borrower takes title to both of the following, simultaneously at closing:

• The land, and
• The completed new site-built improvements, or
• A permanently affixed new Manufactured Home that has been converted to real property.

NON-EXCEPTION ACTIVITY
Servicing: Investor Accounting
Regular monthly activity of principal and interest payments made according to the terms and conditions of the security instrument executed by the borrower.
Examples:

• Newly funded mortgages
• Regular principal and interest payments on active mortgages
• Mortgages inactivated during a previous accounting cycle.

NON-LOAN PROSPECTOR^® MORTGAGE
The Guide glossary
A Mortgage that was:

• Never submitted to Loan Prospector, or
• Submitted to Loan Prospector and received an AUS status of invalid, ineligible or incomplete, or
• Submitted to Loan Prospector after the Note Date (see Sections 2.2.1(a), K33.9(b) and K33.10 for exceptions), or
• Submitted to Loan Prospector, but did not comply with Section 2.2.1 of the Guide, or
• Submitted to Loan Prospector, but has a Delivery Date (if delivered through MIDANET®) or a Settlement Date (if sold through the Freddie Mac Selling System) more than 12 months after the Note Date (i.e., the Mortgage is a Seasoned Mortgage - see Sections 2.2.1(a), K33.9(b) and K33.10 for exceptions regarding determination of seasoning), or
• Submitted to Loan Prospector, but was not eligible to be a Loan Prospector Mortgage under the Guide or the Seller’s other Purchase Documents, or
• Submitted to Loan Prospector, but was delivered without the Key Number (Loan Prospector AUS Key Number)
  

NON-OCCUPANT BORROWER HOUSING EXPENSE
Loan Prospector^®
Total monthly housing expenses for all non-occupant borrowers on the loan application. The monthly housing expense is the sum of the following monthly charges on the non-occupant borrowers' primary residence:

• Rent
• Monthly principal and interest payments
• Property hazard insurance premiums
• Real estate taxes
• Mortgage insurance premiums
• Homeowners association dues
• Payments on subordinate financing
• Other Housing Expense

NON-OCCUPANT BORROWER NON-HOUSING DEBT
Loan Prospector^®
Total monthly non-housing debt for all non-occupant borrower(s) on the application. The monthly non-occupant, non-housing debt is the sum of the following:

• Monthly housing expense on a second home
• Negative net rental income on all investment properties owned and 2- to 4-unit primary residences
• Monthly payments on installment debts with more than 10 months of payments remaining, including open collection accounts and debts that are in a period of either deferment or forbearance. If the credit report does not contain a required monthly payment, the monthly payment used must be based on documentation in the file.
• Monthly payments on revolving or open-end accounts, regardless of the months remaining. In the absence of a stated payment, 5% of the outstanding balance will be considered to be the required monthly payment.
• Alimony, child support, or maintenance payment, with more than 10 remaining payments
• Car lease payments, regardless of the number of payments remaining
• Payments from new debt resulting from material inquiries on credit report within 90 days of application (For FHA/VA loans).

NOTE RATE
The Guide glossary
The Note Rate is the interest rate payable under the Note. For adjustable-rate Mortgages (ARM), the Note Rate may adjust from time to time in accordance with the terms of the Note.

For Mortgages sold under the Freddie Mac Selling System (Selling System), Interest Rate may be used to refer to Note Rate.

NOTICE OF ACCELERATION
The Guide glossary
A Notice of Acceleration is a written notice sent to the Borrower notifying the Borrower that:

• A default has not been cured, and
• The Servicer will accelerate the Mortgage and call all sums due and payable if the default is not cured within 30 days of the notice

NUMBER OF UNITS
Loan Prospector^®
Indicates the number of individual family dwelling units on the subject property.

If the number of units is greater than one, make sure the property type coincides.

OWN/RENT (for Current Address or Former Address)
Loan Prospector^®
An indication of whether the borrower owns or rents the current place of residence or former place of residence.

