This glossary is provided as an educational tool for the Seller/Servicers to use. In the event there is a conflict between terms defined in this glossary and identical or substantially similar terms defined in the glossaries to the Freddie Mac Single-Family Guide, Freddie Mac Multifamily Seller/Servicer Guide or the Freddie Mac Selling System User Guides, the terms defined in the Freddie Mac Single-Family Guide, Freddie Mac Multifamily Seller/Servicer Guide and the Freddie Mac Selling System User Guides shall prevail. For specific information governing the use of material presented on this web site, see our Terms & Conditions.


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A

ABANDONMENT OF PROPERTY
Servicing: Default Management
Either,

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

Factors evidencing abandonment include vacancy, waste, deterioration, and lack of utilities.

ABILITY TO PAY RATE
 Servicing: Balloon/Resets
The maximum interest rate the borrower can afford at the current level of income and expenses and the new term maturity of the modified mortgage.
ACCELERATED REMITTANCE CYCLE (ARC)
Servicing: Investor Accounting
A remittance option where funds are due to Freddie Mac on a contract specified business day. If the date is not specified, use the third business day following the accounting cutoff.
ACCELERATION
Servicing: Default Management
The exercise of the clause in the mortgage which gives the lender the right to declare the entire amount of the mortgage due prior to the maturity date under certain specified conditions, typically payment default or due-on-transfer violation.
ACCEPT MORTGAGE
The Guide glossary
A Loan Prospector® Mortgage that receives a Risk Class of Accept.
ACCEPT PLUS DOCUMENTATION
The Guide glossary
The minimum documentation level that is allowed for Accept Mortgages that receive a Documentation Class of Accept Plus.
ACCEPTABLE NET WORTH
The Guide glossary
Generally defined as GAAP capital but Freddie Mac may make adjustments to GAAP net worth when Freddie Mac deems it appropriate.
ACCOUNTING CYCLE
Servicing: Investor Accounting
A one-month period that begins on the 16th of each month, and ends at the close of business on the 15th of the following month, or the previous business day if the 15th falls on a non-business day. The last day of the accounting cycle is the accounting cutoff.

Example:
If the March cycle starts on February 16th, it will cutoff, or end on March 15th. The 15th is commonly referred to as the “cutoff,” but the actual cutoff date for a given month is different if the 15th is a non-business day. If the 15th happens to be a non-business day then the actual cutoff is the previous business day.

ACCOUNTING METHODS
Servicing: Investor Accounting
The four accounting methods are:

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.

ACCOUNTING NET YIELD (ANY)
 The Guide glossary
The ANY is the net yield rate that the Servicer uses to report and remit interest to Freddie Mac each month. The ANY for each Mortgage is equal to Note Rate less the Servicing Spread of the Mortgage.

The ANY for Mortgages purchased through RNY Cash or ARM Cash equals the Required Net Yield (RNY) except for Mortgages sold to Freddie Mac at a discount.
ACCRUED INTEREST
Servicing: Investor Accounting
Interest earned, but not yet paid, for the period of time that has elapsed since the borrower made the last payment.
ACKNOWLEDGEMENT AGREEMENT
 The Guide glossary
An agreement between Freddie Mac, a Servicer and a third party designated by the Servicer in which Freddie Mac consents to and acknowledges a Servicer's grant to a third party of a security interest in the Servicer's conditional, nondelegable contract right to service Home Mortgages for Freddie Mac.
ADDITIONAL SUPPLEMENT
The Guide glossary
An Additional Supplement is a disclosure document containing information solely provided by the Seller that supplements the information contained in the PC Offering Circular or the Pool Supplement concerning the Mortgages in a PC Pool as of Settlement Date.

ADJUSTED BANK BALANCE
Servicing: Investor Accounting
The bank balance from the principal and interest Custodial Account bank statement, as of the accounting cutoff date (usually the 15th of the month), minus any outstanding drafts and plus deposits in transit.

ADVANCES
Servicing: Default Management
Monies paid from the Servicer’s funds for real estate taxes, property insurance premiums, and other expenses necessary to protect the mortgagee’s interest under the mortgage.
AFFILIATE
The Guide glossary
Any entity related to a Seller that is subject to common operating control and that is operated as part of the same system or enterprise. The Seller typically owns less than a majority of the voting stock or the Seller and the entity are subsidiaries of a third party.

AFFILIATED PERSONS
The Guide glossary
Affiliated Persons of a Servicer include the following:

  • 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

AFFILIATES
The Guide glossary
Freddie Mac's term "Affiliates" encompasses all of the following as defined in GAAP FAS No. 57:

Affiliates
A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the enterprise

Management
Persons who are responsible for achieving the objectives of the enterprise and who have the authority to establish policies and make decisions by which those objectives are to be pursued. Management normally includes:

  • 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

Principal owners
Owners of record or known beneficial owners of more than 10% of the voting interests of the enterprise

Related parties

  • 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 GOLD® 97 Mortgage
The Guide glossary
A Mortgage designed to meet the housing finance needs of eligible, underserved individuals and families in which the Borrower has provided a down payment of at least 3% of value from Borrower Funds.
AFFORDABLE PRODUCT TYPE
Loan Prospector®
An indication that the loan is being submitted to Loan Prospector as an Affordable Gold® loan and, if so, the type of Affordable Gold® product.

