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Step 5 – Post Settlement Correction

Have a Post-Settlement Correction?

A Post-Settlement Correction is required when a workout option is not settled correctly. They can be identified by completing a monthly reconciliation of the Detail Adjustment Report (DAR) and Monthly Accounting Statement (MAS) to ensure accurate credits were received. For example, if the data elements provided at the time of settlement were incorrect, then those incorrect data elements must be corrected.  

*A post-settlement correction cannot be processed to correct the total principal and interest amount (P&I) on a loan. However the components impacting the P&I, i.e., Note Rate/ ANY Rate/Step Rate etc., can be corrected.

Why Post-Settlement Corrections are Important

  • To eliminate key discrepancies between Servicer systems of record and Freddie Mac’s systems of record.  
  • To ensure the correct reimbursement amount is paid and that Servicers have been properly compensated.
  • To avoid compensatory fees for contract noncompliance. A compensatory fee in the amount of $500.00 per mortgage may be assessed in connection with a post-settlement correction.  Review Guide Section 8303.43 for more information.

How to complete a Post-Settlement Correction:

Only follow these steps for a successfully settled workout when a discrepancy has been discovered. 

  1. Download and complete Form 1205: Post Settlement Correction Request or Form 1205-PR: Post Settlement Correct Request for the Principal Reduction Modification.
    • Use the comment sections to clearly describe what needs to be corrected.
    • Only fill out the applicable sections for the specific workout.
  2. Submit Form 1205 or 1205-PR to post_settlement_correction@freddiemac.com with the loan number in the subject line of the email. You’ll receive confirmation of your submission within three business days of receipt. You can also use this email address if you have questions on how to fill out this form or if your correction request is for a scenario not mentioned above.
  3. Monitor your Post-Settlement Data Correction request through Workout Manager® - Status Overview Report. This report provides the current status of your Post Settlement Correction Request.
  4. Reconcile the monthly DAR/MAS to ensure accurate credits are received. Please visit Service Loans application. Use our Post Settlement Correction Interest Calculator for assistance.

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