OWNER-OCCUPANT
The Guide glossary
An Owner-Occupant is an individual who meets all of the following requirements:

• Resides in the Mortgaged Premises, using them as a Primary Residence
• Is listed as an owner of record (by deed)
• Has executed the Note and the Security Instrument

PAYOFF
Servicing: Investor Accounting
The satisfaction of a mortgage due to:

• Note maturity: Exception Code 60
• Borrower prepayment: Exception Code 61
• Repurchase: Exception Code 65
• Borrower conversion of a convertible mortgage sold with repurchase option: Exception Code 66

PC COUPON
The Guide glossary
The PC Coupon is the interest rate, expressed as an annual percentage, which is passed through monthly to a security investor.

For WAC ARM PCs, the PC Coupon is derived by calculating a weighted average of the Note Rates of the underlying Mortgages, and then subtracting the Required Spread and the Minimum Contract Servicing Spread.

For Giant PCs, the PC Coupon is the same fixed interest rate as the underlying assets, and is generally in a multiple of 0.500%.

PENALTIES
Servicing: Investor Accounting
Additional costs to be paid that occur when there is:

• Reporting noncompliance
• Data error

The pricing of products is based on receiving funds by their due date. Fees and penalties help Freddie Mac offset additional costs incurred when we do not have accurate and timely information or cash. Each month, approximately the 10th business day of the month, we send you a Servicer Billing Statement for fees and penalties you may have incurred for performing loans. The funds are automatically drafted from the account you designated for the Automated Clearing House (ACH) draft the last business day of the month. This account is separate from your P&I custodial account. If you do not owe any fees in a particular month you will not receive a Servicer Billing Statement.

PERIODIC CAP
The Guide Glossary
For adjustable-rate Mortgages (ARM), the Periodic Cap is the maximum increase or decrease in the Note Rate on any Interest Change Date after the first Interest Change Date, expressed in percentage points.

POSITIVE BALANCES
Servicing: Investor Accounting
Add (show as positive) amounts that need to be deposited to the bank account, or that you are waiting for us to process a credit for on the Monthly Account Statement. Following are examples of transactions you would carry as a positive adjustment:

• Payments received before the loan was designated as ours
• Corporate funds due for repurchases
• Interest due for new fundings for which a payment is not due for the current cycle
• Amortization differences

PRESENT HOUSING EXPENSE
Loan Prospector^®
The total monthly housing expense for all borrowers on the loan application. The monthly housing expense is the sum of the following monthly charges on the borrowers' primary residence:

• Rent
• Monthly principal and interest payments
• Property hazard insurance premiums
• Real estate taxes
• Mortgage insurance premiums
• Homeowners association dues
• Payments on secondary financing
• Other housing expense

PRIMARY RESIDENCE
The Guide glossary
A Primary Residence is the residential property physically occupied by an owner as the principal home domicile. Among the criteria the Seller should consider in evaluating whether a property is a principal home domicile are the following:

• It is occupied by the owner for the major portion of the year.
• It is in a location relatively convenient to the owner's principal place of employment.
• It is the address of record for such activities as federal income tax reporting, voter registration, occupational licensing and similar functions.
• It possesses the physical characteristics to accommodate the owner's immediate dependent family. These characteristics are those traditional to both the owner and the neighborhood.
• The Borrower states an intention to occupy the property as a Primary Residence.

Freddie Mac may, in its discretion, determine that a property is not a Primary Residence.

PRINCIPAL
The Guide glossary
A Principal, for purposes of Freddie Mac's policy concerning the exclusion of certain persons from participating in transactions or doing business, directly or indirectly, with Freddie Mac, may be:

• A Seller/Servicer, or
• A person with management or supervisory responsibilities within a Seller/Servicer. This category includes, but is not limited to, officers, directors, owners, partners, key employees or other persons within a Seller/Servicer who have management or supervisory responsibilities. Suspended or excluded persons within this category are presumed to have influence on or control over the origination or Servicing of a Mortgage, or
• A person or entity with critical influence on or substantive control over the origination or Servicing of a Mortgage or any function related to the origination or Servicing of a Mortgage. This category includes, but is not limited to, an employee of a Seller/Servicer, a third-party provider of services to a Seller/Servicer, or an employee of such third party. Loan officers, underwriters, appraisers, inspectors, developers, real estate agents, brokers, sellers, and buyers are a few examples included within this category.