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.
AGED TRANSACTIONS IN ERROR
Servicing: Servicer Performance Profiles
For Servicer Performance Profiles, the total number of all aged applied transactions in error (60, 90 or 90+ days) on the Loan Reconciliation Difference Report for each month in the most recent three-month period.

AGENCY
The Guide glossary
The sponsor or provider of financial assistance through an agency grant, Affordable Second® , IDA or unsecured loan, as applicable.

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
AGENCY-APPROVED CONVENTIONAL LENDER
Discover Gold Through Quality Best Practices
An entity approved to sell conventional home mortgages to Freddie Mac or Fannie Mae.
AGENT
The Guide glossary
For Wholesale Home Mortgages, an Agent is an entity or individual that is not an employee of a Seller and that acts for and on behalf of the Seller in originating Mortgages or in taking or processing a Mortgage application or underwriting or funding a Mortgage.
ALIMONY OBLIGATION
Loan Prospector®
For FHA borrowers, the monthly amount of alimony that the lender chooses to treat as a reduction in the borrower's monthly gross income, rather than as a debt obligation, per the Liabilities section of HUD Handbook 4155.
ALLONGE
The Guide glossary
An addendum attached to a Note that can be used for endorsements.
ALT 97® MORTGAGE
The Guide glossary
A Mortgage eligible for Freddie Mac's Alt 97 offering and delivered as an Alt 97 Mortgage.
ALTERATIONS IMPROVEMENTS & REPAIRS
Loan Prospector ®
The cost of any alterations, improvements, repairs and rehabilitation to be made on the subject property.

ALTERNATIVE ACCOUNTING METHOD (ACTUAL/ACTUAL)
Servicing: Investor Accounting
An investor reporting accounting method used for partial reinstatements.

  • 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 (16th - 15th).
ALTERNATIVE FIRST NAME
Loan Prospector®
An additional first name under which the borrower may have been granted credit.
ALTERNATIVE LAST NAME
Loan Prospector®
An additional last name under which the borrower may have been granted credit (e.g., maiden name).
ALTERNATIVE STATED INCOME
The Guide glossary
A Mortgage underwritten using stated self-employed income meeting the eligibility requirements of Section 37.22(a) (paragraph 2) or 37.23(a) (paragraph 2).
ALTERNATIVE TO FORECLOSURE
Servicing: Default Management
Reinstatements, relief and workout options that, when used, result in the resolution of a mortgage delinquency without foreclosing on the property.

A-MINUS MORTGAGE
The Guide glossary
A Loan Prospector® Mortgage that:

  • Has a Risk Class of Caution,
  • Has assessment results of eligible for A-minus, and
  • Meets the requirements of Chapter C33
AMORTIZATION
Servicing: Servicing System
Repayment of a mortgage debt with periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time.
AMORTIZATION MONTHS
Loan Prospector®
Term of the loan in months.
AMORTIZATION SCHEDULE
Servicing: Servicing System
A schedule that shows the amount of principal and interest due at regular intervals and the unpaid principal balance of the mortgage after each payment is made.
AMORTIZATION TYPE
Loan Prospector®
An indication of whether the interest rate payable under the note is subject to change over the life of the loan.
AMORTIZING PERIOD
The Guide glossary
For Initial InterestSM Mortgages, the Amortizing Period is the period (expressed in months) when monthly payments are fully amortizing principal and interest payments; the Amortizing Period begins on the First Amortizing Payment Date and ends at the end of the Mortgage term.
AMOUNT DUE
Servicing: Investor Accounting
An institution's liability to Freddie Mac calculated and reported each accounting cycle. (A liability is a financial obligation for which one business owes another).

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.
AMOUNT OF MORTGAGES AND LIENS
Loan Prospector®
Total of all mortgages and liens against the individual property referenced in real estate owned (REO).

AN AGENCY
The Guide glossary
The sponsor or provider of financial assistance through an agency grant, Affordable Second, IDA or unsecured loan, as applicable.

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
ANY
Accounting Net Yield.

APPRAISAL
Servicing: Default Management
An opinion or estimate of value performed by a state-licensed or certified real estate appraiser in the state in which the property is located. Also refers to the process by which a value estimate (factual analysis) is obtained.
APPRAISAL TYPE/MAF (Minimum Assessment Feedback)
Loan Prospector®
Indicates the minimum appraisal or inspection form required, if any, to meet Freddie Mac's purchase guidelines.
APPRAISED VALUE OF PROPERTY
Loan Prospector®
A statement of the property's value from a valid property valuation source.
ARC
Servicing: Investor Accounting
Accelerated Remittance Cycle.
ARM ADJUSTMENT TYPE
Loan Prospector®
An indication of the type of ARM adjustment product.