PRINCIPAL AND INTEREST CUSTODIAL ACCOUNT WORKSHEET
Servicing: Investor Accounting
A worksheet (Form 59) used to reconcile your P&I account. No line items can be added or deleted from Form 59, although you can transfer the form to a spreadsheet (Excel for example). The three sections of the worksheet are:

1. Adjusted Bank Balance
2. Total Liability
3. Total Variance

PRINCIPAL AND INTEREST PAYMENTS
The Guide glossary
For Custodial Accounts, Principal and Interest Payments include all of the following:

• Freddie Mac's share of Principal and Interest Payments on all of our Mortgages whether received from the Borrower, applied from the buydown account or advanced by the Servicer
• Principal curtailments
• Payoff proceeds including short payoffs and third-party foreclosure sale proceeds
• Prepayment premiums if applicable
• Amounts for fees and other billings assessed by us
• Biweekly payments that require biweekly amortization based on Note terms
• All monies owed as a result of Mortgage repurchases that are payable by the Servicer to Freddie Mac due to Freddie Mac's ownership interest (either a whole loan or a participation interest) in the Borrower's Mortgage

• formation of the project
• rights of the developer and limitations on the actions of the developer
• operation of the homeowners association
• sales of units in project

PROPOSED HOUSING (PITI--Principal, Interest, Taxes and Insurance)
Loan Prospector^®
Monthly housing expense for the subject property. Equal to the Proposed Monthly Housing Expense Total found on the loan application. Calculating PITI (Principal, Interest, Taxes, and Insurance): To calculate the PITI, add the following monthly housing expenses together for the property being financed:

• Principal and Interest (Conventional, FHA, and VA)
• Real estate taxes (Conventional, FHA, and VA)
• Property hazard insurance (Conventional, FHA, and VA)
• Mortgage insurance premiums (Conventional and FHA)
• Homeowner's association dues (Conventional, FHA, and VA)
• Ground rent/leasehold payments
• Payments on secondary financing (for Affordable Seconds, count if payments begin within five years of the subject mortgage)
• Other housing expenses. For example, flood insurance, earthquake insurance, wind damage insurance, etc.

For Initial Interest Mortgages and Mortgages with an interest-only feature, the principal and interest payment must be based on a fully amortizing payment schedule for the term of the Mortgage and must be calculated using the Note Rate for a fixed-rate Mortgage and the higher of the Note Rate or fully indexed rate, the fully indexed rate as defined in Section 30.16(a), for an ARM.

PURCHASE CONTRACT
The Guide glossary
The Purchase Contract is an agreement between the Seller and Freddie Mac covering the purchase of a specific dollar amount of Mortgages, the Seller's obligation to deliver such Mortgages on a mandatory or optional basis, and the delivery period. The Purchase Contract may be a:

• Form 1, Fixed-Rate Mortgage Purchase Contract Confirmation (RNY Cash), under the RNY Cash method of pricing
• Form 2, Adjustable-Rate Mortgage Purchase Contract Confirmation, under the ARM Cash method of pricing
• Form 3, Summary Agreement (Guarantor), under the Guarantor program
• Form 4, Convertible Mortgage Conversion Confirmation, under the Convertible ARM program
• Form 5, Summary Agreement (MultiLender Swap), under the MultiLender Swap program
• Form 9, Fixed-Rate Mortgage Purchase Contract Confirmation (Gold Cash®), under the Gold Cash® method of pricing
• Master Commitment Contract
• Purchase Contract confirmation
• Master Agreement
• Any other agreement between the Seller and Freddie Mac, covering the purchase of a specific dollar amount of Mortgages and Seller's obligation to deliver such Mortgages within a delivery period, that is designated to be a Purchase Contract by Freddie Mac.