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.
ARM QUALIFYING RATE
Loan Prospector®
The interest rate used in calculating the borrower's PITI to qualify the borrower for the subject property mortgage.
ARM SUBSEQUENT ADJUSTMENT PERIOD
Loan Prospector®
Number of months between subsequent rate or payment adjustments after the first initial change date.
ARREARAGE
Servicing: Default Management
The amount past due on a mortgage, excluding any amounts that become due through acceleration.
ASSET AMOUNT
Loan Prospector®
Total dollar value of a given asset category for all borrower(s).
ASSET CATEGORY
Loan Prospector®
Summary-level name given to an asset to distinguish it from other types of assets.
ASSET TYPE
Loan Prospector®
Specifies the general names (type) of items commonly listed as financial assets of the borrower(s) in a mortgage loan transaction. Assets may be either liquid or fixed and are associated with a corresponding asset amount.
ASSIGNED MSP
Loan Prospector®
The mortgage service provider (MSP) selected for loan data assignment.
ASSIGNED/RELEASED BY
Loan Prospector®
The organization that assigned or released the loan data.
ASSIGNMENT STATUS
Loan Prospector®
An indication of the assigned or released status for a specific loan transaction.
ASSUMPTION AGREEMENT
Servicing: Default Management
A written agreement by a buyer to assume the obligation under an existing note, originally incurred by another.
AUS
Loan Prospector®
Automated Underwriting System.
AUS RISK CLASS
Loan Prospector®
Also Known As: Risk Class. The category listed on the Full Feedback Certificate that defines the level of underwriting required, any special underwriting provisions and, if applicable, relief from certain representations and warranties.
AUS STATUS
Loan Prospector®
Indicates if the data received for a loan application was adequate for Loan Prospector® risk assessment.
AUS TRANSACTION NUMBER
Loan Prospector®
Also Known As: Transaction No. A unique number assigned to a loan by Loan Prospector each time the loan is submitted for assessment. Use this number to identify the transaction when you contact Freddie Mac Customer Service.
AUTOMATED VALUATION MODEL (AVM)
The Guide glossary
An Automated Valuation Model (AVM) is a mathematically based software program that produces a value or value range for a subject property.
AVERAGE DAYS, EXCLUDING DELAYS
Servicing: Servicer Performance Profiles
For Servicer Performance Profiles, foreclosure timeline criteria that measure and assess the Servicer's actual performance on average to the performance that has been capped for the "designated counsel credit." It captures all loans that have been acquired through foreclosure sale (reverted to REO) without delays and compares your performance to our state standards. The measurement captures the length of time from the Due Date of the Last Paid Installment until the foreclosure sale date.
AVERAGE DAYS, INCLUDING DELAYS
Servicing: Servicer Performance Profiles
For Servicer Performance Profiles, foreclosure timeline criteria that measure and assess the Servicer's actual performance on average to the performance that has been capped for the "designated counsel credit." It captures all loans that have gone to foreclosure sale (reverted to REO), regardless of whether they were impacted by a delay and compares your performance to our state standards. The measurement captures the length of time from the Due Date of the Last Paid Installment until the foreclosure sale date.

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.

Back to Index

B
BALLOON LOAN MODIFICATION
The Guide glossary
The Balloon Loan Modification is the Mortgage document executed by the Borrower to evidence the Borrower's election to reset and the terms of the Reset Mortgage. Two original Balloon Loan Modifications must be executed by the Borrower. The current version of this Mortgage document is the Freddie Mac Multistate Balloon Loan Modification — Single-Family (Form 3293).

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 NOTE
The Guide glossary
For a Balloon/Reset Mortgage, the Balloon Note is the Note executed by the Borrower which provides for a Balloon Payment on the Balloon Maturity Date.
BALLOON NOTE ADDENDUM
The Guide glossary
For a Balloon/Reset Mortgage, the Balloon Note Addendum is an addendum to the Balloon Note that sets forth the terms of the Reset Option.
BALLOON PAYMENT
The Guide glossary
For a Balloon/Reset Mortgage, the Balloon Payment is the sum of the unpaid principal balance (UPB), accrued but unpaid interest through the Balloon Maturity Date, and all other sums required to pay the Balloon/Reset Mortgage in full on the Balloon Maturity Date.

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")
BALLOON RIDER
The Guide glossary
For a Balloon/Reset Mortgage, the Balloon Rider is the rider to the Security Instrument that sets forth the terms of the Reset Option and that must be recorded with the Security Instrument.
BALLOON TERM
Loan Prospector®
A field in LP for the month at which the balloon payment occurs. For instance, if the loan balloons after seven years, enter 84 in this field (7 years x 12 months). For non-balloon loans, leave this field blank.
BANK STATEMENT
Servicing: Investor Accounting
A summary of all of the investors’ share of cash receipts and cash disbursements.

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.