PURCHASE DOCUMENTS
The Guide glossary
The Purchase Documents are the following:

• The Purchase Contract, including a Purchase Contract confirmation
• This Guide
• Bulletins
• Any agreement pursuant to which a Seller provides a guaranty or any form of credit enhancement in connection with the sale of Mortgages to Freddie Mac
• Servicer Performance Profile published in MIDANET or accessible at http://www.freddiemac.com/service/msp/
• Any other document designated to be a Purchase Document by Freddie Mac
• Any additional terms applicable to the sale of Mortgages, such as written waivers, amendments or supplements to the Guide that are made available to Seller by Freddie Mac through electronic means including sources designated by Freddie Mac for distribution of the Guide

REAL ESTATE OWNED (REO)
The Guide glossary
Real Estate Owned is property acquired through foreclosure or deed-in-lieu of foreclosure.
For use in Section 4.2, REO includes the following:

• REO held for investment
• REO acquired in the settlement of loans (e.g., foreclosed loans)

Investor Accounting: Investor Reporting
A transfer to REO (Real Estate Owned) occurs when a property is not sold at the foreclosure sale and we take title of the property. When we acquire the property we reimburse you for the interest you reported and remitted to us when the mortgage was delinquent.

REINSTATEMENT
Servicing: Investor Accounting
The process of restoring an inactive mortgage to an active status. As part of the reinstatement, you must report and remit all interest due whether or not you received it from the borrower.

RELATED PERSON
The Guide glossary
A person that is any of the following:

• The Borrower's spouse, child or dependent
• An individual related to the Borrower by blood, marriage or adoption
• A guardian of the Borrower
• A person for whom the Borrower is a guardian
• The Borrower's fiancée
• The Borrower's domestic partner

REMITTANCE ANALYSIS (Also known as: Cash Statement)
Servicing: Investor Accounting
A summary report Freddie Mac sends you that can help you manage and monitor your remittance process. The report summarizes:

• Daily remittances via Global Payments, Inc. (GPI) and the dates your remittances are available to us
• Total amounts due based on what we process for your loan level transactions and any adjustments
• Beginning and ending cumulative balances, and your cumulative overage/shortage balance

REMITTANCE OPTIONS
Servicing: Investor Accounting
For monthly processing, the option you selected at the time the mortgage was sold to us. The remittance option is listed on the Funding Detail Report sent to you at the time of funding. You may select more than one remittance option in your portfolio. The five most commonly used remittance options are:

• Accelerated Remittance Cycle (ARC)
• Gold Remittance Cycle
• First Tuesday Remittance Cycle
• Original Remittance Cycle
• Super Accelerated Remittance Cycle (Super ARC)

REMITTING
Servicing: Investor Accounting
The process of initiating a transfer of funds due Freddie Mac from your Freddie Mac custodial account.

• Remit funds via Global Payments, Inc.(GPI ).
• You may access GPI from a touch-tone phone or online via Investor Accounting Manager^SM (IAM).

REPORTING
Servicing: Investor Accounting
The process of transmitting information to Freddie Mac based on the accounting activity (or non-activity) for each mortgage in your Freddie Mac portfolio.

• Report a loan-level transaction for every Freddie Mac loan you service regardless of whether any activity occurred for the loan during the reporting period.
• Process only one transaction per loan. If there is more than one activity for a loan, you must summarize all activity for the cycle into one transaction.
  Example: If a borrower makes a payment on 8/3/XX and then pays off the mortgage on 8/7/XX, you must summarize both of these activities into one loan-level transaction.

REQUIRED NET YIELD (RNY)
The Guide glossary
The RNY is the amount of interest that Freddie Mac must receive from a Mortgage that it purchases under RNY Cash or ARM Cash. Freddie Mac publishes an RNY for fixed-rate Mortgages as well as RNYs for ARMs.

The fixed-rate RNY is used to:

• Calculate the Note Rate for a Converted Mortgage processed through the automated conversion process
• Calculate the Reset Note Rate for a Balloon/Reset Mortgage
• Determine the eligibility of a Mortgage for purchase at the par price under the RNY Cash through MIDANET^®

The adjustable-rate RNY is used to determine the eligibility of a Mortgage for purchase at the par price under ARM Cash through MIDANET.

For Mortgages purchased under RNY Cash or ARM Cash, the RNY will equal the Accounting Net Yield (ANY) except for Mortgages sold to Freddie Mac at a discount.

The RNYs for fixed-rate Mortgages and ARMs are posted on Freddie Mac's website at http://www.freddiemac.com/singlefamily/pricing_center.html, or on various market information vendors.

RESET MORTGAGE
The Guide glossary
A Reset Mortgage is the fixed-rate Mortgage that results from the changing of the interest rate and extension of the term of a Balloon Note when:

• An Eligible Borrower exercises the Reset Option
• An Ineligible Borrower is approved by either the Servicer or Freddie Mac for a reset

• Forgiveness of principal and/or interest on either the first or second mortgage
• Application of a principal curtailment by or on behalf of the investor to simulate principal forgiveness
• Conversion of any portion of the original mortgage debt to a mortgage that is fully forgiven over a period of time or due upon the sale of the subject property (a "soft" subordinate mortgage)
• Conversion of any portion of the original mortgage debt from secured to unsecured

RISK OF PROPERTY OWNERSHIP
The Guide glossary
Risk of Property Ownership exists when there is a risk of liability to Freddie Mac if we become the owner of the property. For example, there is Risk of Property Ownership if Hazardous Substances exist on or around the property, or the property has been cited for a lead-based paint violation, or if the property is in such deteriorated condition that it poses a safety risk.

SCHEDULED/SCHEDULED ACCOUNTING METHOD
Servicing: Investor Accounting
An investor reporting accounting method used for mortgages sold with the Super ARC (Accelerated Remittance Cycle) remittance option. Principal and Interest (P&I) are calculated the same using either the Scheduled/Scheduled or the Guaranteed Timely P& I method. P& I are reported to Freddie Mac according to the loan's amortization schedule.

• Calculate interest in arrears based on the ending Unpaid Principal Balance (UPB) last reported and the Accounting Net Yield (ANY). The ANY equals the note rate less the servicing fee.
• Report and remit the scheduled interest and principal regardless of what you receive from the borrower.The only reporting difference between these methods is the scheduled/scheduled loans can be inactivated and Guaranteed Timely Principal and Interest loans cannot.

• Career members of the United States Army, United States Navy, United States Air Force, United States Marine Corps and United States Coast Guard
• Civilians drafted for active federal duty in the armed services
• Members of the reserve components of the armed services volunteering for or called to active federal duty
• Members of the National Guard volunteering for or called to active federal duty
• Members of the National Guard called to active State duty in response to a national emergency declared by the President of the United States
• Officers of the United States Public Health Service detailed for active federal duty with any of the armed services
  

Military relief, other than that provided under the SCRA, may be available under State law to Borrowers who are serving or have served active State duty, such as members of a State's National Guard serving pursuant to orders of the State's governor in response to a State emergency. Relief under State law may also be available to Borrowers who are serving or have served active federal duty.

If the Borrower requests military relief other than interest rate relief provided under the SCRA, you must submit Form 105, Multipurpose Loan Servicing Transmittal, for a Home Mortgage or Form 102, Second Mortgage/HIL Servicing Transmittal, for a Second Mortgage/HIL to us [ 11] within 10 Business Days of receiving the Borrower's request. You must include all relevant information along with your recommendation.

Compulsory training that civilians must undergo periodically to retain membership in the reserve components of the armed services or the National Guard is not considered active duty for military relief purposes.