BASE EMPLOYMENT INCOME
Loan Prospector®
Borrower's gross monthly income from all verifiable sources that can reasonably be expected to continue for at least the next three years. Can also include secondary income as described in Guide Section 37.13.
BASE LOAN AMOUNT
Loan Prospector®
Amount to be financed by the borrower excluding financed PMI, MIP or Funding Fee financed.
BIDDING INSTRUCTIONS
Servicing: Default Management
The opening price for a property at the foreclosure sale, which could also be the closing price if there is no competitive bidding.
BIF
The Guide glossary
BIF is the abbreviation for the Bank Insurance Fund.
BIWEEKLY MORTGAGE
Servicing: Investor Accounting
A mortgage where the borrower makes a principal and interest payment every two weeks pursuant to either the terms of the note, a rider, or a separate agreement. Each payment received is applied as a P&I payment. The biweekly payment schedule cannot be changed.
BIWEEKLY PAYMENT PLAN
Servicing: Investor Accounting
A plan where the borrower’s account is debited every two weeks, but a principal and interest payment is applied once a month pursuant to the terms of the note. The biweekly payments may be stopped at any time.
BONUSES
Loan Prospector®
The income derived from optional compensation paid out by the employer that is linked to the employers overall performance and/or individual employee performance.

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 CONTRIBUTION
The Guide glossary
The total amount contributed by the Borrower to the down payment, Closing Costs, Financing Costs and Prepaids/Escrows.
BORROWER FINANCIAL STATEMENT (Form 1126)
Servicing: Default Management
A form containing information supplied by the borrower about his or her assets, liabilities, income and expenses. The form also includes a section for you to document servicing information about the mortgage and property.
BORROWER FUNDS
The Guide glossary
All funds paid by the Borrower in connection with the property purchase or Mortgage financing, comprised of cash and other Equity as defined in Sections 26.2 and 26.3.

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
BORROWER'S LETTER
Servicing: Default Management
A letter signed by the borrower containing a description of the circumstances preventing the borrower from making mortgage payments (involuntary inability to pay). The letter also reveals whether the borrower wants to retain ownership of the property and whether he or she has a course of action to resolve the delinquency.
BPO
Servicing: Default Management
The abbreviation for Broker’s Price Opinion (BPO).

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 NAME
Loan Prospector®
Name of the Broker's Company. Also Known As: Broker Company Name, Broker Name.

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

BROKERS PRICE OPINION (BPO)
The Guide glossary
A Brokers Price Opinion (BPO) is a broker's written estimate of the probable sale price of the property.

Servicing: Default Management
A written estimate of the probable sales price of the property, including front, rear, and street scene photographs, completed by a Freddie Mac-approved broker/vendor. The BPO must be ordered from our vendor network, must be completed on Form 1092, and must identify any known hazardous substances or conditions that affect the habitability, safety, value, or occupancy of the property.

BUILDING STATUS
Loan Prospector®
Physical status of the structure.

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.
BUYDOWN CUSTODIAL ACCOUNT
A Buydown Custodial Account is a Custodial Account into which the Servicer deposits buydown funds.

BUYDOWN TERM (months)
Loan Prospector®
Total number of months over which the buydown applies. For instance, if the interest rate changes over a period of two years, the buydown term is 24 (12 months in a year x 2 years).
BUYER CLOSING COSTS
Loan Prospector®
Dollar amount of closing costs paid by the borrower on the subject property excluding discount points and prepaid items. Identifies buyer-paid closing costs that will be counted toward the Statutory Investment Requirement.

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C
CALCULATED REMAINING MATURITY
Servicing: Servicing System
The calculation that determines the number of months remaining to maturity for a mortgage based on the unpaid principal balance divided by the principal and interest payment.
CANCELLATION RATE
Discover Gold Through Quality Best Practices
The percentage of wholesale mortgage applications submitted by a mortgage broker or correspondent to a Seller that are subsequently canceled by the mortgage broker or correspondent.
CAPITALIZATION
Servicing: Default Management
The addition of certain allowable amounts to the outstanding principal balance (applicable in completing loan modifications).
CAR (CUSTODIAL ACCOUNT RECONCILIATION) REVIEW
Servicing: Investor Accounting
For Servicer Performance Profiles, an analysis Freddie Mac performs on your principal and interest and escrow custodial account reconciliations to determine compliance with our requirements. The process not only ensures our funds are safeguarded but can also help you better manage cash flow activities.

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 ADJUSTMENT
Servicing: Investor Accounting
Adjustments that clear only after you make an adjustment (deposit or withdrawal) to your bank account.
CASH DISBURSEMENT
Servicing: Investor Accounting
Anything that reduces your bank balance and may be individually designated as a debit, journal entry (JE), manual adjustment, check transfer GPI EFT/ACH debit, reversal or something similar.
CASH DISBURSEMENT VARIANCE
Servicing: Investor Accounting
Variances that occur during the accounting cycle when the amount of funds withdrawn from the principal and interest custodial account are different from the amount of cash made available to us as stated on the Remittances Made line of the Monthly Account Statement.

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:

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 RECEIPTS VARIANCE
Servicing: Investor Accounting
Variances that occur when your deposits do not equal the Amount Due that Freddie Mac processed as shown on the MAS. The total amount due us is comprised of loan-level transactions and other billings we processed.