1. A Mortgage with a Note Date more than 12 months prior to the:
• Delivery Date, for Mortgages delivered through MIDANET®
• Settlement Date, for Mortgages delivered through the Selling System
2. A Mortgage that was modified or converted pursuant to Chapter 32 (Special Eligibility Requirements for Seller-Owned Converted and Seller-Owned Modified Mortgages) and delivered with a date in the Mod/Conv Date (modification/conversion date) field on Form 11, Mortgage Submission Schedule, or Form 13SF, Mortgage Submission Voucher, or other applicable documentation or electronic submission, which is more than 12 months prior to the:
• Delivery Date, for Mortgages delivered through MIDANET
• Settlement Date, for Mortgages delivered through the Selling System
3. A refinance Mortgage secured by property located in New York State documented using the New York Consolidation, Extension and Modification Agreement (NY CEMA) and the date of the NY CEMA is more than 12 months prior to the:
• Delivery Date, for Mortgages delivered through MIDANET
• Settlement Date, for Mortgages delivered through the Selling System
4. A Mortgage for a Newly Constructed Home where the terms of the Permanent Financing have been modified or the Mortgage Product has changed, or if an ARM, has been converted to a fixed rate, after the Effective Date of Permanent Financing and the effective date of the modified terms or change in the Mortgage Product or ARM conversion, as applicable, is more than 12 months old prior to the:
• Delivery Date, for Mortgages delivered through MIDANET
• Settlement Date, for Mortgages delivered through the Selling System

SECOND HOME
Servicing: Balloon/Resets
A Second Home is a 1-unit residential Property owned by the Borrower, occupied by the Borrower for some portion of the year, and is not subject to any timesharing ownership arrangements. The Property must be:

• In such a location so it functions as a Second Home
• Suitable for year-round occupancy
• Available for the Borrower’s exclusive use and enjoyment
• Not subject to any rental pools or agreements that require the Borrower either to rent the Property or give a management firm control over the occupancy of the Property

SECONDARY FINANCING
Loan Prospector
A lien junior to a mortgage delivered to Freddie Mac.

SECURITY COUPON
The Guide glossary
For Mortgages sold through the Freddie Mac Selling System (Selling System), Security Coupon is PC Coupon as that term is defined in the Glossary.

SELECTED BORROWER
The Guide glossary
The Borrower identified on the Feedback Certificate as the Borrower whose credit reputation Loan Prospector^® most heavily relied upon when determining the Risk Class of the Mortgage.

SELF EMPLOYED INCOME
Loan Prospector^®
Borrower’s total monthly self employment income. This income comes from any businesses in which the borrower has 25% or more ownership.

SELLER NUMBER
Loan Prospector^®
Freddie Mac-assigned number indicating a company approved to do business directly with Freddie Mac.

Loan Prospector AUS automatically enters this value on the Loan Prospector Main page from the User Profile page. Loan Prospector AUS enters the generic Seller Number 121555 for brokers; they cannot edit or change this number.

However, a mortgage service provider (MSP) can update the number on the Loan Prospector Main page when entering a new loan. The Seller number is no longer updateable after a LP AUS Key and Loan Application Number are affiliated with a transaction.

SELLER/SERVICER
The Guide glossary
A Seller/Servicer is an institution approved to:

• Sell Mortgages to Freddie Mac, or
• Service Mortgages purchased by Freddie Mac, or
• Sell Mortgages to and service Mortgages purchased by Freddie Mac

The term "Seller," as used in this Guide and the other Purchase Documents, refers to a Seller/Servicer acting in its capacity as a seller of Mortgages to Freddie Mac.

The term "Servicer," as used in this Guide and the other Purchase Documents, refers to a Seller/Servicer acting in its capacity as a servicer of Mortgages for Freddie Mac.

A wholly owned subsidiary of a Seller/Servicer acting on behalf of the Seller/Servicer, in the Seller/Servicer's name and under the Seller/Servicer's Freddie Mac Seller/Servicer number, does not need separate Freddie Mac approval. The Seller/Servicer remains fully liable to Freddie Mac under the Purchase Documents with respect to any Mortgage originated or sold to or serviced for Freddie Mac by the subsidiary on behalf of the Seller/Servicer.

A Seller/Servicer must be an institution that meets all of the following conditions:

• It is a permanent organization and an ongoing concern
• It is properly authorized to do business in each jurisdiction in which it engages in origination or Servicing
• It is
  • Organized under federal law, or
  • Organized under the laws of one of the States, or
  • A United States-domiciled branch or subsidiary of a foreign entity

SERVICER PERFORMANCE PROFILE
The Guide glossary
A Servicer Performance Profile is a management tool that Freddie Mac uses to:

• Establish performance standards for Servicing performance
• Measure a Servicer's performance with respect to the standards

The profile provides the Servicer with a Tier rating of 1 through 4 in the investor reporting and remitting category and a Tier rating of 1 through 4 or "V" or "X" in the default management category.