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
CAUTION MORTGAGE
The Guide glossary
A Loan Prospector® Mortgage that receives a Risk Class of Caution.
CHARGEOFF
Serving: Default Management
Cessation of collection efforts on a mortgage when the debt is deemed to be uncollectable. A chargeoff does not cancel the note or release the lien on the property.
CITIZENSHIP STATUS
Loan Prospector®
Specifies the borrower's current Immigration and Naturalization Service (INS) status.
CLOSELY HELD CORPORATION
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A corporation whose ownership of common stock is by a single individual, a family, or a few holders. The stock is not publicly traded.
CLOSING COSTS
The Guide glossary
Application fees, appraisal and credit report fees, homeowners association fees, transfer taxes, tax stamps, attorney fees, survey costs or fees, title insurance and any other fees associated with the Mortgage closing.
COFI (COST OF FUNDS INDEX)
Servicing: Default Management
The monthly average cost of savings, borrowings and advances made available by 11th District members of the Federal Home Loan Bank of San Francisco (applies to adjustable rate mortgages).
COLLATERAL
Servicing: Default Management
Any property that serves as security for the discharge of a debt (for example, the real estate pledged as security for a mortgage).
COMMISSIONS
Loan Prospector®
Borrower income that is based upon a percentage of the goods or services the borrower sells.
COMMUNITY SAVINGS SYSTEM
The Guide glossary
A savings system to which members of a community make regular contributions and from which members are entitled to a distribution of funds in accordance with a specified plan. A nonprofit community organization must administer the savings system.
COMPLETE LOAN PROSPECTOR® EVALUATION
The Guide glossary
A Loan Prospector evaluation is complete if Loan Prospector returns a Risk Class of Accept or Caution and a Documentation Class of Accept Plus, Accept or Caution.
CONCURRENT TRANSFER OF SERVICING
The Guide glossary
A Concurrent Transfer of Servicing means Servicing is transferred at the same time Freddie Mac purchases the transferring Mortgages.
CONDO CLASS
Loan Prospector®
Classification of the condominium project for the subject property.
CONDOMINIUM CONSTITUENT DOCUMENTS
The Guide glossary
The declaration of condominium, master deed or similar instrument, the bylaws and regulations, and other documents pertaining to a particular Condominium Project.
CONDOMINIUM HOTEL
The Guide glossary
A Condominium Hotel is a Condominium Project in which any unit owner or the homeowners association is a party to a revenue-sharing agreement with either the developer or another third-party entity. An example of a revenue-sharing agreement is a rental pooling agreement.
CONDOMINIUM UNIT: CONDOMINIUM PROJECT
The Guide glossary
A Condominium Unit is a one-unit dwelling located in a Condominium Project.
A Condominium Project is real estate that includes the separate ownership in fee (or on an acceptable leasehold estate) of a specified residential unit with an undivided interest in the real estate designated for common ownership solely by unit owners.
CONDOMINIUM UNIT MORTGAGE
The Guide glossary
A Mortgage secured by a unit in a Condominium Project.
CONFIDENCE LEVEL
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A statistical term that indicates the reliability of the result of a sample review. It is usually expressed as a percentage. If a result were said to be "at a 95 percent confidence level," the same result would be found in 95 out of 100 samples of the same size selected from the same population.
CONSTANT MATURITY TREASURY (CMT) INDEX
The Guide glossary
For adjustable-rate Mortgages (ARMs), the CMT Index is the weekly average yield on United States Treasury securities adjusted to a specified constant maturity, such as one, three or five years, as made available by the Federal Reserve Board.
CONSTRUCTION COMPLETED AFTER APPLICATION
Loan Prospector®
Loan for financing a new home in which construction of the home is completed after the borrower fills out a loan application. The borrower takes title to the property and closes on the loan at the same time. These are primarily builder homes where the builder, not the borrower, obtains the construction financing (e.g. homebuyer selects a model, chooses custom features, and the builder constructs the home in the housing development.).
CONSTRUCTION CONVERSION MODIFICATION AGREEMENT
The Guide glossary
The agreement executed by the Borrower that modifies the terms of the Interim Construction Financing (the Note and/or Security Instrument) to state the terms of the Permanent Financing.

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.
CONTRIBUTOR
Loan Prospector®
Specifies the source of the temporary subsidy buydown funds.
CONTROLS
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Standards and procedures adopted within a seller's organization to manage risk.
CONVERSION DATE
The Guide glossary
The Conversion Date is the date on which the interest rate applicable to a Convertible ARM changes from an adjustable interest rate to a fixed interest rate. The Conversion Date is the first day of the second month after the month in which the Borrower exercises the option to convert. For example, if the option to convert is exercised at any time during the month of January, then March 1 is the Conversion Date.
CONVERSION FORMULA
The Guide glossary
For Convertible ARMs, the Conversion Formula is the methodology, set forth in the Note, for establishing the Note Rate upon conversion of the adjustable interest rate to a fixed interest rate. The Conversion Formula refers to a published required net yield plus a specified number of basis points.
CONVERSION WINDOW
The Guide glossary
For Convertible ARMs, the Conversion Window is either a specified period of time or specific dates, as stated in the Note, during which the Borrower can exercise the option to convert the adjustable interest rate to a fixed interest rate.
CONVERTED MORTGAGE
The Guide glossary
A Converted Mortgage is a conventional, fully amortizing, level payment, fixed-rate Mortgage, originated as a Convertible ARM, that had an adjustable interest rate until the Borrower exercised the option to convert to a fixed interest rate. See also Freddie Mac-Owned Converted Mortgage and Seller-Owned Converted Mortgage.

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.
CORRESPONDENT
The Guide glossary
An entity that typically sells the Mortgages it originates to other lenders. The Correspondent performs some or all of the loan processing functions such as taking the Mortgage application; ordering credit reports, appraisals, and title reports; and verifying the Borrower's income and employment. The Correspondent may or may not have delegated underwriting and typically funds the loans at settlement. The Mortgage is closed in the Correspondent's name and the Correspondent may or may not service the Mortgage. The Correspondent may commission a Mortgage Broker to perform some of the processing functions.

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 ENHANCEMENT
Servicing: Default Management
An agreement between Freddie Mac and a Seller/Servicer and-/or a third party, defining risk sharing responsibility for covering losses, usually resulting from a borrower defaulting on a mortgage obligation and/or a Seller/Servicer’s institutional practices.

CREDIT SCORE
The Guide glossary
A number summarizing an individual's credit profile that indicates the likelihood that a Borrower will repay future obligations.
CS/LTV FEE LEVEL
Loan Prospector®
A delivery fee based on credit score and loan-to-value as identified on Exhibit 19 and paid in accordance with the provisions in Section 17.2 of the Guide.
CUMULATIVE BALANCE
Servicing: Investor Accounting
The cumulative difference between what you have remitted to Freddie Mac and what we are posting due (or how well you are managing your remittance process). Your goal is to maintain a zero balance by remitting amounts due in a timely manner and maximizing your float.
CUMULATIVE VARIANCE LOG
Servicing: Investor Accounting
A record of all variances outstanding (i.e. unresolved) as of the accounting cutoff regardless of the cycle it originated. Take corrective action to remedy all outstanding variances to manage your principal and interest custodial account(s).
CURRENT CYCLE VARIANCE LOG
Servicing: Investor Accounting
A record of all causes of variances. Complete a separate log for each type of variance (cash receipts and cash disbursements). Identify and record all causes of a variance identified at each step of the process, including any variances which are offset by cash receipts or disbursements variances.
CUSIP NUMBER
The Guide glossary
A CUSIP Number is a unique nine-digit alphanumeric designation assigned by the CUSIP Service Bureau to each PC Pool and Giant PC Pool. The CUSIP Number is used to identify the PC Pool or Giant PC Pool on the books and records of the Federal Reserve Bank's book-entry system. All PCs in Book-Entry Form and all Giant PCs are identified by a CUSIP Number.

CUSTODIAL ACCOUNT
The Guide glossary
A Custodial Account is a Demand Deposit Account or Interest-Bearing Deposit Account established and maintained by a Servicer at an Eligible Depository, into which Principal and Interest Payments, Escrow Funds and other monies due to Freddie Mac or held on behalf of Freddie Mac Mortgages are deposited. The types of Custodial Accounts are:

  • Principal and Interest Custodial Accounts
  • Principal and Interest Disbursement Clearing Custodial Accounts
  • Escrow Custodial Accounts
  • Buydown Custodial Accounts
CUSTODIAL ACCOUNT REVIEW SCORE
Servicing: Servicer Performance Profiles
For Servicer Performance Profiles, criteria that measure compliance with our custodial account reconciliation requirements.
CUSTODIAL RECONCILIATION
Servicing: Investor Accounting
The process of ensuring that your cash management and investor reporting systems are in balance with our loan-level accounting records.
CUSTODIAN
The Guide glossary
The Custodian is an institution that verifies and maintains the original Notes and assignments of the Security Instruments.
A Custodian must satisfy the eligibility requirements described in Section 18.2 and must enter into the Form 1035, Custodial Agreement, described in Section 18.3.
The definition of Custodian includes both a third-party Custodian and a Seller/Servicer acting as its own Custodian, as described in Section 18.2.
CUT-OFF DATE
Servicing: Default Management
The date up to which loan collections are included in reports and remittances to Freddie Mac.

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D
DAILY COLLECTIONS REPORT
Servicing: Investor Accounting
A report that summarizes the investors’ share of collections received on a given day.
DAILY EDIT REPORT
Servicing: Investor Accounting
A report that Freddie Mac sends to notify you of any discrepancies or “edits” with your loan-level transactions.

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, Evaluated 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).
DEBT RATIO
Loan Prospector®
Borrower’s monthly debt payment-to-income ratio (Total Debt/Total Income).

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.
DEED
Servicing: Default Management
A written document (signed, delivered and usually recorded) conveying (transferring) title to real estate from one owner to another.

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.
DEFICIENCY JUDGEMENT
Servicing: Default Management
A court order obtained by a lender to pay the balance owed on a loan when the proceeds from the foreclosure sale are insufficient to pay off the loan.
DEFICIENCY RIGHTS
Servicing: Default Management
The rights of the note holder to recover from the borrower through subsequent legal action the portion of the total debt secured by a mortgage that is not satisfied by the proceeds from the foreclosure sale.