SERVICING SPREAD
The Guide glossary
The Servicing Spread is the amount of interest income retained by the Servicer from each Mortgage as compensation for Servicing that Mortgage, and is the amount by which the Note Rate exceeds the Accounting Net Yield applicable to that Mortgage.

Servicing: Balloon/Resets
The Servicing Spread is the amount that is retained by the Seller/Servicer to provide compensation for Servicing Mortgages, as provided in the Purchase Documents.

Selling System
The Mortgage Coupon less the Accounting Net Yield. The portion of the Coupon Rate retained by the Seller or designated Servicer as compensation for servicing the Mortgages.

Servicing: Investor Accounting
The servicing spread (sometimes called the servicing fee) is the amount you keep for servicing the mortgage for Freddie Mac. It is the difference between the note rate and the ANY. If we round to the nearest 1/8 when calculating the new ANY and the note does not provide for rounding the note rate, the servicing spread may change after a note rate change, but will be within a range for the term of the note.

SETTLEMENT DATE
The Guide glossary
For the Guarantor and MultiLender Swap programs, the Settlement Date is the date when Freddie Mac purchases the Mortgages and sells the PCs or Giant PCs to the Seller. For purposes of this Guide, the Settlement Date is the Funding Date. Mortgage delivery must be made in advance to meet the established Settlement Date.

Investor Accounting: Custodial Accounting
The settlement date is the date of the mortgage note, also known as the origination date.

STANDARD DOCUMENTATION
The Guide glossary
The minimum Documentation Level that is required for:

• A Loan Prospector^® Mortgage that receives a Risk Class of either
• Accept with a feedback message indicating Standard Accept eligibility, or
• Caution (including all A-minus Mortgages)
  and
• Non-Loan Prospector Mortgages

STATE
The Guide glossary
As used in the Freddie Mac Single Family Seller/Servicer Guide, the term "State" includes the District of Columbia, Guam, Puerto Rico and the Virgin Islands as well as the 50 States.

SYSTEM CLEARED EDIT REPORT
Servicing: Investor Accounting
A report that lists transactions with edits our system was able to resolve and process. Our system will

1. Calculate the expected interest for the transaction based on the action code, beginning UPB and ANY.
2. Change the principal due and/or interest due reported for non-exception transactions to match what we expect if the difference is less than $1,000.
3. Change the principal due and/or interest due reported for exceptions if the difference is less than $5.00.

“No data in error” message appears when you have no transactions for this report.

TOTAL MONTHLY DEBT
Loan Prospector^®
Total monthly debt of all borrowers on the loan application, including non-occupant Co-borrowers. The components of total debt may differ depending on the occupancy type and Co-borrower occupancy status for the subject loan. Calculate Total Monthly Debt as the sum of the monthly charges for the following:

• Proposed monthly housing expense (principal, interest, taxes, and insurance (PITI)) and/or present monthly housing expense for Co-borrower(s).
• Monthly Mortgage payments (PITI) for second home and 2- to 4-unit primary residences.
• Negative net rental income on all investment properties owned.
• Monthly payments on installment debts with more than 10 months of payments remaining, including open collection accounts and debts that are in a period of either deferment or forbearance. If the credit report does not contain a required monthly payment, the monthly payment used must be based on documentation in the file.
• Monthly payments on revolving or open-end accounts, regardless of the number of payments remaining. In the absence of a stated payment, 5% of the outstanding balance will be considered to be the required monthly payment.
• Car lease payment, regardless of the number of payments remaining.
• Alimony, child support, or maintenance payments, with more than 10 remaining payments
• Payments on taxes and liens, with more than 10 remaining payments
• Debts paid through payroll deduction and other debts as required by HUD Handbook 4155 (For FHA/VA loans).
• Payments from new debt resulting from material inquiries on credit report within 90 days of application (For FHA/VA loans).