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.

If the due date is The Mortgage is 30 days delinquent
The 1st day of the month When all or part of one or more payment(s) remain unpaid as of close of business on the last Business Day of the month
Not the 1st day of the month (from the second through the 31st day of the month) When all or part of one or more payment(s) remain unpaid 30 or more actual calendar days as of close of business on the last Business Day of the month
DELINQUENT
Servicing: Default Management
The borrower has failed to make timely payments of principal, interest, or escrow in accordance with the terms of the mortgage agreement.
DELINQUENT INTEREST AMOUNTS
Servicing: Investor Accounting
Aggregate figures consisting of uncollected interest reported to us for the current cycle, and uncollected interest reported to us in previous cycles that remains uncollected as of the current cutoff.
DELINQUENT INTEREST PAYMENT
Servicing: Default Management
The portion of scheduled interest payments that contractually past due on the existing mortgage (with interest being accrued at the existing note rate).

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 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.
DEMAND DEPOSIT ACCOUNT
The Guide glossary
For Custodial Accounts, a Demand Deposit Account is a deposit account from which funds may be withdrawn by the Servicer/depositor immediately and without any advance notice of intended withdrawal or any restrictions on the frequency of withdrawals.
DETACHED CONDOMINIUM PROJECT
The Guide glossary
A Condominium Project comprised solely of detached, 1-unit dwellings.

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.

DISASTER, MAN-MADE
Servicing: Default Management
A catastrophe of man-made origin, such as a flood caused by a broken dam, a nuclear power plant accident or toxic waste spill.
DISASTER, NATURAL
Servicing: Default Management
A catastrophe of natural origin, such as a earthquake, hurricane, tornado, or flood.

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.
DISCRETIONARY PROVISIONS
The Guide glossary
Discretionary Provisions are those terms or provisions of the Guide identified in Section 12.13 and in Exhibit 26, Discretionary Provisions.
DISTRIBUTED SOFTWARE
The Guide glossary
Distributed Software is software or software-related documentation that is not specifically covered by the terms of a separate agreement between Freddie Mac and the Seller/Servicer.
DIVIDENDS/INTEREST
Loan Prospector®
Funds paid to owners of stocks or bonds by issuer of stock or bond.
DOCUMENT CHECKLIST
Loan Prospector®
Checklist that lists the minimum documents to be included in the loan file. This list is specific to the loan data. If you change the loan data, the Doc. Checklist may change after you resubmit.

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 CLASS
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 classes are:

  • Accept (FHA and VA loans) - The minimum documentation required for FHA or VA mortgages that receive a risk class of Accept with a documentation class of Accept.
  • Refer (FHA and VA loans) - The minimum documentation required for FHA or VA mortgages that receive a risk class of Refer with a documentation class of Refer.

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. The Documentation Level for users of Loan Prospector Classic will be identified in a feedback message under the Documentation Guidelines section of the Feedback Certificate.

DOWN PAYMENT
Loan Prospector®
Cash paid at the time of purchase towards the full purchase price of the property.

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 InterestSM 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.

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E
EARLY COLLECTIONS
Servicing: Servicer Performance Profiles
For Servicer Performance Profiles, criteria that measure the percentage of your active and 30-day delinquent loans that become 60 days delinquent at any point over a six month period.
EARLY DELINQUENCY COUNSELING
The Guide glossary
Counseling provided to a delinquent Borrower by a nonprofit third-party homeownership-counseling agency or eligible Servicer, that involves identifying the reason(s) a Borrower did not make a Mortgage payment on time and working with the Borrower to resolve any financial problems so that future Mortgage payments can be made on a timely basis. The counseling includes a personal and interactive relationship with the Borrower that deals with money management, budgeting and debt management counseling.
EFFECTIVE DATE FOR DELIVERY
The Guide glossary
The date identified in either a Master Agreement or Master Commitment Contract upon or after which a Seller may begin delivery of Mortgages to Freddie Mac under the terms of the Master Agreement or Master Commitment Contract.

EFFECTIVE DATE OF PERMANENT FINANCING
The Guide glossary
The date of the closing on the Permanent Financing and the date the term of the Permanent Financing begins; or, for Construction Conversion Mortgages and Renovation Mortgages, the date when the Interim Construction Financing is deemed to be paid off or converted or modified to, and replaced by the Permanent Financing. The Effective Date of Permanent Financing is as follows:

Newly Built Home Mortgages

Permanent Financing Note Date of the Mortgage


Construction Conversion and Renovation Mortgages

Integrated Construction Conversion Documentation Due Date of the first monthly payment of principal and interest on the Permanent Financing
Separate Construction Conversion Documentation Note Date of the Note and Security Instrument for the Permanent Financing
Modification Construction Conversion Documentation Date on which the Construction Conversion Modification Agreement is effective or the date of the new Note for the Permanent Financing if a new Note is required.

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.
ELIGIBLE DEPOSITORY
The Guide glossary
An Eligible Depository is a depository institution in which a Servicer must establish a Custodial Account or invest monies deposited into a Custodial Account, that meets the institutional requirements and rating requirements as found in Sections 77.9 and 77.10.
ELIGIBLE VETERAN
Loan Prospector®
An indication if any borrower qualifies as Veteran under VA guidelines.
EMINENT DOMAIN
Servicing: Default Management
The taking of real estate, generally through condemnation proceedings, for the public's use.
EMPLOYER ASSISTED HOMEOWNERSHIP (EAH) BENEFIT
The Guide glossary
Financial assistance provided to an employee from the employer pursuant to an established, ongoing and documented employer benefit program, provided (i) the employer is not an interested party (as described in Section 25.3) and (ii) the funds were not obtained from an interested party either directly or through a third party. See Section 26.6.2 for additional requirements.
EQUITY
The Guide glossary
The difference between the value of the Mortgaged Premises and the total dollar amount of all Mortgages and other liens secured by the Mortgaged Premises.

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
The Guide glossary
Escrow includes all funds collected to cover expenses to be paid under the Mortgage including, but not limited to, taxes, special assessments, ground rents and other charges that are or may become First Liens on the Mortgaged Premises, as well as property insurance premiums and mortgage insurance premiums.

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.
ESCROW CUSTODIAL ACCOUNT
The Guide glossary
An Escrow Custodial Account is a Custodial Account into which the Servicer deposits Escrow Funds.
ESCROW DISBURSEMENT CLEARING ACCOUNT
The Guide glossary
An Escrow Disbursement Clearing Account is a deposit account established by a Servicer, at its option, specifically for the payment of all expenses payable from Escrow Funds with respect to Mortgages serviced for Freddie Mac and for others.
ESCROW FUNDS
The Guide glossary
For Custodial Accounts, Escrow Funds are any and all funds deposited by a Servicer on a Borrower's behalf (such as buydown funds) or any and all funds remitted by a Borrower to a Servicer, to be used by the Servicer to pay, with respect to a Mortgage in which Freddie Mac has an ownership interest (either a whole loan or a participation interest), such expenses as property insurance premiums, mortgage insurance premiums, property taxes, special assessments, ground rents and any other charge that is or may become a prior lien on the Mortgaged Premises.
ESTIMATED CLOSING COSTS
Loan Prospector®
The dollar amount of the estimated loan fees, title fees, appraisal fees and other closing costs associated with the subject transaction excluding discount points and prepaids.
ESTIMATED PREPAID ITEMS
Loan Prospector®
Estimated Prepaid Items
The dollar amount of the escrow/impound that is to be held by the lender and is to be collected at closing for future payment of taxes, insurance or other obligations on the subject property.
ESTIMATED VALUE OF PROPERTY
Loan Prospector®
Borrower's statement of the subject property's value or appraised amount if available.
EXCEPTION ACTIVITY
Servicing: Investor Accounting
Any exception to the regular monthly principal and interest payments that changes the status of the mortgage.
Example: A borrower paying off their loan or a borrower reinstating their loan to an active status from foreclosure.
EXCEPTION INTEREST
Servicing: Investor Accounting
Interest calculated at the ANY based on the current accounting cycle’s beginning UPB. Exception Interest is due for exception activity (reinstatements, payoffs, REOs and third-party foreclosure sales). There are two types of exception interest: daily and monthly.
EXISTING CONDOMINIUM PROJECT
The Guide glossary
A Condominium Project that has been completed, and at least 90% of the total number of units have been conveyed or are under contract to the unit purchasers. "Project completed" means that all units and common elements in the project and any master association are complete, and the project is not subject to additional phasing or annexation.

EXTENDED BUYDOWN MORTGAGE
The Guide glossary
A Mortgage with a temporary subsidy buydown plan for which:

  • 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.

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F
FACE VALUE
Loan Prospector®
The dollar amount of the face value of the applicable borrower's Asset Type. The face value is the par value or actual selling price of the asset or the amount the issuer contracts to repay.
FAIR MARKET VALUE
Servicing: Default Management
The estimated market value of the mortgaged premises as determined by a Broker’s Price Opinion (BPO, Form 1092) or by an appraisal report that meets the standards and requirements of the Guide.
FDIC; FDIC-INSURED DEPOSITORY
The Guide glossary
FDIC is the abbreviation for the Federal Deposit Insurance Corporation. The FDIC administers the BIF and the SAIF. An FDIC-Insured Depository is a depository institution whose deposits are insured by the FDIC.
FEDERAL RESERVE BANK
The Guide glossary
The Federal Reserve Bank means the Federal Reserve Bank of New York and/or such other Federal Reserve Bank(s) as may from time to time maintain Freddie Mac PCs and Giant PCs on their books and records.

FEEDBACK CERTIFICATE
The Guide glossary
The printed or printable document returned by Loan Prospector® that details the results of the Loan Prospector submission. The Feedback Certificate may include, but is not limited to:

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

The in-file and merged credit reports printed by Loan Prospector are not part of the Feedback Certificate.

FEES
Servicing: Investor Accounting
Fees occur when there is:

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

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 busi