TRANSFER OF OWNERSHIP
The Guide glossary
Transfer of Ownership includes, but is not limited to, the conveyance of the Mortgaged Premises or any right, title or interest in the Mortgaged Premises, whether legal or equitable, voluntary or involuntary, by any of the following methods:

• Outright sale
• Deed
• Installment sale contract
• Land contract
• Contract for deed
• Leasehold interest with a term greater than three years
• Lease-option contract
• Land trust
• Transfer of a beneficial interest in an inter vivos trust
• Any other conveyance of real property interests, including those involving secondary financing, such as wrap-around Mortgages

UNDERSERVED AREA
The Guide glossary
An Underserved Area is either of the following:
An underserved rural area is an Underserved Area located outside of a metropolitan area, which may be a whole census tract; a federal or State American Indian Reservation, tribal or individual trust land; or the balance of a census tract excluding the area within any federal or State American Indian reservation, tribal or individual trust land, with:

• A median income at or below 95% of the greater of the State or nationwide non-metropolitan median income, or
• A median income at or below 120% of the greater of the State or nationwide non-metropolitan median income and a minority population of 30% or greater

An underserved non-rural area is an Underserved Area located in a central city or metropolitan area, which may be a whole census tract; a federal or State American Indian Reservation, tribal or individual trust land; or the balance of a census tract excluding the area within any federal or State American Indian reservation, tribal or individual trust land, with:

• A median income at or below 90% of median income of the metropolitan area, or
• A median income at or below 120% of median income of the metropolitan area and a minority population of 30% or greater

UNDERWRITING SCORE
The Guide glossary
The one Credit Score selected from all usable Credit Scores obtained for an individual Borrower that quantifies the credit reputation risk for that individual Borrower.

VA RESIDUAL INCOME
Loan Prospector^®
Monthly balance of funds available for family support after meeting the borrowers' shelter expenses, debts, and taxes, per the VA Lender's Handbook.

This number must be calculated per VA Form 6393 and submitted. Residual requirements for Loan Prospector AUS loans are not always the same as those required for traditional VA underwriting.

WEIGHTED-AVERAGE COUPON (WAC)
The Guide glossary
The Weighted Average Coupon (WAC) of any group of Mortgages is calculated by:

• Multiplying the purchased unpaid principal balance (UPB) of each Mortgage by the Note Rate of such Mortgage (resulting in a "product" for each Mortgage)
• Adding the products so obtained for all of the Mortgages
• Dividing the sum of the products by the purchased aggregate UPB of all the Mortgages in the group
• Freddie Mac's determination of the WAC is conclusive.

WEIGHTED AVERAGE REMAINING MATURITY (WARM)
The Guide glossary
The Weighted-Average Remaining Maturity (WARM) of any group of Mortgages is calculated by:

• Multiplying the unpaid principal balance (UPB) of each Mortgage by the number of months remaining to maturity of such Mortgage (resulting in a "product" for each Mortgage)
• Adding the products so obtained for all of the Mortgages
• Dividing the sum of all the products by the aggregate UPB of all the Mortgages in the group

With respect to buyup and buydown options described in Sections 11.11(b) and 11.11(c), the WARM is the Weighted Average Remaining Maturity, stated in months, of the aggregate of all Mortgages purchased pursuant to any Guarantor or MultiLender Swap conversion or Cash Purchase Contract, as of the Date of Seller's Offer. Freddie Mac's determination of the WARM is conclusive.

2- to 4-UNIT CONDOMINIUM PROJECT
The Guide glossary
A 2- to 4-Unit Condominium Project is a project that is comprised of at least two but no more than four 1-unit dwellings that are each separately owned with separate legal descriptions.

11th DISTRICT COST OF FUNDS INDEX (11th District COFI)
The Guide glossary
For adjustable-rate Mortgages (ARM), the 11th District COFI is the monthly average cost of savings, borrowings and advances of the members of the Federal Home Loan Bank of San Francisco (the "Bank"), as made available by the Bank.